Oil policies threaten U.S.
Terence Corcoran, Financial Post
Published: Thursday, May 22, 2008
http://www.nationalpost.com/opinion/columnists/story.html?id=530426&p=2
In the now-familiar century-old ritual of cor****ate punishment, the U.
S. Senate judiciary committee yesterday ordered members of the Big
Oil's CEO chain gang to explain themselves. Which they did, very
effectively. Whether any of the demagogic politicians were inclined to
hear the message is another matter. The committee chair is Vermont
Senator Patrick Leahy, from a state not known for its firm grasp of
the oil business or even market economics; the other Senator from
Vermont, Bernie Saunders, is a socialist radical known in some circles
as "Vermont's Communist Senator."
The gap between Leahy and Saunders is a small one. Yesterday, Leahy
lit into oil industry profits, oil executive salaries, and the oil
industry's alleged links to President Bush. "The president once
boasted that with his pals in the oil industry, he would be able to
keep prices low and consumers would benefit. Instead, it is his pals
in the oil industry who have benefited," Leahy said. "Why has the
price of oil increased 400% since President Bush took office?"
As the price of oil topped US$130 a barrel, the best U. S. politicians
can come up with as a response is blind partisan****p and destructive
policy initiatives aimed at attacking the oil industry. Among the dumb
ideas is the Consumer First Energy Act, to impose a windfall profit
tax on U. S. oil firms. Another plan would force U. S.-based oil
companies to disclose money they pay foreign governments for
resources.
The dumb self-destructive futility of these political inquisitions
into cor****ate America -- rituals that date back through to the Robber
Barron myths of the 19th century -- has always been lost on most
Americans, even as they paid a price. The great power of the U. S.
national market economy could always pull the country out of the worst
effects of mounting levels of government control and regulation.
The post-Enron Sarbanes-Oxley overkill began to show that the ability
of the U. S. economy to overcome major blows to its cor****ate sector
was weakening. During the oil and inflation crises of the 1970s and
1980s, price controls and regulatory cor****ate attacks were eventually
shoved aside, minor irritants in the great national economic
enterprise. Sarbanes made the great enterprise look vulnerable. This
current oil price crisis, if it becomes that, could prove to be a
major watermark in the declining capacity of the U. S. to weather
regulatory storms and political attacks on the markets that give
America it's economic strength.
If no one in America's political system pays attention to the messages
delivered yesterday by the executives of the oil firms to the Senate
judiciary committee, then U. S. economic fortunes are destined to
decline. The politicians are living in a 1960s fantasy world, playing
old and mythical Marxist themes on the alleged power of giant oil
capitalists to control, manipulate and direct energy markets at the
expense of the common man, the consumer.
The Big Oil giants that appeared in Wa****ngton yesterday were actually
pipsqueaks in the new global energy market. Exxon Mobil, Shell, BP,
ConocoPhillips have no more control over oil supply and prices than
the owner of a corner gas station. CononoPhillips executive
vice-president told the committee that in the 1960s as much as "85% of
the global oil and natural gas reserves were available for direct
development by international oil companies, versus only 7% today."
What kind of impact do politicians expect to have if they go about
policy with the idea that the few executives standing before them--and
the media--are the powers behind the price of oil? Price controls, tax
grabs and new regulations can only damage the few remaining
market-based links in an industry that is now largely controlled and
regulated by foreign governments.
Shell president John Hofmeister tabled a re****t from the Argonne
National Laboratory listing 40 U. S. laws and regulations that
prevent, delay, limit and/or increase costs in the gas industry.
Hundreds of lawsuits hamstring development. Similar obstacles to
energy development are building in Canada, forcing oilsands projects
into retreat. Imperial Oil's Nearl project is now before the federal
Cabinet, awaiting a jumpstart following a botched legal processs. Will
Canadian politicians behave any differently that their American
counterparts?
The oil industry's main message was aimed at getting U. S. politicians
to act on policies that can actually increase oil and gas supplies:
Remove obstacles to new exploration and development and resist the
temptation to impose new taxes and constraints that will limit the oil
industry's ability to operate.
In the past, the United States could afford to shoot itself in the
foot, confident that its economic power could repair the damage. The
current state of the world energy markets are such that current
misguided policies, let alone new ones, are much more than a shot in
the foot.
--
"We can't drive our SUVs and eat as much as we want and keep our
homes on 72 degrees at all times ... and then just expect that other
countries are going to say OK." -- Barack Obama
The object of life is not to be on the side of the majority but to
escape finding oneself in the ranks of the insane. -- Marcus Aurelius
"...the whole world, including the United States, including all that
we have known and cared for, will sink into the abyss of a new Dark
Age, made more sinister, and perhaps more protracted, by the lights
of perverted science." -- Sir Winston Churchill
Joseph R. Darancette
daranc@[EMAIL PROTECTED]
|
