THE PROGRESSIVE CONSERVATIVE, USA
An Online Journal of Political Commentary & Analysis
Volume XIV, Issue # 49, March 19, 2012
Dr. Almon Leroy Way, Jr., Editor
Government Committed to & Acting in Accord with Conservative Principles
Ensures a Nation's Strength, Progress, & Prosperity
HUNTING FOR SCAPEGOATS WILL NOT LOWER PUMP PRICES;
Exporting Gasoline & Diesel Fuel Creates Jobs & Prosperity.
By Paul K. Driessen
MAJOR FACTORS CONTRIBUTING TO THE RAPIDLY RISING PRICES OF GASOLINE & DIESEL FUEL AT THE PUMPS IN THE U.S.A.: ASIA'S GROWING APPETITE
FOR OIL, COUPLED WITH AMERICA'S REFUSAL TO PRODUCE MORE OF ITS OWN PETROLEUM -- THE OBAMA ADMINISTRATION'S POLICIES GOVERNING MATTERS
RELATING TO ENERGY, ENVIRONMENT, & THE ECONOMY -- UNCERTAINTY OVER POTENTIAL OIL SUPPLY DISRUPTIONS, DUE TO DRILLING ACCIDENTS, UNSTABLE
INTERNATIONAL POLITICS, CONCERN ABOUT ISLAMIST TERROR ATTACKS ON MIDDLE EAST OIL PIPELINES & PROCESSING CENTERS -- THE CONCERNS &
ACTIVITIES OF OIL SPECULATORS -- THE KEY TO SOLVING AMERICA'S ENERGY PROBLEMS: TAKING ADVANTAGE OF THE 2012 FEDERAL ELECTIONS TO DEFEAT &
REMOVE FROM POWER THOSE WHO CURRENTLY CONTROL THE U.S PRESIDENCY & SENATE, NAMELY, BARACK HUSSEIN OBAMA, THE DEMOCRATIC PARTY, &
THE LEFTIST-ENVIRONMENTALIST COALITION
FULL STORY:
When President Barack Obama took office, regular gasoline cost $1.85 a gallon. Now it’s hit $4.00 per gallon in many cities, and some analysts predict it could
reach $5.00 or more this Summer. Filling your tank could soon slam you for $75-$90.
Winter was warm. Our economy remains weak. People are driving less, in cars that get better mileage, even with mandatory 10% low-mileage ethanol. Gasoline
is plentiful.
Misinformed politicians and pundits say prices should be falling. Our pain at the pump is due to greedy speculators, they claim, and greedier oil companies that
are exporting oil and refined products.
Their explanation is superficially plausible – but wrong.
Energy Information Administration (EIA) data show that 76% of what we pay for gasoline is determined by world crude oil prices; 12% is federal and state taxes;
6% is refining; and 6% is marketing and distribution. The price that refiners pay for crude is set by global markets.
World prices are driven by supply and demand, and unstable global politics. That means today’s prices are significantly affected by expectations and fears
about tomorrow.
A major factor is Asia’s growing appetite for oil – coupled with America’s refusal to produce more of its own petroleum. Prices are also whipsawed by
uncertainty over potential supply disruptions, due to drilling accidents and warfare in Nigeria; disputes over Syria, Yemen, and Israeli-Palestinian territories;
erroneous reports of a pipeline explosion in Saudi Arabia; concern about attacks on Middle East oil pipelines and processing centers; and new Western
sanctions on Iran over its nuclear program and the Mullahs’ threats to close the Straits of Hormuz.
Moreover, oil is priced in U.S. dollars, and the Federal Reserve’s easy money, low interest policies – combined with massive U.S. indebtedness – have
weakened the dollar’s value. It now costs refineries more dollars to buy a barrel of crude than it did three years ago.
Amid this uncertainty and unrest, speculators try to forecast future prices and price shocks, pay less today for crude oil that could cost more four weeks hence,
and get the best possible price for clients who need reliable supplies. When they’re wrong, speculators end up buying high, selling low, and losing money.
Oil speculators play a vital role, just as they do in corn and other commodities futures markets.
Basic chemistry dictates that a barrel of crude (42 gallons) cannot be converted entirely into gasoline. Depending on the type of crude, some 140 refineries
across the U.S.A. transform each barrel into gasoline, diesel, jet fuel, heating oil, asphalt, waxes, petrochemicals, and other essential products.
This manufacturing process leaves them with excess diesel fuel, because American vehicles consume less diesel than refineries produce – due to air pollution
laws that limit diesel use. U.S. refineries export that excess diesel to Europe, which uses more diesel than gasoline, and Europeans ship their surplus gasoline to
mostly East Coast consumers. U.S. refineries also sell excess inventories of other manufactured products to overseas markets, but diesel is by far their principal
export.
