America is in a worsening energy crisis, and the increasing consumer costs associated with it are wreaking economic havoc on American families. Tackling this crisis has fallen prey to presidential politics and looms large as a top-shelf issue in this fall's election.
Gas prices have topped $4 a gallon, and prices are soaring across all sectors of the economy because of the impact of fuel prices on businesses.
Families are hurting. It's worse than just having to cut back on family vacations and travel, or not being able to visit each other. It's sapping money out of the paychecks of families, money that would otherwise go to funding non-public schools, college, retirement, buying or paying off a home loan, or getting out of credit card debt. Energy prices are undermining family independence.
Voters are demanding action and the presidential candidates are scurrying around in response.
Barack Obama is proposing taxing the profits of oil companies while vigorously opposing any additional oil exploration and nuclear power. Even the liberal L.A. Times blasted his approach this week. And a former Democratic senator of Louisiana, John Breaux, said taxing companies will not generate a single barrel of oil.
Enter John McCain. He advocates building dozens of new nuclear power plants, building new refineries, and now supports aggressive oil exploration on the American continent and other locations. That would be an enormous step in the right direction. This week he said that he would create a $300 million prize for any person or group that can create a battery for electric cars meeting the needs of the average driver.
President Bush just has proposed an eco-friendly energy plan, largely on the same page as Mr. McCain. Among other things, he proposes drilling on the continental shelf and extracting oil from the shale rock of the Rocky Mountains.
The McCain and Bush plans aim to meet our domestic energy needs, and eventually move us away from foreign suppliers. Right now, the world consumes almost 86.4 million barrels of oil per day, and only produces 86.5 million barrels. America consumes about 20 million barrels a day. That tightness of supply and demand accounts for most of the runaway prices.
The supply numbers are staggering. Everyone acknowledges that there are at least 18 billion barrels of oil under the continental shelf, and possibly as much as 95 billion. Tens of billions more are found in various states nationwide.
But the mother lode is in shale rock. It's estimated that the Saudis have about 260 billion barrels under their sand. By comparison, with current technology, we can safely recover more than 800 billion barrels of the estimated 7 trillion barrels of oil in the shale rock from the Rocky Mountains. That means that current technology could give us more than three times the entire national resources of oil-rich Saudi Arabia.
Extracting oil from shale rock only recently has become economically feasible. It costs about $70 per barrel to extract and make the oil usable. When oil was $18 a barrel that would have been crazy. But at $138 a barrel, it's a bargain. And American companies can make money by supplying our nation's need, and lowering costs for all of us in the process.
Speaking of profits, don't buy into this tax-the-company mentality. If people want to criticize how much oil executives are paid, that's one thing. But the profits go to you and me. Almost two-thirds of oil-company stock is owned by mutual funds and pension funds. That means taxing those profits would decrease the return on your 401k or IRA. And most of those pension funds serve union members. So taxing those profits would hurt middle- and working-class Americans. That's unacceptable.
We need to find more domestic oil and get it. We need more refining. And we need to aggressively expand alternative energy while we build dozens of next-generation nuclear reactors. Finally, we need to create new models of cars that use no petroleum fuels at all. We need to do all these things starting now. Energy is a major issue, and could decide this fall's presidential election.