Vicious Rants of an Angry Yellow Man

President Bush is trying to ease the pressure on gas prices by halting the purchase of oil for the strategic petroleum reserve. This has been done by his predecessors with almost no effect. The problem right at this moment is not the amount of oil inventory, which is at a 6 year high, but is the production of gasoline not meeting the demand of consumers. The investigation of price gouging is not likely to be fruitful because the oil company can legitimely make huge profits by just letting the law of supply and demand work. The only fault I see of the oil companies is that they have been negligent in increasing the number of refineries which would increase production. This is like OPEC which controls the supply to drum up higer prices. The only way you can fight that would be to decrease demand ourselves.

Yes, we are to blame for our energy problem. In the short term the Bush administration is partly responsible for this run up. The disastrous policy of invading Iraq and the fighting stance we take against Iran (more on that in another blog), have cause a big rise in the futures market for oil and gas which affect the current prices. In the long term it is the poor energy policy of our government, including previous democratic administration, and our own appetite as consumers for fossil fuel that bring about unstable energy prices. Sure, India and China are increasing their comsumption at record paces. But we still use way more energy per capita than anyone else. We drive Hummers that get maybe 5 miles per gallon when park on the 405 "freeway". We heat swimming pools and jacuzzis in warm southern California. We live in 5000 square feet houses that we need to heat and air condition even though there may be 2 people in the house. I always say: don't blame the Colombians for our drug problems. Now I say: don't blame the Saudis for our energy problems.

What is the energy policy of the Bush administration consists of? Drilling the Alaska Wildlife Refuge is their first priority. I am no card carrying liberal environmentalist. Nobody reading this or anyone I know has ever gone to the Alaska Artic area. So if nobody ever goes there, what difference does it make how pristine it is? The only thing is, drilling this whole area is not an energy policy. Even if every drop of oil is taken out of there, it will only be enough for couple of years of usage by us. It will benefit the oil companies more than anyone of us. The Bush administration, as everyone else, advocates alternative fuels. But advocating doesn't mean help bring it about and the government is doing very little to bring it about.

What are my suggestions? I don't pretend that my solutions will work perfectly nor that anyone will vote me into political office if they see what I am suggesting. They are more likely to assassinate me first. But here it is: First I would increase the price of gasoline to level of what the Europeans and Japanesed pay. That means increase the tax so that the total cost is over $5 per gallon! Everybody says that alternate energy is important but unless there is an extreme urgency such that buying gas may actually be more expensive than buying an alternate fuel, nobody will be serious about it. Our greatest successes in science as a nation were beating the Germans to the atomic bomb and beating the Russians to the moon. If the challenges of the Germans and the Russians were not there, we would not have accomplished these goals in such a short time. We need a real shock and awe to our country to get this done.

After we see what happens with $5 dollar per gallon prices for maybe 6 months, I would cut the tax so that the price would go back to market value. The reason is that a high price of gas hurt the poor people much more than rich people. Some people would not make it to work because of the price of gas. High energy price leads to inflation which will hurt low-income people much more. So then I would put in a flat income tax with no loopholes. There would be a decrease in capital gain tax. There would be no deduction for mortgage interests nor for home property tax paid. There would be a luxury tax on cars with low mileage and high price tags. There will be taxes on heated swimming pools, jacuzzis, private planes and boats. What I am saying is that if you make lots of money, you can save some income tax, and the money you earn by investing in the businesses of this country will be taxed at a lower rate. You have the freedom to buy anything you want but anything frivolous and high energy costing will set you back a l0t more.

I would use the money from all these taxes to subsidize energy research. We can't count on the energy companies to plow money into research for alternate fuels. The best company in this area is British Petroleum which claims that BP stands for Beyond Petroeum. But upon being pressed on the Charlie Rose show, the president of BP admits that alternate fuel research budget of the company is still very low. As an overall education program (more on another blog), we must increase the number of physics, chemistry and engineering students in this country. A subsidized education in these fields for American citizens is a must. I know that India and China are working very hard in these areas. While losing this race will not be as disastrous as losing the atomic bomb race with Germany, it will have far more economic repurcussion than the increase of price of gas today.

Needless to say the medicine I prescribe is hard to swallow. But we must know that energy policy is not just about our pocket book. It is about a reliance on a geographical area that is totally unstable and this affects our foreign policies. It also affects the foreign policies of China and India. Without stable energy supplies, China will be more and more friendly with countries like Iran, Venezuela and Sudan. Even we are reluctant to put pressure on Saudia Arabia for human rights violations and for indirectly helping terrorists. The $3.15 per gallon we are paying today is not a crisis. It is just a mild cold. But if we don't do more prevention for the future, eventually no medicine will be effective. We may not be around to see the real disasters but we would have left a poorer world for our children and grandchildren.