All the news that seems fit to print these days is on the subject of oil. This week in response to congress and the public’s demand “that something must be done” to halt the inflationary spiral of commodity prices, the United States Commodities Futures Trading Commission announced the formation of an interagency taskforce consisting of the Federal Reserve, the Securities and Exchange Commission and the Treasury, Energy and Agriculture Departments to go after the commodity “speculators.”
Not to be outdone, both Democrats and Republicans spent the last few days dredging up every issue, every pet peeve, and every preposterous claim concerning energy over the last 20 years. Pointing outraged fingers at each other across the aisle, the Senate Democrats proposed and the Republicans blocked a barrage of measures which were meant to bring oil companies and the “speculators” to their knees. When they got tired of blaming each other, both sides competed to see who could slam both the oil industry and Wall Street the most.
On a personal level, I received an e-mail recently from my local fuel company urging me to contact congress today. It went on to blame speculators and investment banks who were using loopholes in commodities law to drive up energy costs and reap record profits at the expense of the American family and small businesses. They quoted “some experts” as believing that as much as 60% of the cost of a gallon of gasoline or heating oil can be attributed to pure speculation. All this sounds impressive but like the sub-prime mess, it’s a little late for theatrics.
If you filter out the rhetoric what becomes clear is that none of our politicians have a clue on what this country needs the most—a coherent and far-reaching energy policy that includes alternate energy sources, conservation and a total change in the nation’s consumption habits. Instead we get the same old rehash of scapegoats and failed policy initiatives. So, to me, it’s not surprising that there is push to repeal the 26-year-old moratorium on drilling for oil and natural gas in Alaska and the outer continental shelf. They are still quoting the same old estimates of 86 billion barrels of oil and 420 trillion cubic feet of natural gas. Even Obama and McCain, who are vying for the right to lead this country into the future, have failed to offer a comprehensive energy policy or until recently even named energy as a priority.
Yes, I do think that global speculation has contributed to the rapid rise in energy prices but only on the margin. Today you can trade commodity futures in London, Singapore or Dubai. It is going to be difficult for America to dictate to these sovereign nations how to trade securities in their own markets. And remember its not just America’s Citibank, Morgan Stanley and Goldman Sachs that are playing the futures market. Plenty of foreign institutions buy and sell commodities in Europe and Asia as do millions of individual investors worldwide.
How does taxing U.S. oil companies wind fall profits really impact anything when 80% of the world’s oil is owned by foreign companies and countries. It may give us a certain feel-good rush to do so but in the end you know Washington will just squander the extra tax money on pet projects anyway. Those are all stop-gap measures that fail to provide an answer to the basic issue.
One thing is for certain. As long as the politicians can keep our focus on this three ring circus of congressional hearings, windfall energy taxes, imposing regulations and investigating exactly who and how this dastardly deed was perpetrated on America no one will ask why this country has never developed an energy policy in the 25- plus years since the first energy crisis hit back in the late 1970s.
I think lifting the moratorium on drilling for Alaskan oil is a mistake. It would simply be a short-term solution that would leave our children and theirs’ with no energy reserves at a time when the world’s oil truly runs out. It could mean the difference between our nation’s future prosperity and even survival
In the end the solution to rising energy prices, like global warming, is too big for any one government to legislate. As I’ve written before, I believe it is up to each one of us to take action. Giving up your gas guzzler, spending money on new windows or insulation, car pooling and a hundred other initiatives are at your fingertips. It will demand sacrifice, millions of us working together and a lot of patience something Americans are not accustomed to doing in our Twenty-First Century culture. But it can be done. This nation has proven that time and again throughout our history.