February 28, 2009 | Mark Paradies

When the Price of Gas Goes Up … Remember Why

Everybody is affected by the price of gasoline.

We pay for it to fill our cars to go to work.

It is part of the transportation costs of things we buy.

It’s a portion of the cost of the food we eat.

Many of the oil companies are also TapRooT® Users. Therefore, I pay attention to the industry and the challenges the industry faces.

The last three weeks haven’t been good.

First, there was an announcement that efforts to start offshore drilling in the US would not be going forward.

Next, the Secretary of the Interior said he would stop Rocky Mountain oil shale production to “study” it some more.

Finally, the President released his budget, which includes significant tax increases on domestic production of oil and gas over the next 10 years.

To me, the impact of these actions seems obvious. We are causing the price of gas to go up by discouraging domestic production of oil and gas through regulation and further increasing the price at the pump through taxation.

Some might hope that alternative energy sources will take the place of domestic oil and gas production. But they should be aware that the technologies that can provide the fuel we need (electric cars, fuel cells, and natural gas) are unproven and/or may not be developed in time (before the recovery occurs).

What will that leave us?

Skyrocketing prices at the pump when the recovery occurs.

Also, before the recovery occurs, the jobs that could have been created in the domestic oil and gas industry (and could have helped raise taxes to pay for our current surge in spending) will be lost.

Don’t get me wrong. I’m not saying that we should rape and pillage the environment. I think the domestic production of oil and gas can be done responsibly. And I think the government should incentivize our domestic oil and gas companies to develop new sources responsibly (perhaps some decreased royalties based on excellent environmental performance of a site).

Also, I’m not saying that drilling and oil shale will come on line in the next 12 months. But we could be finding sources, adding to proven reserves, and combating rising prices by showing that we are serious about the domestic production of energy.

Instead, I believe we will forgo domestic sources of energy and continue to use foreign oil. We will pay higher prices, send jobs and dollars overseas, weaken our economy, and hurt those who can afford increased fuel prices the least (the poor). And I really can’t understand why.

Sorry if you see this as a political rant, but I see it as a discussion of jobs in the US using our own local resources and a way to help us out of this economic slump.

I think of this as a performance improvement program for our economy.

I think we ALL should be doing all we can to turn things around, and that includes the politicians in Washington.

If they don’t – we suffer. People should remember who did what when the price of oil goes back up to record levels. Big oil companies are often portrayed as robber barons.  But the truth is that our own energy policy (crafted by politicians and bureaucrats in Washington, DC) is the real issue. If we don’t remember what politicians in DC do that causes the crises … they will never be held accountable.

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I’m open to other ideas.

If you see things differently – or if you agree – please leave a comment to explain the way you see things.

Just use the comment link below… (be nice)

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