America is being held hostage, and not much is being done to alleviate the problem. We're paying $123 dollars a barrel for a product that was recently in the $60 range. I'm sure I will catch a lot of flak from this column, but someone needs to speak out, and someone needs to follow the money. Just because most conspiracy theories seem crazy, that's not always the case.
I was listening to Fox News today and it was mentioned that up to 70,000 oil drillers are meeting to discuss the U.S. energy policies and to discuss new ways to drill in sensitive areas. The goal is to open up the Arctic National Wildlife Refuge (ANWR) for drilling. I believe this can be done with minimal disruption to the area's wildlife. Theoretically, following the concept of supply and demand, by increasing the supply the prices will fall. If they can come up with an acceptable drilling method that will retrieve the oil and be sensitive to the environment, it is said our problems will be solved.
Which problem? Lack of supply, foreign oil, higher prices -- what will more drilling solve? Although I'm all for drilling in ANWR and other remote areas, I wouldn't begin to give the oil companies carte blanche to any more U.S. resources before developing some conditions or a new energy policy. Lack of supply, foreign oil and higher prices are not necessarily fixed by more drilling.
I believe most people are concerned about higher prices first, lack of supply second, and foreign oil last. First let's look at higher prices:
If the price was not so high today, it wouldn't be an issue. We would all be going about our business just like any other day. But the price of crude oil is up by 50 percent just in the past few months. Did a lack of supply cause this? No. There is plenty of oil out there. It's business as usual; we all go to the pumps and fill our tanks. Did foreign oil or OPEC cause this? Again, no. OPEC only provides about 30 percent of our oil. President Bush recently met with OPEC and requested a production increase. But OPEC says it's meeting the demand, so why increase the supply?
And what about supply? Supply is not causing the higher prices. As I said above, OPEC is meeting the supply of all their clients. We have plenty of gasoline and diesel at the pumps all over America. Think back to the '70s when we sat in line to buy gas. Remember the fuel rationing and only buying fuel on even or odd days? Remember when energy credits actually restricted the amount of fuel a company could purchase on a monthly basis? Lack of supply means exactly what it says -- no more oil. That's not spin. Many of you may not remember the '70s, when lack of supply meant no more oil.
Foreign oil: Foreign oil is easy to blame for our woes. It's so easy to blame OPEC for not increasing supply to drive the prices down. But as they said, they're meeting the current demand with their production, so why produce more? We often expect that other countries are there to make us more comfortable and because of that we're upset with OPEC for not increasing production to make life easier for us.
But OPEC asked a very logical question recently: If you need more oil, why not produce more from our own vast supplies? Duh! Why should OPEC drain their reserves just because we would rather use their resources than our own? If you take off the spin and the attitude, we are not in this mess because of foreign oil. Using foreign oil has always been the main philosophy of our energy plan; why use our resources when we can economically use theirs? This is a question of national security, not pricing. My point is that OPEC itself has not caused this drastic increase in the price of crude oil.
So what's the problem? We are being gouged and held hostage. We have surrendered our economy to a few major corporations that have shown restraint and responsibility in the past. Supply and demand is not the problem here; for the past two years America has reduced consumption, yet look at the results. The oil companies are biting the hand that feeds them and we need to fight back.
Solution
I hate it when people complain without offering a solution, so here goes. Our president and Congress need to stand up to the environmentalists and to the oil companies, say enough is enough and seek compromise. We need to drill, but even if we started today we would not reap the benefits for another 10 years or so.
But drilling in ANWR will not lower the price of oil here unless other action comes first. There must be an agreement that if they are allowed to drill, there must be restrictions on prices. The oil produced from ANWR must first go to serve the U.S. and its interests. The oil produced here should first fulfill our demand, with the balance be sold on the open market or held for future use.
These actions would be capable of starting a price war. I'm not talking about the government handling our oil reserves, but creating a better long-term energy program. All this alternative fuel business will not solve the problem. It will only create world hunger. Just today I heard that Congress was going to propose a bill to postpone the gasohol programs (corn). It costs more to produce this product than regular gasoline, and it is creating higher food prices, shortages and panic. Although the dollar is not the problem, it's a small part of the problem. Although we are not technically in a recession, we are hurting.
Again I say, we are being held hostage and the ransom is to open ANWR. The ransom is reasonable, but only if it leads to lower pricing. Although oil is typically sold as a commodity on the international market there is no written law governing this, and sweetheart deals are in place all over the world. Remember, 40 percent of the oil sold here is produced in the U.S. Mexico and Canada are both major suppliers here. Iraq is rich with oil and we are sinking billions into its economy. We have helped these countries in the past, and it's time for payback.
With the proper compromises, common ground could be reached with these countries to help us through the next 10 years. But why should they help if we are not willing to take steps to help ourselves? The U.S. consumers have lowered their consumption. The new world reserves projected to come online in the next few years by far exceed projected world growth. So what is it? We are doing what they have asked; supply and demand are under control. I look all these factors and then look at the money being made by the oil companies and the hardships being caused here.
When I follow the money, I see billions of new profits being made by the major oil companies, record profits at a time when America is suffering. I see these same record profits being generated during a time span that corresponds to the increased prices. We are being had.
Higher prices are due to a lack of guts and dedication in our government, and because of a change in corporate attitudes that fulfill today's wants rather than tomorrow's needs without conscience. Our government needs to be stronger; liberals and conservatives need to be realistic and compromise. We need to be strong, and to elect people who will do the job. We need to open up ANWR.
This is not rocket science; supply and demand does work. But at the moment it's broken.
Crude is up to $123 per barrel, so prices are climbing. Fasten your seat belts -- it's going to be a bumpy ride.
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