Tags: opec | oil | energy | policy

A New Energy Policy Is Needed

Wednesday, 23 Apr 2008 04:43 PM

By Ralph Hostetter

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The call for change is heard everywhere in this presidential election year of 2008.

The leading Democratic primary election candidates for president are constantly calling for change. Change is in the political air.

The candidates have not defined or explained, up to this point, what all these proposed changes are. If a prospective voter asks another which candidate is preferred, chances are it will be the one who promises change.

The word change, as used by politicians, can be, in many instances, a coverup for the lack of constructive ideas.

One change offered by the Democratic candidates is that Americans should not suffer as they have during the last four years of the Bush administration.

Suffer is another word somewhat similar to change. It has many meanings to different people.

Suffering high oil and gas prices is a legitimate claim. However, it applies to previous administrations as well, dating as far back as President Jimmy Carter.

A change in energy policy by any new administration would be welcomed, provided it would bring the energy independence promised by the administrations of both parties since 1973.

If one listens carefully, no Democratic candidate has advanced a realistic energy independence plan.

The price of crude oil stood at nearly $120 per barrel on April 22, a record price.

Crude oil has risen 24 percent in just this year, and that places it up 88 percent from last year, according Bloomberg News.

In 2002, crude oil was selling for as little as $17 a barrel. At today's cost of about $120 per barrel, the price has risen to seven times what it was just six years ago.

Nearly all the economic experts and more than a few pundits are pointing out that the United States is entering or is already in a recession. No one can predict how deep it will be and, most certainly, how long it will last. It can’t be worse than the Great Depression of the 1930s as John Kerry claimed during the presidential campaign of 2004 when he ran in opposition to President George W. Bush.

There is one thing that is certain, and that is the current price of crude will not help to relieve the pressures that brought about the recession in the first place.

Perhaps more important is the question of how long the high price will last or, worse yet, how much higher it may go in the future.

Rania El Gamal at Reuters reports from Kuwait that the president of the Organization of Petroleum Exporting Countries (OPEC), Chakib Khelil, who is also Algeria's Energy and Mines minister, refuses to increase production to alleviate the high price of oil.

He said, "I don't think that any increase in production will have an impact on prices. There is a balance [now] between supply and demand."

Any hope that OPEC will, in the future, begin to lower the price of crude oil to reasonable levels appears to be at an end.

Gasoline prices on April 23 were an all-time high of $3.53 per gallon, representing nearly a four-fold increase from the price in March 1999 of 90 cents per gallon. The cost of diesel now stands at $4.21 per gallon.

It is obvious that the price of oil, now ranging over $100 per barrel, will not be lowered by the present oil producing nations. It is doubtful that the U.S. economy will continue to grow with oil prices this high. With a no-growth economy in the future, America’s productivity will be hindered, making it difficult to compete in a global economy against oil-rich nations, including Russia.

Now that $100-plus oil per barrel has become an established fact, both the executive and the legislative branches of the U.S. government must reassess the country’s energy base and act before the economy begins to erode under the burdensome weight of excessively high oil prices.

The answer is simple enough.

Begin developing America’s own petroleum resources, domestically, offshore and in Alaska, particularly in ANWR.

Canada has developed its oil sands project to an extent the program is delivering 108 million barrels of oil annually.

The United States could start to aggressively develop the oil shale reserves in Colorado, reported to contain at least enough oil to provide a substantial lift to the United States well into the future.

Ralph Hostetter, a prominent businessman and agricultural publisher, also is a national and local award-winning columnist. He welcomes e-mail comments at eralphhostetter@yahoo.com.

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