Wednesday, June 11, 2008

Feeling the Pinch

Anyone else think that $4/gal is totally nuts? At the risk of sounding like an old fart, I still remember when $1/gal got skipped for being too expensive.

It seems most people like to blame OPEC for not producing enough or the oil companies for charging too much. Nice. It's always fun to point the finger at some one else. Remember mom's little adage 'when you point your finger at someone else, there's always three more pointing back at you'? Never has this statement been more true than America's current energy troubles. We have allowed this to happen, most of us by inaction and silence.

First of all, the pump price of gasoline has as much to do with our domestic refining capacity as it does with the oil supply. Wanna know why oil spiked after Katrina & Rita? Houston and New Orleans represent nearly half of the total refining capacity of the US. Oops. Oh, and since people have been slow to trickle back into the city below sea level, wedged between a lake, a major river and an ocean (oh Lord, don't let me get started on that insanity!!), do ya think maybe the New Orleans refineries aren't back to full capacity yet?

So increasing refining capacity would decrease gas prices. Ah, but we haven't built a new refinery in 40 or 50 years. (This is where Bill O'Reilly blames the oil companies -- duh-- more refineries would mean more profit in the long run, so that dog don't hunt Mr. OReilly). A coalition of eco-freaks and NIMBYs (Not In My Backyard) has used an avalanche of lawsuits to prevent the building of new refineries. At the same time, many states (at eco-freak urging) have adopted laws requiring a number of exotic fuel blends. This effectively reduces our refining capacity further since refining capacity must be dedicated to the additional blends.

So here's an idea -- and a constitutional one at that! Congress should mandate which blends can be required across state boundaries. Under the Constitution, Congress has sole power to regulate interstate commerce. If we limit the number of blends refineries must produce, we effectively increase our refining capacity. This solution can produce noticeable effects in six months to a year (perhaps less, I'm being conservative - go figure). The delay time would depend on how long it takes the refineries to retool. Now, if a state wanted a blend not on the allowed list they can get around it - by having a refinery built in their state. (I love double-barreled solutions).

Of course, we'd have to be careful and deliberate in deciding which blends are on the allowed list. The panel making the recommendations can not be overloaded with politicians or eco-freaks, though it should certainly include these groups. Automotive companies as well as oil companies should have a significant showing at the table since they are the ones who know about refining and using oil. If these groups are marginalized, the recommendations will be trash.

Wow, this already getting long so I'll make the rest short and sweet. We will still need to acquire more oil - preferably from a reliable, secure source. Oh wait, we already have oil we can depend on -- OUR OWN OIL!! Yes, ladies and gentleman, the US has no shortage of crude oil deposits within it's own national boundaries. We have major deposits along the continental shelf, Alaska (Anwar) and the Gulf of Mexico. Much of the off shore sites are along the California coast and the southern east coast (Florida & the Carolinas). Unfortunately again, the NIMBYs and eco-freaks have stopped the utilization of a needed resource. Folks have been trying to drill in Anwar since at least the mid 90's. Even though we can access this vast reserve with a very small facility (due to new innovations that allow horizontal drilling) the eco-freaks have continued their campaign to keep this country dependent on hostile nations. While Congress has severely curtailed domestic oil drilling in the Gulf of Mexico, China is pedal-to-the-metal exploring and developing this field. Nice. Now, thanks to the eco-freaks, Chinese tanks will be burning oil that should be in American cars. Instead of taking the kids to soccer practice, that oil will be crushing student demonstrators or charging in to neighboring countries.

One last note, we are still finding or finding ways to access oil in our own lands. Minnesota has a vast (I mean VAST) oil deposit that we can now get to due to the recent development of horizontal drilling techniques. I think Minnesotans are smart enough to tell the eco-freaks what to kiss if they try to stop development.