More rants on energy policy

Sorry for sounding so bitter but I really am. But, most people are missing some key points:

1) The price of oil is in dollars. The dollar has essentially been devalued by W, Congress, and the Fed. So, the high price of oil in large part reflects the decrease in the value of the dollar.
2) Refinery capacity: We haven't built a new refinery in the US in 30 years!?! Why? The greens won't let us. Just like they won't let us build coal power plants in Texas. Take a look at the electricity demand vs. supply curves lately? Better get ready for California-style brown outs in the next couple of years. Anyway, with respect to the price of gas it would sure take a lot of pressure off the price if we weren't running right at capacity in terms of our ability to refine.
3) Drilling for our own oil in Alaska, off the coast of California, and in the Gulf of Mexico? NO! Well, at least the Gulf of Mexico is being tapped…by the CHINESE! We can't drill there but in Cuban waters not too far from Key West the Chinese are sinking wells.

I'm not a particular fan of George Will. But, he is on target with both of these:

The Gas Prices We Deserve
By George F. WillThursday, June 5, 2008; A19
Rising in the Senate on May 13, Chuck Schumer, the New York Democrat, explained: "I rise to discuss rising energy prices." The president was heading to Saudi Arabia to seek an increase in its oil production, and Schumer's gorge was rising.
Saudi Arabia, he said, "holds the key to reducing gasoline prices at home in the short term." Therefore arms sales to that kingdom should be blocked unless it "increases its oil production by one million barrels per day," which would cause the price of gasoline to fall "50 cents a gallon almost immediately."
Can a senator, with so many things on his mind, know so precisely how the price of gasoline would respond to that increase in the oil supply? Schumer does know that if you increase the supply of something, the price of it probably will fall. That is why he and 96 other senators recently voted to increase the supply of oil on the market by stopping the flow of oil into the Strategic Petroleum Reserve, which protects against major physical interruptions. Seventy-one of the 97 senators who voted to stop filling the reserve also oppose drilling in the Arctic National Wildlife Refuge.
One million barrels is what might today be flowing from ANWR if in 1995 President Bill Clinton had not vetoed legislation to permit drilling there. One million barrels produce 27 million gallons of gasoline and diesel fuel. Seventy-two of today's senators -- including Schumer, of course, and 38 other Democrats, including Barack Obama, and 33 Republicans, including John McCain -- have voted to keep ANWR's estimated 10.4 billion barrels of oil off the market.
So Schumer, according to Schumer, is complicit in taking $10 away from every American who buys 20 gallons of gasoline. "Democracy," said H.L. Mencken, "is the theory that the common people know what they want and deserve to get it good and hard." The common people of New York want Schumer to be their senator, so they should pipe down about gasoline prices, which are a predictable consequence of their political choice.
Also disqualified from complaining are all voters who sent to Washington senators and representatives who have voted to keep ANWR's oil in the ground and who voted to put 85 percent of America's offshore territory off-limits to drilling. The U.S. Minerals Management Service says that restricted area contains perhaps 86 billion barrels of oil and 420 trillion cubic feet of natural gas -- 10 times as much oil and 20 times as much natural gas as Americans use in a year.
Drilling is underway 60 miles off Florida. The drilling is being done by China, in cooperation with Cuba, which is drilling closer to South Florida than U.S. companies are.
ANWR is larger than the combined areas of five states (Massachusetts, Connecticut, Rhode Island, New Jersey, Delaware), and drilling along its coastal plain would be confined to a space one-sixth the size of Washington's Dulles airport. Offshore? Hurricanes Katrina and Rita destroyed or damaged hundreds of drilling rigs without causing a large spill. There has not been a significant spill from an offshore U.S. well since 1969. Of the more than 7 billion barrels of oil pumped offshore in the past 25 years, 0.001 percent -- that is one-thousandth of 1 percent -- has been spilled. Louisiana has more than 3,200 rigs offshore -- and a thriving commercial fishing industry.
In his book "Gusher of Lies: The Dangerous Delusions of 'Energy Independence,' " Robert Bryce says Brazil's energy success has little to do with its much-discussed ethanol production and much to do with its increased oil production, the vast majority of which comes from off Brazil's shore. Investor's Business Daily reports that Brazil, "which recently made a major oil discovery almost in sight of Rio's beaches," has leased most of the world's deep-sea drilling rigs.
In September 2006, two U.S. companies announced that their Jack No. 2 well, in the Gulf 270 miles southwest of New Orleans, had tapped a field with perhaps 15 billion barrels of oil, which would increase America's proven reserves by 50 percent. Just probing four miles below the Gulf's floor costs $100 million. Congress's response to such expenditures is to propose increasing the oil companies' tax burdens.
America says to foreign producers: We prefer not to pump our oil, so please pump more of yours, thereby lowering its value, for our benefit. Let it not be said that America has no energy policy.
georgewill@washpost.com



