THE PROGRESSIVE CONSERVATIVE, USA
An Online Journal of Political Commentary & Analysis
Volume IX, Issue # 142, July 29, 2007
Dr. Almon Leroy Way, Jr., Editor
Government Committed to & Acting in Accord with Conservative Principles
Ensures a Nation's Strength, Progress, & Prosperity
THE REAL REASON WHY GASOLINE COSTS MORE
By Alan Caruba
AMERICA'S RISING ENERGY & TRANSPORTATION COSTS -- THE CAUSES: (1) CORRUPT & AUTHORITARIAN POLITICAL
REGIMES IN PETROLEUM PRODUCING FOREIGN COUNTRIES & THE IMPACT OF THEIR POLICIES & TACTICS ON THE WORLD'S
OIL & NATURAL GAS SUPPLIES; (2) THE ENVIRONMENTALIST MOVEMENT IN THE U.S.A. & ITS INFLUENCE ON U.S. ENERGY &
ENVIRONMENTAL POLICY; & (3) POLITICALLY PARTISAN DEMOCRATS IN THE U.S. CONGRESS & THE OBSTACLES THEY ARE
CREATING TO INCREASED U.S. DOMESTIC PETROLEUM PRODUCTION.
FULL STORY:
Finding, extracting, transporting, and refining crude oil is a very expensive business. It is also a very risky one. There are
no guarantees that one will find oil and, finding it, there are no guarantees that the investment and all the assets involved
will not be stolen by the governments that invite oil companies to tap their natural resources.
If you want to know why gasoline and everything made from oil is going to cost more in the years ahead, I give you, ladies
and gentlemen, Hugo Chavez, dictator of Venezuela, and a number of other nation-states whose authoritarian and corrupt
political regimes have engaged in extortion.
On June 26, 2007, Hugo Chavez told the Big Oil companies that had invested in Venezuela’s Orinoco Belt that they were
going to have to sell their assets at a ridiculously low price to Petroleos de Venezuela (PDVSA), the state oil company.
They were instructed to hand over majority control as part of Chavez’s nationalization program.
In power since 1999, this disciple of Fidel Castro fired 75% of the managers of the state company, after they staged a strike
in 2003. Only the increased investment by foreign-owed companies kept Venezuela’s oil industry from total implosion. This
year he showed his appreciation by forcing out British Petroleum, Chevron, Total, and Norway’s Statoil. ConocoPhilips
and Exxon Mobil Corporation have since concluded they too could not continue their operations in Venezuela.
The popular myth about Big Oil is that it wields such great power that nation-states cannot resist them. The reality is that,
faced with dictators like Chavez, often the only alternative is to leave or cut the best deal they can. The other reality is that
Venezuela’s oil production has declined 25% since Chavez, a committed Communist, crushed the strike. With the major oil
companies departing, how much greater a decline lies ahead? That is just one reason gasoline will cost more.
Russia may no longer be officially Communist, but it continues to be run like a Communist-ruled state. As Business
Week recently reported, in June, 2007, Russia “forced BP to sell a controlling stake in a massive east Siberian gas field
called Kovykta for around $700 million — a fraction of the project’s potential value. Last year, Moscow strong-armed Royal
Dutch Shell PLC into giving up control of its big Sakhalin II gas project in the Far East, and it’s now battling Exxon Mobil
over a similar field nearby.”
Our neighbor to the south, Mexico, won’t even allow foreign investment in its oil industry. Its nationalized oil company,
Pemex, needs lots of capital investment, but isn’t getting it. That may lead to a decline in production.
Add to this the situation in Iraq that has caused a decline in oil production. Who can say what events will occur in Iran if it
continues its intention to build nuclear weapons? Then add in the worldwide oil industry’s need to grow by at least 3%
annually to keep up with demand.
You’re looking at a world that needs new production estimated at four million barrels per day and it’s not going to happen.
You don’t just create production or refining capacity overnight. It requires lots of money, something the free market Big Oil
companies have been willing to risk up to now. That’s something Communists don’t do.
There are other options, but right now the Democrats that control the U.S. Congress, led by House Speaker Nancy Pelosi
and Senate Majority Leader Harry Reid, are howling like moon-besotted coyotes that the United States must become
“energy independent.”
Congress is refusing to allow known, vast oil reserves in Alaska to be extracted, nor facilitating exploration and extraction
of other potentially vast reserves of oil and natural gas off the continental shelf of the United States. Indeed, they want to
punish Big Oil for whatever profits they may have garnered from their investments in the Gulf of Mexico.
The vast matrix of insane “environmental” laws and regulations has made it impossible, i.e. unprofitable, to build a single
new refinery in the United States since the 1970s. The New York Times recently reported that mechanical
breakdowns in U.S. refineries “have created a bottleneck in domestic energy supplies,” helping to drive up the cost of
gasoline. Even if an oil company was to begin construction tomorrow, you’re still years away from it coming on line.
Instead, the Democrats are wailing about “global warming” and “climate change,” demanding the imposition of “cap and
trade carbon credits” and, in general, racing toward the worst possible choices for a nation whose energy needs are being
ignored in the name of fraudulent science and pure politics.
These are things you need to think about as the cost of a gallon of gasoline goes up at your local gas station or the price
of heating oil rises as Winter closes in on the northeast and elsewhere.
The mandated, increased production of ethanol from corn that Congress has imposed is already driving up food costs.
Ethanol is so corrosive it cannot be sent through pipelines, so imagine what it doing to the engine of your car? As for the
trucking industry on which the nation depends for the delivery of practically everything, its increased costs will just add to
the cost of practically everything.
It is a “perfect storm” of international criminality when Communist thugs and others decide to line their pockets and bully
the rest of the world. This is the kind of thing that causes wars and economic woes.
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
Russia & Other Former Soviet Republics
Communism: Longterm Enemy
Latin America -- Economics, Politics, Political Regimes,
& Relations with the United States of America:
Problems & Opportunities for the U.S.A.
War & Peace in the Real World
Page Two
Page One
American Politics & Political Competition:
Elections, PACs, & Political Parties
The American Political System:
Politics & Government in the U.S.A.
Alan Caruba is a veteran business and science writer, a Public Relations Counselor, and Founder of the National Anxiety Center, a
clearinghouse for information about media-driven scare campaigns. Caruba writes a weekly commentary, "Warning Signs," posted
on the Internet website of the National Anxiety Center, which is located at
www.anxietycenter.com.
Caruba’s new book, Right Answers: Separating Fact from Fantasy, has been published by Merril Press.
© Alan Caruba 2007
Published with Permission of Alan Caruba
ACaruba@AOL.Com
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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