A Change in Energy Policy

Last summer, oil peaked at $147/Barrel and begand to descend when President Bush announced that he was resinding the Presidential Ban on off-shore drilling. Since that time, the oil bubble has burst. Oil is now trading at rougly 25% of it's peak price. This is consistent with the pattern seen with other commodity bubbles.

It appears now that President Obama is about engage his energy policy. He will soon move to suspend any new off-shore drilling. We will build no new refineries. We can not use coal. We can not use nuclear power. We hear a lot about what we won't do to produce energy, but nothing about what we will do to produce it. From these new policies, you would think we had too much energy, not too little.

The really interesting part of all this is that this policy will transform of our heavy dependence on foreign oil into absolute dependence on the federal government.

Because our failure to build more refineries creates an artifical restriction on our capacity to produce gasoline, and our demand for gasoline will surely rise again, the 'market' for gasoline will cause the price of gasoline to rise. The Oil Companies make their money as a percentage of the sell price. They make more money when gas sells for $4/gal than they do when gas sells for $2/gal. Consequently, when gas goes up, they make more money. This profit will be demonized, and the governmnet will be that as an excuse to nationalize the oil industry. Then our fuel supply will be managed by the same nameless, faceless folks who have done such an admirable job managing Social Secuity, running Fannie May and Freddie Mac, regulating banks, and running the Securities and Exchange Commission.

Because it will be managed at the Federal level by Federal Civil Service employees, they will be completely unaccountable for failure. We are about to see new levels of mismangament, corruption, and incompetence. Because energy will be administered by the federal government, you can soon expect 'energy' entitlements to help ease the inequity of distribution that our capitalist society has imposed on the poor. It is, after all, the federal government's responsibility to ensure an equitable distribution of the resources.

We are moving from a 'free people' to a 'social people', from independence to dependence, from a proud and self-reliant people to an empoverished mob reduced to begging at the public trough for more and more scarce energy resources. With federal involvement, drilling bans, bans on coal and nuclear energy, be assured that private dollars will run away from exploration and development of energy resources.

This is change that you can believe in.