Energy Commentary Part II

This is part II of a three part commentary on energy letters recently published in the Delaware State News. Part I was a letter about the benefits of immediate drilling. This second letter, a response to that letter, also discusses the benefits of drilling, but as part of multi-faceted approach. The headline is misleading though.

This commentary appeared in the July 8, 2008 edition of the Delaware State News as a letter to the editor/guest commentary. Again I have attempted to add links where I was able to find support for the points.

Drilling will not solve oil crisis
Andrew Alea, Dover, Delaware

This is a two-fold response to Franklin Wright's June 30, 2008 commentary, "Drilling Answer to Gas-Price Woes." I first offer a counterpoint to Mr. Wright's letter, and then a starting point for a more productive discussion on approaching our nation’s energy concerns.

We both agree that the price of and our dependence on oil will continue to be a central issue for both candidates this fall and to this country for at least the next decade. In none of Wright's hyperbole and rhetoric, however, does he offer any substantive approach for the candidates (and more realistically the voting public) to think about given that the price of gas is not coming down anytime soon. Unlike Wright, I will not attempt to summarize my understanding of either Obama's or McCain’s positions beyond what they agree on, leaving the readers to their own resources to check Wright's allegations for accuracy and form a sound, independent opinion.

Wright begins by arguing that both parties have "distinct solutions" to the energy problem. I believe he has misspoken. Everybody agrees on the solution: we need to increase our oil reserves and alter national perceptions and trends regarding energy policy and use. Obama and McCain agree that one way to reach it would be through offshore domestic drilling. They also agree that this is only one means to increase supply, it should not be undertaken at the expense of the Alaska National Wildlife Reserve, and is, at best, a long-term, insubstantial fix. What distinguishes the candidates is not in their "solution," then; it is with their "approaches," which aren't that distinct.

Wright and I also agree that drilling even as early as next year will not affect oil prices significantly for at least a decade (or at least the 2016 election). Thus, we both conclude that the only logical reason for making a concerted public push to drill domestically serves no purpose, save a political one.

After reaching this conclusion, Wright and I have divergent reactions. He focuses on a senator's comments (implying that he supported nationalization of the oil refineries) as gospel that the Democratic party has become a Trojan horse for a socialist agenda. Not only does this position overlook the fact those comments were clarified the next day, it dodges the likely purpose behind them, which is probably as political as the push for domestic drilling. Regardless, Wright uses them to bolster his personal theory that the Democratic party (and by implication, their candidate) is attempting to tie the invisible hand of the free market to benefit OPEC and domestic oil barons. I have not found any source that supports that theory (for either candidate or party), which ultimately led to my confusion as to the point of his commentary beyond the simple idea of more drilling to lower gas prices. As should be clear, more drilling serves little to accomplish that goal in the short term. His reaction to the idea of increased drilling as the only viable approach prompted me to write this response.

I offer a short and long term approach which may start to reach the issue. The only short term (and immediate) method for lowering gas prices would be for the federal (and perhaps state) government to implement a gas tax credit. The credit, available to anyone who files a tax return, could give, for example, a maximum $400 credit to qualifying tax payers. The credit could be adjusted for mileage, whether they own or lease a car, or maybe for the type of car they drive in order to influence nationwide purchasing trends. According to a 2004 report by the California Energy Commission, the average American guzzled 464 gallons gas (Delaware was 541.6). At $4/gallon, this adds up to around $2150/year. Those taking the maximum credit would magically have their yearly gasoline expense drop to $3.26/gallon. Of course, tax credits are only a quick solution, and would have to be made up somewhere, and certainly the General Assembly or the Congress can work out the details for either of these approaches better than I can. The longer term solution would be to revamp the tax code and modernize it to reflect our current society and economic trends. I haven't heard either candidate float that albatross out yet, but perhaps it is coming.

My long term approach to the oil problem would be for Congress or the President by executive mandate to direct each state’s government to examine, pass, and begin to implement (within a certain time frame), an individual state energy policy. Thus, if a state wants to start drilling for oil, either within their borders of offshore, build a field of solar panels in the desert, build a nuclear reactor, wind farm, hydrogen plant, or whatever, the federal government will have to work with these states and decide how their plans fit within the national scheme. The federal government could also mandate through fiscal bullying a reason for the car companies to use existing plants in cities like Newark and Detroit to start producing some sort of fuel efficient concept car on a mass scale.

States (like Delaware with the wind farm) would be able to use their independent policies to help other states develop and implement similar strategies, which in turn would provide a steady stream of revenue and work for those initial states and their citizens. Letting each state develop the technology best for its citizenry would not be easy, and the role of the federal government, Republican or Democrat, would have to be to work with the states to implement their plans quickly and in harmony with the refined national goals and policy.

