Obama was deservedly mocked for his suggestion of getting tuneups done and maintaining optimal tire pressure as a material response to our domestic oil deficit problem. It's good practical advice for any auto owner--as it has been for decades. Hopefully this isn't one of those "new ideas" that Barack has hyped for his prospective Presidency. But I submit the main issue isn't that American car owners have suddenly stopped maintaining their vehicles the last few years, and I certainly don't think we need Big Brother auditing our engines and tires. If $4/gallon gas doesn't motivate people to conserve gas by buying more fuel-efficient vehicles, maintaining their vehicles, exploring mass transit, carpooling, etc., what will do it? Barack Obama saying, "My fellow citizens of the world, can we count on you to check your tires tonight? Let me hear you now... Yes, we can; yes, we can...."
What's going on is the phenomenon of supply and demand. During the Iraq-Iran war, the supply of oil dropped about 10%, resulting in more than doubling the price from $14 to $35 a barrel. The price range has fluctuated based on the supply/demand gap, at one point dipping below $10 a barrel in 1998. A strongly improved standard of living elsewhere, particularly in Asia, has eaten up much of the surplus with oil producers struggling to keep up with demand, with some key fields thought to be on the decline. China and Indonesia, earlier in the decade exporters of oil, are now importing oil.
A key difference between the United States and other countries is that the others, like Russia, China, and Brazil, have worked aggressively to develop alternative resources, including offshore, to ensure future supplies. In the United States, we have seen politicians in a state of denial, as a small number of Americans have stonewalled oil shale deployment in Colorado, Utah and elsewhere in the north-central states, exploration off our coasts (even as the Chinese drill for oil off Cuban waters) , and, of course, ANWR. There are offshore rigs in the Gulf of Mexico, North Sea, and elsewhere, operating with minimal environmental impact, but we think the small risk of an oil spill or concern for the mating habits of the caribou outweigh US economic security posed by overreliance on foreign suppliers of oil? John McCain, what good is the "pristine" nature of the Grand Canyon or Florida beaches if prospective visitors can't afford to go there? It is far more reasonable to simply insist on a small footprint, improved drilling technology, and restoration of land/environment at the end of their production lives.
However, the Democrats have put up disingenuous arguments, implying that domestic oil companies are deliberately passing up economically viable tracts they already lease in favor of riskier, more costly offshore tracts, exaggerating time to market, and arguing this is a long- and short-term issue, no short-term price relief. With regards to the latter point, if I have 50 barrels of oil now, and I think that 5 or 10 years from now demand will exceed supply and I'll be able to sell for over $200/barrel then, why sell now? If, on the other hand, the supply side improves, or demand decreases (because of economic problems, energy substitutes, etc.), I may be persuaded to sell sooner than later.
We know that with developments such as the rumored short-term introduction of a $3000 car in India, giving millions of Indians an opportunity to enjoy what many of us take for granted, those $3000 cars are going to need fuel to run on (and India is already a net importer of oil). In short, I do not expect supply to outstrip demand over the coming decade.
Democrats have always underestimated the difficulties of scaling up alternative energy production, the fuel transport and retailing infrastructure, and compatible vehicle production. Let us just consider corn-based ethanol: first of all, corn is not as energy-efficient for yielding ethanol vs. sugar-based alternatives. (Some have speculated on the alternative use of tropical maize or earless corn, where sugars are stored in the stalk and can be pressed.) But there are no pipelines among ethanol producers and gasoline refineries (existing oil pipelines can't be used). Even if we get E-85 production at refineries, only a tiny percentage of retailers have one or more pumps. Even if we get a critical percentage of retailers to carry it, most US vehicles can't run on it. Even though flex-fuel techology exists (Detroit has to build such vehicles for its Brazilian market), Detroit balks at mass-producing the technology based on cost and presumbly the inability of customers to find E-85 pumps. But, in the meanwhile, the use of food for fuel has sharply accelerated food inflation, a particularly regressive tax on the poor. The bottom line is that it will take years to build out such alternatives. Oh, and by the way, why do we still have a high tariff on Brazilian ethanol?
The Democrats also need to address the military need to protect transport of foreign-produced energy supplies to us. Dependence for oil on the volatile Middle East doesn't seem to be a viable option. Say it takes us 6 years for us to get a pipeline of or other transport of ANWR oil to U.S. refineries. Imagine if we had that oil today instead of being warned a decade ago that's how long it would take to hit our refineries. In the meanwhile, we spent up to $150/barrel to buy Middle East oil instead of paying American workers and an American company paying taxes to refine our own oil? So how is Democratic Party procrastination or inaction an answer?
So Obama comes out and suggests he's willing to play wheeler-dealer. We've seen this game before; need social program spending? No problem--I'll just take the Bush tax cut revenue for high-income earners. (Even if that results in killing job growth.) Need more troops for Afghanistan? No problem--I'll just redirect the troops I'm unilaterally withdrawing from Iraq. We never hear a legitimate answer from Obama as to how he is organically going to grow federal revenue or military manpower: just simplistic quid pro quo's.
Obama wants to open outer continential shelf to oil production just a crack--as a carrot to win higher-fuel-mileage vehicles and alternative fuels. That's not good enough, Barack. I think the high price of oil is already providing an incentive for those things. Did you see how many lower-mileage trucks and SUV's are being sold with $4/gallon gasoline?
No, Obama. What you need to do is provide a viable plan to get off foreign oil. We can't afford a weaker dollar--that's already been priced into oil. Whether Pickens' wind power/natural gas speculation is viable is beside the point. The point is--if we wait until $300/barrel oil to start drilling for oil, what will that mean--a dad taking a second job just to pay his energy bills to the Middle East? And having to wait another 6 years to see some relief?
