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The Trouble with Oil

The problem isn't just supply and demand: It's that the internal political concerns of producing countries trump economics.

12:00 AM, Aug 24, 2004 • By IRWIN M. STELZER
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Meanwhile, as these ominous signs accumulate, politicians fret, strut, and do nothing. President Bush has a multibillion dollar energy bill before Congress that at most would squeeze a relatively few drops of oil from the Arctic, perhaps a decade from now, and gives short shrift to any effort to increase the efficiency with which energy is used in America. Fortunately, Congress has so far refused to pass it, not out of any sudden spurt of parsimony, but because it wants still more goodies placed under this Christmas-tree of a bill.

John Kerry is proposing to denude American dinner tables of corn by converting the nation's crop to expensive methanol, along with somehow forcing consumers to pay for expensive solar power, and effectively foreclosing the nuclear option by opposing a bill he once supported that would create a storage site for nuclear waste in Nevada's Yucca mountain, a state with five up-for-grabs electoral votes. How this will allow Kerry to achieve his stated goal of "energy independence" remains a mystery to all serious observers of the energy scene.

Meanwhile, with America's refineries operating at a stretched 96 percent of capacity, environmentalists continue to oppose any significant expansion of the nation's creaking energy infrastructure, local groups continue to fight to prevent the construction of port facilities that would allow the needed increases in imports of liquefied natural gas (LNG), and voters remain unenthusiastic about a tax that might encourage them to use a bit less gasoline.

In sum, current high prices are the least of America's energy problems.

Irwin M. Stelzer is director of economic policy studies at the Hudson Institute, a columnist for the Sunday Times (London), a contributing editor to The Weekly Standard, and a contributing writer to The Daily Standard.