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There’s a reason it’s called crude

It’s not yet Thanksgiving and we’ve already got gas pains having to swallow gasoline prices spinning upward at the pump like the dials on a one-armed bandit.

It used to be that you could gauge spikes in gas by the upcoming holidays. Today it’s anyone’s guess when filling up will be more akin to vacuuming out your wallet. The price of a barrel of oil topping the once-unheard-of $100 ceiling might soon be a blurring image in our rear-view mirrors. Last week, the price was just a few dollars short of the crushing number.

And it’s not just happening in the United States; it’s global. Even in booming China, government leaders are fearful that the rising fuel costs will cut two ways: increasing the cost of raw materials and wages and thus lessening the country’s attractiveness to foreign investors; and creating social instability among the lower-income class.

Among the winners ­ outside the Middle East ­ is Russia. Last week, Rosneft and Lukoil, the country’s number one and two producers, respectively, garnered high numbers for shareholders by the rising cost per barrel.

The United States unfortunately is one of the major losers because of a weakening dollar and dwindling oil supplies.

So, Mr. or Mrs. Lawmaker, why haven’t you attempted to bring legislation to help everyone affected, and every one of us is affected?

And what about the Strategic Petroleum Reserve that sits in salt caverns along the Gulf of Mexico coastline? President Gerald Ford signed the Energy Policy and Conservation Act on Dec. 22, 1975, which established a reserve of up to 1 billion barrels of fossil fuel.

The action came as a result of the 1973-74 oil embargo by Arab nations.

Three years back, U.S. Sen. Charles Schumer and other Democratic senators drafted a resolution seeking the release of 1 million barrels of oil a day from the reserve to offset rising gas prices. The average price of gas in spring 2004 was about $2.19, having risen from $1.60 at the beginning of the year.

But President Bush would have nothing to do with such a proposal. In May 2004, he said: “We will not play politics with the Strategic Petroleum Reserve. That petroleum reserve is in place in case of major disruptions of energy supplies to the United States. The idea of emptying the Strategic Petroleum Reserve … would put America in a dangerous position in the war on terror. We’re at war. We face a tough and determined enemy on all fronts. And we must not put ourselves in a worse position in this war. And playing politics with the Strategic Petroleum Reserve would do just that.”

It’s interesting to note that the patriarch of the Bush family, George H.W. Bush, was the first president to sign an order authorizing the Energy Department to dip into the reserve on Jan. 17, 1991, just after the start of the Persian Gulf War. The department was going to sell 33.75 million barrels of crude oil, but international supplies and prices stabilized and 17.3 million barrels were sold.

And in July 2000, the Clinton administration established a Home Heating Oil Reserve when commercial heating oil stocks were low. The goal was to have a 2 million-barrel reserve to act as an emergency fuel source for consumers in the Northeast. The heating oil was to be stored in aboveground tanks leased from private companies. As a bartering tool, the U.S. Department of Energy offered to exchange crude oil from the Strategic Petroleum Reserve for the use of the tank farms and the oil they contained.

The last official drawdown of the reserve occurred shortly after Hurricane Katrina steamrolled into the Gulf of Mexico in 2005, knocking out refineries, terminals and pipelines.

But perhaps the reason why lawmakers are not looking to at least try to control gas prices is that no one cares. There has been no public outcry as prices have climbed across the nation from $2.823 on Oct. 22 to $3.013 on Nov. 5, up 81.3 cents from a year ago, according to numbers crunched by the Energy Information Administration (EIA), an arm of the Department of Energy.

In its Short-Term Energy Outlook report released last week, the EIA found America’s taste for petroleum remains insatiable. For the remainder of the year, total U.S. petroleum consumption is expected to increase by 0.5 percent and by 1 percent in 2008, despite the higher prices.

Worldwide oil use also continues to rise, according to the report, with fourth-quarter consumption projected to be 1.8 million barrels per day higher than fourth-quarter 2006 levels.

The world consumes about 85.6 million barrels of oil a day, with the United States using about 20.6 million barrels per day.

Despite attempts by automakers to introduce alternative-fueled vehicles, there is no end in sight to our reliance on foreign oil. Perhaps states can help by reducing the amount of taxes charged per gallon. In New York, the state tax per gallon is compounded by state and county sales taxes; add in the federal tax and the amount is now more than 50 cents per gallon.

As the holidays approach, perhaps a gas-tax holiday is in order. It won’t be an overall, fix, but at least it will put some smiles on motorists’ faces.

And if that doesn’t work, maybe we all can start lining up for subprime loans to pay our gas and heating oil bills.

 

 

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