Wednesday, April 27, 2005
As the weather breaks and Americans' thoughts turn to the open road, motorists can be sure of one thing: There will be no price breaks at that gasoline pumps this summer.
Saudi Crown Prince Abdullah paid a courtesy call on President Bush at his Crawford ranch and they discussed Saudi Arabia's plan to increase oil production in the long term. But nothing either could say will affect short-term prices.
The Lundberg Survey of 7,000 gas stations around the country showed the average price for all grades of gasoline nationwide fell nearly 41/2 cents per gallon in recent weeks, but that is only a blip on the screen.
Trilby Lundberg, who publishes the survey, predicted that prices would flatten or even decrease a bit in coming weeks, but that any dips will be erased by increased demand from summer travel and an increase in refining costs.
Higher production
For his part, Abdullah stressed Saudi Arabia's previously announced plans to spend $50 billion to increase its oil production capacity from 10.8 million barrels a day now to 12.5 million by 2009 and 15 million within 10 years after that. But some industry experts question whether such output numbers are realistic or sustainable.
President Bush came out of his meeting with Abdullah saying he was sure of one thing, that he needs to sign an energy bill quickly.
But the American people have reason to wonder whether any bill the president would sign will help them in either the short term or the long run.
For one thing, the genesis of the Bush energy policy remains cloaked in mystery.
The General Accounting Office tried for three years to find out how Vice President Dick Cheney's energy task force approached its job of developing administration policy. It was blocked by the administration, a reluctant Congress and the courts.
The GAO was able to report that it found the policy recommendations of the task force were dictated from the "top down." The task force largely ignored the government's career energy experts. Private input was "principally petroleum, coal, nuclear, natural gas and electric industry representatives and lobbyists." Among them, to the White House's subsequent chagrin, was Enron chief Kenneth Lay, whose energy trading company collapsed amidst massive accounting fraud.
The energy bill approved by the House, with the administration's blessing, is high on tax breaks for oil producers and refiners, short on incentives for alternative forms of energy and conservation.
Perhaps the Senate will be able to take a more productive approach.
Not in the driver's seat
The United States has to realize that no matter how much more oil Saudi Arabia or any other country or combinations of countries produces, the reality of energy costs in the world is now being driven in large part by the booming economies of China and India. The United States can't buy its way our of the oil squeeze, and to the extent that it tries, it is simply adding to the nation's dangerously out-of-kilter trade imbalance.
Every additional barrel of oil that Saudi Arabia produces for sale to the United States will be another 50 U.S. dollars headed overseas.
High gasoline prices will no doubt encourage some individual conservation, at least by those for whom money is tight, but that's no substitute for a coherent government policy designed to conserve energy.