With such a large and profitable industry, many supporters and opponents find themselves repeating logical fallacies to support their claims. I have highlighted a few of those below.
Many proponents of increased oil drilling argue that the lower price will cause greater consumption, and therefore the oil companies will become more financially successful. Unfortunately, the facts show otherwise. Newt Gingrich titles his energy solution handbook “Drill Here, Drill Now, Pay Less.” Although oil price does correlate with short term economic success, the economy has tripled in size since the 70’s without requiring proportional amounts of oil. For Shell, Halliburton, and plethora of other petroleum companies, the lower gas prices caused lower profits. In turn, the desire to drill for more oil and natural gas slowed and wells were temporarily capped.
Legislators have also frequently called for approval of the Keystone Xl pipeline as a way to enhance energy security and lower prices. However, studies have indicated the Keystone XL will actually raise U.S. gas prices, and destroy the planet in the process. Valero, the main recipient of the fuel, stated that the pipeline was for exports to China, which will divert oil from local markets and raise prices. Just like drilling for oil in Cuba, the material is becoming more costly to obtain, less likely to find, and more reliant on price hikes to justify drilling. If T. Boone Pickens stated that tar sands oil wouldn’t be profitable until gasoline hit $3 a gallon, why are the same proponents of $2 a gallon gas, like Newt Gingrich and Michelle Bachmann calling for pipeline approval? The answer is because $2 a gallon is a pipedream, pun intended.
Another meme of pro-oil anti-Obama citizens is that “gas prices have doubled under Obama” in 2008 onward. This is meant to imply that the oil-friendly president sought to vastly increase gas prices with either predatory taxes or burdensome environmental regulation. In reality, the price of oil is set at a global market. So the price swing in oil, more volatile than it usually is, resulted more from the Bush Administration that aided in the national and global economic crisis.
The United States has essentially three ways to reduce oil imports: production, protectionism, or promoting alternatives. As Michael Klare points out in Blood and Oil, “We will never be free from the dangers of endless wars in the Middle East until we disassemble this large military apparatus that has been created for the protection of Middle Eastern oil.” The United States has an obvious gain from reducing imports, so it is not surprising that all three will raise the price of fuels. Here are the facts on the three routes to energy independence:
Production- Despite increasing oil production over the second half of the 20th century, the United States imported a greater share of foreign petroleum. In the 1950’s, only 10 percent of oil came from foreign countries, and then it steadily increased to 55 percent through 2001. (Klare, Blood and Oil, Location 329 of 6985) Obama claimed (somewhat falsely) that the United States consumes more than 20% of the world’s oil but now only has 2 percent of the world’s reserves. Despite the non-sequitur, the criticism ironically proves his point that conventional U.S. oil production will not save us- higher prices from increased demand and diminishing supply raises the economic viability of more expensive extraction techniques and unconventional fuels. As Michael Klare explains in The Race for What’s Left, “every fresh advance in mining and drilling techniques leads to the exploitation of hard-to-reach reserves, until those deposits, too, are exhausted. (Location 387 of 6515) This increases the value of “technically recoverable” reserves, and as shown by this graph, these previously unpopular fuel sources are substantially greater than those of conventional ones.
Protectionism- Imported fuels are taxed while domestic ones are subsidized. However, becoming more dependent on domestic oil is not going to reduce our reliance on foreign oil. If the markets in foreign countries provide a greater opportunity for profits, the fuel will be exported there and not to domestic companies. Furthermore, the price disturbances affect the global market which in turn negatively affects American consumers. A similar trend is observed by the recent tariffs on photovoltaic panels from China- higher costs affect American consumers and solar jobs as much as Chinese producers.
Alternatives- The current cost of alternative energy is more expensive than imported fossil fuels, yet the market price does not include all of the added benefits. Environmental Economist John Whitehead mentions that the price of solar is higher “because the market isn’t born yet”. Renewable technologies like solar panels can be placed on landfills and degraded lands to produce energy and literally clean the air. Lower carbon dioxide emissions will help stabilize the climate, and renewable energy jobs have much higher potential than their fossil counterparts. After wildly circulated news of the U.S. being predicted to become the biggest oil producer, careful analysis would show that it is only temporary and requires tearing up our land to do so. Instead of putting our hopes in fossil fuels to provide domestic energy, we should follow in the footsteps of IKEA, who wants energy independence with renewables by 2020.