News flash for Congress, people are mad as hell. Sure, it’s an election year and both political parties are jockeying for competitive advantage. Yeah, the conventional wisdom is that nothing will get done until 2009 when a new President and Congress are in place. But we have a full-fledged energy crisis that will soon tank the economy if not addressed quickly. You, our Senators and Representatives, can do something about it now if you just put the nation first, address the problem with a little common sense and stop political posturing for once.
Stop blaming Bush, Carter, Clinton, OPEC, the oil companies, speculators and break out your Economics 101 book. There’s a chapter in there about supply and demand. There is also a discussion of futures markets, or that might be in Econ 200, but in either case you would learn that the intersection of the supply and demand curves set the price and the futures traders try to forecast those curves and set a price accordingly. In the case of oil, they forecast demand, especially from the major consumers like China, India, Europe and the United States, and supply from the major producers worldwide. Today, there is enough supply to meet demand but in the futures market, weather, political unrest, pumping and refining capacity, currency exchange rates, all affect the supply side of price determination. Government policy affects both supply and demand. You have the power to influence several of these factors by setting an energy policy that tells the world we are serious about protecting our economy by lowering energy costs.
Put your ideological mantras on hold and write legislation that clearly sets forth an energy policy we intend to implement ASAP. The policy should:
1. Recognize we will not be able to replace oil in the near future and therefore we must increase supply by exploiting our own resources. If the Chinese can drill off the coast of Cuba, ninety miles from Florida, surely we can drill off our own coasts and develop our oil shale and remove obstacles to building new refineries.
2. Admit that wind and solar fall far short of replacing carbon based electrical generation. Encourage development of a standard nuclear power plant and begin building them. It the French can generate most of their electricity with nuclear, we certainly can also.
3. Provide tax and other incentives to develop alternatives to gasoline and diesel fuels for transportation. Hydrogen, bio fuel, battery technology, combustion engine advancements are all areas with potential to replace or reduce usage of oil.
4. Forget cap and trade carbon markets, they are too difficult to establish, monitor and control. Instead use a transparent carbon tax, offset by lowering other taxes, to encourage conservation and innovation.
5. Control spending and balance the budget. This one action would strengthen the dollar and lower oil prices because oil prices are set in dollars. So a stronger dollar means fewer would be needed to buy a barrel of oil.
This policy does not have to be a five hundred-page bill designed to scratch everyone’s itch. It should be just a few pages that include a straightforward statement of policy and maybe, if you are really brave, a process whereby blue ribbon commissions provide specific implementing legislation and you get to vote yea or nay, amendmentable only by a two-thirds majority vote. Regardless, we don’t have time to wait. Get busy or get out!