Yes, the price of oil keeps going up, gas is at about $3 a gallon and the politicians are afraid. They're in a tizzy because they think they'll be next as the bloodthirsty cries of the unwashed masses echo to the sky ever louder in a rising chorus of outrage and despair: "Bring us the head of ExxonMobil!!!!!!!"
But it may surprise you that the big oil companies are not laughing all the way to the bank.... ok, well maybe they're chuckling a little, but there are dark clouds on the horizon for Big Oil. I came across this
article on BusinessWeek's website which explains it pretty well.
These problems are well known in the industry, and those of us who work in it are bemused when politicians and refuseniks blame fuzzy concepts like "greed" and "price gouging" for the price of oil. Yes, both of these reprehensible things exist, but it all depends on the thresholds that we're willing as a society to tolerate. Nobody was calling for oil executives' heads when gas was $.89 a gallon in 1991, were they?
Trust me, as an unashamed enviromental conservationist liberal, I am no fan of Big Oil or our country's addiction to it (even though I work in the industry :-) How's that for 'perspective'). The BusinessWeek article's boo-hoo tone is fairly sympathetic to the industry -- no surprise there, though from my perspective they are crocodile tears. It's par for the course -- the article's in a business magazine after all. And as a business major I like to read about issues such as this one from a business perspective, expecially since the issue of oil dependence is so divisive right now. I just can't feel sorry for ExxonMobil, whatever troubles they may have in the future. Among oil companies they in particular have been instrumental in blocking progress re: CO2 emissions and regulations to protect the environment, as well as stumping hard for opening ANWR to exploitation. Cry us a river, ExxonMobil.
But people who blame the oil companies miss the point -- the problem is built-in, systemic greed in petroleum markets, the world's escalating demand, diminishing supplies, flat refining capacity, and certain cartels and unsavory countries which have found our Achilles heel and are using it to their advantage. I could go on to say that the root of the problem is a blind adherence to a free-market, capitalist ideology that is inappropriate and destructive for an irreplacable and finite resource such as petroleum/fossil fuels, but I think you get my point.
I admit I do take a certain bitter pleasure in watching the Republicans try to squirm out of this, because there is nothing they can do about it. NOTHING. And they're the ones who are supposed to understand the underlying principles of free markets so well. The "solutions" they've proposed would be ineffectual at best and more likely will only exacerbate the problem in one way or another.
$100 one-time tax rebates? *guffaw* That was pretty funny. Hooboy... who says Republicans don't have a sense of humor?
Suspend the national gas tax? Nice try. They (or the Democrats) may even try it for short-term political gain, but it doesn't matter -- any price reduction will be temporary if it happens at all. Suspending the gas tax would also cut off a vital source of funding that governments use to maintain their highways and infrastructure, and that would cause its own problems.
Drill in the Arctic National Wildlife Refuge? That won't work either except to temporarily alleviate some of Big Oil's worries (elucidated in the article) about replenishing their proven reserves. Drilling in ANWR won't reduce the price of gas, no matter how much the Republicans talk of "secure oil supplies."
Even the Democrats' idea of a "windfall tax" on oil companies, while slightly more rational from a macroeconomic viewpoint, will indeed decrease investment in oil exploration and production (known as 'E&P' in the industry) -- just as the oil companies say. And E&P is about the only segment of the industry enjoying fat profit margins these days. As the petroleum supply moves "downstream" the margin gets as thin as a razor, especially at the wholesale level -- my company TransMontaigne's segment.
So go ahead Republicrats -- try all of the above! Knock us all out. Keep the half-baked schemes coming! None of them will work and some of these options will cause shortages in supply, which will make the pain even worse. Face it people, we are in for prolonged economic pain and it is directly due to the lack of attention that has been paid to reducing our oil dependence for the past 30 -40 years.
There is no easy solution to this one and the problem goes deep -- far beyond one focus-grouped, sound-bitten, negative-ad, god-fearing election cycle. Our elected leaders' inability to speak the truth about our country's long-term problems represents a profound failure in our democracy.
Anybody have an opinion on this that is not totally clouded by rigid free-market ideology? Let me know.
