Politics as Usual

I received a story today from U. S. Newswire that goes to show that some Democrats also don’t “get it”.

House Democratic Leader Nancy Pelosi released the following statement today on news reports that the price of oil has skyrocketed to more than $70 a barrel:

“The Republican Rubber Stamp Congress has passed two energy bills, costing taxpayers $12 billion for giveaways to big oil companies. But the Republican bills clearly have done nothing to lower gas prices, as the price of a barrel of oil has settled above $70 a barrel – the highest price in our history. Even the Chairman of the Federal Reserve agrees that gas prices are decreasing the purchasing power of American families and depressing the U.S. economy.

I almost hate to point out that the biggest giveaway was to the ethanol industry, by mandating an increase in the inefficient production of grain ethanol. But that’s not the reason for my ire. This is:

“Democrats have a plan to lower gas prices, taking America in a new direction that works for everyone, not just the few. Our plan would empower the Federal Trade Commission to crack down on price gouging to help bring down skyrocketing gas prices, increase production of alternative fuels, and rescind the billions of dollars in taxpayer subsidies, tax breaks, and royalty relief given to big oil and gas companies.”

You see, Nancy, lowering gas prices is not a solution. If America is “addicted to oil”, how exactly is lowering the price going to help us end that addiction? Higher prices will have the effect of slowing down our use of oil, especially if prices stay high for an extended period of time. I can understand your concern for American families, but you are not helping matters by calling for lower prices. Have you ever heard of Global Warming? Didn’t you recently issue a press statement condemning the Bush administration for failing to take action on Global Warming? Do you think lower gas prices will improve the situation? Given that we have had falling gasoline inventories in this country for several weeks, do you think lowering prices will help us build those inventories back up? Or will they make inventories fall at an ever faster pace? That is why gasoline prices are high, Representative Pelosi. The sooner Democrats learn that lowering prices is going to do nothing but make the problem worse, the better.

Politicians. Sheesh. Don’t we deserve something better than constant pandering to people? Can someone have the guts to look into the camera and say “Gasoline prices are high because of YOU, the consumer”? Can someone have a frank talk with the American public and explain that cheap gasoline is not an entitlement? We need some real leadership here. Europe has learned to deal with high prices by learning to conserve. It is time we learned the same lesson, but lower gasoline prices won’t encourage anyone to conserve.

12 thoughts on “Politics as Usual”

  1. Hello Robert,

    I found your excellent blog through JD’sPeak Oil Debunked. I am an academic physicist who first learned to be seriously concerned about peak oil about a year ago.

    I fully agree that leadership on the issue of energy pricing is vital. A big problem is that the vast majority of the public does *not* agree with the general principles of economics that you are implicitly assuming: for example, that one should sell to the highest bidder.

    If your neighbor was selling, say, his wristwatch, and you liked it and wanted to buy it and offered a fair price, and he said, “No! I’m going to list it on eBay! You can bid along with the rest of the world!”, might you not call him greedy??

    This is how most people think of the (American) oil companies. Shouldn’t they cut their friends and neighbors a better deal? Why should the Chinese be bidding on equal terms? Sure, the oil companies should be able make a fair and reasonable profit, but anything more is price gouging and collusion. If they won’t go along, we need a windfall profits tax to make them go along. If their executives don’t like it, they can all move to China.

    We need a good and convincing rebutal to this psychology. I find it hard to compose one that has the necessary force and clarity.


  2. A related point:

    You assume that averting shortages through high prices is a good thing. Not everyone would agree. Shortages affect rich and poor equally: in the 70s, a beautiful Mercedes 450SL was in a gas line behind my battered Toyota Corolla. Back then, I thought it was good that the owner couldn’t just buy his way out of that line. Now, I believe that high prices are probably the best rationing system. But perhaps this opinion is influenced by the fact that I could now afford to buy a Mercedes …

  3. hmmm. Yeah, there are values questions here. But, there are also questions of fact, such as peak oil, global warming, dependency on unreliable foreign state oil companies, etc, and in that connection I think people are smart enough to understand complex issues. The problem is dishonest politicians, who are willing to tell the public what they think people want to hear, the campaign contributors who influence the politicians, and corporate media which refuse to do hard, objective news.

