We Americans are going to pay through our noses to stay warm this
winter, and we can thank our elected and unelected officials in
Let's analyze the economics of it by starting with an example.
Pretend you own a supermarket. What would you want the government to do
that would enable you to price-gouge your customers? The answer's easy:
government should do anything that would restrict the market supply of
grocery products. Government might shut down your competitors or enact
regulations that make it more costly for them to operate. But, if your
prices got too high, your customers might choose substitutes: such as
eating at restaurants. You would also want government to do something
that would make restaurants more costly.
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The supermarket example explains the nuts and bolts of the high oil
and gasoline prices that we're paying. Let's look at it. OPEC is a
monopoly cartel. The best way to secure and maintain a monopoly power is
to have governments write laws and regulations that reduce competition
with competitor products. The Clinton-Gore administration has aided OPEC
by restricting drilling and exploration in Alaska's Arctic National
Wildlife Refuge, where the Department of Energy conservatively estimates
that there are more than 16 billion barrels. At fairly modest drilling
rates, that translates into about 800 million barrels of oil per year.
There are also Clinton-Gore administration restrictions on untold
billions of barrels of oil under the ocean floor oil waiting to be
drilled. By putting all this oil off-limits to drilling, the
Clinton-Gore administration has empowered the OPEC monopoly and has made
us vulnerable to its price-gouging.
But Washington has done even more to strengthen OPEC's hand. In our
supermarket example, your ability to jack up prices was not only
enhanced by the government doing things to restrict your direct
competitors but also by placing restrictions on your indirect
competitors -- restaurants. Just as restaurants are partial substitutes
for supermarkets, coal is a partial substitute for oil, particularly for
heating and electricity generation. The Clinton-Gore administration has
restricted our supplies of clean, low-sulfur coal by using its executive
order authority to declare millions of acres in the Western U.S. to be
In the wake of rising oil prices, what do our politicians try to sell
us? Sen. Dick Durbin, D-Ill., accuses the oil companies of "gouging" the
public, stating, "It's an increase directly attributable to
profit-taking by the oil companies." EPA Secretary Carol Browner
declared, "The oil companies ... owe us an answer." Al Gore chimes that
the Republican presidential ticket of Bush and Cheney is "in the pocket
of big oil." That's typical Washington. Counting on an uninformed
public, politicians blame everybody except themselves.
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Stifling oil production is a major part of high gasoline prices, but
not the only one. According to a Congressional Research Service report
"Midwest Gasoline Prices," the new EPA requirements for reformulated
gasoline, requiring the use of ethanol, add 25 to 34 cents per gallon.
That's not the only cost. MTBE, which is used in reformulated gasoline
in other parts of the country, has become a major source of ground water
pollution, not to mention making people who smell the fumes sick.
The bottom line is that America's environmentalists have massive
clout with the Clinton-Gore administration. They've used that clout to
impose monumental costs on the American people. We, like suckers, listen
to Washington's hacks blaming U.S. oil companies. As to high-energy
prices, we haven't seen anything yet, particularly if Gore becomes our
next president and puts his extremist environmental ideas, outlined in
his book "Earth in the Balance," into practice.