Energy Blues, Part I

Watching Democrats and Republicans alike grapple with $3-$4 a gallon gas is like watching “Dumb and Dumber” and “Groundhog Day” back to back. It’s tough for anyone with half a brain to slog through the half-assed pandering, partisan finger pointing and quick-fix remedies that the geniuses in Washington are offering to people that are paying $50 or more to fill up their car for the unforeseeable future. But hey, there’s no IQ test to run for public office, right?

Here’s some of our more dimwitted politicians showing their fascinating minds at work:
· "Since George Bush and Dick Cheney took over as president and vice president, gas prices have doubled!" charged Sen. Barbara Boxer (D-Calif.), standing at an Exxon station on Capitol Hill where regular unleaded hit $3.10. "They are too cozy with the oil industry."
· "Energy independence is our Democratic vision and our goal, and we intend to achieve it within 10 years," House Minority Leader Nancy Pelosi stated.
· Senator Majority Leader Bill Frist said, “The Republican plan will help people who are emptying their wallets at the pump with a $100 rebate check … but we’ll do it the right way.”

The goofball $100 rebate is thankfully dead, but the remaining bad ideas, quick fix ideas and Congressmen are still around. The sound bites are to be expected, but basic supply and demand economics – for everything from oil to beer and diamonds – is pretty much out of Congress’ control. I’ll fill the tank of the first elected official who honestly admits, “What can we do to lower gas prices? Basically nothing.”

Thank goodness for smart guys like Charles Krauthammer of the Washington Post, who conveniently pointed out this simple fact that anyone who has taken Economics 101 can figure out. The easy answer is not to blame President Bush, ExxonMobil or gougers at the pump, but to simply look at ourselves and repeat: Supply and Demand.

First, let’s look at demand. We demand more energy than ever for our gas-guzzling SUVs and minivans, our myriad of electrical appliances, air conditioners for our homes and offices, planes to get us everywhere and…well, you get the idea. Americans used to be alone in their titanic demands for oil and fossil fuels, but we are now joined by growing populations and economies in emerging giants like China and India, the two most populous nations on earth. Ten years ago when gas was about $1.25 a gallon, nobody in those countries even had a toaster oven. Now emerging middle classes there want just as many cars, refrigerators and electric dryers as we do.

Now, the supply issue. As we know, most of our oil comes from countries that are extremely unscrupulous, if not outright hostile, to American and Western interests. The first is our so-called phony “ally” Saudi Arabia, who continues to fund anti-Western and anti-Israeli madrasas that teach terrorism. Iran is an unapologetic terrorist state that wants nuclear weapons and has a radical president that wants to wipe Israel off the map. Nigeria is in the midst of a civil war with rebels blowing up pipelines. Venezuela has a leftist president who is nationalizing its oil industry and hates America. Iraq is in shambles thanks to a non-existent Marshall Plan. Think all of this would have an effect on oil prices? Congress apparently doesn’t.

Environmental mandates, while necessary, also contribute to the rising price of oil. The 2005 Energy Policy Act, besides being laden with tax breaks for large oil companies, also included some environmental caveats. One of these was stating that more ethanol (MBTE) must be integrated into gas this year to make it cleaner burning and more environmentally friendly. Sounds good, and it is good. Unfortunately, it also mandated that it must be American-made ethanol, which – thanks to subsidies – is some of the most expensive ethanol available. The transition was so sudden it has contributed to short-term gas shortages and higher prices across the board.

If you look back over the last 40 years, every gas price hike was followed by typical partisan posturing, finger-pointing, price gouging investigations and howls of execration at oil companies who are recording high profits (Note to Barbara Boxer: If the price of my commodity tripled over five years, I would have record profits too). But supply and demand explains everything quite simply.

Here’s some information from April 27’s Washington Post, that sums up the problem in a nutshell. After a Congressional press conference to discuss how Washington would knock down gas prices, the Senators went back to their offices:

Sen. John Sununu (R-N.H.) hopped in a GMC Yukon (14 mpg). Sen. Jim DeMint (R-S.C.) climbed aboard a Nissan Pathfinder (15). Sen. Ben Nelson (D-Neb.) stepped into an eight-cylinder Ford Explorer (14). Sen. Dianne Feinstein (D-Calif.) disappeared into a Lincoln Town Car (17). Sen. Edward Kennedy (D-Mass.) met up with an idling Chrysler minivan (18).
Next came Sen. Bob Menendez (D-N.J.), greeted by a Ford Explorer XLT. On the Senate floor Tuesday, Menendez had complained that Bush "remains opposed to higher fuel-efficiency standards."

As for Barbara Boxer, after her photo opp denouncing big oil for causing the problem, she got into her Chrysler LHS (18 mpg) which drove her back to her Senate office – one block away.

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