Whether we like today's high gasoline prices or not, according to
Vice President Gore, they're good for us. In Gore's book "Earth in the
Balance," he claims that the internal combustion engine is the single
greatest threat to mankind, and the way to combat that threat is with
higher fuel prices.
Now that the OPEC cartel has managed to push oil prices from 1998's
$10 a barrel to nearly $30, instead of Gore publicly thanking OPEC for
helping to save the environment, he's calling for an investigation of
"Big Oil" for price-gouging. That's standard for politicians -- pointing
fingers to divert attention away from the folly they created.
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OPEC's supply restrictions no doubt account for part of the gasoline
shortage problem, but it's the Congress and the White House who've made
us more vulnerable to our Middle East "friends," for whom we fought a
costly war to preserve their sovereignty.
We're vulnerable because of restrictions placed on domestic oil
exploration. Congress has refused to authorize exploration in a small
section of the Arctic National Wildlife Refuge that in 1980 was
specifically set aside by law for exploration. That site is estimated to
contain 16 billion barrels of oil. The Clinton-Gore administration
recently used its executive powers to lock up 43 million acres of
government land in so-called roadless areas, making oil exploration
impossible. Plus, more restrictions have been placed on offshore
Just recently, the U.S. Supreme Court ruled that two oil companies
which purchased oil and natural gas leases from the government, and
later were prevented from drilling, have to be compensated by the
government. The bottom line is U.S. oil is in plentiful supply. Our
dependence on imported oil reflects the power that environmental groups
have in Congress to stifle domestic oil production. That benefits OPEC
immensely, and I wouldn't be surprised if OPEC nations were major donors
to environmental groups.
Another part of the problem is the 1990 Clean Air Act. Provisions of
the act allow the Environmental Protection Agency to mandate the use of
reformulated gas. The National Academy of Science reports that the
benefits to the environment of reformulated gas were trivial. On top of
that, MTBE -- a chemical used in reformulated gas -- is showing up in
our water supplies as a cancer-causing contaminant. Requiring companies
to produce reformulated gas increases manufacturing costs and the price
we pay at the pump.
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Some oil companies in some areas of our country blend their gasoline
with ethanol, a corn derivative, as a means to meet EPA mandates. In
1999, for an equivalent amount of energy, ethanol was twice as expensive
as gasoline. In addition, ethanol is extremely water-soluble and cannot
be transported in pipelines. Instead, it must be trucked, barged or
railed to distribution sites, where the finished product is then trucked
to gas stations. That's more expensive. But what the heck! Congressmen
from the farm states pushed for ethanol mandates to benefit their
constituents. Whether it harms the rest of the nation is not much of a
concern to them.
Another part of the high prices are federal, state and local taxes
imposed on gasoline. The federal tax alone is 18.4 cents. State and
local sales taxes can be as high as 30 percent of the selling price.
That means that if gas costs $1.75 a gallon in your area, its pre-tax
price might be $1.35. Your state legislators might pretend they feel
your pain, but they love revenue. When gas prices are $1.00 a gallon,
they extract 30 cents in tax revenues; when gas sells for $2.00, their
take doubles to 60 cents.
Here's my bet: If Congress were to announce the ending of
restrictions on domestic oil production, there'd be a fall in oil prices
and the crumbling of OPEC.