Why Oil Remains the Status Quo

For years I've pondered the question of how the U.S.A. maintains its high wages and standard of living when there are so many other nations full of capable hard workers willing to do the same jobs for less. Certainly this is a question that a lifetime of research could be spent on, but one obvious answer is that we use more oil than any other country, and we get it cheap (remember, oil = energy = work done). Now I used to believe that we out and out strongarm our suppliers to keep the price low. A friend pointed out that anyone can buy a barrel of oil on the open market--it's how the U.S. taxes it that makes a difference. It's hard to argue with that. However, it's also hard (though most Americans pull it off) not to be aware of how much we spend on military efforts, either ours or those of our suppliers, to maintain the flow of fuel to our country. OK, not the exact amounts spent, but that our war machine is largely geared towards maintaining regimes favorable to gas extraction (and subsequent supply to the U.S.A.).

I've brought up two topics in the above: the U.S. has very low taxes on fuel, and the U.S. funds military operations and regimes around the world that help to maintain our fuel supply.

Nothing wrong with that, you say?

Well, let's start with the facts. America fuels itself currently using 21 of the 85 million barrels of oil produced per day. With 3% of the population, we use 25% of the worlds fuel. That makes us the haves. How do we keep the have nots from being upset about this? Well, for one, we fund despots like Saddam Hussein (until they stop doing our bidding), and sell our weapons to the leaders we like, such as fighter jets to the Saudis--remember them, the country who can lay claim to 19 of the 21 hijackers of 911? I'm not claiming here that the Saudi Arabian government was involved with the attack, but the Saudi government is not well liked among its people, largely for aligning itself with the west (that's us). This is a big issue and not the main topic of this post.

How about our lax taxation? The problem is spelled SUV. The great success of U.S. auto makers selling SUVs is partially due to low gas prices. As long as you can buy cheap gas, the biggest deterrent to buying an SUV is their higher cost. Ahh, but here, the government has helped out Detroit again: businesses can write off the costs of an SUV for their taxes. That's because they are classified as farming equipment if they weigh over 6000 lbs. See:

http://www.taxpayer.net/TCS/whitepapers/SUVtaxbreak.htm

So, here we have our government using taxes (possibly made on sale of fuel) to subsidize the cost of SUVs--and at the same time providing an incentive to ensure that SUVs weigh at least 6000 lbs to qualify!

And what do those auto makers do with all that cash? Well, they certainly recognize a great deal, so they spend political action committee dollars to ensure the status quo doesn't change. A case in point:

Going to

http://www.crp.org/pacs/pacgot.asp?strID=C00043687&Cycle=2004

you can get a list of PAC contributions to the 2004 race by Daimler Chrysler. Doing a search on bills drafted by one of the two highest paid recipients in the senate, Christopher Bond, (R) of MO, I found, not surprisingly, that he'd drafted the Bond-Levin Ammendment. From the following site:

http://www.40mpg.org/getinf/congress_votes.cfm#amend2

"The provisions in the Bond-Levin amendment...also would undercut the government’s incentive to set standards at the maximum feasible fuel economy for the industry as a whole by requiring consideration of "manufacturer competitiveness," which likely would drive down standards to those achievable by the worst performers."

Not surprisingly, Levin was also well rewarded and was one of the top recipients in the House race for 2004.

So not only do we get cheap gas, but our representatives make sure we have low fuel efficiency standards and great tax incentives to buy the WORST performers.

So just ponder for a moment, what could we accomplish if we taxed oil a little more, and ended our subsidies for gas guzzling SUVs? In fact, what if we didn't subsidize the oil industry as well, but, rather, spent our subsidy monies on alternative energy? But, you say, the president talks about funding research for alternative energy every time there is an energy bill passed. And he always mentions how important it is to national security that we develop aleternative energy.

That's what he says. But whay he and congress do is a whole other thing. For example from:

http://www.unpluggedliving.com/nrel-budget-cuts-force-layoffs/

"NREL’s budget for fiscal 2006 will be $20 million smaller than 2005’s $200 million. While a 10% percent cut may seem drastic and dimwitted at such a time on this planet, it’s a drop in the bucket when you consider that the US Congress has chopped the DOE’s total renewable energy programs budget for 2006 by more than a staggering 35%."

For those of you who don't know, NREL is the National Renewable Energy Laboratory in Golden, Colorado (www.nrel.gov), the preeminent research lab for renewable energy in the country. I visited there last year and found the public area of this institution to look like a 2nd rate high school, maybe even grade school, science fair. They had computers that weren't working, and a smattering of demos, some of which worked and some which didn't. Obviously when your budget is getting slashed while the pres talks about how important alternative energy is, as an employee of NREL, you aren't really motivated to go fix the dog and pony show for the public.

Not outraged yet? Why the *#!& not?

To review:

1. SUVs, if they weigh over 6000 lbs, are a full tax write off. For example, a $110,000 SUV provides a $106,000 tax write off! Our government gives up tax income to provide purchasing incentives for these vehicles.

2. Automakers make campaign contributions to our government officials, who turn around and make sure the government doesn't raise fuel efficiency standards.

3. With all that lost revenue, the government's gotta save money somewhere. So, they slash the renewable energy budget of the Department of Energy by 35%!!!

So the next time someone says renewable energy isn't really feasible, you can tell them that neither are SUVs, that's why our government subsidizes the mother *#$!#*@ !!!