Big Oil is taking a beating these days, especially now that gasoline prices are above $4 a gallon in most areas of the U.S. Chevron0
It is as common as “daily workplace chatter” to attack the major oil companies for their greed and huge profits, all the while blaming them for some, or even all, of the economic problems that we currently face.

Last week the congressional Democrats blamed Big Oil with their usual attacks while they did nothing serious to address the need they have never addressed for over thirty years—the production of more energy within the borders of the United States. So, expect to hear the same message that we have heard in every election since the 1960s–“we must find more energy (alternative sources) within the U.S.”–but this time expect that the next president and the Congress will finally have to do something about it. We cannot depend on alternative energy for decades so something has to be done with oil supply now. It is really that simple.

The problems will come when he solutions are offered and then, if ever, passed. The Democrats want to repeal $17 billion in tax breaks for the oil companies over 10 years and then impose a windfall profit tax on those same companies that do not invest enough in new energy sources. Cal Thomas is correct to call this “political expediency at its worst.” And President Bush visited Saudi Arabia this week asking the Saudis to produce more oil for America.

But the facts are these. We have not opened a new refinery in the U.S. since 1976. Eight-five percent of offshore drilling is off-limits. It is argued that this is all about protecting the environment. I am more pro-environmental than most of my more conservative friends but I think this confuses the issue seriously. This is not an issue between oil and the environment. Some of Europe’s strongest pro-environment nations—Denmark, Norway and the U.K.—all lease offshore locations for oil exploration. Off_shore
People falsely worry about offshore drilling. During hurricanes Katrina and Rita a 1,000 offshore wells were destroyed but not one of them leaked. I would call that a safe source for more American oil but we still refuse to get serious about it. 

When the Alaska pipeline was built radical environmentalists argued that the caribou would be wiped out by the pipeline. I think their concern was not unimportant. But the facts are these—it has, quite simply, not happened. The caribou is alive and well. There is a serious difference between “good” green policy and the kind of environmentalism that sounds like a religious creed. It is hard to tell the difference at times.

Besides this issue there is the sense of entitlement that most of us have the right to “cheap gasoline.” While we have had it quite easy for years Europe has paid three to four times as much for fuel. This is why they drive more fuel efficient vehicle, vehicles that many Americans laugh at in their cavalier disdain for all things European and their desire to drive huge cars. If the price of oil keeps rising the market will correct itself and we will finally alter our lifestyles to fit the new reality. One thing here is sure—the days of cheap oil are over!

What about our U. S. energy companies? They are already spending large sums of money on exploration for new sources of energy. Look, these are businesses that must produce profits for their shareholders. They will spend what makes sense and they will produce profits. This is the way the system works and those policies that recognize this will do the best to produce supply so that demand will be met. If the government tries to force change this scenario by taxing and punishing profits the results will bring back the scenario that we saw in the 1970s under President Carter. (Anyone remember waiting for a half hour to an hour just to get gasoline? Or do you recall the signs out front which said, “No gas today?”) Between people learning restraint, and the oil companies being urged to further drill and develop new energy sources, there is a solution. The question then is simple: “Will we be smart enough to find it?” If we aren’t then this problem alone will add to our considerable woes in the Middle East.

According to the U.S. Department of Energy our oil production has fallen 40% since 1985. Meanwhile our consumption has increased dramatically. Government estimates are that we have enough oil toGwb_2
power more than 60 million cars for 60 years. The reason we do not get this oil is the surrender of U. S. policy to the radical environmentalists. It appears to me that these arguments are, in many cases though certainly not in all, bogus.
Now we have a U. S. president going to Saudi Arabia begging for more oil production. Cal Thomas concluded earlier this week, “The specter of a president of the United States going hand-in-hand to Saudi Arabia to plead for more (and more expensive) oil from the dictatorship that underwrites an extreme form of Islam that is out to kill us is obscene. President Bush ought to be rallying Americans, not embracing people who don’t allow women to drive cars.” I think Cal is right. 

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  1. Anthony May 17, 2008 at 1:44 pm

    What I would like to see is a clear demonstration from oil companies that the environment genuinely matters to them, that they would be willing, if need be, to inhibit profit for the sake of environmental well being. I imagine that it is possible to both create products that are environmentally sound and profitable. However, I don’t imagine that this would initially be expedient and so there is probably resistance. Consequently, though I don’t want to see American companies unduly taxed, I can understand the use of external incentives, such as taxation to prompt investment in alternative sources. Although, maybe it would be better to give tax breaks to those who invest in the development of alternative energy as opposed to punishing those who don’t. Honestly, I don’t have an economic background to clearly understand the ramifications of different economic courses of action.
    In the end, as I mentioned, what I want is some kind of demonstration that maximum profit is not the ultimate criteria for making all business decisions. I realize that companies have an obligation to share holders to make a profit, but I think there is a greater moral obligation to the well being of creation. I think when Xians respond to this matter they have to be conscientious to the fact that the laws of Mammon, which often drive the world of commerce, conflict with the ethic of God’s Kingdom.

