big bad oil

by Ian Schuldt

Published: May 2, 2008

It’s that time of year again. The summer driving season is here, the people are terrified of gas prices and politicians are taking advantage of it. Hillary Clinton and John McCain have both proposed a suspension of the gas tax for the summer months, Obama is against it. This of course looks bad for Obama because at first glance suspending the gas tax to help out summer drivers looks like a great idea. The reality is that this is just another political ploy to make voters think Clinton and McCain are doing something when, as usual, they are not.

The gas tax is 18 cents per gallon. Figuring the average Gas tank is about 12 gallons, that’s $2.16 per fill up. I fill up my tank about twice a month. I don’t drive quite as often as most people though so let’s say you’re filling up twice as often, so once a week. That works out to $8.64 per month. Take that times the 3 months of the year they are proposing the suspension for and it comes to $25.92 for the whole summer. Last time I filled up my car the total was around $50, so that means that even if you fill up once a week all summer long, Clinton and McCain’s brilliant plan is only going to save you about half of a tank of gas. Meanwhile, this will take away millions of dollars designed to go towards road construction projects.

To be fair, Hillary wants to make up for that loss by taxing the windfall profits of oil companies. This is a tax that Obama also supports, the difference is that while Hillary wants to use that money to pay for her short-term political ploy, Obama wants to take that money and invest it in long-term clean renewable sources of energy. Just like the typical politicians that they are, Clinton and McCain are pushing short-term solutions designed to get them elected, rather than long term solutions that will actually solve the problem.

So why aren’t all of our politicians doing what they can to save us from Big Bad Oil? Well, first let’s start by identifying the problem. Are the Oil Companies to blame for high gas prices? No and yes. Let’s refine the question. Are the Oil Companies gouging us? No, the oil companies are not artificially inflating the price of gas in order to get rich off of the American people. “But Ian, last year during the months of April, May and June, the 5 biggest oil companies had record profits of 25.1 billion dollars. How come they keep making more and more money if they’re not gouging us.”

This is simply supply and demand. The supply of oil coming into the country is not growing at the same rate that the demand for oil is growing. Meaning people want to buy more oil then we are actually able to produce. If you continue to sell gas at $2.00/gallon, then people continue to fill up their Hummers like it’s $2.00/gallon and by the end of the week we start running out of gas at the pump, so you have pandemonium from people racing to top off their tank before the big weekend. In order to ration out the oil to make sure everyone gets their share, you have to raise the price of it. This way people only buy what they absolutely need, so there’s some left over for everyone.

Naturally, if the oil companies are producing about the same quantity of oil that they were before, their costs in producing it stay about the same, but since the price they have to sell it for goes up, their profits also go up. This isn’t gouging, this is the free market, and it’s the only way it can work. “But Ian, didn’t you say earlier that the oil companies were to blame for high gas prices?” Well, kind of, not because they are causing the problem, but because they are blocking the solution.

As I said before, the gas prices are going up because the supply of oil coming into the country is not growing as fast as the demand for oil to be used up. So in order to bring gas prices down we must do one of two things: increase the supply of oil coming in or decrease the demand for gas going out.

The Republican solution to this problem for the most part is to increase the supply of oil coming in. This is why they support things like drilling in Alaska’s national wildlife refuge. The problem is that oil is a finite resource. While drilling in Alaska might help a little short term, most experts agree it would be putting a band-aid on a severed leg. It would be years before we saw any benefit from that, and the benefit would be minuscule at best. With increasing competition for the world’s oil reserves from China and India and a limited number of realistic sources for oil, increasing the supply of oil isn’t feasible.

That leaves us the only real solution to the problem. If we want to bring down gas prices, we must decrease the demand for oil in this country. The way we do that is we stop using so much of it. We must move towards renewable resources, and cut back as much as we can on the oil we are using. In a way, higher gas prices have already forced us to do this, but still the prices climb, because we aren’t conserving enough. As long as we need to get places and as long as our gas tanks are empty, we will have to fill them up.

Unfortunately, just asking the country to buy hybrids and conserve gas isn’t going to do it. Like asking people to recycle, some people will, some won’t. If we want to get ahead of this problem before it gets worse, we need legislation requiring more fuel efficient vehicles. We also need to put more funding into the development of alternative fuel sources. Obviously if our tanks aren’t getting empty as often we won’t have to fill them as often, and if we can fill them with something other than gas, then who cares how much it costs.

Alright, finally - back to the original questions. Why aren’t all of our politicians pushing for this legislation, and why is it the fault of the oil companies? Lobbyists from the oil companies and from the auto industry are blocking it. Lobbyists like the ones that are donating to the campaigns of Hillary Clinton and John McCain. This is why they can’t solve our problems, because they are more concerned with catering to their special interest groups than they are to the American people. This is why they call for gimmicks like a suspension of the gas tax rather than actually try and pass legislation that could work.

This is why Bill Clinton and his Nobel Prize-winning vice president did nothing to solve our problems in the 90s. This is why George Bush has done nothing to solve it since. There is a fundamental problem with the way Washington works. As long as big money from Michigan and Texas have more pull on our politicians then the rest of us, the problem will never be solved.

Barack Obama has received donations from almost 1.5 million everyday Americans. People are giving him $10, $25, $50 at a time. He is dominating both Hillary Clinton and John McCain in fund raising, and he’s doing it without taking a single penny from these people. This is the type of president that can actually solve our problems. A president who is actually listening to America. A president who is willing to do what needs to be done, not just tell us what we want to hear.

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