Dumb Or ill-informed

Walter Williams's picture

What assumptions do congressmen make about the American people? Do they assume that we’re dumb or ill-informed about the energy problems we are experiencing?

Every time there has been a huge spike in gasoline prices, Congress hauls oil company executives before their committees to accuse them of greed, obscene profits and price-fixing. One federal investigation after another of supposed oil company misconduct turns up nothing to substantiate congressional allegations.

Unfortunately, the congressional hearings make front page news and lead the evening television news, but the results of federal investigations that follow are only casually mentioned deep in the body of newspapers and get little or no time on the evening television news.

If news media people had an ounce of integrity, they would highlight the federal investigation findings that undermine congressional charges of oil company misconduct, and they would question the congressmen who made those charges.

Americans might prefer heroes-and-villains explanations to problems to reality-based explanations.

A politically satisfying explanation for today’s $4 a gallon price, when it was less than $2 a gallon a couple of years ago, is because oil company executives have all of a sudden become greedy in their pursuit of “obscene” profits.

As such, congressmen, as our heroes, should call these greedy men on the carpet and take sanctions against them in the forms of windfall profits tax, price controls and other measures to take away their ill-gotten gains — never mind the effects of the 1980 windfall profits tax.

According to the Congressional Research Service, the 1980 windfall profits tax had the effect of decreasing domestic production by 3 percent to 6 percent, thereby increasing American dependence on foreign oil sources by 8 percent to 16 percent.

Controlling the price of anything is very difficult and it can only be accomplished through the force of government, mostly by restricting supply. The U.S. Congress is a major player in oil supply restriction, and OPEC nations must be laughing all the way to the bank.

Congress has banned energy exploration in 85 percent of our coastal waters. Ironically, China, in conjunction with Cuba, is drilling for oil nearer to our coastline than U.S. oil companies are permitted.

According to “We don’t have to take $4 gas prices — we can drill,” written by Sterling Burnett in the Houston Chronicle (5/21/08), “It is estimated that beneath America’s coast lies enough oil to fuel 60 million cars in the United States for 60 years and enough natural gas to heat 60 million homes for 160 years. ... If allowed access to American oil reserves in Alaska and off our coastline, American oil companies could increase our country’s reserves an estimated fivefold, taking the United States from 11th place to fourth among the countries with proven oil reserves.”

You say, “What about the environmental impact?” Contrary to the hysterical claims made by environmental extremists, caribou and other wildlife have expanded and flourished in and around Alaska’s Prudhoe Bay, unaffected by the oil and gas development.

What’s more, Burnett points out that the “two leading environmental groups, the Audubon Society and the Nature Conservancy, have allowed oil and gas production on several of their most important and unique nature preserves.”

Environmentalists come to their senses when non-drilling philosophy costs them something. It’s two-faced hypocrisy. At times I’ve suggested that the best way to get oil exploration in the Alaska National Wildlife Reserve is to give the land to environmentalists. You can bet they wouldn’t sit on billions of dollars of oil and gas.

The true villain in our having to cough up $60, $70 or $80 to fill our gas tanks is the U.S. Congress caught in the grip of environmental extremists. But if reality is too difficult to swallow, we can continue to blame and support the congressional attack on oil executives, turn food into oil and think of other crackpot “solutions.”

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JeffC's picture
Submitted by JeffC on Wed, 06/18/2008 - 4:21pm.

Today, oil companies possess nearly 10,000 permits to drill in the US that they choose not to use to increase domestic production.

House Natural Resources Committee Chairman Nick Rahall, says more than 68 million federal acres are now under lease and sitting idle. Nearly ¾ of the 40 million acres currently under lease for oil and gas development are not even being explored. Rahall estimates they could yield an estimated 4.8 million barrels of oil and 44.7 billion cubic feet of gas a day.

Rahall has introduced “The Responsible Federal Oil and Gas Lease Act of 2008.”

