OIL POLICIES RUNNING ON EMPTY

By Travis Willmore

[This article was published in: Portland State University Vanguard, 8,11,2004.]

It’s always entertaining to watch how a big spike in oil prices makes such a wide array of people in this country dance as if they were on strings. From presidential candidates frantically scrambling their energy policies to soccer moms trading in their Expeditions for hybrid cars, the ravenous thirst for oil has people in the United States, once again, by the wallet.

Or so it seems.

But “high prices” at the pump are all relative, and compared with much of the civilized world, we’re enjoying a relative fire sale. However, among all the other rollbacks on civil liberties in the interest of avoiding Terror, we still haven’t lost our constitutional right to bitch-and in an election year, people are going to be paying very close attention to a concentration of bitching on any one subject.

If anyone from Western Europe-where gas tends to run in the $4-6 per gallon range-could hear Bob Taxpayer from Portland whining about paying $1.95, they would probably be pressed not to start laughing hard enough to accidentally drive their diesel Peugeot off the side of an Alp. Compared to red-blooded Americans, they’re much more used to paying high taxes on gasoline and driving small, fuel-efficient cars. But people here, in the country that is the largest consumer of oil on the face of the earth, always seem to have an inexplicably difficult time coming to terms with the idea that they don’t have infinite access to a finite resource. Well, now it’s wake-up time. Again.

The per-barrel price of oil just hit an all-time record on Friday and came within fifty cents of it again on Monday. This isn’t simply because of antics at the national casino on Wall Street that are beyond the understanding of anyone without an economics degree and a lot of letters after their name.

A big part of the problem is supply and demand. The spare production capacity of the member nations of Organization of Petroleum Exporting Countries is at a level below where it was during the 1973 oil crisis. Additionally, oil consumption levels are at an all-time high, and concerns over terrorism and terrorist attacks hand over some of the supply lines from the Middle East. To top that off, even the more stable suppliers like Russia are having difficulties. Russia’s largest petroleum exporter owes billions of dollars in back taxes and is tottering on the verge of bankruptcy.

While consumers continue to wail and gnash their teeth, nobody seems to have a very effective solution ready. So far, the president hasn’t been very vocal about what he plans to do about gas prices. To be fair, he’s been pretty busy trying to reform the intelligence community so that it can more effectively run down leads on discarded four-year-old al-Qaida terror plots. He’s also no doubt been concerned with the small matter of running a neck-and-neck presidential campaign.

The loyal horse-faced opposition has been more ambitious on the subject. John Kerry recently revealed his energy policy “solution,” which involves throwing sacks of money at the problem for the next ten years, $30 billion worth of sacks, to be exact. So we’d better start stocking up on extra-large sacks.

“We can control our own destiny, we can create the jobs of tomorrow and we can make sure that no young American in uniform will ever be held hostage to our dependence on oil from the Middle East,” Kerry said in a recent speech. I only read it in print, but after seeing the Democratic convention, I can totally picture him delivering such a line in person-waving his fist and projecting the general demeanor of someone in the throes of an unusually vigorous attack of Irritable Bowel Syndrome.

From a metaphysical standpoint, “we can control our own destiny” is pretty shaky when applied to any subject, but never mind that. The real problem is that he wants to spend $5 billion on subsidizing alternative fuels that are the subject of hardly any interest from consumers. And $10 billion on subsidizing the auto industry to develop more fuel-efficient cars at some point down the road. And a billion for this, and a billion for that…

Nobody wants to risk political paralysis and suggest it, but I suspect there might be only one real fix and that’s slapping a big European-style tax on gas. As I mentioned before, there’s no point in pining for a reprieve on the supply. Jacking the price up that much would actually be enough to make a sizable dent in demand.

Otherwise, prices will reach Euro levels on their own much sooner than anyone would like to believe.