America exports $180 billion in finished products every month – $2.2 trillion annually in corn, wheat, cars, tractors, appliances, airplanes, pharmaceuticals and
much more.
Last year, for the first time since 1949, America was a net exporter of fuel and other petroleum products. Those exports injected $107 billion into our economy
and sustained thousands of refinery and other jobs that otherwise might have been lost, as refineries also struggled in our stagnant economy.
Farm and factory jobs would evaporate if we made exporting their products illegal. Prohibiting fuel exports, and demanding that refineries manufacture only what
we need here in the United States, would have the same effects on our employment, economy, and living standards.
The U.S.A. has 1.4 trillion barrels of technically recoverable conventional oil, the EIA and other experts estimate, and enormous additional supplies in shale and
tight sand deposits. The best way to keep prices down is to produce more of this American oil, and import more from secure, friendly, nearby suppliers like
Canada.
However, our government prohibits leasing and drilling on nearly 95% of the onshore and offshore lands it controls. It is dragging its feet on leases and permits
for the remaining 5% and over-regulating production on private lands. It vetoed the Canada-to-U.S.A. Keystone XL pipeline. It is imposing layers of costly and
unnecessary new regulations on every aspect of energy production it does not simply reject.
We are losing billions of dollars in bonus, rent, royalty and tax receipts, killing countless jobs, and impairing Americans’ living standards, health, and welfare.
“More exports mean more jobs,” President Obama said recently. “We need to strengthen American manufacturing. We need to invest in American-made energy
and new skills for American workers.”
His words ring hollow. Above all, President Obama and his environmentalist and congressional allies want to end our “addiction” to oil, “fundamentally
transform” America, and “invest” billions of dollars (borrowed from us and our children and grandchildren) subsidizing efforts to turn corn, switchgrass, algae,
and pond scum into fuel.
Generating billions of dollars and millions of real jobs by producing American oil and manufacturing American oil products doesn’t fit this agenda. Even though
one of every ten jobs created in the last three years has been in oil and gas, when it comes to petroleum, Team Obama wants to punish success, and reward
failures like Solyndra, Fisker, and the Chevy Volt.
To paraphrase a recent White House jab at Republicans who want more drilling and fewer obstructionist regulations: Every time prices start to go up, President
Obama heads down to the local pond or cornfield, makes sure a few cameras are following him, and starts acting like he can wave a magic wand, throw a few more
billions around, and have cheap, eco-friendly biofuels forever.
Meanwhile, Energy Secretary Steven Chu has made it abundantly clear that he wants to “boost gasoline prices to European levels” – $8 to $10 per gallon! He’s
already half way to his goal.
Those prices would certainly force Americans to drive less, and “hope” the hype about “changing” to algae-gas becomes reality in less than twenty or thirty
years.
Meanwhile, skyrocketing fuel prices will certainly “boost” the cost of transporting people, raw materials, food, and other products by wheels, wings, and
waterways; manufacturing anything still made in America; and preserving jobs, family and business budgets, and dreams that depend on affordable energy.
Hunting for scapegoats won’t lower pump prices. Reality-based energy policies will.
LINKS TO RELATED TOPICS:
Political Environmentalism Versus Human Progress & Prosperity:
Policy Issues Relating to Energy, Environment,
& Natural Resources
Political Economy -- Philosophies, Systems, & Public Policies:
Government, the Economy, & Economic Prosperity
Conservative columnist and political commentator and author of Eco-Imperialism: Green Power, Black Death,
Paul K. Driessen is Senior Policy Advisor for the Committee For A Constructive Tomorrow (CFACT), the Congress Of
Racial Equality (CORE), the Center For The Defense Of Free Enterprise (CDFE), and the Atlas Economic Research
Foundation. Driessen has served on the Staffs of the U.S. Senate and the U.S. Department of Interior, as well as on that of
an energy trade association. He has often spoken and written on such topics as environmentalism, global climate change,
global warming alarmism, corporate social responsibility, and public policies relating to energy, the environment, and
economic development.
Driessen earned his Bachelor of Arts degree in Geology and Field Ecology at Lawrence University, Appleton,
Wisconsin, and his Juris Doctor (JD) at the University of Denver College of Law. He received accreditation in Public
Relations from the Public Relations Society of America, New York, N.Y.
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THE PROGRESSIVE CONSERVATIVE, USA
An Online Journal of Political Commentary & Analysis
Dr. Almon Leroy Way, Jr., Editor
Conservative & Free-Market Analysis of Government, Politics & Public Policy, Covering Political, Legal, Constitutional, Economic,
Cultural, Military, International, Strategic, & Geopolitical Issues
Conservative Government Ensures a Nation's Strength, Progress, & Prosperity