The 18 Cent Solution - "Re-Management of US Oil to end Oil Wars"

The 18 Cent Solution

MAY 2008

Robert McElroy's proposition of positive solutions to the wars in the Middle East over Oil, and how we can conserve our own natural gas and oil resources.

It has not been said enough – ‘To support the troops, use less energy’.
Many Americans believed the US invaded Iraq to remove a threat from Saddam Hussein, but it is not an acceptable conclusion in light of 1997 United Oil of California testimony before a US House subcommittee on the need for and challenges to a proposed oil and gas pipeline through Afghanistan (now being proposed without US participation by Iran). Prior to that, Richard Nixon drew a clear conclusion in his 1994 book, Beyond Peace that the US must continue to control, even if it involves military action, access to Middle East oil in order to protect the US domestic economy.

That is why we are in Iraq and have been in the region for at least five decades. It is about oil and it is about our individual energy consuming habits. We have been feeding at the cheap energy trough for nearly 100 years and now find we can’t afford to continue that lifestyle. High gas prices may help wean us away from impulsive and unnecessary energy use and that won’t hurt us, perhaps strengthen us personally, but it is an election year and Americans are complaining about the price of gas and candidates naturally want to solve the problem.
To ease our pain Senators Clinton and McCain propose a three-month moratorium on the 18 cent per gallon federal gas tax. Such a savings when the price of gas is still going to be around $4.00 per gallon raises the question if those candidates are telling us that there is simply no other solution to high gas prices or consider us to be energy addicts who will scramble gratefully when thrown a bone.

Perhaps because energy policy is a convoluted mesh of foreign policy, domestic economic policy, political ideology, and catering to special interests, the 18 cent solution is easy to peddle but it is not a solution and it is offered when there are immediate and effective solutions available.
In her recent testimony before the House Select Committee on Energy Independence and Global Warming Massachusetts Institute of Technology energy expert Melanie A. Kenderdine, who was a former official at the Department of Energy, explained that there are things government can do and can do immediately.

The Strategic Petroleum Reserve is nearly full at 700 million gallons but President Bush continues to purchase millions of gallons of crude thereby increasing demand and rising prices, Ms Kenderdine explained and added that simply releasing millions of gallons from the Reserve on the market would immediately increase supply and drive prices down. She supported her conclusion by contrasting President Bush’s actions to those taken by Bill Richardson when he was Secretary of Energy in the Clinton Administration. Richardson dumped 30 million gallons of crude on the market. “The results were immediate, in spite of the fact that oil had not yet moved into the market--demonstrating the psychological impacts on the market when the U.S. signals its intention to act. . . By the end of the year, actual oil prices had dropped from $30.94 to $20.38 per barrel, a 34% decrease.” She testified.

A more nuanced approach Ms. Kenderdine described would be swapping out the light crude in the Reserve for less expensive dark crude, capturing an immediate profit without lowering the Reserve content. Her suggestions showed saving or profits upwards towards $9 billion.
What seems to be overlooked in the President’s and Congress’ wean-away-from-foreign-oil strategies is 2005 information from the US Energy Information Administration calculating that North America has 100 years of oil resources. Canada is the largest supplier of crude to the US now that the price has made it profitable to extract from Canadian sand. Mexico is an OPEC aligned country but does not have to function under OPEC price controls and the US itself has untapped oil reserves in which investments were justified when oil passed the $40 per barrel price. Where would we be now if the $600 billion we have spent in Iraq had been directed to nurture an energy relationship with our neighbors?
If we used our own oil we would have nearly 100 years to figure out how to meet our energy needs with the estimated 300 trillion cubic feet of natural gas on the continent, solar and bio-energy solutions.

To be sure we would not have lost over 4,000 troops.


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Are insurance co's against the public option because they're afraid the gov't might actually run health care BETTER than they have? - post by John Watson

Soraya Navarez - Afraid they may have to cut profits 750%
8 hours ago

Holly Kittleman  Nope.
7 hours ago

John Watson - I don't know why everyone just assumes the government would do a bad job. Look at the mess insurance co's got us into. Maybe it's time to give someone else a chance.
about an hour ago

John Watson@Holly: doesn't the military have a govt-run health plan?
about an hour ago
 
Bill Fulbright
John, there is a misconception here. The insurance companies did not get us here. I used to sell group insurance with my family's general agency during the mid-70's. Health insurance used to cost about 30.00 per family in a group, and about 50.00 for non-group family coverage.

Lawyers started taking cases and encouraging a litigious atmosphere where huge settlements were obtained for relatively normal malpractice suits. Sure, there were some crappy doctors who left sponges and scissors in people, but these low level cases made it harder and more expensive to settle the cases that were serious. Due to the huge increase in numbers of medical malpractice suits levied by less than ethical lawyers (and there were and are some very ethical ones - so no bashing here), the cost of settling these suits began an upward spiral of costs, covered by insurance companies, including the cost of medical malpractice insurance. The doctors were shocked, but in order to keep their practices open, they passed the cost along to the insurance buyer by raising their cost schedule. I watched the state of Texas have to create a pool of insurance for basic limits of liability for Doctors only available at 100/300 for basic limits. This initial level of coverage was no longer offered by insurance companies. Once obtained, the Doctors had to go out to the second and third layers of liability umbrella providers of medical malpractice insurance to get the limits of coverage needed to stay open for business.

If that wasn't enough the Auto Workers Unions and the Oil and Chemical Workers Unions were going on strikes for more benefits, the Arab Emirates were raising the price of oil - in short prices were starting to soar....

In my opinion the upward spiral of costs in the health insurance begain due to uncontrolled/non-regulated medical malpractice suits.... hence the need now some 40 years later to press for Tort Reform.

Insurance works on the law of numbers, where many pay a lower cost for the coverage received by a few.. all actuarially proven.

Sure, the insurance companies make a profit, and they should. Did you want to support the beginning of a dis-incentive program that will affect lawyers, doctors, insurance companies - effectively chasing away the good guys because some bad guys went nutty and greedy? (this is now underway with the banks not even in the TARP program) . If the talented people are chased away due to no incentive, and the reins of the institutions are left in the hands of the less capable...... what do you think will be the case? Better quality or less quality?

Look, there is a happy balance for it all, and I think we will find it, but not at the point of a gun. We are being asked to accept a half-baked plan that may not be so good at the moment. There are some very good examples of social health care in europe, from which we can learn alot, and implement a lot.

We are being rushed into a second or third rate solution due to politics, rather than the realistic assessment of real health reform, for which I am in favor.

I have been out of work and dependent upon unemployment insurance, but was not allowed to receive any medical care because I had earned too much money previously. So because I worked for many years and had contributed into this public system, when I needed it for me and my family, it was not there for me.

I do not challenge you lightly, but with real world experience.