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My congressman’s advice on oil, gas prices … not so good

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My congressman sent me his May 2008 newsletter today via e-mail to explain to me why gasoline prices are so high and what he’s doing about it. His analysis is unimpressive.

According to the newsletter and its link to his Web site, Rep. John R. “Randy” Kuhl (R-N.Y.) says:

Why are gas prices so high?

The high price of gasoline results from the cost of crude oil, the world demand and supply for oil, our limited refining capacity, and taxes. [emphasis added]

But what didn’t make his list?

Rep. Kuhl did not mention the role of a weakened dollar in the cost of crude. Nor did he point to speculation ā€” which Congress said added $20 to a barrel of oil back when oil cost $70 per barrel ā€” as a root cause of precipitous price increases. According to Peter Way of Block Traders’ Oil & Gold Monitor:

[W]e observed that a tug-of-war was developing between the regulars and the newer speculators that would influence world energy costs. Until recently, the contest had gone to the newbies with steadily rising prices, but now they, and the nearer expectations, are ebbing. But where the speculators have influence, say, out beyond December 2008, the trend of expectations in most months is upward. The tug-of-war is still on.

Nor has Rep. Kuhl noticed that the oil market has become detached from considerations of supply and demand, according to an OPEC minister. Abdalla Salem El-Badri blamed “heightened levels of speculation,” a weak U.S. dollar and geopolitical concerns on recent fluctuations in crude prices. Rep. Kuhl mentioned none of these factors. He has not noticed that hundreds of energy hedge funds are bidding up oil markets.

And Rep. Kuhl’s recommendations to Congress?

Congress should open ANWR to environmentally sensitive production, increase offshore drilling, reduce the barriers to more nuclear plants, and allow more refineries to be built.

He argues that “the Arctic National Wildlife Refuge (ANWR) in Alaska could yield 10 to 16 billion barrels of oil, enough to replace all of our imports from Saudi Arabia.” Is that total yield? Yield over what period of time? According to the federal Energy Information Administration, the United States imported 1.614 million barrels per day from Saudi Arabia in February. That’s about 17 years of oil imports from ANWR ā€” but the U.S. imports only about 11 percent of its oil from the Saudis.

But Rep. Kuhl makes no mention of the role of conservation of energy instead of risky ANWR drilling that would offset the Saudi imports he decries. Instead, he argues that ANWR “development would occur only on 1.5 million acres utilizing advanced technology to prevent any environmental damage.” [emphasis added]

That’s a big environmental risk on a vague technological premise.

Rep. Kuhl argues that nuclear power “is the number one source of emission-free electricity” without explaining 1) what to do with nuclear waste and 2) his position on the proposed federal Yucca Flats storage facility. He bemoans the lack of construction of new nuclear plants and new oil refineries. He wants to reduce regulatory and environmental protections to allow those facilities.

Rep. Kuhl advises that he is “working to increase the use of new fuels and technologies, including renewable energy sources, along with promoting more efficiency.” Details, please? Effects on the cost of foodstuffs if corn continues to be a prime raw material for ethanol?

Rep. Kuhl’s analysis of oil and gas pricing is straight from the Bush administration’s playbook. This is the congressman who says that slowing down and avoiding aggressive driving can save up to 82 cents per gallon.

On this issue, Rep. Kuhl does not have the necessary skills and knowledge to wisely advise his constituents. So why should his constituents trust him when he comes re-election-hat-in-hand to them? After all, these energy increases have happened on his Republican watch.

How’s your representative in Congress doing when it comes to oil and gas?

xpost: Scholars & Rogues


Written by Dr. Denny Wilkins

May 2, 2008 at 4:01 pm

Posted in Uncategorized

2 Responses

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  1. That’s a Readers’ Turn to Write, Denny. Good stuff.


    May 2, 2008 at 9:55 pm

  2. I’m always amazed at the politicians – when a little oil crunch rolls around – who are all, “Let’s open up the ANWR to drilling!”
    No, “Hey, how about we get all public lighting on the solar energy grid”.
    Or, “Hey, let’s support more localized farming and ecofriendly food production, because 20% of our oil consumption goes into the growing (fertilizer), processing, production, packaging and shipping of our food.”
    Or, “Let’s find ways to start cutting back on plastic consumption, as a means to cut down on some of our petroleum needs.”
    Or, “Public transportation, people – make your local politicians know you want it, and then use it. It’s not just for poor people.”
    Or, “Oops, wait – didn’t Al Gore and Leonardo DiCaprio try to tell us something about melting tundra and the resulting released greenhouse gases?”
    I’m all for an annual tax for individuals who drive cars that are over X tonnage weight or cannot even crack a reasonable mpg (ie. 20 mpg), by the way. You’d think that after 125 years of car production, more cars would have better fuel consumption than the Ford Model T (13 to 21 mpg).


    May 2, 2008 at 11:45 pm

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