The majority of Americans are now supportive of the concept of US Energy Independence. It is one of the few topics that all of the candidates are in general agreement. The various methods and strategies to achieve that independence differ, but everyone realizes that we have to stop the massive transfer of wealth from our country to that of countries that are run by non-democratic dictatorships.
What is the current biggest risk in our ability to reach that goal in the next ten years? Falling oil prices. Seriously, that is our biggest risk. If oil prices fall, consumers will quickly forget the pain, investors will stop pouring money into alternative energy, car companies will crank up the SUV assembly lines, and politicians will start talking about the next new “crisis”. You say that can’t happen? Check your history books, as that is exactly what happened after the late 70’s oil crisis. The oil cartels felt the reduction in oil demand; they saw the new investment into solar and got scared. OPEC’s back was broken, new supplies came online in the North Sea and Alaska, and cheap oil returned.
We cannot allow that to happen again. With oil prices dipping to close to $100 a barrel, Congress should immediately call for a price floor on foreign imported oil. Any oil purchased over-seas at less than $100 a barrel would receive a tariff that made up the difference. Any oil that was produced in the US would remain tariff free, enabling US oil companies to invest in new fields, knowing that their oil could always be sold for a stable price. That price would never be undercut if OPEC and other oil-exporting companies suddenly increased supply.
The government could announce that, as part of a comprehensive energy strategy, it will henceforth not allow the price of foreign purchased oil to fall below $100 per barrel. If high oil prices continue, the proposal would have little impact and cost nothing, either politically or financially. If prices fell below that level, the added tariff would be sent to Washington to help fund alternative energy investment, tax refunds for hybrids, etc.
If consumers and industry knew that the price of a barrel of oil would never again fall below $100 a barrel, they could make long-term investment and consumption decisions with the knowledge that vastly lower oil cost will not under-cut those decisions. Americans will not buy fuel-efficient automobiles, create distribution networks for alternative fuels, or invest in technologies such as hydrogen fuel cells, flex-fuel vehicles or wind power unless they know that a future sharp fall in oil prices will not undercut them.
Would you support a price floor? If not, why?
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Have you looked at what you’re spending on groceries lately compared to last year?
The problem with keeping oil prices high is that the price of basic needs also cost more.
Put a floor on oil prices if you’ll put a cap on the price of a loaf of bread and a gallon of milk.
We need to drill and drill now.
We also need to use technology and American ingenuity to find alternative sources of energy.
There’s no excuse for us to be so susceptible like this.
That was before Hurricane Ike…Gas is $5 here in the Nantahala Gorge of Western North Carolina and gas is in short supply…many stations are out completely.
You’ve taken into consideration consumers and government, but the main player in this whole issue is neither. It’s the big players like Exxon that have the final say about gas and fuel supply and prices. The only role the government plays is broker/mediator - “If you don’t do business with US businesses, I’ll through my military might at you.” The crap end of the stick goes to the majority of the hard working Americans who pay taxes into the government to fund that military might, on top of paying the exorbitant retail prices determined by the businesses that pay no taxes at all and get their global protection for free. Personally, I’m tired of breaking my back to make some rich bastard richer while that same rich bastard sews me into a corner by monopolizing the consumer market and limits my spending choices too.
When all the fluff is burned off, that’s what it boils down to, and whatever our government says is nothing more than lip service.
Thersa, thanks for stopping by. While I generally agree with you, many, if not most, business’s do pay taxes. For example, ExxonMobil paid $32 Billion last quarter alone!
Matt, I heard that on CSPAN this morning. That just sounds like pure gouging to me. Here in VA, the price jumped a bit, but no where near $5 a gallon. Thanks for stopping by!
I’ve been thinking about this a bit recently, but haven’t worked out the details of my own position.
However, the general idea is that perhaps the strategic oil reserve should be treated more like part of the Treasury and Federal Reserve Board. (Not that I think they are doing a great job either.)
However, the Fed ends up making statements about when they are buying or selling U.S. dollars or key debt in an effort to keep interest rates stable.
Perhaps the Strategic Oil Reserve should do something similar. Whenever oil drops below $100/barrel, they should start aggressively buying. Whenever it gets above some danger point, let’s just say $150/barrel, it starts selling.
This would keep energy prices more stable, limit the damage that excessive speculation could do, etc.
I’m interested in thoughts and reactions.
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Not a bad idea Aldon, but I see a couple challenges. First, the SPR is at this time essentially full. It would need to be expanded in order to function as you propose. Interestingly, Bush has been a very strong supporter of SPR, and asked Congress in 2007(newly Democratic) to double the size of the SPR. They did nothing.
