Posts tagged with: domestic drilling

Gas prices are beginning to come down, but for many people prices are not falling fast enough.

The pain caused by high gas prices is spread widely, but it is felt intensely on the working poor and the unemployed who are trying to find a job.

A recent story in the Chicago Tribune highlights Alicia Madison, a resident of the Chicago suburbs who is unemployed. Madison is looking for a job, but because of high gas prices she, at times, cannot even afford to go to an interview:

Before a recent job interview, Alicia Madison climbed into her 2001 Ford Explorer and realized her gas tank was empty, just like her bank account.

Unable to afford gas for the 25-mile round trip from her Glen Ellyn home to the Naperville business, Madison was forced to reschedule. She now relies on gas vouchers issued by a nonprofit agency to drive to interviews.

Madison, a certified nursing assistant unemployed three months, is desperate to return to work, but not desperate enough to take a job too far from home with gas prices at record highs.

“I have to be conscious of where I’m looking and how far it’s going to be,” said Madison, 23, a single mother on food stamps. “I don’t want to work just to pay for gas.”

Her dilemma underscores the problem that steep gas prices have created for the unemployed: They need income to fill their tank but can’t afford to take jobs with long commutes.

Some job seekers say they are more selective now, curtailing face-to-face networking and ignoring some opportunities based on the high transportation costs.

As the article also points out, job seekers have to decide if the pay for a potential job is enough for them to make the daily commute. Is it worth working eight or nine hours a day when a good chunk of the earnings goes toward paying for the gas needed to get to work?

The hardships for low income workers are further explained by Greg McBride, Senior Financial Analyst at Bankrate.com. According to McBride, 72 percent of Americans who make less than $50,000 are cutting their discretionary spending. While cutting discretionary spending is what is needed to be a good financial steward when money is tight, McBride explains that higher gas prices hurt economic growth because they cause a decrease in consumer spending.

As Ray Nothstine argues in “High Gas Prices Devastating to Poor”, we should do everything we can to lighten the burden on the poor and lower gas prices. This will aid everyone, but especially those who are the most adversely affected by the high gas prices. One way to lower gas prices is to look no further than the free market, which is articulated again by Nothstine:

While we are bound to labor, 17th century Bible commentator and Presbyterian minister Matthew Henry reminds us, “Let not us, by inordinate care and labor, make our punishment heavier than God has made it; but rather study to lighten our burden.”

Similarly, John Paul II declared, “Besides the earth, man’s principal resource is man himself. His intelligence enables him to discover the earth’s productive potential and the many different ways in which human needs can be satisfied.”

This is good advice. The free market helps to sort out those effective alternatives, encouraging us to drill for oil responsibly at home, and protecting us from costly utopian schemes that drive up energy prices. The market is also our best hope for developing renewable energy technologies that are economically feasible.

My commentary this week focuses on the how the rise in prices at the pump is impacting the poor. Currently, in many areas of the country a gallon of gas is now priced over $4. I also argue that we need a more coherent energy policy coming from leaders in Washington. Part of the argument against drilling in ANWR (Arctic Refuge) over a decade ago was that the oil wouldn’t hit the market for 10 years. That’s a very shortsighted way of thinking about meeting our energy needs. We need leaders in Washington to work for us not against us.

Perhaps now a forgotten event, former Senator Jesse Helms in 1982 waged a dramatic battle against a federal gasoline tax hike of five cents. The tax hike had bipartisan support, including the support of President Ronald Reagan. However, Helms fought virtually alone with only a small cadre of tax opponents. He eventually lost on the measure but as he was traveling back to North Carolina he stopped at a rural Hardees restaurant. Truckers recognized Helms and he was greeted with thunderous applause for his efforts. Helms stood up not just for business interests like the trucking industry, but the rural poor, who are hit hardest by increases in gas prices. The current federal tax on a gallon of unleaded gasoline is 18.4 cents per gallon and the mean state tax on a gallon is 26.6 cents. My commentary is printed below:

High Gas Prices Devastating to Poor

by Ray Nothstine

Religious leaders staging a fast over budget cuts on social spending have not offered to fast over higher gas prices, even though the impact on the poor is devastating. In fact, there is very little focus on the rise in energy costs, with political and religious leaders remaining largely silent. Yet, when they speak on the issue, they often do not have your best interests in mind.

