Greasing the skids towards
reducing oil consumption
Response to “Pain at the Pump and Beyond” in the NYTimes:
I am sure that others will make this point as well, but let me bring it up because it is not in the essay: the price of oil is also increasing rapidly because of the speculation of the market.
The Saudis pointed this out last month when they refused to increase their production. They are getting $40 or so dollars for a barrel, according to what they said, and the rest of the increase is due to gambling in the markets. Much of that gambling is in the United States.
Since oil is vital to the United States both domestically and militarily it would make sense for the President to issue an Executive Order forbidding the speculation in oil. Such an order, highly unlikely from a “free trader” like the president and his crew of pirates, would in all likelihood cause a drop in the cost of oil at the pump.
The order could provide that any company which has oil contracts could trade in futures to protect their contracts but no one else could. Once the insane bidding up of the price ended, the costs of fuel would drop.
The President could also go on television and tell the American People that we are in a crisis and that it is time to rethink our driving habits. He could tell them to plan their trips so that they traveled in a circle on their errands, thus reducing the amount of mileage covered. He could tell them that it was essential to our national economy that we stop taking unnecessary trips. It might even be reasonable to tell the American people, at least in the cities, to buy folding metal shopping carts and walk to the supermarket. We might also walk whenever possible or clean up our bicycles for local trips.
A real leader would also encourage Americans to carpool with their neighbors for trips to the supermarket if it was too far to walk to. Two people in one car use one half the gas, and three people would be even better.
If he were a real leader he would try and encourage the American People to work together to overcome our problems.
March 31st, 2008 at
You presuppose that speculation is bad for oil prices, but I posit that high oil prices have had a net benefit to our economy. After relying on the OPEC nations for at least the last 40 years as our major sources of oil, we as a nation have begun exploring alternative sources of oil (tar sands in Alberta for example) that opens up more stable markets and suppliers of our crude. Furthermore, the high price of oil has encouraged the development of more fuel efficient vehicles and alternative sources of energy. During the Clinton years, when gas was cheap, Detriot was in a race to see who could build the worst SUV for the environment. That heavy investment is now proving disasterous as more nimble car manufactors from Japan produce vehicles in line with consumer demand.
Also, profits from the oil companies have helped solidfy the pension and retirement futures of millions of Americans. The major holders of Exxon Mobil are (from Yahoo Finance):
Barclays Global Investors
STATE STREET CORPORATION
VANGUARD GROUP, INC. (THE)
FMR LLC
Bank of New York Mellon Corporation
AXA
BANK OF AMERICA CORPORATION
JP MORGAN CHASE & COMPANY
NORTHERN TRUST CORPORATION
WELLINGTON MANAGEMENT COMPANY
State Street, JPMorgan, Northern Trust, Bank of New York Mellon are all holding these shares on behalf of pension fund clients. FMR and Vanguard are two of the largest mutual fund companies in the world, and a major investment source in 401(k) plans. The more profits Exxon Mobil makes, the higher its stock prices goes, and the more it increases its dividend, to the benefit of the major holders of its stock.
To your idea, an executive order as laid out here would be disasterous for our financial industry. Capitalism is smarter than regulation. Limiting who could, and could not, trade oil futures in the U.S. would only serve to drive speculatory capital to alternative venues. The DIFX has long eyed the trading of oil contracts, and with such a decree, an oil market would open virtually overnight.
March 31st, 2008 at
I have no dissent with your discussion of the benefits of the oil trade, except that we are still stuck in a necessary relationship with the Arab Sheik (full disclosure here; every time I typed the last word it came out Sheits! There’s some sort of psychological problem there
Anyway, it would, in my opinion, be better to rely less on “friends” like the Saudis and acquaintances like the Venezuelans. If we had actually figured out a way to turn shale into oil cheaply we wouldn’t have to rely on dictatorships for our energy. You’re certainly right about the SUV’s under Clinton, but that was also the fault of our CAFE standards and the ways the auto companies used to get around them.
What about the other ideas in the piece? Use the presidency as a bully pulpit.
March 31st, 2008 at
I agree completely that we as a nation should be more energy independant. And no, I don’t mean drilling holes in Alaska. Beyond shale oil, or other hard extraction techniques, I’d like to see the development of more wind farms offshore, nuclear power plants, tidal power plans and the like. The objective is to free more crude oil to be used for other means. As for promoting fuel efficiency, I believe the end of cheap fuel is in fact upon us and will finally spur the necessary research and development necessary to look beyond fossil fuels.
What I really liked about your piece is the President setting a tone for ways we as Americans can be more energy efficient. I would like our leaders to encourage more use of public transport, car pooling and the like. Why not devote an hour one weekday night to discussing common sense ways to save energy (and money). If nothing else, such a speech would go a long way toward helping improve the Republican party’s image on environmental standards without appearing to compromise to the left leaning environmental groups. What you have given us, is a great way two sides can work together to achieve meaningful change.
Alas, that is unfortunately not the way our fearless leader does business. The biggest regret I have from the Bush administration is the lack of common sense leadership examples such as this one. Further, he is stubborn and is unwilling at this point to work with anyone beyond is inner circle.
March 31st, 2008 at
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