Saturday, January 15, 2011

One Idea to Solve Many Problems

I'm driving down the road, listening to the news.  Unemployment is moving up again.  No surprise, since the holiday temps are being let go.  Prices are going up on energy and food, and the Russian government now owns  five percent of British Petroleum (BP).  None of those stories comes as a surprise either.

The laws of supply and demand dictate that price goes up, when demand goes up.  That is, unless the supply can be increased.

Demand is going ever higher, because China has become a very thirsty beast. Thanks to the new prosperity her people are experiencing, China is becoming the new America, at least as it pertains to oil consumption.

Since, at this point in our history, we can't increase the supply... guess what.

Because it takes energy to produce food and get it to market, we can naturally expect that the price of food will increase with the price of energy.  Add to that the fact that a portion of our food is being used to produce energy, and, since that affects supply...  guess what.

Another pretty big story in the news, and on Capitol Hill is the debate over raising the debt ceiling, so our government can borrow more money, so it can continue to meet its obligations.  The obvious question is, if you can raise it at will, why call it a ceiling?  A better question is, what else can we do?

It seems to me there is ONE thing that can be done that would address every one of these stories I've mentioned.

DOMESTIC ENERGY PRODUCTION

The way I see it, if the U.S. were to begin producing her own oil, that one act would make a dent in all of these problems.

A.  It would create an awful lot of jobs in numerous areas of our economy.  Construction, Fabrication, Transportation, etc.  And, let's not forget, drilling itself.  Of course, these jobs would cause an increase in consumer spending.  I would HOPE some saving too.  That would cause even more jobs to be created in other areas.

B.   It would lower the price of energy.  Domestic production would increase the supply of oil in the world market, bringing the price down.  To maintain the same revenue stream, the current oil producers would have to increase supply.  That would bring the price of a barrel of crude down further yet.

C.  It would increase GDP (Gross Domestic Product).  The amount of goods and services produced in a the U.S. in a year.  A measure of economic health.

D.  It would free the U.S. from the need to involve herself in the affairs of nations who are hostile to our way of life.  It would also allow us to, in effect, stop funding the efforts of our enemies to make war against us.  Which should mean we would not have to make war against THEM, saving even more money.

E.  It would lower the cost of goods produced domestically.  Because it would cost less to produce, and transport, the price of everything America produces, including food, would decline.

I'm sure there are other advantages worth noting, but I think I've made my point.  I'm sure there are a some who would like to bring attention to the negatives as well.  Possible environmental impact... the oil isn't as good.

The possible impact on our environment is not something to be ignored.  We should be good stewards of our environment.  Every effort should be made to protect against possible disaster, and even a degree of concern for habitat.  But we can't continue to sacrifice the U.S. economy on the alter of "Mother Earth".  We have to find equilibrium between the foul extreme of the days leading up to the creation of the Environmental Protection Agency (EPA) and the prohibitive extreme of today.

As for the quality of the oil?  I'm not sure that's true, but it's not really relevant anymore.  Since the U.S. is no longer the biggest consumer of oil, we will not likely get the best oil anymore.  If we are going to have to spend more to refine it anyway, doesn't it make sense to pay less for the oil?

If you think this idea makes sense, share it with a friend or two.

I'll get back to ya...

Scott A. Rupert 

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