Roll Out The Barrel (of Oil)

Senator John Warner (R-VA) suggested last Thursday that Congress might want to consider re-imposing a national speed limit to save gasoline and possibly ease fuel prices. He cites studies from the 1974 lowering of the national speed limit to 55 MPH.

Wake up Senator Warner, or are you still daydreaming about being married to Elizabeth Taylor. Or perhaps you are falling asleep during your briefings, as Ronald Reagan did during Cabinet Meetings.

It’s not that I think that lowering the speed limit back down to 55 MPH is a bad idea; it’s a great idea that would probably save many lives per year. But Senator Warner’s reasoning is askew. Less gas usage will not bring lower prices at the pump. Yes, it will save most consumers money, but it will not lower prices.

Let’s look at the Gas Crisis of 1973-74.

It started when the Arab oil producing countries decided not to sell their oil to any country that supported Israel. Pure and simple extortion!

At that time, US Petroleum Company’s were buying a good portion of the oil that they refined from the Arabs and stockpiling the oil that was produced nationally. The Congress, in its infinite wisdom, decided that the stockpiled oil could not be sold at a price higher than what it was worth at the time the crisis began. Only newly drilled oil could be sold at a higher price.

Here’s what happened.

Our Oil Companies caused an artificial shortage, by withholding their stockpiles, to make more profits, subsequently lowering the Supply to fall under the Demand. Therefore prices rose as supplies fell and caused long lines at gas stations.

This time (2006-2008) it is not a Supply and Demand issue. You can save the wasting of Gas all you want, but these prices are not going down because of oil conservation. I am not saying that conservation is a bad idea; I believe that we should all conserve our finite resources and leave some for our grandchildren.

Is there a solution? The G-8 is meeting in Japan to decide what steps to take to curb the rising cost of oil, among other things. I read that they had a great dinner last night (they are 11 hours ahead of EDT). I wonder what they will have for breakfast in a few hours.

The solution should be simple. Except for oil the Arabs have very few natural resources and very little agricultural products. All the countries that supply them with imports should raise the prices on these items by a factor of ten and promise to lower them down to a more reasonable rate when the price of oil drops. If that doesn’t work raise the prices again. Pure and simple counter-extortion!

The Beach Bum