“Party of the People” Not Serving Our Energy Needs
- 3 August 2008 by Author 0 Comments
“Party of the People” Not Serving Our Energy Needs
By Richard Larsen
Published – Idaho State Journal, 08/03/08
The political party in control of congress touts itself as the “party of the people,” as represented by their party name. Their legislative priorities then are subject to scrutiny to ascertain their commitment to pursuing the interests of the people they claim to be the voice for.
It seems obvious that one of the primary concerns of “the people” is the high price of gas. Having gone from $2.19 per gallon in November of 2006 when they took over, to $4.00, the price of gas is dramatically affecting the prices of everything, because of the high cost of transportation.
Since high fuel prices are such a concern we would assume that the leadership of the “party of the people” would want to do something about it, right? Well, obviously that’s assuming too much. Rather than dealing with the crucial energy issue at all, Congress strikes out on its 5 week August recess. But they did take the time to deal with one really critical issue: apologizing for slavery and Jim Crow laws of the 19th Century. Wow, that makes it so much easier to pay $4.00 for gas! So much for legitimate legislative priorities.
Without so much as allowing a discussion on their own proposals to reduce high gas prices Congress is now officially on recess. There is no indication whatsoever that Congress will follow the President’s lead and rescind the Congressional ban on offshore drilling in the outer continental shelf. In other words, what matters most to “the people” is not a concern of the Congressional leadership. They wouldn’t even allow their own plan to be voted on, which was conspicuously absent any substantive recommendations to increase our supply.
Congress has no viable solutions to alleviate the pricing pressure of oil. Their “solutions” have been anything but that. Speaker Pelosi recommends releasing 10% of the Strategic Petroleum Reserves to alleviate pricing pressure. That amounts to about 2.5 days of U.S. consumption. I’m sure that’ll make a big difference. Harry Reid (true to form) wants to sue OPEC.
I’m sure that will drop the price. Senator Obama wants to give us another stimulus check, which again, does nothing to solve the pricing problem. And his most recent recommendation this week was to put more air in our tires. And they all want to tax oil companies more. That sure creates incentive to produce more! Can these people really be so devoid of logic and detached from economic reality? If this is the best leadership the “party of the people” can muster, they should be disbanded and start a new party that has at least a modicum of common sense and economic consciousness.
All they had to do before their recess (I think we could actually argue that they’ve been on recess since they took control two years ago!) was agree to rescind the Congressional ban on offshore drilling. Witness what happened two weeks ago after the President announced he would rescind the Executive Order banning outer continental shelf drilling. The price per barrel dropped from $147 on July 11 to $122. That’s a 17% drop in the price of crude based on the market’s perception that supply might be increasing. That’s even with the threat of a tropical storm disrupting operations in the Gulf. The weekly report from the EIA (Energy Information Administration) indicated a drop of 2.1% in gasoline consumption from a year ago, and inventories increased by 3mm barrels the prior week. That type of news typically causes crude prices to drop about 1-1.5%. The only other factor then is the President’s announcement. If Congress was to follow the President’s lead we would probably see crude oil drop to $100 per barrel, and drift slowly toward the $80-85 level that is fundamentally justifiable.
Many contend that it would take years to start seeing any production from offshore. However, a Sanford C. Bernstein & Co. analyst said recently that there is a lot of offshore crude that can be produced relatively quickly. The Minerals Management Service said that of the estimated 18 billion barrels of oil in off-limits coastal areas, almost 10 billion are off the coast of California. California could actually start producing new oil within a year if the moratorium were lifted, because the oil is under shallow water, has been explored and drilling platforms have been there since before the moratoria.
There are some who think that the President has been asleep at the wheel on the energy issue, and have choked at a gnat over the Vice President’s “secret” meetings with energy officials early in the first term. From that series of meetings, the President’s energy plan was spelled out in detail, calling for more expanded drilling domestically, more funding for alternative energy sources, and expanded implementation of nuclear energy into the mix. A drastically watered down version was finally enacted in 2005.
But here we sit with $4.00 gasoline, with a lame-duck President no one listens to, and a congress that is perpetually on a mental recess. “The people” deserve better.
Richard Larsen is President of Larsen Financial, a brokerage and financial planning firm in Pocatello, and is a graduate of Idaho State University with a BA in Political Science and History and former member of the Idaho State Journal Editorial Board. He can be reached at email@example.com.