The lead story in the New York Times this morning reports that the people worst hit by $4.00-a-gallon gasoline are those living in rural areas, where public transportation is poor and commutes often long. These are, of course, areas where per capita income is usually lower than the national average. In some rural counties, according to the Times, people are now spending as much as 13 percent of their income on gas, a big chunk of their very limited disposable income.
There are many reasons for rising oil prices to be sure, but a major one has been the furious resistance to developing any new domestic sources of oil. Oil company executives were dragged before Congress recently and berated for their “obscene profits” and their failure to plow more of those profits into exploration.
But where are these American companies supposed to explore? The Arctic National Wildlife Refuge? Off limits, thanks to the Democrats. Off shore on the Pacific coast? Off limits, thanks to the Democrats. Off shore on the Florida Gulf and Atlantic coasts? Off limits, thanks to the Democrats. The Chinese are drilling for oil less than a hundred miles off the Florida coast, in Cuban waters, but not American oil companies.
Even known domestic reserves of huge potential are off limits. The oil shale of Colorado, Utah, and Wyoming have upwards of 800 billion (yes, billion) barrels, three times more than the total oil reserves of Saudi Arabia. Two-thirds of all the oil shale in the world is in the Great Basin of the United States. But the Senate Appropriations Committee just killed a bill that would have ended a moratorium on developing the rules for exploiting this gigantic bonanza on federal lands, where most of the oil shale is located. It was a Democratic Senator who provided the crucial vote.
So, not only can we not exploit the oil shale we cannot even develop the rules for exploiting the oil shale.
This seems incredibly perverse. Just consider. Much of the country’s negative balance of trade is due to importing over half our oil supply. Every barrel of new domestic oil would improve the balance of trade by $136.78 (as of 9:09 this morning). Because the best oil shale is on federal land, the government would reap huge royalties if it were fully exploited. A new oil source of such proportions, once brought on line, would put intense downward pressure on oil prices globally, helping even further the balance of payments, the American economy (oil is an input in almost everything), inflation, and, just by the way, the people who are now spending 13 percent of their limited incomes on gasoline. Even the announcement that oil shale development was to begin might well cause speculators to flee the oil futures markets, bringing down prices almost immediately.
The Democrats are supposed to be the party of the little guy — what’s going on here? Simple, environmentalists are a major special interest of the Democrats, right up there with tort lawyers and unions. And environmentalists are solidly upper middle class. So four-dollar gas doesn’t impact their disposable income significantly and they, like most people, are perfectly willing to see others suffer for a noble cause.
Their objection to oil shale is, at least nominally, that it would be environmentally damaging. That need not be the case.
This would seem to be an opening the size of the Grand Canyon for McCain, and Republican candidates for Congress, to exploit this year. To be sure, McCain has always opposed drilling in ANWAR, but he can simply say that four-dollar gasoline has changed the situation, showing a flexibility he has not always shown. Then he just hammers the Democrats as the party of four-dollar gasoline in TV ad after TV ad.
Would it work? Well, that ever-reliable barometer of public opinion, the late-night TV talk shows, indicate that it will. Jay Leno recently noted that the Democrats say it would take ten years to get oil from ANWAR. He also noted that ten years ago, Bill Clinton vetoed a Republican bill that would have permitted it, and if he hadn’t, the oil would now be on line and we could sure use it. The audience roared.