Gas Prices: We're to Blame

By Jan Frel, AlterNet. Posted April 26, 2006.

As the price of gas hovers in the mid-$3 range across the country, and the price of gas rising on the poll charts as an issue of concern for American citizens, out come a series of dueling calls for federal investigations, tax cuts and trust-busting from the political leadership in Washington.

Leading the Democrats' charge has been New York senator and serial grandstander Chuck Schumer who called for a study to consider the break up of the oil industry and a federal investigation into price gouging on the part of oil companies. "The bottom line is that [oil companies and refiners] are producing at 85 percent capacity when they should be producing over 90 percent," Schumer told CNN. Congressional Republicans echoed Schumer, and then Bush waded in with an order to probe oil companies.

Bush's other big moves, announced this Tuesday, have been to relax clean fuel standards so that states with a high environmental bar for fuel emissions can burn dirtier fuel, and to divert shipments from the U.S. strategic oil reserve into the American market to increase supply -- good for 70,000 more barrels a day. And now Democratic Sen. Bob Menendez has proposed eliminating federal gas taxes for 60 days, taking the weight off of the cost of gas for the consumer by about 18 cents per gallon.

Meanwhile the media have recently begun pointing a pseudo-populist finger at retiring Exxon exec Lee Raymond's $400 million retirement package, marking him as sacrificial gouger-in-chief. Lee Raymond may well go down as one of the biggest corporate vampires in American history, but we aren't going to get any closer to dealing with gas prices on a long-term basis if this is just about Lee Raymond.

The problem with media and political responses like the ones we've heard so far is that they don't even begin to address the central reason why gas prices are going through the roof -- the global supply of oil is having a hard time meeting demand, and the United States is built to consume a quarter of all of it -- on a daily basis.

Not only this, Schumer's complaint about an unexplained 5 percent production margin and Bush's move to divert oil from the strategic reserve to gas stations displays how narrow the gap has become between full supply and fuel shortages. Seventy thousand barrels pumped into the American oil supply isn't going to do much for gas prices when you take into account that the United States consumes more than 20 million each day. Those are tinkering solutions at best, and they are a massive distraction from any kind of serious approach to the scale of what we're facing.

It may well be a fine thing for our politicians to break up the big oil companies, establish a windfall profits tax on them, open federal investigations into price gouging, and fund incentives for alternative fuels and lithium batteries, but none of them address the principal cause of all this demand for oil: the average car-driving American citizen.

And so, as with the Iraq war, where there has been no increase in taxes or military draft to pull in soldiers from a wider range of economic backgrounds, the American people aren't asked by their politicians to make any kind of sacrifice. The underlying message from Washington is: "We'll just work around your extreme gas consumption; you just keep doing what you're doing."

Moreover, what "solutions" like these reveal is an astounding lack of creativity and political will in Washington to envision a society that doesn't have automobiles as the fundamental unit of American life, as though our car dependency is the best outcome possible. Democratic House Minority Leader Nancy Pelosi tried to shame Bush by painting his ties to the oil industry as evidence of his collusion on the recent hike in gas prices: "… [Y]ou are too wedded to the oil companies. We have two oilmen in the White House. The logical followup from that is $3 a gallon gasoline. There is no accident. It is a cause and effect."

There may be a sliver of truth in what Pelosi said, but that's a placebo debate she's tried to start. Pelosi and the D.C. Democrats are equally complicit as the worst Bush big-oil Republicans in refusing to discuss how American oil demand is made possible by hundreds of U.S. garrisons all over the planet that guarantee a steady supply, and why Iraq and Iran have been objects of such fascination in American foreign policy for decades. Moreover, no one has taken into account the military costs of maintaining the price of gasoline at the mid-$3 level.

It's tempting to lay this at George Bush's feet, but the guilt stretches across the Washington political establishment. As James Howard Kunstler recently put it:

The right wing thinks we can still drill our way out of this, if only the nature freaks would allow them to. The "green" folks thinks that we can devote crops to the production of gasoline substitutes, even though a scarcity of fossil fuel-based fertilizers will sharply cut crop yields for human food. Nobody, it seems, can imagine an American life not centered on cars. … Can we bust out of this narrow tunnel of fantasy? Can we imagine living differently?

We better, because the price of oil is only going to become more volatile as demand increases and supply becomes less predictable. Even Bill Clinton, who did virtually nothing in his eight years to address our auto dependency stated at a conference this March that "You may see $100 a barrel oil in the next two or three years."

Politicians and local governments have increasingly tried to address this on their own. The city of San Francisco, for example, recently passed a peak oil resolution, recognizing the reality of the threat that a dwindling global oil supply poses for urban existence. And increasingly nonprofits, oil theorists, experts in alternative energy fields and sustainability experts have come up with ideas about a post-oil American society, but none of them has access to the massive amount of power, reach and capital that the federal instrument does.

Dick Cheney once called the petro-dependent model of American life "non-negotiable." The recent political flap in Washington gives all signs that Cheney's wisdom isn't just his; it's conventional. Does it make sense for us to wait around until the president or Nancy Pelosi tells us that the price of gas has everything to do with us and the way we live? To do so would be a failure of imagination as bad as theirs.

              

Jan Frel is an AlterNet staff writer.

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