  2. George C May 17, 2008 at 2:05 pm

    The religious zeal of many envirmentalist is scary. Very little of what we are hearing is based upon fact; just fear mongering.
    The same groups of scientist that were trying to scare us in to thinking we were headed for an ice age a couple of decades back are now using equally questionable data to say we have global warming to fear.
    Like every brand of religious fundementalism people are being pressured and scared into accepting things without critical examination. And in the same way that fundementalist preachers thrive financially off their tactic so are many of the envirmentalist prechers.
    I definitely believe that we need to treat the earth with respect which is a group effort, but the inconsistancies of the data and the conclusions mixed with the jobsecurity and politisizing of things amkes me very leary.
    Besides, things have gotten better evry year just bsaed upon the free markets need to do things more efficeintly to compete.

  3. Anthony May 17, 2008 at 4:42 pm

    I agree with George that fear mongering is all too common for both the religious right and the environmental left. And, I agree that there needs to be more critical examination before people come to conclusions. But, it seems to me that a big problem is that most people, who work, raise families, have hobbies, and maybe attend to other civic duties, don’t have the time to do their own research in this matter. This means that most will have to rely upon distillations of research that are shared through various media outlets, and the problem here is that various forces within the media (often commercial forces) lends itself to presenting, framing, and shaping information in a manner that produces disinformation.
    I consider myself a critical reader and writer, and as one who teaches written communication, I am probably more rhetorically aware than the average Joe, and still, I have a hard time wading through all the information that is out there, so that I can come to some definitive conclusions regarding what constitutes a real threat to the environment. However, stepping back and looking at the socio-political landscape, I see that the majority of people who espouse environmental causes plot out left on the political spectrum, and those who debunk, or want to debunk, the claims of environmentalists tend to plot out on the right. This makes me suspicious on both accounts because I can imagine how the claims of the left would support certain research interests and certain industries, whereas the claims on the right would support other research interests and industries. All of this is to say that it is hard not to be cynical regarding the influence of money, regarding people’s objectivity when it comes to arriving at conclusions.
    Finally, I don’t think that I can affirm the idea that things have gotten better “because free markets need to do things more efficiently to compete.” I understand the invisible hand concept, but still I think that it is a bit naïve in the face of human falleness. I remember from an American Intellectual history class the idea that the framers were trying to create a system in which vice would be held in check and in which virtue could flourish. My sense, (one that I admit is more of a hunch than anything else) is that the espousal of a pure laissez faire approach to markets falls short of the checks needed to hold vice in place. This is why I don’t, on principle, reject external measures (laws, taxes, levies) to prompt certain courses of action and inhibit others, when it comes to business practices.

  4. ColtsFan May 18, 2008 at 2:07 am

    I like reading JA because he is one of the few theologians who has a decent grasp of economics. In contrast, most theologians tend to be very poor economists.
    This post was an excellent one, JA.
    The growing worldwide demand for oil is reflected in the emergence of Third World countries like India and China and the growing middle class and the more cars on the road worldwide, more fuel consumption, etc. Just a few years ago, India lacked a middle class and China was largely agricultural in nature. Now “made in China” is a hallmark card. But China as the world’s capital of manufacturing requires lots and lots of factories. And lots and lots of oil. India’s (population close to 1 billion) middle class is exponentially growing and buying cars.
    Another factor is Venzuela. Venzuela has tons and tons of oil and likes to cause trouble for the USA by hoarding it. Venzuela just recently purchased a billion dollar submarine fleet from the Russians, despite the fact that Caracas supermarkets have chronic meat and produce shortages due to Chavez’s disastrous left-wing economic policies of Statism-Socialism.
    And then there is Iran. When we blink, Iran and the markets go haywire.
    It is interesting that Saudia Arabia is not helping George W. SA is probably ticked off that George W.’s little war in Iraq basically eliminated the buffer state of secular Baathism in the Sunni dictatorship of Saddam Hussein. Now, the Saudis fear that Basra and the oil-rich area of southern Iraq will turn into a de facto province of Iran.
    It would be nice if the USA could open up Alaska for oil.

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