At a recent visit to a wind turbine plant, President Obama responded to one questioner’s concern about rising prices by laughing and saying, “If you’re complaining about the price of gas and you’re only getting 8 miles per gallon, you might want to think about a trade-in.” The president didn’t say which vehicle he was talking about. But a 2003 Hummer H2, rated among the worst for gas mileage, scores 10-14 miles per gallon.

But for most people a truck that is getting 8 miles per gallon is the one that delivers their food. This is true too for charitable food banks as delivery costs cut into the number of people they can feed. Food banks also depend on volunteer drivers to deliver meals to shut-ins.

Many individuals and families are already curtailing discretionary spending to save for gas. In turn, more money and jobs exit the U.S. economy for oil exporting countries.

The national average for a gallon of gas is currently $3.79. Some American cities are well over $4 per gallon. The price, up almost a $1 since last year at this time, has some experts forecasting $5 for Memorial Day.

While oil markets can be complex, free market alternatives offer better relief than heavily subsidized “green energies” propped up by government. A new study in the United Kingdom by Stuart Young Consulting and the John Muir Trust again pointed out what previous studies have found: Wind output is often less than anticipated and is an unreliable source of energy.

Likewise, electric cars are rejected by consumers shopping for fuel economy—even though they are subsidized with tax credits. Rachel Slobodien of the Heritage Foundation points out that people are instead buying more affordable super fuel economy cars with traditional engines that get upwards of 50 miles per gallon.

Some lawmakers from both parties in oil producing states are asking for more domestic drilling, more refineries, and uniform state standards on gasoline mixture requirements. All of these proposals will help lower prices and could add hundreds of thousands of American jobs.

President Obama has responded by saying an increase in domestic drilling “will help some.” He also signaled he may be willing to tap more of the Canadian oil sands, but at the same time, he wants to cut oil imports by one-third.

High prices at the pump can offer a moment to pause too and remember a spiritual truth. The price of gas not only draws attention to the Middle East, but it draws our attention back to the Garden of Eden that tradition places in that oil-rich region.

Oil itself is decayed vegetation and plankton that has seeped into the ground, forming over millions of years. At one time wildlife was abundant and forests were especially lush in the garden. In the creation story we are reminded that after the fall of man, we have to toil for resources (Genesis 3:19).

While we are bound to labor, 17th century Bible commentator and Presbyterian minister Matthew Henry reminds us, “Let not us, by inordinate care and labor, make our punishment heavier than God has made it; but rather study to lighten our burden.”

Similarly, John Paul II declared, “Besides the earth, man’s principal resource is man himself. His intelligence enables him to discover the earth’s productive potential and the many different ways in which human needs can be satisfied.”

This is good advice. The free market helps to sort out those effective alternatives, encouraging us to drill for oil responsibly at home, and protecting us from costly utopian schemes that drive up energy prices. The market is also our best hope for developing renewable energy technologies that are economically feasible.

We know too well that leaders in Washington reflect the fall of man, but they are not working to lighten our burden right now. As the price of gas approaches $5 per gallon, perhaps its rise may help us to refocus on new ways to meet the needs of those who have the most to lose from rising fuel costs.

Last week President Obama gave an address outlining his new energy policy. In light of the tragic events in Japan, the speech was much anticipated especially considering the president’s prior commitment to nuclear energy.

As expected President Obama continued advocating for a greener energy policy while continuing to push for the country’s independence from oil. However, the President’s speech, an article by Reuters points out, was “short on details on how to curb U.S. energy demand.”

Furthermore, the President’s call for a path towards greener energy and energy independence will not be easy. The New York Times appropriately states, “The path to that independence — or at least an end to dependence on the Mideast — could well be dirty, expensive and politically explosive.”

President Obama continues to voice his support for alternative fuels and green energy. He argued for energy from wind, solar, natural gas, biofuels, natural gas, and nuclear. However, as I have argued in the past, these alternative fuels have costly subsidies, unintended consequences, are not cost effective, and have proven to be largely inefficient (I address the unintended consequences of ethanol here, here, and here and the unintended consequences with wind turbines here).

The president is calling for more government regulation. He gave a glimpse of a new energy standard he is going to pursue this summer, “This summer, we’re going to propose the first-ever fuel efficiency standards for heavy-duty trucks. And this fall, we’ll announce the next round of fuel standards for cars that build on what we’ve already done” he said. In an economy that is looking to rebound from a recession, businesses do not need another costly government mandate forcing them to change their transportation fleet. Instead, the President should rely on the market. Businesses will upgrade their transportation fleet naturally through the market when it is efficient and more cost effective for them to utilize heavy-duty trucks that are more fuel efficient.

