SEARCH BLOG: OIL
I have written repeatedly about the Federal government's ineptitude in developing a strategic energy policy and plan for the U.S. On March 9, I wrote:
But the one thing the government will not do... because, well, I just don't know.What I do know is that this particular government inaction imposes a significant trade imbalance on this country, contributes to the decline of the dollar, hurts domestic manufacturers, and hits us all in the pocketbook.
This appeared in The Detroit News yesterday:
Wednesday, March 12, 2008
U.S. pays price for untapped oil
Drilling lessens foreign dependency more than tax hikes and ethanol
Mark J. Perry
With oil prices hitting record levels above $100 a barrel, the economy in either a slowdown or recession, and with Venezuela threatening to end oil exports to the United States and Nigeria's oil production held hostage to internal strife, the case for tapping more domestic oil is getting stronger every day.
Unfortunately, Congress continues to resist the idea, preferring to hold substantial domestic energy resources on Alaska's North Slope and the U.S. Outer Continental Shelf off-limits to production.
Congress also worries about environmental damage from oil drilling, despite the oil industry's excellent safety record. Instead of encouraging the industry to invest in domestic oil production, which would help the economy and generate jobs, Congress is considering legislation that would require the manufacturing sector, including oil companies, to pay billions of dollars in additional taxes to support the development of renewable energy resources. And politicians prefer to replace oil with ethanol, having mandated a five-fold increase in its use, even though ethanol has gone from a cure-all to a serious problem in the eyes of many experts, and is now being blamed for pushing up food prices, straining water supplies and worsening global warming. [read more]
Mark J. Perry is a professor of economics and finance at the Flint campus of the University of Michigan.
The only saving grace is that it is highly likely that this pricing pattern will follow the similar patterns of the dot.coms and housing. Economics abhors anomalies.