The Problem Is Not Oil Price Speculation. The Problem Is No Energy Policy To End The United States’ Oil Addiction!

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5% of Americans use mass transit in their daily commute.

Burn that in your mind as most of us sit in our individual cars going bumper to bumper in rush hour traffic. Burn that statistic into your mind the next time you fill up your car with $4 per gallon gasoline.

I had just graduated college when we went through this in 1974 due to the OPEC oil embargo. Back then the blame was placed upon Middle Eastern oil countries, greedy oil companies and speculators.

Now we are after those “speculators” again as if that will drop the price at the pump.

Oil is a global commodity. It will be traded for profit. The United States can change the law to insure that those who trade oil on American exchanges actually have a physical ownership of oil. This would eliminate sheer speculative trading, in the United States. Speculative trading in oil or any other commodity like gold or copper will always be available in some financial capital around the world.

The key to reducing the pain at the pump is to break our collective addiction to gasoline.

The great news is that this isn’t 1974 when we really didn’t have readily available technology alternatives. Today we do. We have hybrid cars with mileage per gallon that is double what most of us achieve with our current cars. Emerging electric cars offer 100 mile per gallon performance. And bio-fuels combined with electric cars would truly free us from gasoline.

Let’s face reality. Brazil is Energy Independence of foreign oil. They use E75, a mix of 75% ethanol and 25% gasoline. Why can’t the United States achieve a similar result?

The answer is you!

American consumers still blame someone other than themselves for higher gasoline prices.

Economists have been suggesting since 1974 that the smartest energy public policy the United States could adopt is to gradually tax gasoline up to its true externality costs that reflects what we pay as taxpayers to:

  • Protect other countries’ oil fields
  • Reflect the devalued dollar because imported oil is crippling our balance of trade
  • Reflect the health care costs tied to gasoline and diesel based transportation systems.

But this rational approach has not been implemented because voters say no based upon their short term self interest. In Systems Thinking this is called a Tragedy Of The Commons where everyone loses because individually we all want to win.

What we must do as voters and consumers is embrace changes, however painful in the short run, to return the United States to an energy system that is sustainable. And the good news is that if we do pay the short term price the long term result will be a price competitive solution.

For example, NRG owns a Texas utility. They now offer UNLIMITED recharging of an electric vehicle for a flat $60-80 per month! Think about that the next time you pump gasoline.

Bill Roth is the founder of Earth 2017 that focuses upon the emerging smart, healthy and green economy. His book, The Secret Green Sauce, profiles best practices of businesses making money going green.

About Bill Roth

Bill Roth is the founder of Earth 2017, author of The Secret Green Sauce and a nationally-followed contributor to Entrepreneur.com, Triple Pundit, The Green Economy Post and Media Post on best business practices emerging from the smart, healthy and green global economy. He coaches entrepreneurs, business and community leaders on how to grow revenues, profits and jobs by going smart and green.
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