The president also stated that we need to look to other countries, such as Brazil, for oil. However, an article published by Real Clear Markets is very critical of the President’s pursuit of Brazilian oil:

Now, with a seven-year offshore drilling ban in effect off of both coasts, on Alaska’s continental shelf and in much of the Gulf of Mexico – and a de facto moratorium covering the rest – Obama tells the Brazilians:

“We want to help you with the technology and support to develop these oil reserves safely. And when you’re ready to start selling, we want to be one of your best customers.”

Obama wants to develop Brazilian offshore oil to help the Brazilian economy create jobs for Brazilian workers while Americans are left unemployed in the face of skyrocketing energy prices by an administration that despises fossil fuels as a threat to the environment and wants to increase our dependency on foreign oil.

Furthermore President Obama’s talk of expediting drilling permits is not wholly accurate. The Obama Administration has not been friendly to offshore domestic drilling since the BP disaster last year. As the above quoted article from Real Clear Markets explains, there has been a seven-year offshore drilling ban on Alaska’s continental shelf and in much of the Gulf of Mexico. That has not changed under the Obama Administration. The Heritage Foundation pointed out in February:

Putting aside calls from some who want to increase domestic exploration to areas in Alaska and elsewhere, President Obama has completely shut down the existing oil drilling infrastructure in the U.S. At least 103 permits are awaiting review by the Bureau of Ocean Energy Management, Regulation and Enforcement. The federal government has not approved a single new exploratory drilling plan in the Gulf of Mexico since Obama “lifted” his deepwater drilling moratorium in October 2010. Obama also reversed an earlier decision by his administration to open access to coastal waters for exploration, instead placing a seven-year ban on drilling in the Atlantic and Pacific Coasts and Eastern Gulf of Mexico as part of the government’s 2012-2017 Outer Continental Shelf Program.

As expected the president’s energy speech is not receiving much praise from the oil industry. Obama claimed that the oil industry is sitting on leases instead of using these for oil production. Ken Cohen, Exxon Mobile Corp.’s vice president of public and government affairs addressed the President’s claims and reflected on his speech in a Wall Street Journal article:

Said Mr. Cohen: “90% of the words sound relatively right in line with what you’d hear us say,” in terms of enhanced use of natural gas, increasing energy efficiency, more research and development and more domestic production. But the speech didn’t address policies that Mr. Cohen said are hampering oil development, such as opening areas that are off limits to the industry, and insisted on uneconomic mandates for renewable fuel. Moreover, the mention that oil companies are hoarding unexploited leases is off the mark, he said.

“The notion that there’s some economic incentive to sit on a lease is wrong,” Mr. Cohen said, particularly when oil prices are above $100 a barrel.

Despite the recent tragic events of Japan’s nuclear power disaster, it was relieving to see the president not call a halt to nuclear energy. While it will most likely take time for nuclear energy to rebound from the catastrophic events, the president looked at the situation pragmatically by continuing to voice support for nuclear energy while requesting a Nuclear Regulator Commission safety review to make sure all existing nuclear energy facilities are safe.

Despite the criticism, it is still important to keep in mind that we are all stewards of the Earth and need to take care of the planet God has given us. We do not get a replacement and we must see that future generations have a planet they can live in without problems created by our generation. The President’s call to not waste energy should be applauded, and advice we should all heed. However, as the United States continues to define its energy policy it is also equally important to keep in mind we are called to not just be environmental stewards, but also financial stewards. Our energy policy should be for the well-being of the planet but also economically feasible without being burdened with costly subsidies and unintended consequence.

Full text from President Obama’s speech can be found here.

The American Enterprise Institute also provides and insightful critique on the President’s speech which can be found here.

Following up on my commentary “Washington’s Unpopular War on Energy,” Alaska Governor Sarah Palin talks about her own frustration with Washington energy policies in an interview with Investor’s Business Daily. Governor Palin is of course in favor of drilling for more oil in Alaska, and she believes development can be done in a safe and clean manner. She also believes increasing the domestic supply of oil will have a positive affect on oil prices for Americans. The interview is a solid discourse on the ongoing theme of Congressional inaction in regards to an energy policy. Also, it is a reminder of an unpopular Congress completely ducking a policy that is now widely supported in the country. Governor Palin declares:

There are billions of barrels of oil underneath the ground up there on the North Slope including ANWR. In Alaska alone we can supply seven years of complete crude-oil independence, and eight years’ supply of natural gas for Americans with ANWR (and) other areas of Alaska that we want to allow for development.