    The interesting question is whether Pelosi believes the first item, about gas prices, or is she just saying what she thinks people will understand and believe in the run-up to the fall elections?

    Might be worth sending her office a letter, and seeing what the response is….

  4. Weekly gasoline inventories were released this morning. They have fallen for the 7th week in a row, and fell almost twice as much as was predicted. That will mean higher prices are on the way (or in the world of pandering politicians, that Big Oil is going to keep sticking it to you).

    Avo, I agree that the real problem here is that the general public doesn’t understand how markets work. In reality, what would happen if someone tried to cut a break, they would quickly run out of supplies. Someone at The Oil Drum this morning said he noticed 2 gas stations across the street from one another in Dallas. One is advertising gasoline at $3.00. The other is advertising gas at $2.87. The problem is, you can’t get gas for $2.87 because they are out of gas. That’s just what happens when you fail to raise prices to control inventories.


  5. Robert,

    I just responded to the Salon’s Andrew with this:


    Saw your post asking Robert Rapier about the efficiencies of ethanol and whether he had read the Pimental/Patzek studies, and the recent Science.

    I am going to suggest to you that you ignore both studies, and instead do your own thought experiment and see what conclusion you reach:

    * If making ethanol actually returns more energy than its production consumes, then why don’t corn farmers and ethanol plants use some percentage of the ethanol they make as their energy source with which to make more ethanol?

    * If ethanol production returns more energy than its production consumes, why do corn farmers and ethanol plants continue to be slaves to fossil fuels?

    The obvious answer is that if they really made more energy than they consumed, they would not use expensive fossil fuels to make ethanol. Why depend on fossil fuels over which you have no control, if you could instead supply your own energy needs with the fuel you make?

    The most recent USDA study said that making corn ethanol was 167% efficient. Think what that would mean were it true:

    If corn ethanol returned more energy than it consumed, our country would be awash in energy. If that were true, it would be a license to print money, and every company in the U.S. would be jumping into the corn ethanol energy business to make a quick profit.

    Think of the possibilities:

    * Invest 100 units of energy and get 167 units back.

    * Re-invest those 167 units and get back 278.

    * Re-invest those 278 units and get back 466.

    In only three cycles they could more than quadruple the original investment. I’m sure you get the idea — any CEO who didn’t take advantage of that profit potential would soon be kicked out the door by the board of directors.

    Yet that isn’t happening, and the corn ethanol industry and their lobbyists continually ask for mandates, tax credits, and tariffs protecting them from Brazilian sugar cane ethanol.

    If the USDA study were true, why would they need those mandates, tax credits, and subsidies? The obvious answer is that they wouldn’t. One can only conclude the USDA study has a fatal flaw and that Pimental and Patzek are closer to the truth.

    Best regards,

    Gary Dikkers
    Madison, WI

  6. Pelosi’s pandering aside, Big Oil did get billions of taxpayer dollars, didn’t they? And that was a Republican production, so it was not inappropriate for her to point it out. As for the “plan to lower gasoline prices”, yeah, that was stupid.

  7. I was referred here by Engineer-Poet and it’s good to see that he’s inspired other people. Welcome to the blogosphere!

    Very good blog so far, and great post!

  8. One book is all you need to read to get a clear perspective on Ethanol and it’s possibilities. Corn is lowest on the rung as far as a return on energy invested. Fodder Beets can return 3x or more Ethanol than corn. Farmers are just getting warmed up on this subject.

    One marsh plant doesn’t need farmland or even low quality agricultural land at all. It would also raise primary treated sewage to tertiary treatment levels as a by product. That would not be so bad for out rivers and the ocean.

    Does 2500 gallons per acre without cellulose conversion sound too good to be true?

    David Blume has authored a book titled “Alcohol can be a Gas”
    available at http://ush2.com/ or David’s website http://permaculture.com/

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