Oil Hydra
Is there an easy way out of the mess we've gotten ourselves into?
By Victor Davis Hanson
NationalReview.com
November 08, 2007
Oil is nearly $100 a barrel. Gas may soon reach $4 a gallon. And Americans are being bitten in almost every way imaginable by this insidious oil hydra.
Two billion people in China and India are now eager consumers. They want the cars, gadgets, and lifestyle that Westerners have claimed as a birthright for a half-century. Their growing energy appetites mean that the international petroleum market may remain tight, even if Americans — who use almost twice as much oil per day as China and India put together — cut back on imported energy.
The Middle East is raking in billions each week. At best, our so-called friends in cash-laden Saudi Arabia subsidize fundamentalist mosques and hate-filled madrassas worldwide. At worst, our enemies in petrol-rich Iran are after the bomb, send weapons into Iraq to kill Americans and fund Hezbollah jihadists.
War in Iraq, rumors of fighting in the near-future in Iran and tension on the West Bank only panic markets, raise oil prices and further enrich our grinning enemies.
The nearly half-trillion dollars we will soon pay for imported oil does a lot more than prop up Russia's Vladimir Putin, Venezuela's Hugo Chavez and Iran's Mahmoud Ahmadinejad. The petrodollar drain also contributes to our trade deficits, falling dollar and a general demoralization of the American people.
Our oil habit not only makes us dependent on some creepy suppliers, but we look like fools as we work nonstop to hand over our earnings to those who are rich by an accident of sitting atop oil someone else found and developed.
There is talk in this country of a gradual transition to alternative fuels, solar power, wind machines, plug-in electric cars, and nuclear power. Supposedly Americans will soon be less dependent on imported oil — while helping to slow global warming — as we are weaned off our fossil-fuel addiction.
But let's talk about the present: If oil continues to climb, ultimately, it will change our very way of life. Hard-pressed families will shell out thousands more a year in direct transportation and heating and cooling costs, and more still as consumer prices inflate.
It may have always been unwise for commuters to buy large SUVs and V8 supercab trucks. Now, though, we may reach the point where these pricey huge vehicles will sputter to a halt. Indebted Americans will still shell out monthly payments to pay off their parked dinosaurs, only to drive them for emergency or ceremonial occasions.
Also expect rising popular anger at an asleep-at-the-wheel government that for the last 20 years should have been doing a lot more to mandate conservation, subsidize alternate fuels, encourage nuclear power and open up oil fields offshore and in Alaska.
Instead, doctrinaire free-market purists and radical environmentalists, hand in glove, for years have thwarted both conservation and exploration.
True, in a perfect world, the market would teach Detroit not to build gas-hungry big cars. Yet in the here and now, we are needlessly burning scarce fuel as too many 7,000-pound mammoths deliver single 180-pound drivers to work — while the auto industry continues on its path to irrelevance.
Meanwhile, green politicians may not want messy oilrigs off their coasts, or tankers up north among the ice and polar bears. But so far very few of them have sworn off jet travel, nice cars or ample homes.
Oil companies claim that they are only passing along escalating costs from overseas suppliers over which they have no control. But around a third of our oil is pumped here at home.
Think about it: The cost to extract oil from existing older wells is relatively fixed. For much of the 1990s and early 2000s, oil prices had been steady at between $20 and $30 a barrel (when adjusted for inflation) — and domestic oil companies did quite well. So now at near $100 a barrel, these corporations are raking additional profits of over $60 a barrel — potentially a domestic windfall of hundreds of billions of dollars each year.
Is there an easy way out of the mess we've gotten ourselves into?
Maybe a Silicon Valley genius inventor or entrepreneur will step forward with a breakthrough new energy source.
Maybe our government will start a crash project on the scale of the Manhattan Project to conserve and produce more fuels.
Maybe China and India will consider radical conservation measures.
Maybe countries like Iraq, Libya, and Russia will start reinvesting in their oil infrastructures and double production.
Maybe the Middle East will finally settle down and soothe jittery oil speculators.
Those are too many maybes to wait for while our way of life hangs in the balance. It is past time to demand from our presidential candidates, as well as the current government, exactly when and how they plan to slay this many-headed oil monster.
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