Second, I am not sure we have the room in our federal budget to actually do this at a level that would keep demand high enough to support a price above $100. If oil prices returns to historic norms, we would have to pump millions of barrels a day to try and make even small changes in the actual price. And, in the end we would still be sending all of that money over-seas into the hands of people that hate us.
If people are not ready for a price floor, another alternative is to forbid US oil companies from selling domestically produced oil for less than $100 a barrel. This would essential “store” our oil as a reserve, artificially lower supply, and not cost the country a nickel(outside of lost tax revenue on that oil)
While your point is indeed a very good one, it would take some -serious- political courage to see through such a plan. Can you imagine the finger pointing that would ensue over artificially inflated oil prices?
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the problem with a price floor on oil is it won’t encourage the oil-rich countries to bring their prices down, and it will take the money out of our pockets and put it in theirs.
that’s the last thing we need right now, as america is slowly slipping down losing it’s spot on the top of the pile.
we do need to find alternatives to oil, but a price floor won’t help enough to justify the hurt it will put on this country (see prior comments RE food prices).
Good point — if oil prices fall we don’t need to revert to our old habits and forget about energy independence.
BUT, price floors? Can’t fall in line with that at all. Why? We simply don’t have the infrastructure to be energy independent just yet and we’ll only take resources from working Americans if we were to put such a floor in place.
Energy independence should be a key priority in this country. But let’s not forget that high gas prices have dealt the economy a solid, reeling blow and there’s no reason to artificially maintain the burden that high fuel prices place on the economy.
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An oil price “floor” isn’t the answer to American profligacy and over-consumption. Why should the rest of the world suffer high oil prices just because the American consumer has no self-discipline or sense of eco-responsibility ? Stop using gas guzzlers and give the rest of the world, particularly the 3rd world, a boost by keeping oil prices DOWN.
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Great. So we investigate the oil companies every year for price gouging, then we recommend that the government do it? Why should the rest of the country have to suffer at the whim of a few extremist environmentalists?
Here’s a news flash. Remember all the super hurricanes predicted for ‘07 that never happened? That’s because that prediction was based on global warming bs. Here is a prediction that will happen. Get ready for a brutal winter. Why? Because of sunspot inactivity. And as the cold winter develops, we need real solutions to keep the oil prices down. Not ridiculous fantasies of extremism to artificially inflate the price.
Please no! I know, US is going through a lot of crisis now, economy is down. Butif you do that, 3rd world contries just like the Phlippines will really suffer. We really our economy to your’s we are always affected on how your economy adjust. If you are going through a tough time, just imagine how are we going through. High Oil prices, means high cost of living here. The higher your oil cost goes, the higher is our inflation rate too. A lot is really suffering, today 60% or our population are considered poor. Most poor Filipinos only eat once a day, if they are lucky, because of the high price of commodity. If you keep the high cost of oil, a lot of Filipinos and other 3rd world people will not eat. Please be considerate. Now that your oil is going down, we are getting a little break from all the hits, suffering we got from the months of high cost living. Please let us breath and eat even for just awhile at least, spear us from suffering on Christmas.
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I believe in good ole capitalism and market forces to control prices. Now that gas prices are through the roof, we’re investing in technology to become independent. To add a tax — that’s what it is — indexed to the price of oil…that’s a criminally bad idea. We’ll hurt our own citizens at the worst time — when the economy is shaky. If gas prices drop through market forces, prices will drop as well, and spending will increase. Inflation will fall. I know everything is not connected to gas prices, but I’m feeling the pinch, how ’bout you? Milk is $369 per gallon, and my kids drink 3 gallons a WEEK!
Here is sunny Florida the citizens have cleverly taxed everything that has to do with tourism. Why? you might ask? to soak the tourist, of course. But OH! that’s why our gas prices are .15 higher than surrounding states, and we have “resident” deals at theme parks, because prices are so high we can’t afford to vacation any more. Clever? No. We’re inflating prices to soak the tourist. What happenes when the tourists go somewhere else, because of the prices? That’s about as smart as indexing health care spending to tobacco taxes and use. Eventually, either your tax base will die or quit their use. Then you won’t have any taxes to devote toward your ehalth care issue. Not real smart,either.
Market forces and capitalsim will take care of technology for making us energy independent. When someone figures out how to make a TON of money with hydrogen, electric, propane, or whatever for transportation, gas consumption will fall, so will gas futures, and gas prices. Nothing better than good ole capitalism
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