Why would any american agree with someone who is trying to rape money out of us? Do you not want gas to be cheaper if it means some company is going to make 10 billion less than 40 billion a year off of you?
Don't give a company 8 billion a year in tax incintives and subsidies that's already making 40 billion a year in profit.(profit, mind you, not costs) It's not rocket science and it's not politically motivated, just plain american!
Gas prices and subsidies are two separate issues. Personally, I'm not a big fan of subsidies to any industry, and I've seen research that suggests even if well intended the subsidy usually fails to produce the desired results. Of course, taking the subsidies away from the oil industry under current plans that I'm aware of will not redirect that money into the bank, so to speak. The proposals that I've seen would simply redirect that money into other industrial sectors that are move favored by the Democrats like agribusiness.
BTW, exactly who is trying to "rape" the money, and how would you fix the problem and still have a free market system, particularly since the entities involved range from foreign counties with state oil companies, to multinational oil companies (BP and Shell not even headquartered in the US) to the OPEC cartel to independent refiners and terminal operators, to any number of trading entities? As I have pointed out, the oil companies do not set a price. They can potentially manipulate that price, but at least two FTC investigations in the 2000's have found no wrong doing, and I can assure you the oversight on these investigations was certainly there.
The reality, though it is one many do not want to hear, is that we are responsible for our own pain. 1973 wasn't the exception, it was the rule for our country's energy future. The late 1980s to 1990s were an exception that geopolitical changes and our move away from efficient cars to "commuter trucks" have only exasperated. There are solutions, but they don't typically involve SUVs or 300+ hp sedans as daily commuter cars, unless you want to pay for that luxury. Just like most of the 1970s and 1980s for those of you too young to remember reality. We'll likely only see 1990s prices again if something really bad happens. But, $2 per gallon gas is not that unrealistic, perhaps.
For those old enough, here's a blast from the past:
Muscle Cars -- weren't any
The Mustang II was built based on the smaller Pinto platform. In 1974 the engine selection was limited to either a 2.3L four cylinder or a 2.8L 105 horsepower V6, from Ford of Germany. This was the only year a V8 engine was not available in a Mustang and it was also the first year no convertible was available. From 1975 through 1978 the Mustang II did offer a 302 2bbl V8, but as with all engines of the time, it was low on power with only 122 to 140 horsepower, depending on the year and whether it was 49-state or a California car.
And the Pony wasn't the only one. Eventually by the Mid 1980s there were a few hotter economy type platforms that could pull 0-60 in the 9 second range that were considered to be "hot rods." It wasn't until probably the mid 1990s that you saw any number of sedans with any real power at all.
Speedometers -- I can drive 85!
In the early '80s, GM removed the 120 mph speedometer from some of its full-size, V-8-powered — and therefore lowest-mileage cars — and replaced them with speedometers that went up to only 85 mph. The idea was to show that the automaker was more concerned with how far, rather than how fast, cars would go on a gallon of fuel.
Govt. Intervention -- it works so well.
US Oil Price Controls - Bad Policy?
The rapid increase in crude prices from 1973 to 1981 would have been much less were it not for United States energy policy during the post Embargo period. The US imposed price controls on domestically produced oil in an attempt to lessen the impact of the 1973-74 price increase. The obvious result of the price controls was that U.S. consumers of crude oil paid about 50 percent more for imports than domestic production and U.S producers received less than world market price. In effect, the domestic petroleum industry was subsidizing the U.s. consumer.
Did the policy achieve its goal? In the short term, the recession induced by the 1973-1974 crude oil price rise was less because U.S. consumers faced lower prices than the rest of the world. However, it had other effects as well.
In the absence of price controls U.S. exploration and production would certainly have been significantly greater. Higher petroleum prices faced by consumers would have resulted in lower rates of consumption: automobiles would have had higher miles per gallon sooner, homes and commercial buildings would have been better insulated and improvements in industrial energy efficiency would have been greater than they were during this period. As a consequence, the United States would have been less dependent on imports in 1979-1980 and the price increase in response to Iranian and Iraqi supply interruptions would have been significantly less.
http://www.wtrg.com/prices.htm
An oil glut and the free market (where's the love when our profits are down?) From Time, 1987 when oil prices were plummeting. A very insightful piece that shows how the oil glut of this period led to dangerous changes in consumer behavior and a lack of investment capital in the oil industry.
Whenever the moment of truth arrives, it would seem, the beleaguered U.S. petroleum industry will be in no position to respond to a resurgent OPEC. Fully 75% of all U.S. drilling rigs now stand idle. A total of 806 rigs are currently operating in the U.S., down from 4,530 in 1981. The oil is there for the taking, of course, but it is simply too expensive to get out of the ground. While Middle East producers can find and lift a new barrel of oil for about $1, U.S. companies spend an average of more than $17.
Investment in exploration has fallen dramatically. Last year oil firms spent an estimated $16 billion in exploration and production, down from $33 billion in 1985. Says L. Frank Pitts, head of Dallas-based Pitts Oil: "Our industry is being dismantled at a rapid rate."
That is a trend that may not be easily reversed. Rigs are being taken apart and sold for scrap. Stripper wells, which produce less than 10 bbl. of oil a day, are getting plugged up. Once a stripper well is closed, it becomes as expensive to reopen as it is to drill a new well. Petroleum engineers are abandoning the industry, and college graduates are avoiding careers in oil. Meanwhile, alternative sources of energy, such as solar heating and synfuels, are not being developed rapidly because of their high cost....
The national debate over how the U.S. can best stave off a future energy crisis is just beginning. Peter Beutel, an analyst with Elders Futures, a major Wall Street oil-trading firm, believes that despite America's current infatuation with cheap oil, most people can readily recall what it means to suffer through an energy shortage. Says Beutel: "We were caught napping twice. We would have to be extraordinarily foolish to fall into the same trap again." Maybe so. This much is certain: the oil shocks of the 1970s came as a complete surprise. The next one will not.
http://www.time.com/time/magazine/article/0,9171,963770-1,00.html
Doh!
Charon
