If We Could Drill...
Energy: One driver who might join a threatened truckers strike says "there's no reason for" fuel prices to be so high. Actually, there are many reasons. But they aren't necessarily good ones.
The retail price of diesel fuel is determined by the global price of oil. And, yes, at more than $100 a barrel, it is high. But it's not due to some corporate conspiracy. ExxonMobil and Chevron are not colluding on prices.
Oil reacts to market signals just like any other commodity and the message it is getting is that demand is high, supply is too low, or some mix of the two.
Developing nations China and India, where the populations — already a third of the world population — and economies are growing, account for more than two-thirds of the increased consumption. Their use is expected to double in the next 20 years.
With demand rising, prices must move up. If they don't, shortages will follow. Unless, of course, supply is increased.
In the case of oil, though, this isn't happening.
Naturally, the oil industry is blamed. The popular complaint is that it is holding back because of greed. But the problem is due to government policy, both here and abroad.
For instance, last year diesel users were forced to switch to new low-sulfur blends. So today, it's more expensive to make — by law.
As we have noted before, nine of every 10 barrels of crude reserves are either owned by a government or are under the authority of state-controlled companies. Poor policy decisions have made sure that supply has not been able to keep pace with demand.
In the U.S., a Congress cowed by hysterical special interests has refused to allow the development of a rich oil field in Alaska's Arctic National Wildlife Refuge. It has similarly forbidden the harvesting of crude from fertile fields off of our coasts.
We watch helplessly while prices at the pump reach $4 point in the priciest U.S. markets and as much as 131 billion barrels of oil remain off-limits beneath our soil and our waters. Even the prospect of that oil hitting the world market would hit crude prices hard. Imagine what its actual arrival on the market would do.
But as long as the governments that run OPEC can be sure there are no plans for the U.S. to allow development in those fields, they can continue to limit production and keep prices high.
Their allies in the ruin of the many truckers who can no longer afford to fill up their rigs and the wider economic decline a truckers strike or slowdown would have are the environmental groups and the lawmakers who are aligned with — and afraid of — them.
All I can say is this: I told you so.