Thursday, May 8, 2008

High Fuel Costs – Causes and Solutions



Fuel costs have shot up so high they are causing hardship for many Americans. It appears they will continue to surge, creating a number of serious problems. Why is this happening, and what can be done about it?

Politicians, bureaucrats, and judges have stifled domestic oil and gas production and the construction of new oil refineries and nuclear power plants. Their irresponsible behavior is forcing us to rely on foreign oil, gasoline, diesel fuel and gas; much of it coming from nations that are hostile to us. To buy this foreign oil, gasoline, diesel fuel and gas, we are forced to bid against other countries, including India and Red China, which have rapidly growing appetites for them. The United States dances to the tune of the OPEC oil cartels and the unstable and expensive world market of oil.

The U.S. has no shortage of oil and gas reserves. They are located in the Gulf of Mexico, other offshore areas, in parts of Alaska, and in other public lands. The American Petroleum Institute informs us that we could have enough domestic oil to power 60 million cars for 60 years and enough domestic natural gas to heat 60 million homes for 160 years. However, 85 percent of U.S. coastal waters and 75 percent of onshore prospects are off limits.

Did you know we import 60 percent of our oil and we have lost more than one million jobs in oil and gas during the past 20 years?

Politicians, bureaucrats, and judges have been blocking the construction of oil refineries and nuclear power plants for more than thirty years, which also contributes much to our dependence upon foreign suppliers of energy. The last new refinery built in the United States was Marathan Ashland's Garyville, La. Plant, completed in 1976. Between 1999 and 2002, refining capacity in the United States rose only 3 percent, pushing up prices since demand grew much faster than that. Watts Bar 1, which came on-line in Feb. 7, 1996, was the last U.S. commercial nuclear reactor to go on-line.

Politicians created federal and state regulations requiring dozens of "boutique fuels" – different blends of gasoline for different regions. This causes a very inefficient national market, because a surplus that occurs in one area cannot be shifted to another part of the country that needs more. Creating boutique fuels also requires expensive refinery shutdowns to change output from one formula to another, This reduces production overall and risks overproduction for some areas and underproduction for others. All of this results in higher prices at the pump.

Then there is the 2005 federal ethanol mandate, the Energy Policy Act of 2005, that politicians forced on us. Since taking effect in 2006, this measure has increased energy and food prices while doing little to reduce oil imports or improve the environment. Federal incentives for the creation of ethanol are costing the federal government (taxpayers) about $1.00 per gallon. Ethanol still tends to cost consumers more than gasoline. We can thank politicians for this additional increase in fuel costs.

Let us not overlook fuel taxes, a very large percentage of the cost of fuel. Who creates these big taxes? Politicians, of course.

Analysts tell us the steep decline in the value of the U.S. dollar is contributing to the steep increase in fuel costs. The dollar has lost its value because politicians have been spending far more money than our government has been receiving. The proposed Global Poverty Act (S.2433) is a classic example. The United States Senate may vote on it any day. This proposed United Nations style welfare to third-world countries could eventually cost U.S. taxpayers as much as $845 billion. Senator Barak Obama is sponsoring it.

When you see politicians attacking oil companies for the surge in fuel costs, you are seeing politicians scapegoating the oil companies to shift the blame. Let us put the blame squarely where it belongs – on politicians, bureaucrats, and judges.

What are the most important things we can do to bring fuel prices down? We must:Begin drilling for and using the oil and gas that are available in the United States.Build refineries and nuclear power plants.Remove expensive, wasteful mandates, such as the ethanol and boutique fuel mandates.Control governmental spending.

The huge problem of skyrocketing fuel prices and the serious problems they cause will not be solved until we, the people, insist that politicians, bureaucrats, and judges take the actions that commonsense tells us are required.

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