HASENMILLER: Do something, anything

By Blake Hasenmiller

With gas prices the way they are, solving America’s energy “crisis” has become one of the top priorities of Americans and, therefore, politicians, this election season. Luckily, Senator Barack Obama has a foolproof plan for dramatically reducing energy costs, should he be elected president. Here are a few pieces of that plan, which he has outlined on his campaign Web site:

One of Obama’s first priorities will be to “enact a windfall profits tax on excessive oil company profits to give American families an immediate $1,000 emergency energy rebate …” Unfortunately, when you tax something its price is inevitably increased. So even though families would be receiving an energy rebate, they would pay for it through higher gas prices. And, of course, the ones who would be hurt the most would be the very people the bill was intended to protect: the families that bought the most gas. On the other hand, the overwhelming majority of Americans won’t see the connection. They’ll just continue to blame the oil companies for the high gas prices and feel just a little bit justified by the fact that they’re getting a piece of those darned oil companies’ money.

Obama also plans to “create a new $7,000 tax credit for purchasing advanced vehicles.” This, of course, is designed to make advanced vehicles, which will allegedly get better gas mileage, artificially cheaper so that more of them will be bought. That is, until the price of these cars rises in response to the tax credit so that the price to the consumer is nearly what is was to begin with. Granted, a few more cars will be bought, mostly because of the huge profit margins the price increase will create. The main effect, however, will be that taxpayers will get to pay $7,000 every time someone buys one of these vehicles, with the majority of the money going straight to the manufacturer.

Another one of Obama’s plans is to “require oil companies to develop the 68 million acres of land — over 40 million of which are offshore — which they have already leased and are not drilling on.” The fact that the oil companies are not drilling on this land is a very good sign that it is likely not, presently, profitable to do so. Most likely, the cost of extraction would exceed the price they could sell the oil for. Supply is greater than demand at the current price level. If this were not the case, the oil companies would almost definitely be drilling in those locations because, as we all know, those evil, price-gouging oil companies aren’t about to forgo a profit. If Obama’s “use it or lose it” plan were to go into effect, one of two things would happen: The oil companies could start drilling in an attempt to keep their leases and raise their prices in response to the increased costs; or they could allow their leases to be lost, which would simply decrease the supply — and increase the price — of oil in the future, when prices are higher or costs of extraction are lower.

Obama also wants to “ensure 10 percent of our electricity comes from renewable sources by 2012, and 25 percent by 2025.” Although renewable energy is the energy of the future, it isn’t currently as cheap to produce. If it were it would be more widely used without the government’s help. By forcing renewable energy on us early, thus ensuring that we produce electricity with higher supply costs, Obama also ensures that we produce electricity with a higher price tag for the consumer.

A wiser plan would be to find a source of energy that could get us to that point. Say, for example, the Arctic National Wildlife Refuge. The U.S. Geological Survey estimates that there are approximately 7.7 billion barrels of recoverable oil in the ANWR, with another 2.6 billion recoverable barrels throughout the rest of the coastal plain. This oil, according to USGS, could begin to be recovered in seven to 12 years. We could be well on our way to acquiring this oil, had Senate democrats not voted down President Bush’s 2002 proposal to allow drilling in ANWR.

So maybe Obama’s energy plan isn’t quite as foolproof as it seems. But most Americans lack the desire and/or the ability to look into it this far. They just want something done, and that’s exactly what Obama’s plan is: to do something. And when the actual results of the plan don’t really matter, the plan turns out to be pretty foolproof after all, especially if you’re Obama.

— Blake Hasenmiller is a senior in industrial engineering from De Witt.