Oil's Fair In Love And War

OK, it’s time to come clean about the Iraq War. It was, at its core, about oil.

But these days, everything is about oil.

I never for one instant thought that the invasion of Iraq and overthrowing Saddam Hussein was part of some ploy to take control of Iraq’s oil, and I still don’t. That was small potatoes in the big picture — it was about securing the free flow of oil from the Middle East to the industrial world.

Because without oil, our entire civilization comes to a crashing halt.

Back during the Iran-Iraq war, Iran started mining the Persian Gulf to deny oil tankers — all of them, not just ones carrying Iraqi oil — passage and to put a chokehold on the West. The United States chose to “lend” its flag to tankers of non-combatant nations and put the United States Navy to service protecting tankers. Two US warships were badly damaged as a result, but the oil kept flowing.

The high price of oil is a hefty component in the rising food prices we’re seeing around the world. Remove oil from the equation, and kiss goodbye a lot of fertilizers, most heavy farm machinery, and the transportation infrastructure that moves food from the farms through the food chain to your dinner table. Worst of all, the price of oil has pushed some folks to start burning food in place of oil.

So, so much of our daily lives depends on fossil fuels, and in ways we never even consider. Most all plastics and synthetic fabrics are derived from fossil fuels. Take a look around your home and eliminate anything that uses plastics, and you’ll end up with a whole lot of empty space. Most of our electricity comes from fossil fuels.

And it is an indisputable fact that much of our oil comes from abroad. Of all the misdeeds of the Clinton administration, I would rank among the highest his refusal to allow the development of the oil reserves in the Arctic National Wildlife Reserve in Alaska. When he vetoed the entire federal budget to keep it from development, one of the rationales he gave was that it would be about ten years before we’d see any oil from that area.

That particular event happened in 1995. It’s now 2008. The remainder of the math problem is left as an exercise for the reader.

The problem of our dependence on oil does not have any simple solutions. Indeed, it cries out for what I like to call “shotgun problem solving” — trying several solutions at once, in hopes of alleviating the crisis quickly. It tends to less useful in identifying the root causes of problems, but it does tend to get feasible workarounds and short-term fixes faster.

In the short term, we need to look at the causes of the high prices and potential shortages, and how we can fix them. In this area, I find myself agreeing with Senator Obama and disagreeing with Senators Clinton and McCain about the federal gas tax. A temporary suspension of that measure won’t do a hell of a lot. I’ve seen some estimates that the “holiday” will save the average consumer a grand total of thirty bucks during the summer months. Indeed, I think it will have a long-term harmful effect, as it will give politicians cover to say “hey, look, we did something!” and avoid having to take actions that might actually help matters.

Another bad idea is Senator Clinton’s “windfall profits tax” on oil companies. Look up the phrase “biting the hand that feeds you.” These companies are huge, and their profits are huge based solely on volume. Their profit margins are actually slightly lower than in recent years (a fraction of the return that Hillary Clinton enjoyed in her brief adventures in cattle futures. Then, Hillary made 999 dollars for every dollar she invested; the oil companies are making about a dime on each dollar), as a percentage of revenues, and they already pay tremendous amounts in taxes. Besides, the real killer right now is not the price of gas, but the price of oil — and these oil companies don’t sell oil, they buy it and turn it into the stuff we need.

And that’s not to mention the legions and legions of accountants, bookkeepers, and tax lawyers they employ. You can bet that whatever Senator Clinton decides is enough for them to make

No, short-term, what we need is to find ways to both increase supply and decrease demand, and let the marketplace fix itself. The American people are already doing this on a collective basis, independent of the government; gas consumption is slipping, new SUV sales are down, and people are looking at smaller and more fuel-efficient cars all on their own without anyone from the government telling them to do so or using “carrot and stick” approaches to push them that way.

We also need to increase the flexibility of our supply. As I understand it, we currently have about 45 different blends of gasoline that we produce, almost entirely the result of different federal, state, and local regulations. This is, to put it mildly, absurd. I can understand that a single formulation probably should not be used in every area for every purpose, but the sheer diversity we have now is nothing short of a formula for chaos. It is micromanaging on a scale that we can no longer afford. I would have no problems with the oil companies simply telling certain governments “you say we can’t sell gas unless it meets these specific criteria? OK. We’ll stop selling in your jurisdiction, and pump more into less restrictive regions.” Indeed, I’d welcome it.

I also would not support any messing around with the Strategic Reserve. That is there for a reason — a genuine shortage of supply. We have plenty of oil, we just don’t like the price we’re paying for it. In other words, our current shortage is of cheap oil, and the Reserves oil is not cheap — we’d have to replace it, and at current and future prices. Tapping the Reserves for this purpose is the equivalent of the current “stimulus” payments Washington is sending out — a simple transfer of money from the government to the people. But in this case, it isn’t just money that is being moved around, but oil, and replacing that in the Reserves will be very expensive.

But not as expensive as not replacing it, and then later needing it.

No, leave that alone. That’s our national rainy day fund of oil, and it’s only partly cloudy right now.

OK, that’s short-term. Mid-range, we need to increase the overall oil supply. That means biting the bullet and going after the oil we have under our control right now. Yes, I mean carefully controlled development of ANWR, the oil fields off our coast, and (if Rob will let us) the newly-discovered oil in the Dakotas. With the current instability in the Middle East, as well as the pricks who run OPEC quite happy to keep the price of their oil as high as the market will bear, we need to find a way to screw with their power a bit. The United States, if we put our mind to it, could put a pretty decent dent in their market share and dilute their power — and I think it’s long past time we did just that.

This will also help mitigate the effect of other nations developing and increasing their demand for oil. China and India, just to name two nations, are buying up a lot more oil, and expect to buy even more every year. And they are bidding against us for pretty much the same amount of oil as before.

Long-term, we need to wean ourselves off of oil. As I noted, petroleum is one of the most useful and valuable substances we’ve ever discovered. We make almost everything out of it. It can — and is — used as a component in almost every linchpin of our modern age. And the most common use of it? We burn it. That’s right, it literally goes up in smoke.

And it’s nasty stuff to burn. While its energy density is remarkable, it still is incredibly vile to produce, refine, transport, and burn. We have so many alternatives to it for energy. (Thank you, Jane Fonda and the rest of the anti-nuke crowd, for your role in keeping us from using that particular energy supply. And thank you, Senators Kerry and Kennedy, for your valiant efforts in keeping your beachfront mansions’ views pristine and killing the wind power project off Cape Cod.)

Our problems are the product of literally decades of ignoring the situation, pushing back any possible solution and simply living in the here and now. And it’s been a bipartisan accomplishment. There is no quick fix available.

But it ain’t going away. Efforts that will not pay off for some time will still be useful, by the time they mature and start working.

For that, we can thank President Clinton for a perfect example of shortsightedness. If we take him at his word that ANWR will take at least a decade to start producing oil in meaningful amounts, that means that we would have had an additional supply of oil — unendangered by Mideast instability and other foreign concerns — on line for a least a couple of years now today. But that didn’t happen.

Predicting the future is a dangerous thing, but I’ll go out on a limb and say that we will still be having trouble with the Middle East and foreign oil in the year 2018. Gosh, wouldn’t it be nice to have some additional domestic oil to soften the blows and buy us more time to wean ourselves off of oil?

Fawn the Media, Part III
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