High Gasoline Prices Highlight the Need for New Energy Policy

by Gordon Cooper

From Broader View Weekly, May 23, 2008

There is a scene in the Frankenstein movie where the village residents, bearing torches and pitchforks, head out in pursuit of the fearsome monster. It seems that the promise of this “New and Improved!” form of life turned out to be a threat. The moral of that particular story is the classic warning that when we tinker with nature, we may not always like what we create.

Today we have a presidential candidate trying to inspire the electorate to grab the pitchforks and light the torches once again. This time we are going to storm the strongholds of that hairy monster called BIG OIL. According to the proposed tax holiday, this campaigner will bring the hairy monster to its knees by repealing the 18-cent per gallon federal excise tax. We also have a vote-hungry New York State Legislature proposing a similar repeal of the state excise. These temporary measures are supposed to miraculously rid our landscape of high gasoline prices and teach that monster exactly how much profit it should make for bringing this vital commodity to our fueling stations each day.

This proposal scares me more than the hairy monster does for several reasons. First of all, let us discuss how this monster was created in the first place.

To trace the origin of BIG OIL, we need to go back to the year of 1999, when our present campaigner slept in the White House while her husband’s administration gleefully approved the merger of Exxon and Mobil. This seemingly innocuous combination of two companies started a rash of mergers that, over the next decade, resulted in the number of major oil companies falling from 43 separate and competitive entities into less than 14 companies with no more than five major companies controlling the lion’s share of oil revenues.

At the time of that merger, gasoline was priced at $2.05 a gallon and oil was $12.37 a barrel. It is easy to see with hindsight that this merger was not in our best interest and the Federal Trade Commission was obviously sleeping on the job as well.

But today the monster is here and we must learn how to live with him. We cannot rout him from the tower with a minor manipulation of the gas tax. We can not placate him with less demand for his product. According to the latest figures from the first quarter of this year, fuel demand is down over 1.4% from the same quarter of last year. Yet the prices continue to rise and the monster seems to be hungrier.

Another reason why I oppose this Band-Aid approach to economic crises is because it is clearly political pandering and, as such, it is an insult to my intelligence and the intelligence of my fellow citizens.

It would also serve to cloud the real issues by forestalling true energy policy reform.

In order to tame this monster, we need to reaffirm our commitment to the American people and the American economy. We need to realize that sound energy policy is necessary not only to calm the effects of Gasoline Pump Anxiety Syndrome (GAS PAS), but it is also necessary for national security reasons. As long as we continue to harass this monster by imposing a host of unnecessary restrictions and limiting domestic production and exploration, we will always be at the mercy of this monster and the foreign producers.

We should also examine ways to partner with friendly producers such as Canada, who, by the way, happens to be our number one supplier, and Mexico, who ranks as our third highest supplier. These two nations are already partnered with us in NAFTA and with further encouragement and cooperation with our research and development capability could easily compete with OPEC producers.

We have to take a sane and logical look at exploiting the tremendous reserves in the deposits of oil sands in Alberta as well as pressuring the Mexican government to revert the control of PEMEX (the government-controlled oil producer) back to private ownership.

The GAS PAS will not be relieved by temporary patches, nor will it be resolved by chasing big, bad monsters with pitchforks and torches. It demands honest appraisals of what created this monster, and logical solutions.