Posturing At the Pumps
By George F. WillThursday, May 17, 2007; A17
Democrats, seething at the injustice of gasoline prices, have sprung to the aid of embattled motorists. So resolute are Democrats about defending the downtrodden, they are undeterred by the fact that motorists, not acting like people trodden upon, are driving more than ever. Gasoline consumption has increased2.14 percent during the past year.
That probably is explained by the inconvenient (to the Democrats' narrative) truth that Speaker Nancy Pelosi was characteristically overwrought when she said that Democrats intend to do this and that because the price of gasoline recently " set a record" at $3.07 a gallon. In real (inflation-adjusted) rather than nominal dollars, $3.07 is less than gasoline cost in 1981.
Pelosi vowed, as politicians have been doing since President Richard Nixon set the fashion, to achieve "energy independence." Such vows are, as Soviet grain production quotas used to be, irrational reflexes that no serious person takes seriously. Pelosi baldly asserts that "energy independence is essential to reducing the price at the pump," but she does not say how.
As Steven Hayward of the American Enterprise Institute notes, there is no yearning for national self-sufficiency concerning other essential goods, such as food, automobiles, airplanes or medicines. Are Democrats worried about security of oil supplies? In some ways, Hayward says, America's energy supply is more secure than it was in the 1970s, partly because "since 1975, energy consumption per unit of gross domestic product has fallen 48 percent." Furthermore, "oil represents a shrinking share of total U.S. energy consumption -- from 44 percent in 1970 to 40 percent in 2005." The oil America consumes -- only one-eighth of which comes from the Middle East -- is used almost entirely in transportation. Half of America's electricity is generated by coal, of which the United States has a huge abundance.
America has about 22 billion barrels of "proven" oil reserves, defined as "reasonably certain to be recoverable in future years under existing economic and operating conditions." In addition, there are an estimated 112 billion barrels that could be recovered with existing drilling and production technology. Make that, with existing drilling and production technology and fewer Democrats like Pelosi who, while promising energy independence, are opposed to any drilling in the Arctic National Wildlife Refuge and much drilling offshore, where 87 billion of the 112 billion barrels are located, as is much of the estimated 656 trillion cubic feet of recoverable natural gas.
Pelosi announced herself "particularly concerned" that the highest price of gasoline recently was in her San Francisco district -- $3.49. So she endorses HR 1252 to protect consumers from "price gouging," defined, not altogether helpfully, by a blizzard of adjectives and adverbs. Gouging occurs when gasoline prices are "unconscionably" excessive, or sellers raise prices "unreasonably" by taking "unfair" advantage of "unusual" market conditions, or when the price charged represents a "gross" disparity from the price of crude oil, or when the amount charged "grossly" exceeds the price at which gasoline is obtainable in the same area. The bill does not explain how a gouger can gouge when his product is obtainable more cheaply nearby. Actually, Pelosi's constituents are being gouged by people like Pelosi -- by government. While oil companies make about 13 cents on a gallon of gasoline, the federal government makes 18.4 cents (the federal tax) and California's various governments make 40.2 cents (the nation's third-highest gasoline tax). Pelosi's San Francisco collects a local sales tax of 8.5 percent -- higher than the state's average for local sales taxes.
Pelosi and others who just know, evidently intuitively, the "fair" price of gasoline must relish what has happened in Merrill, Wis., where Raj Bhandari owns a BP gas station. He became an outlaw when he had what seemed, to everyone but the state's government, a good idea. He gave a discount of 2 cents per gallon to senior citizens and 3 cents for people who support local youth sports programs.
But Wisconsin's Unfair Sales Act requires retailers to sell gasoline for 9.18 percent above the wholesale price. The state's marvelously misnamed Department of Agriculture, Trade and Consumer Protection has protected consumers from Bhandari's discounts by forcing him to raise his prices. Some customers now think he is price gouging.
Some Wisconsin legislators are considering changing the Unfair Sales Act to allow retailers to discount gasoline to benefit things those legislators think should be benefited. In Madison, Wis., as in Washington, D.C., it is considered eccentric to think that government should butt out, let people buy and sell as they please, and let markets equilibrate.