This land currently averages $3 per acre per year to lease. The legislation would force producers to pay $5 a year for every acre the companies hold but are not working on to produce oil and gas. By the fourth year, the fees would jump to $25 an acre and rise to $50 an acre every year thereafter.

Guess which party is in opposition to this legislation.

JAFO 72's picture
Submitted by JAFO 72 on Tue, 06/10/2008 - 11:52am.

I am amazed that someone finally understands how this works. I don't think congress gets that there is a difference between profit and profit margin. What is the government take from oil? Depending on the state, the average federal take is 18.5% per gallon. Some states can tack on an additional 10 to 25%. What about the oil companies you say? Try a profit margin of about 4 to 8%. Keep in mind, that the cost you see at the pump also includes the cost to drill, refine, store and ship.
The government would like us to think that it's all the big bad oil companies trying to get rich. Nice try. It take the focus off of those who are really "sticking it" to us.

Lets not forget the oil futures traders that are increasing the cost (to us) everday. Do you have a 401K or IRA? You are an indirect contributor to the increase.

Thanks Walter for a great article.

"The one constant in all of your failed relationships is you."

Submitted by daisyheadmaisy on Sat, 06/07/2008 - 8:09am.

I have a son on his way to Colorado via chartered bus. Since it costs him $60 to fill up his car with gas, he has taken notice of gas prices as he makes his way out West.

Boonville, Missouri = $3.69
Dalton, GA = $3.74

Greed is #1 for our high gas prices. Consider when the price of a barrel of oil ticks up, we see an immediate increase for us at the pump, but when the price ticks downward, it doesn't mean we'll see a decrease in our prices. Greed's the bottom line and it will continue until our usage, or lack thereof, sends a powerful message that we are changing our ways. YMMV

Cyclist's picture
Submitted by Cyclist on Sat, 06/07/2008 - 8:35am.

well perhaps we mere mortals will never know. We are simply required to continue to pay if we wish to remain in the game. Smiling
Caution - The Surgeon General has determined that constant blogging is an addiction that can cause a sedentary life style.

wulfman's picture
Submitted by wulfman on Sat, 06/07/2008 - 10:16am.

If anyone is planning a trip here's a neat little web site for gas prices across the USA.


It doesn't show all of the gas stations just a sampling of ones in each community.

If you click on the map and zoom in you can see the actual prices and the names of the gas stations. They claim it’s updated daily.


Cyclist's picture
Submitted by Cyclist on Sat, 06/07/2008 - 10:30am.

Thanks. It just so happens that I'm pulling the "26ft box" to Destin. I normally get 13 mpg going down and 12 mpg coming back. Cost should be about $130 one-way. Sad But, I'll I get to put my fat body into the gulf and prove Archimedes correct and at the same time I will play with the fish. Smiling I got to go and wax the big Ford. See ya!!!
Caution - The Surgeon General has determined that constant blogging is an addiction that can cause a sedentary life style.

wulfman's picture
Submitted by wulfman on Sat, 06/07/2008 - 10:51am.

Have a safe trip and enjoy your time playing with the fish.


Submitted by skyspy on Fri, 06/06/2008 - 10:34pm.

You make some very good points.

I think the bottom line is the oil companies know their customers very well. Too well.

They know that Americans are lazy, complacent, overweight, and not willing to suffer or do without anything. We have a very large sense of entitlement. We think we deserve every material comfort known to man, and we will sell our souls and our credit scores down the river to get whatever we want.

They know that very few Americans could actually fit into a Smartcar, even if we wanted to. Even one average American would come close to exceeding the weight limit for one of those cars. They are all over Europe though, very cute, and easy to park. They know that we will not give up even so much as one activity in order to lower our consumption of gas.

How can we hang these guys for being smart buisnessmen and knowing their target audience?? It would be like hanging the mortgage brokers for flattering people with interest only mortgages into homes they could never really afford in their lifetime.

This won't change until our behavior as consumers changes.

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