Look in the Mirror

Are Congressional Democrats correct in blaming Big Oil for rising oil prices?

A week after U.S. gasoline prices hit a near-record $3.05 a gallon, Democrats in Congress are promoting legislation taking aim at the big oil companies, although industry experts say that the efforts aren’t likely to have any effect.

Standing in front of an Exxon station near the Capitol on Wednesday with the posted $3.05-a-gallon price for unleaded regular in the background, half a dozen senators railed against the oil industry.

Sen. Charles E. Schumer (D-N.Y.) said Congress would look into breaking up the giant companies. Sen. Maria Cantwell (D-Wash.) promoted her anti-price-gouging bill, which the Senate Commerce Committee adopted on Tuesday. And Sen. Bernard Sanders (I-Vt.) backed a windfall profits tax, pointing to $440 billion in profits over the past six years for the nation’s five biggest oil companies.

Big Oil probably isn’t who Sen. Schumer thinks it is. The international oil companies—ExxonMobil, Shell, and others—aren’t where the real action is. The real action in the oil industry is with the national oil companies—Saudi Aramco, Chinese Cnooc, and others. These now dwarf domestic big oil. I’m not sure what Sen. Schumer is going to do about them.

According to the National Household Travel Survey the number of individual commutes to work has nearly doubled since 1969 from 27.8 billion trips to and from work to 51.3 billions trips in 2001 and the length and duration of the trips have increased as well.

As the percentage of the people who have jobs increases, so do the number of commutes. As the number and length of commutes rise, we use more oil. As we use more oil, the price goes up.

So, want to conserve? That’s how we used to refer to what’s now called “reducing your carbon footprint”. Live and shop closer to your work. There’s no real way to offset the emissions produced by commuting 10,000 or 20,000 miles a year to work.

And, if you decide that a longer commute is worth it if you can buy a cheaper or better house in a nicer neighborhood, look no farther than the mirror when you wonder why oil prices are going up and why the price increases are affecting you.

5 comments… add one

  • Shamefully, your view probably represents less than a percent of America. Politicians only feed the view that cheap gas is some kind of entitlement.

  • That’s as good an explanation as any for why I have this blog, Andy. I think I have something to say, my voice is an unusual one, and it needs to be heard.

  • PD Shaw

    Let’s see:

    * federal gas tax (18.4 cents per gallon)
    * state gas tax (NY = 31.9 cents per gallon)
    * state sales tax (NY = 8.3 cents per gallon)
    * state spill tax (NY = 0.3 cents per gallon)
    * state petroleum testing fee (NY = 0.5 cents per gallon)
    * county taxes (NY avg. = 7.9 cents per gallon).

    That’s 67.3 cents per gallon, or about 22% of $3.05 per gallon of gas. I’ve seen estimates that Exxon earns from 5 to 13 cents per gallon in profit.

    I support higher gas taxes, something unlikely to happen if the debate is framed by Schumer.

  • I’ve favored higher gas taxes for more than 30 years, PD, if only for national security reasons.

  • Since 1969, 2.4 billion people have moved from poverty inducing socialism to the possibility of a high energy consumption capitalist life. This is a huge amount of progress but the cost is a terrifying increase in demand for energy that far exceeds our ability to supply on the long-term without adding unconventional supplies (from GTL techniques to turn coal to liquid fuel to the green panoply of renewables).

    That demand increase has yet to play out. In fact, I don’t even think we have even hit the half-way point on the demand surge. The US is too small and we’ve got too few basic lifestyle changes left to have much of a global impact in comparison.

    This does not excuse us from doing our part to deal with the demand side problem but it does orient our solutions to be a bit better fit with reality. Unfortunately too many people disagree including the “high gas tax” people here.

    In an uncertain energy future, discriminatory energy taxes favor certain energy solutions over others and generalized high energy taxes promotes poverty. Government in general is no more capable of deciding which energy is preferable than the commissars were.

    Instead a free market with lowered barriers to entry for new competitors will solve our energy woes the quickest. We have made it too hard to become an energy producer.

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