Thursday, May 15, 2008

Solving the Oil Crisis

Solving the Oil Crisis

By Jerome Grossman

High oil prices and a hotly contested election have turned the energy debate into political football. Calls for a gasoline tax holiday this summer would produce miniscule savings to drivers. Cries to force OPEC to pump more oil have been futile as the cartel enjoys enormous profits and wants more. Drilling in Alaska and offshore Florida and California risks serious environmental damage. Demands to tax the multi-billion dollar profits of the oil companies lack political clout and would be opposed by corporate America coast – to – coast.

There are only two ways to reduce prices: increase supplies or reduce demand. This is basic Capitalism 101. Increasing supplies is limited by environmental concerns and cartel power. Reducing demand in the United States, the nation that consumes about a quarter of global production would have an immediate effect on oil prices, bringing them down dramatically but still several hundreds of percent over cost.

Here are some suggestions:

1. Increase the current tax on gasoline to a level that would dramatically decrease auto driving, reduce air pollution and global warming while using the money generated to repair roads and bridges and to modernize mass transportation.

2. Subsidize the auto companies in their retooling to produce cars that obtain 50 miles to a gallon. Why should we wait until 2020 when the technology is available now? Let the automakers repay over a period of years.

3. Institute a rationing system for gasoline and heating oil with special allotments for transportation to and from work.

4. Allow a tax credit or refund for people of lower income to offset the increased tax.

5. Encourage (with a tax break) work by telecommuting that would reduce pollution, traffic and unhealthy stress on workers who sit in gridlock twice a day.

6. Promote a nationally coordinated program of car pooling, ride sharing and more efficient mass transit.

Reducing U.S. addiction to foreign oil would ease the Federal Budget Deficit. Foreign oil suppliers are awash in trillions of U.S. dollars and are using some of them to buy American assets and corporations in the largest transfer of wealth in the history of humanity, without firing a shot.

Goldman Sachs says that the price of oil could reach $200 a barrel this year. Without a plan, our costs could go even higher. Enough is enough. Let's have some serious political leadership for change to stop indulging ourselves in our uncontrolled appetite for oil.


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