Saturday, October 11, 2014

Please, Let Us Stand Prosperity

Yesterday, I filled up the family car for $2.95 per gallon, the first time gasoline has dropped below $3.00 around here since November 2010. Today, I noticed the futures price of petroleum in the New York Stock Exchange had fallen to $85.00 per gallon; it has not been that low for a long, long time.

The futures price is of interest because it tends to confirm the opinion of some experts that prices at the pump in the U.S. will stay relatively low or continue to fall in the near future. Why have we arrived in this happy position?

1. Federal rules requiring auto producers to build machines that get more miles per gallon are paying off. The builders complied by designing vehicles in all categories that are more fuel efficient. And the American public is buying more small cars and more electric and hybrid vehicles in all sizes.

2. Fracking and improvements in more conventional extraction methods have combined to glut the American market with gas and crude oil. No matter what economic theories you subscribe to, that tends to keep prices down. But fracking needs firm controls to prevent environmental disasters, and we would be wise not to change policies to encourage more use of the technique.

3. For a variety of reasons, Americans generally have been driving fewer miles in recent years, which contributes to the favorable supply situation.

Low oil and gas prices reverberate positively through our economy. Consumers have more cash to buy goods of all kinds. That demand then can be met through lower manufacturing and transportation costs. That kind of demand also creates jobs in many sectors. It is the sort of prosperity we should embrace.

But some people are just too greedy to allow us to stand prosperity. Those are the guys who control the big oil companies.

We have been protected to some extent from their avarice for 40 years. In 1973, several Arab nations put an embargo on oil exports, sending prices soaring world-wide and creating shortages in the U.S. Our government responded in several ways, one of which was a ban (with some exceptions) on exporting crude oil produced here.

The idea was to break our dependence on foreign crude oil and stabilize the domestic market for refined products. It has been a long haul, but success seems imminent. It should be pointed out that the ban does not include export of gas, which can be liquefied and shipped overseas, or products from oil refineries.

Surprise: the American Petroleum Institute is leading a lobbying campaign asking the Administration to circumvent the ban by introducing more exceptions and the Congress to revoke it entirely with legislation. Some refineries that profit from the ban are mounting  a counter campaign.

Genius is not necessary to know that no matter how technology advances oil and gas are nonrenewable resources. We eventually will run out of them. We are working to replace oil and gas with solar and wind power, but the conversion will take a long time. It makes no sense not to conserve our nonrenewable resources as much as possible.

Please, Mr. President and Members of Congress, let us stand prosperity. Resist the petroleum lobby, and act in the national interest. Keep the ban on crude oil exports in place, and delete some exceptions from it as well. 

11 comments: said...

Interesting analysis. Perhaps we need to give credit to George W Bush (the oil guy) for pushing the U.S. to produce more energy following 9-11? I didn't vote for him in either election, but looking back have come to admire him. Unlike his predecessor, I believe history will see his administration as having a positive effect on the nation's welfare, despite the housing crash

. The repeal of Glass-Stegall under Clinton will be seen as the major driver of the Great Depression.

The positive and negative effects of any administration are felt long after the executive leaves office.

I just read a really negative book about ho Americans always want more, more, more. The author says that craving, grasping, whatever you want to call it drives the demand for oil and other energy. The millennial generation is hurting following the recession, and like my granddaughter many have rid themself of a car.
I am a fan of sensibly planned and executed mass transportation.

Tom Sightings said...

Good analysis, and I agree, I guess. But does it seem fair? The U. S. happily (and greedily?) takes oil exports from Mexico, Canada, Russia and elsewhere ... but we won't export to them?

Dick Klade said...
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Dick Klade said...

Tom, your question applies to a larger philosophical matter I grapple with sometimes. Should the wealthier nations on this earth share with the needy ones? I think the answer to that must by "yes." But when "how much" is the question, the answer becomes difficult.

Surely, when the Arab states, several of whom we had supported, embargoed their oil in the 1970s they didn't care a bit about the negative effect on us. In relations among nations, there probably are a lot more examples of self-interest that angelic behavior.

I conclude the right path for us is to share a lot, but be careful that we always consider our national interest in the balance. If sharing results in driving everyone into poverty, it serves no purpose in the long run.

PiedType said...

We definitely need to keep developing alternative fuel sources. Especially since the expansion of oil and gas production via more offshore drilling, more fracking, and more exploration and drilling in ANWR is so detrimental to just about everyone and everything except the oil and gas folks. Fracking, especially, is a very hot issue in Colorado right now, and it was all I could do to remain civil, barely, to two different survey workers who've knocked on my door this month to ask my opinion about fracking.

I don't want to go through another embargo or shortage, but in trying to avoid or prevent it, we should not be shortsighted about preserving and protecting irreplaceable wildlands. Wilderness either is, or it isn't.

Jayhawk23 said...

Just checking in for the first time in more than a month, but I see you and I still see eye to eye on many things. This is like the left glove to match the right glove I just posted.

On the fairness of our export policy, raised by some here, I suspect falling prices will force the issue of greater exports. That in turn will loosen the political hold of petrostates from Russia to Venezuela, which is also a positive outcome.

Big John said...

"I filled up the family car for $2.95 per gallon".
Lucky old you, Dick.:-)
I just filled up mine, here in the UK at $6.20 per (US) gallon !

Dick Klade said...

John: Ouch! I well recall prices like that when we motored through southern Germany and Austria a couple of years ago. I will say, however, the European roads were in much better condition relative to what we're experiencing in the U.S. A good case can be made for raising taxes to fix our roads, but politically it probably won't fly.

Dick Klade said...

JayHawk makes some interesting points on this topic in his latest post. If you want, you can check it out at

Wally Shiverdecker said...

I don't know if I buy the argument about the governments efforts to force car makers to improve fuel economy. I just bought a new car. I came without a spare tire. It comes with an inflation kit making the car about 30 pounds lighter to get the fuel economy. We will soon be riding on two wheel skate boards or bicycles to meet the standards. Maybe we will all lose weight reducing the amount of fuel needed to transport our load. Somehow I think we are missing the point.

Dick Klade said...

Wally, I thinking the lack of a spare tire has more to do with available space than weight. Just looked at a Ford C-max that comes only with an inflation kit for space reasons.