Why punish oil companies just when we need more energy?
By Dennis T. Avery
Gasoline at $3 per gallon tells us vehicle fuel is scarce in America right now. Some U.S. politicians propose to "fix" the high prices with an "excess profits tax" on the oil companies.
If you want less of something, tax it. If you want less fuel at higher prices, just raise the taxes on the energy companies.
If you want more of something, raise its price. Willing suppliers then find ways to provide it. Over time, competition and investment bring down prices.
The excess profits tax is a political diversion to help you forget that it's America's own voters and politicians who have created our current pain at the gas pump: Many of the "excess profits taxers" have voted consistently against more energy.
There's no shortage of petroleum. Canada alone has 2500 billion barrels of oil in the massive Athabasca tar sands, 400 miles north of Montana. That's 83 years worth of current world oil consumption. Steam injection can deliver the oil for $10-13 per barrel, but it will take several years and big bucks to expand tar sands output importantly.
The first world is highly nervous about fossil fuels, even though there's no evidence that burning them has significantly increased Earth's temperatures.
Who told us that humans were more powerful than the sun? In the past 25 years, we've found massive global evidence that the Earth has a natural, moderate 1500-year climate cycle linked to the sun. Deep ice cores from Greenland and Antarctica say the Medieval Warming in the 12th century and the Roman Warming in the 1st century were both warmer than today. So do seabed sediments, cave stalagmites, glaciers and tree rings from around the world. The cycle is at least a million years old.
Six years ago, Green guilt gave California its rolling blackouts. California found that current technology really offers only two alternatives for powering the modern world: fossil and nuclear. California opted for more fossil power plants.
Since then, millions of auto sales in China and India have underscored the world's rising demand for energy. China and India have decided to build both fossil and nuclear power plants, lots of them.
America today faces the same choice that was forced on California and China. We need more fossil fuel, more nuclear plants, or both. Punishing oil companies will only discourage the increasing energy investments we need.
Dennis T. Avery is a senior fellow for Hudson Institute in Washington, DC and the Director for the Center for Global Food Issues. He was formerly a senior analyst for the Department of State. Readers may write him at Post Office Box 202, Churchville, VA 24421.
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