Dealing with Big Oil
Everyone in the U.S. is upset about the high price of gasoline and the first impulse when faced with a problem of this magnitude is to find someone to blame.
We would like to blame “The Arabs” because they are far away and different and we have been told they hate us because we are free. On the other hand, if we piss them off, they could just pump a little less oil out the ground and drive prices up even more. There is really not much we can do to them that wouldn’t just make matters worse.
Then there are the oil companies. They had it last so they must be responsible for the high price of gas. They are also within reach. Should they be punished for charging us so much for their products? Barack Obama seems to think so. According to his website he does. He would take away the oil companies tax breaks and impose a windfall profits tax on them. I couldn’t find any mention of the oil companies on John McCain’s website. However, he does talk about letting them drill in areas previously considered too sensitive.
So what should we do with Big Oil? Should it be punished or rewarded?
I would argue neither. They oil companies, like most other companies, are in the business of selling a product to make a profit. That is not a bad thing. But since they have been so successful as of late at making a profit, I see no reason to extend them any special tax breaks either.
That still leaves the issue of who to blame. We can’t blame the oil producers for not producing enough oil, and we can’t blame the oil companies for doing their jobs of selling at a profit, who is left to blame?
How about blaming the buyers for bidding up the price? Prices can only go as high as the market will bear. If gas is selling for $4 a gallon, it means people are still buying it at $4 a gallon. We all learned in grade school that prices are set by supply and demand. Try demanding less. Drive fewer miles. Next time you buy a vehicle think about getting one that gets better fuel economy instead of one that compensates for… well, you know what I mean.
We saw this problem coming in the 1970s. Jimmy Carter started an energy program back then but it was killed by Ronald Regan and the country has largely been ignoring the problem ever since. At least until gas prices became painful.
The only way to ease the pain of high oil prices is too reduce our need for oil. It will take a few years to accomplish but, if we can stay focused and not be fooled by some temporary price reduction (like before), we can do it. A gas tax holiday is not the answer. In fact, it would only make the problem worse. I would go so far as to raise the gas tax in the event of a fall in gas prices. Four dollars a gallon seems to be minimum price required to get people’s attention.
Of course there is a second reason for the high price of oil, the weak dollar. There is only one way to fight two wars while cutting taxes – print more money. That is the surest formula for wrecking a currency and, in effect, taxing everyone’s savings without ever having a debate or a vote.
If we have to blame someone for high fuel prices, we should blame ourselves.