No Loss for Words

I was listening to Dave Ross on KIRO recently and he was talking about the fact that left wingers oppose drilling for oil in American coastal regions for a variety of reasons, but one they cling to is the assertion that there is not a meaningful quantity of oil to be found if drilling is allowed.

In spite of the fact that Dave Ross and I are often on opposite sides of the political debate, I was pleased that he aggressively supported measures to exploit American resources first to nullify the argument that we face high energy costs because we are not allowed to search for and consume fossil resources in our own country.  Both sides of the energy debate maintain that we are held hostage by the oil producing countries.  It makes sense that we know how large our oil reserves are whether we drill for them or not.  Then if we decide to pump our own reserves or consume someone else’s we will at least know if we have a fall-back position.  Whether there is a price difference remains to be seen.

Common sense dictates that nobody intentionally develops products that are not cost competitive; who would buy them?  If the price of oil is $60 or $80 per barrel it is still too cheap to make us look elsewhere very seriously.  If the cost of alternative energy sources were translated into cost per barrel of oil, the most familiar ones would probably be priced at around $160 to $170 per barrel.  That means that even paying $140 per barrel, energy is still cheaper with oil than domestic alternatives.

If you are a proponent of alternative energy, the next step in the logic says that if you can’t reduce the cost of alternative energy to be more competitive, you figure out how to increase the cost of the existing product.  That way the comparison between “foreign” oil and trendy alternatives shows a lesser differential.

If you are a proponent of alternative energy and you don’t control the resources from an ownership standpoint, you work to limit access to them from a regulatory standpoint.  If you limit the market supply, you increase the value of the product in the “pipeline”.  No pun intended.

I think it would be clear to anyone that if you were a manufacturing company, you would want to be selling product at a price where you could make a killing and I think the international and domestic oil companies are doing just that.  Who could blame a company for successfully doing what it is in business to do?  Does it really matter to you whether the company screwing you is American or foreign?  Do you feel somehow better knowing that it is OPEC that is transferring the resources from our country to theirs?  Or would you feel better if you knew the price would be the same, but the money was going to American companies. 

I believe that the reality is that domestic oil will not affect the price at the pump, but it will perhaps change who gets to collect the profits.  Isn’t it easier hating a foreign country than an oil company you think of as American?

There seems to be a feeling that because we have developed a dependence on any and every oil supply available that the product should be affordable.  Free market systems do not have any obligation to offer product anyone can afford.  Check with Canadian or European consumers about the price of gas at the pump over the past fifty years.  Ask them how affordable fuel is in their countries.

Our government manipulates market forces in many ways that do not benefit consumers.  In most cases, the manipulation comes in the form of preferred treatment for some entity.  Think about how your food bill went up when the government shifted the preferred treatment to companies who would “relieve our dependency on foreign oil supplies.” 

If you combine the cost of your fuel and food and compare this year to last, you can see the serious effect of market manipulation.  Biofuels will not represent even a hiccup on the fuel supply but the shift from feeding to fuel production will affect nearly everything you eat.  Imagine what a loaf of bread would cost today if the government had not created an artificial market for grains.

Remember what I said about the price of alternative forms of energy and how you have to raise the price of oil to make the alternative look attractive.  Biofuels don’t even look good if you just consider their part in the fuel supply.  If you factor in the additional negatives on the food supply we are facing a disaster.  Looking at all the impacts in total, manipulating the cost of the food supply to ease the energy problem will prove to be a significant error in judgment by our government.

World economies force us to play in arenas outside our comfort zone.  Big business learned many years ago that consumers have a hunger for low priced goods.  Consumers say they want “good quality” but are rarely willing to pay for it.  What they really want is “cheap priced products that are of minimally acceptable quality.”  Americans are so greedy for stuff that they sabotage their own country for lower priced goods.  That will prove to be a strategic error in judgment at some point. 

WTO and NAFTA have changed the way business works.  There aren’t American companies like they used to be.  Ownership is international and there is no patriotic mandate in their corporate goals.  Shareholders are looking for profit; consumers are looking for low prices.  Formerly American companies learned how to adapt by dumping American workers in favor of cheap Asian workers.  The name on the product remained the same, but the strength of our economy shrank because our jobs and money left the country.  If you believe that the company is American, think again.  Time and again, American factories closed and American jobs were traded for cheaper consumer goods.  Is that healthy?

Our government has been the back pocket of business since our country was formed.  Nobody should be shocked to learn that today.  What we can learn is how to put the interests of our country ahead of the interests of business.  If we look at international trade and test whether it is in the best interest of our country to have cheap imports that fuel the economy of foreign countries or do we exchange the cheap imports for agreements that allow American companies to export goods to foreign countries.  I guess we have to look at the value of the product exported to know whether the deals we make with the devil justify the price we pay.

For me, I am a proponent of America’s ability to be self sufficient and not dependent on foreign anything.  I am a proponent of American workers and I know that we can’t have it both ways.  In our state, we are one of the most dependent upon international trade so taking this position may not be particularly popular with some.  Having access to international markets is important to our state, but it may not be best for our country.

I would prefer that our products be desired by foreign countries and the products stand on the competitiveness of our efficiencies.  If we sacrifice our national interests to advance local interests, we take the risks of having neither.

If you know someone who lost a job because the company he worked for moved that job to a foreign country you know the impacts that creates.  Are the jobs that are going away family wage earning jobs?  Then think about the companies that benefit from liberal trade policies that allow us to export products instead of jobs.  Are those saved jobs family wage earning jobs? 

Our country is becoming increasingly more service oriented and less product oriented.  We are finding that the public sector is growing as the private sector is withering.  Public sector jobs produce nothing to fuel the economy.  Private sector jobs create employment, products and services that pay for everything.

Where does all of this leave us?  We need to explore our country for resources that allow us to choose whether we buy foreign goods rather than have no choice.  We need to exploit technologies that enable us to reduce our dependence on fossil fuels.  Whether it is a global warming issue or not; reducing pollution is a good idea.  We need to reduce the regulatory permitting process to facilitate construction of state of the art refineries and technologies that produce cleaner energy like nuclear power.  There are responsible processes that acknowledge that the plants need to be built in ways that protect the interests of the majority of the public.

The interests of the majority are not necessarily the interests of either big business or environmental extremists.  Common sense has to play a part in the discussion.

And that brings us back to Dave Ross who brings common sense to the masses one listener at a time.