Friday, April 28, 2006

You Know It's an Election Year When....


Okay, color me cynical, but you know it's an election year when politicians start hanging out at gas stations. In the past week I've seen at least 10 democrats and almost as many republican members of congress and now, the Decider himself, Dubya is taking to standing in front of a gas station to decry the high gas prices. Also, breaking news, Chevron and Exxon make record profits yet again. Are you an investor? If you are, you should be happy as the dividends and earnings are going through the roof right now. If you are only a consumer, then you're going to feel the pinch in everything you buy. Why? We're an oil economy. The world is an oil economy. Everything we do depends on petroleum in some fashion. Whether it's transportation or the use of something made from plastic, everything you buy that is petroleum based is getting more and more expensive.

Of course, the politicians are red-faced with righteous indignation now. I honestly don't know what is worse, the oil companies saying they are only making nominal profits while (in Exxon's case, reaping $8B in profits in the 1st Quarter of 2006) the same politicians who voted to give the oil companies huge tax breaks last year are acting like Claude Rains' character Louis in Casablanca ("I'm Shocked, Shocked to find gambling going on here..!"). It is honest to God enough to make one puke.

There's no easy way out of this mess. We will have to work like dogs to transform our economic dependency on petroleum to some other source of energy. Ethanol is barely a stop-gap, although you have to admire the Brazilian efforts over the last 30 years to become energy independent. They are now a net-exporter of energy. Jeez, and we thought those guys in Latin America didn't know anything!

Until we get some political leadership with enough spine to stand up straight and tell Exxon and Chevron, "hold-on", you are now going to invest 45% of your profits in American based alternative energy research and development (or some such number).., then we will see energy prices continue to escalate. China is not going to stop buying oil. The fact that they have about a million cars coming online every year will keep demand for crude oil up. The fact we've not built new refinery capacity in years will keep demand and prices for refined gasoline up. It's time Washington did something besides worry about gay marriage. But now, collectively they are a bunch of pussies that aren't willing to take on the oil companies until election year, and even at that it's just a show.

This year, vote to throw every single representative in congress out on their collective asses unless they promise, promise through a threat of recall to vote windfall profits taxes or some other mechanism of support for alternative energy production in to law. If you don't do it now, then you have two more years to bitch about high gas prices until the 2008 elections.

Tell me what you think,

Regards

Dennis

1 comment:

  1. Anonymous9:39 PM

    Dennis,

    I agree with a lot of your points. Let's face it, though. Politics notwithstanding, this is a global demand problem. Since we are still the largest consumer, we are a big part of it.

    Short term, the only answer is conservation. I've read that a 3% decrease in US consumption would cause the price to plummet. Long term, it's alternative fuels and the infrastructure to deliver them.

    We need to implement public policy to incent both conservation and development of alternatives. As for the exploration tax credits, etc. Not necessarily a bad thing. Devil is in the details. Too bad we weren't developing more supply in the 1990's to tide us over in 2K. Of course, when oil was at $17/bbl, not much incentive.

    Some change in DC wouldn't hurt, but if Nancy Pelosi is ever Speaker of the House, I'm looking seriously at Canada.

    Ed

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