Posted by
Chris Fitzgerald on Wednesday, October 08, 2008 4:22:29 PM
Plastic. Rubber. Gasoline. Home heating oil. Diesel fuel. Motor oil. These are but a few of the things we manufacture when we refine crude oil. This nation has been a mobile one since its foundation, moreso in the past century.
At first when we drilled on US soil, crude was cheap and restrictions were few. In the 1970's, the EPA was created as were a plethora of regulatory agencies. Though the best of intentions were behind their creation, some of the results were downright disastrous. Among these disasters was a complete moratorium on the building of new refineries. Here we are over thirty years later being adversely affected by spikes in gas prices every time a hurricane hits the Gulf Coast because back-up refineries are not there to take up the load. Here we are importing seventy per cent of the crude we consume because we are no longer free to drill our own supply. The end result became gasoline that tripled in price in four years. The price of home heating oil will be keenly felt in the nation this winter, especially in the northern states.
The price of energy has done more damage lately to our economy than even the credit crash. The credit crash was certainly coming because of the fact that risky loans were given to too many people who just were unable to pay them. While that may be true, skyrocketing prices of fuel are largely part of the reason why these loans went into default. Let me explain.
The family budget is what it is. A certain amount is set into each area- mortgage/rent, food, clothing, utilities, transportation, entertainment, vacation if possible. Entertainment may include movie-going, sporting events, dining out, cable/satellite TV, etc. For a long time fuel costs were relatively low, so the entertainment budgets were not too badly affected. For some, it really wasn't a major concern.
In recent years, specifically the past eight, world demand for crude oil spiked dramatically. Increase in supply marginally followed, resulting in a sharp increase in the price of crude. Families still need to pay their mortgage or rent and heat their homes (or cool them in the summer). These are liabilities which are largely non-negotiable. Therefore families must either earn more and/or spend less on other things in order to accommodate these increasing costs. The non-necessities are always the first to go. This means fewer dollars being spent on vacations. Travel dollars are greatly conserved if not cut out altogether. This may mean opting for McDonald's, Burger King, Wendy's, etc., or even packing a homemade lunch for day trips or back yard/ neighborhood park, instead of taking a long trip somewhere and eating out in a fine dining or family sit-down restaurant.
These dollars not being spent by some translate into dollars not being earned by others. Those others also have housing costs to pay, etc. It's a vicious circle that starts from the inside and works outwardly. When those who earn the lowest amounts see even these resources dry up, even the necessary bills begin to lag behind until everything comes to a grinding halt for them resulting in catastrophic damage to the family budget, including mortgage foreclosure and automobile repossession. All because one area of the budget required drastically more.
I know this sounds like I'm getting ready to suggest yet more social programs that "help" people, but I am not. What I am doing is suggesting real and lasting solutions that require courage to implement.
Step one: Cut taxes. All taxes for all people, rich, middle class, and poor alike. Doing this takes less out of one area of the family budget enabling families to apply it elsewhere- like their mortgages for instance.
Step two: Drill for oil. A no-brainer here. Domestic production not only increases our supply, it also increases the world supply thus driving down the cost of energy globally. Think maybe if those around the world have to pay lss for their energy, they might be willing to purchase American goods? Also, drilling domestically immediately creates new, good paying union labor jobs. (Are you listening AFL-CIO?) People who work these jobs have the money to do those things mentioned in previous paragraphs. They turn around and create jobs for others.
Step three: Build new refineries. Again, a no-brainer. Each time a refinery goes off line temporarily, gas prices in that region spike. I lost track of how many formulas of gasoline there are because of regulations in different states that result in not allowing one region to fill in the gap for another. For instance, due to stricter regulations in California, gasoline produced in Texas may not be used in California. Allowing for off-shore drilling and increasing refining capacity in California would create new jobs for Californians as well as reduce the price of gasoline overall. California's tax revenue would increase as well. Ditto for Florida, Virginia, Oregon, Massachusetts, North Dakota, etc.
Step four: Develop renewable sources of energy. While these sources make up less than five per cent of US energy production, It will help. Manufacturing wind mills and solar panels greate jobs. The best places for windmills are either in fly-over country or just of shore, where wind is most plentiful, especially during the winter. Solar panels work everywhere, but mostly in the southwestern states where the Mojave Desert is. Sun is plentiful and cloudy days are rare. The biggest drawbacks to these sources is that they are not always reliable. In the Plains states, wind in the summertime slows down and the sun is always down at night. Hydrogen power looks promising.
Step five: (Which really should be step one) Elect conservatives to Congress and the state legislatures. They are the only ones who have the courage to implement these ideas.