Don McKee
Republican presidential candidate Newt Gingrich blames President Barack Obama and talks about bringing down the price to $2.50 per gallon. In California where the price hit $4.277, Gingrich promised if he was elected he would sign an executive order approving the Keystone XL pipeline to move Canadian oil to the Gulf Coast refineries. He blasted Obama’s restrictions on offshore drilling and development of oil shale in the West, among other things.
“We need to go on an all out effort to produce our own energy,” he said, so that it won’t matter what happens in Iran which has been saber rattling and purportedly unsettling the oil market.
Granted that Gingrich and other Republicans are on the money with their call for approval of the Keystone XL pipeline, which would generate an estimated 20,000 jobs, and other steps to develop more domestic oil and gas resources.
However, there’s another factor involved, one that is nothing short of mind-boggling. Figure this: Our country is the world’s largest importer of crude oil and the leading gasoline consumer — but now for the first time, the United States is exporting more gasoline, diesel and jet fuel than any other product.
The reasons, according to the Associated Press, are the higher prices of crude oil and — get this — the lower demand for gasoline in this country as the result of the sluggish economy and the effect of more fuel-efficient automobiles. Contrary to what most of us think, this scenario of lower demand has not brought down the price of gasoline.
Instead, while we are using less gasoline because of tighter budgets, unemployment, foreclosures and other havoc wreaked by the Great Recession, the price is going higher by the day. Instead of cutting prices at home, the oil companies last year sold nearly 120 million gallons of gasoline, diesel, jet fuel and other petroleum products per day to other countries. That’s up from 40 million gallons per day about a decade ago.
“It’s a world market,” Tom Kloza, chief oil analyst of Oil Price Information Service, told the AP. So fuel economy and driving less gets the American consumer nothing but higher prices because of unexpected competition with other countries.
Even more incredible, oil economist Phil Verleger was quoted by the Houston Chronicle as saying that the higher fuel efficiency plus growing output of oil and natural gas would lead the U.S. to “want to consider joining with other energy-exporting countries, like those in OPEC, to sustain high oil prices. Such an effort would support domestic oil and gas production and give the U.S. a real competitive advantage.”
So if we drill here, drill now, as Gingrich proposes, the price of gasoline will not come down, barring some form of government intervention.
It’s a catch 22 and we consumers are caught in it.
dmckee9613@aol.com
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In response to the article written by columnist Don McKee, on 27 February 2012, I can only say that I am sickened, by this country’s energy policies and corporate greed. Our government allows the oil companies to export petroleum to other countries to the detriment of its own citizens. Why do we allow this to continue? Are the energy producers so greedy that they would undermine their own country’s economy, just to get a higher return on already outrageous profits?
Over the years, Americans have lowered their dependence of foreign oil. We were told that doing so was good for the country’s economy, free us from the dictates of OPEC, and that producing our own energy would lessen our personal energy costs. The automobile companies have been required y government regulation to increase the energy efficiency of our vehicles, and they have been fairly successful in that effort. We have done as requested, but now have discovered that our efforts were in vain. Now we are informed that U.S. petroleum companies desire to join our foe, and become members of OPEC. Now that we have lowered our energy consumption, the oil companies are exporting petroleum, which requires U.S. consumers to compete with the world market, and thus we pay a greater price than is necessary.
What if other U.S. products were exported to the detriment of our citizens? 1. Would we allow our food producers to export food products to other countries, while U.S. citizens went hungry, because other countries would pay more?
2. Would we allow the pharmaceutical companies to export cancer or other life saving drugs overseas while our citizens did without? I would hope not. But with so much corporate greed and political graft, there is no certainty. After all “It’s a World Market.”
What can we do to fix this problem? Well, we could nationalize the oil companies, or the government could buy enough of the stock to control the decisions made regarding distribution. Maybe we should tax exported oil products at a very high rate, or close the many tax loopholes available to them. After all, they don’t seem to be interested in anything except greed.
If, we are truly interested in preserving our independence from foreign domination, and economic blackmail (OPEC), then we should treat energy exports the same way we treat defense technology. That is, we don’t let it out of the country. Our economy will improve, as the average citizen would have the funds to save their homes from foreclosure, businesses would have funds to expand thus creating more jobs.
I have also read that Obama killed the Keystone XL Pipeline which would have created even more energy for the U.S. This project would have created a pipeline from Canada to the Texas so that the crude oil could be refined into usable petroleum products. These products too, would most likely once refined be exported outside the U.S. Sure this construction would initially create many jobs, but it wouldn’t reduce the cost of energy in the U.S. Why then would we want to take the chance of fouling our water and land, should a mishap occur? Its creation might be a short term benefit to some in the construction business, but it wouldn’t lower individual energy costs, and it could be an environmental disaster in the making.
Another difficulty is Texas refineries couldn’t handle the additional volume of crude oil sent down the pipeline. If the Keystone Pipeline were someday approved, it might be wise to add the needed refineries before the oil is pumped out of Canada. It might even be a good idea to build a new refinery in North Dakota, and avoid the long pipeline altogether. That way we limit our exposure to an environmental disaster, save the expenses of a line all the way to Texas, and develop a refinery that could service the northern parts of the U.S.
I believe this matter should be debated, and approval given, ONLY if the oil companies stop exporting all oil outside the U.S. This would create a surplus and reduce the cost of energy to U.S. taxpayers.
Larry Hogue
Kennesaw, GA
The article half implies that our conservation is all for naught. This isn't quite true. Our conservation matters--oil, like any other commodity, is subject to pricing based on world demand. Our own slight decrease in oil demand is partially offsetting increased demand and shortened supply elsewhere. So while we aren't the ones driving oil prices today, at least we aren't making the situation worse than it already is. Conservation is a good thing. Cheers.