Energy Independence

Gasoline prices in the US have risen 43% since 2006. In the same time period, the average US income has risen by 4.2%. It doesn’t take a mathematician to determine that fuel prices are taking an ever increasing bite out of an American citizen’s wallet. Recently, headlines have been made regarding TransCanada Corporation’s Keystone Pipeline expansion project and President Obama’s rejection of the proposal until further studies can be conducted on its economic and environmental impacts. Proponents of the pipeline state that it will create jobs and help America obtain energy independence. But will it?

Personally, I believe it will create jobs, although they’re likely to be temporary since most of them would disappear once construction is complete. But the purpose of this post isn’t to debate the project’s merits on that front. My focus in on this country’s need to reduce our dependence on Middle Eastern oil. Would Keystone allow us to import less crude oil from the Middle East, replacing it with Canadian oil instead? Yes, it would.

However, it’s at that point that the issue gets murky. Despite our need to import crude oil, we actually export more of the petroleum products made from it (like gasoline) than we import. In fact, the rate of these exports is growing rapidly. How can that be? How can Americans be forced to pay 43% more for a necessity like gasoline while our country exports more and more of that same product overseas to places like China, Brazil, and India?

The answer is – deregulation.

Over the past decade, Congress has made it increasingly easy to profit from commodity stockpiling and selling. The Commodity Futures Trading Commission (CTFC) has provided exemptions to most of the large banks, allowing them to falsely manipulate the price of commodities like oil in order to reap massive profits for their investors.  US oil companies sell their products offshore because demand in those countries allows them to sell at a higher price, lowering US supply and falsely inflating US prices in the process. Furthermore, we spend hundreds of billions of dollars attempting to influence Middle Eastern countries through a combination of war and bribery in the hopes it will positively impact the supply of crude oil when we could be spending a portion of that money on supporting the development of alternative energy instead.

Imagine how independent we could be of Middle Eastern conflict if we replaced 20% to 30% of our cars with electric vehicles? Imagine how much lower US gas prices would be if they were controlled by supply and domestic demand instead of speculation and offshore profiteering. That future isn’t so far fetched. With proper regulation, oil and gasoline prices could be stabilized while still allowing a fair profit to investors. With proper investment, electric cars and recharging facilities could be built to turn our gasoline driven economy into an electricity driven economy. In comparison, the amount of domestic jobs such a transformation would create dwarf anything possible via projects like Keystone.

Tesla Motors is a great example of the sort of company the United States should be investing in via tax credits and rebates to buyers. These aren’t dinky cars that you’d be embarrassed to drive and they don’t have wimpy batteries that need to be recharged every hundred miles. These are beautiful vehicles with batteries that last over 200 miles. If our country were to invest in the development of cars like this and the recharging stations that would supply replacement batteries (instead of pumping gasoline), we’d be well on our way to solving one of the biggest factors in the demise of this country’s middle-class.

In conclusion, the Keystone Pipeline is a short term improvement, and in my opinion, should be approved. But the long term solution is not increasing the supply of crude oil and the sooner our leaders recognize what really needs to be done, the better.