The candidate who makes the most common sense with his energy plan and gets the most votes is going to be the winner. The question each of us is going to be asking, sooner or later, is who should that person be. Just don’t be fooled by Wright into thinking that increased drilling will solve the problem anytime soon.

Three interesting commentaries on energy: Part I

It is rare that I remark over the typical opinions printed in the local newspaper, and I note that other bloggers appear to have done so with more frequency. Over the next couple of days, however, I'm going to post three commentaries from local residents that were in the Delaware State News.

Each presents a different vantage point on energy plans and oil drilling. I'm not sure whether I have anything intelligent to add to theses commentaries, but in light of my suggestion that more prominent national figures have been floating ideas into the general public and mainstream media, why not include some suggestions from Delaware into the mix.

The first commentary appeared in the Monday, June 30, 2008 edition of the Delaware State News (page 5) as a letter to the editor. I have attempted to add links where I found them to support the author's points.

Drilling Answer to Gas-Price Woes
Franklin T. Wright, Milford, Delaware

I had thought that national security would be the main fighting ground for the upcoming general election, but it seems that, as hard as this is to believe, I was wrong. The main issue will be oil, or more specifically, what to do about its price. Whatever candidate can get out in front of this issue will likely win the presidency.

Republicans and Democrats have two very distinct solutions. The Republicans have long argued that we need to be more self-sufficient and that we should drill offshore, in the Alaska National Wildlife Refuge and at other locations in the country that have oil and natural gas. This is nothing new.

A New York Times article, dated May 18, 2001, outlines President Bush's plan, stating: "President Bush began an intensive effort today to sell his plan for developing new sources of energy to Congress and the American people, arguing that the country had a future of 'energy abundance if it could break free of the traditional antagonism between energy producers and environmental advocates.'" President Bush also talked about how we could be blackmailed by foreign oil suppliers. Imagine that.

President Bush, of course, lost out to the environmentalists and liberals, and of course, now the liberals say that it is because of Bush's policies that we are in this mess.

We have not built a refinery in this country since 1976. We have not built a nuclear power plant since before 1979. President Clinton had a chance to open ANWR to drilling in 1995, but he vetoed the bill presented to him by the then-Republican controlled Congress.

In this country, enhancing our own energy supply will create more jobs, boost the economy, lower the dependence on foreign oil and, hopefully, lower the gas prices. At $4-plus a gallon, I could care less about preserving the mating habitat of some sort of subspecies of fruit fly that I have never heard of.

I know that we cannot drill our way out of this mess and that once we begin drilling, it is estimated that we will not see the results for 10 years. But think were we would be now if we had started long ago when we knew this was going to happen.

Obama, on the other hand has a different view. He says that the Republican plan is just pandering to the big oil companies. These would be who? The same big oil companies whose executives contributed to Obama's campaign.

In April of 2006, Nancy Pelosi proclaimed: "Democrats have a plan to lower gas prices, taking America in a new direction that works for everyone, not just the few." The Democrats have controlled both the Senate and House since then. What have they done so far to implement this plan?

Rep. Maurice Hinchey, D-NY, a member of the House Appropriations Committee and one of the most ardent opponents of offshore drilling, had this to say Wednesday: "We (the government) should own the refineries. Then we can control how much gets out into the market."

Is this Pelosi's plan? There is a word for that: socialism. This is a very scary proposition. An industry gets too good at making money, adn the government seizes their business. Maybe the dictator Chavez in Venezuela can get away with nationalizing the refineries, but we cannot.

Here is the bottom line. Politicians on both sides of the aisle make money off of the oil companies, both in stock and campaign contributions. To argue that one side or the other has the right to proclaim a moral advantage in this argument is like two fleas arguing over which one owns the dog.

Fortunately, or unfortunately, depending on your point of view, this is how capitalism works. You provide a product that people need and you make a profit. If you make obscene profits, as the oil companies have been doing recently, then, there is definitely something wrong that needs to be fixed.

Are we really at the point that we are so intent on not letting the oil companies make a profit that we continue to hurt ourselves to accomplish our goal? Yes, I know. Drilling for more oil in this country and opening refineries will mean the oil companies will make more money. Next time you fill up, if you can affort to without taking out a loan, ask yourself this:

Are you satisfied with paying out the ying-yang for gas as you try to keep the oil companies from making money off of new refineries, when building the refineries will actually bring the price down? That is like an oxymoron, with the emphasis on "moron."

I guess it comes down to this: Whom do you want making money off our gas, U.S. oil companies, or foreign dictators and monarchs? We cannot snap our fingers and the entire country will magically be driving hybrids that get 200 miles to the gallon with zero emissions. That may be your vision of the future, but we still need gas until we get there from here to there. I say drill, drill and drill some more. Maybe if we do it fast enough, Sheik What's His Name over there in Saudi Arabia will have to settle for a gold-plated Rolls Royce instead of a second diamond-encrusted one.