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No easy answers for high gas prices

Posted to: Editorials Opinion




With gas at $4 a gallon, and headed higher, everyone understandably wants to do something. Americans are driving less, switching to smaller cars, carpooling, taking mass transit. Some are even changing jobs and moving. If gas prices rise more, or even stay where they are, such trends will only grow.

The upheaval extends to whole nations. Oil nearing $140 a barrel has inspired unrest from Indonesia to England. Saudi Arabia and its allies in OPEC appear worried that high prices might finally force the world to look for alternatives to buying oil from terrorist-sponsoring dictatorships. More oil, the Saudis say, is on the way, even as companies in Nigeria turn off the tap.

American politicians are positively tripping over themselves to trim the pain at the pump, in the bargain trying to buy some job security from a restive electorate. Populist politicians threaten to take away the huge profits oil companies are making. Unfortunately, that same pandering is actively distracting people from real solutions.

Corporations being what they are, a special tax on oil company profits - on windfalls - would simply be passed along to customers. No one in Congress - where the windfall profits tax regularly arises when gas prices spike - actually believes it would lower gas prices. They just believe it would make those of us filling our tanks feel better about paying obscene prices.

The tropes of oil company apologists mostly surround capacity. If we just had more oil, goes the line, we'd be OK. It's all the environmentalists' fault. But those arguments are wrong, too.

Thanks to expansion of existing facilities and leveling consumption, U.S. refineries are now running under capacity, according to the U.S. Energy Information Administration. In fact, American refineries ran at 88.5 percent of capacity in 2007, well under the average rate for the past decade. In 2008, the rate is even lower, so far.

As for offshore drilling, it's a subject that returns over and over. U.S. Rep. Thelma Drake, who represents coastal Virginia, has repeatedly advocated making the state a test case for opening the east and west coasts now closed to drilling.

Sen. John McCain, in an appearance in Arlington this week, advocated lifting the longtime ban on coastal drilling. Former Virginia Gov. Jim Gilmore, Republican candidate for the U.S. Senate, has again shown a remarkable skill for boiling a complex issue into an empty slogan for a bumper sticker: "Drill here. Drill Now. Pay Less."

The problem is that even the most optimistic advocates know that offshore oil will be hard to get, and that there's unlikely to be enough out there to be worthwhile. Drilling in the Arctic National Wildlife Refuge - which this page has advocated - is a far surer thing. There's a lot of oil there, and it's relatively easy to get to.

But here's how much oil America uses these days: Even if we could extract every ounce in ANWR, it would lower oil prices by only 1 or 2 percent. The impact on gas prices would be even smaller - a few measly pennies.

Nobody believes the coast of Virginia - or even the entire East Coast - has anything like that potential. Which makes drilling seem hardly worth it, no matter what a gallon of gas costs.

There are plenty of other areas - both offshore and on - with confirmed oil in the ground, land that has already been leased. Yet for some reason, oil companies choose to leave it fallow. Perhaps before the oil companies open a new area - like the outer continental shelf, like ANWR - they should take the oil they've chosen to ignore.

Like so many problems in life, a solution to surging gas prices has no single answer - not windfall profits taxes, not more refineries, not more drilling.

More oil would certainly help, as would some order in the dysfunctioning oil markets, peace in the Middle East and a strong dollar. We all know the simplest and cheapest solution to high gas prices is to use less and conserve more, and work like the dickens to find something else on which to base the economy to begin a real shift to alternatives like nuclear and biofuels and solar and wind.

In the meantime, lower gas prices would be great, if only to put an end to the pandering and bad ideas that make real and lasting solutions so much harder to find.



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with the increase price of a gallon of gas

With the increase price for a gallon of gas everything else that touches our lives has also increased. IF and that's a big IF we can get gas prices under control, don't expect your grocery bill to decrease accordingly. Grocery stores, department store and everyone else know the public gets use to higher prices and that's adding "fuel" to the fire.

Want to make some money?

I have lots of money to invest. What should I do?

I decided to invest in oil futures and buy 1000 barrels of oil at $130 a barrel.

Why? Because in the "FUTURE" my $130,000 oil investment will be worth more.

How do I know? America, with the largest supply of untapped oil resources, declared they won't produce more oil. That will make my oil worth more money in the "FUTURE."

So if anybody wants to buy 500 barrels for $140 a barrel now, I'll sell. It's going over $140.

But If America decides they'll start drilling soon I will sell you my 1000 barrels for $135.

And if America declares they will do everything they can to become energy independent I will sell you my 1000 barrels for what I paid, $130.

If I can't get $130 for my 1000 barrels because everybody else is selling their barrels cheaper, I'll probably take the best offer.

Who am I? I'm a Speculator.

Domestic Production Still the Answer

China is drilling for oil 60 miles off the coast of Florida. Would they if the amount of oil were insignificant?

Alternative fuels are not the answer in the near future. For the next decade we need to drill for oil, build nuclear power plants and utilize coal.

Germany fueled WWII with synthetic fuel from coal and America has 1/4th of the coal on Earth.

$55 a barrel is the estimated cost of synthetic fuel from coal, including the infrastructure and labor force necessary to operate plants. Visit http://governor.mt.gov/hottopics/faqsynthetic.asp Oil was recently $140 a barrel.

And reducing trade imbalance keeps jobs here in America. Every billion in trade deficit costs 13,000 American jobs. Do the math: $400 billion for foreign oil in 2007.

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