Don't Blame Oil Companies...

My friends are organizing a boycott of Exxon/Mobile this coming Sunday.  I support the right to protest anyone, including Exxon.  But I also know that there are things that are beyond the control of Exxon and others.  For example, there were laws enacted in the past to prevent Big Oil from squeezing ma and pa gas stations out of existence.   That is why nearly every corner gas station in your town has the same price for gas.  It is against the law for someone to sell the gas much cheaper than someone else.  It's a strange law because, for example, most Chevron gas stations are in fact not owned by Chevron but are ma and pa stores.  They only have the Chevron logo on their pumps.

But let's examine the supply and demand equation in big oil.  You have limited and regulated supply, plus you have strong, almost inelastic demand.  This is the formula for a cash cow.  Like it or not, this is not the fault of the oil companies, it is the fault of...government.  Government policies created this and only in repealing them can we bring a solution.

Not just the US government, but government everywhere.  Some governments are using their vast supply of oil to buy the favor of the people with cradle to grave benefits from healthcare to education.  That is why it has been much easier to depose the president of Egypt while the Saud Royal Family is still very much in power in Saudi Arabia.  But they are only able to do this because the oil under the ground is state property and they are part of the insane profit equation.

We have not helped the situation here in the United States.  We would rather protect pristine wilderness than resolve the problem by doing what makes sense, and that is taking logical steps to dramatically increase supply and stabilize prices.  We could also help the equation by the development of alternatives.

There has only been a minor push toward the use of bio fuel.  But one must remember that in the US, it takes a lot of fuel to produce crops.  It takes fuel to plant the crops, it takes fuel to irrigate the land, it takes fuel to fertilize the crops and defend them from predatory vermin.  It also takes fuel to harvest the crops and refine them.  We have ethanol that we can burn in our engines, but it is not profitable and heavily subsidized at this time.  It also takes food out of the food supply, thus increasing the price level for food as well.  Until yield per acre can be increased significantly, bio fuels will not be a replacement for fossil fuels.  Besides, there are much better crops than corn that can be used for bio fuels.  For example, the Aston-Martin that was used in the Royal Wedding is in fact powered by ethanol distilled from surplus wine.  If we can create booze from just about anything, why not ethanol?  Anything we can make booze out of, we can make fuel out of.  We do not have to insist on corn.

We could push for electric cars, but would need to replace gasoline with electricity, and right now there is not a big push in the country to increase the supply of electricity.  Sure, there are clean technologies, such as wind and solar, but at this time can not even come close to replace our current mixture of coal, gas, hydro- and nuclear generated electricity.  If we can figure out how to handle the waste, then nuclear becomes a great option.  Right now, however, especially after the disaster in Japan, it still seems too risky.  But almost every form of electricity generation has an environmental cost.  Wind power poses a danger to birds in flight and solar power will block sunlight from reaching the ground and that will result in unnatural cooling.

The worst thing to do at this time is what we are doing right now, while spending just a little money to research clean alternatives; while doing very little increase supplies of known, reliable forms of energy.  We would rather argue than find solutions.  (Remember, we don't elect our representative to compromise with their colleagues.)  This lack of action is bad and will continue to be a drain to the economy.  Energy is an input to all economic activity (and most economic activity in Nevada ;-)).  Allowing energy costs to continue to remain high will be a mistake.  The money that is spent on energy could be spent on other things, like healthcare and beds for the homeless and midnight basketball leagues and condoms in schools and a bunch of other things that social liberals love to spend other people's money on.  I would be for a compromise; even a new tax.  1 cent of every dollar of new US oil going to alternative energy research.  Almost anything to make our current situation better.