McCain's Energy Ignorance

08/01/2008 05:12 am ET | Updated May 25, 2011

John McCain foolishly credited the recent $10-a-barrel drop in the price of oil to President Bush's lifting of the offshore drill ban. What's he going to do when prices nudge or jump upwards again? Is he going to admit that White House announcements about offshore drilling have nothing to do with today's supply-demand influences on oil prices? How can offshore drilling, not even approved by the states involved, affect spot oil prices when it will take years to produce a single drop of oil from these areas?

McCain's statement was so ignorant it was even debunked by a Bushie.
"I don't know if we fully deserve the credit," said spokeswoman Dana Perino. "We don't predict what happens in the market. We can't really tell. Certainly, taking that action would send a signal that at least the executive branch is serious about moving forward and increasing the supply we have in America."

McCain's comments, like Bush's energy policy, betray a complete ignorance of how oil is priced or of the effect of supply and demand. For instance, as prices soared Bush asked the Saudis to pump more oil to reduce prices. They did, by 200,000 barrels a day, and prices kept rising.

So here's the skinny for the Republicans:
Prices went up to $147 a barrel because of demand from consumers around the world and gasoline subsidies in China and elsewhere. Conversely, prices have fallen by $20 a barrel or so because of cutbacks in usage by consumers around the world due to the high price and the fact that China lowered its gasoline subsidies to reduce consumption. The market, or supply and demand, works. It just doesn't work the way McCain and Bush seem to think it works.

There's also little in the way of intelligent energy policy notions coming out of energy guru Al Gore or oil gadfly, T. Boone Pickens. Both have proposed solutions which make no sense.
Gore's would bankrupt the country. He wants to back out fossil fuels and nuclear within ten years in terms of power generation, at a cost of five Iraqi wars or universal health care for Americans and Mexicans.

T. Boone wants massive taxpayer subsidies to build wind and solar farms in order to replace natural gas for power generation and free it up to be used in all vehicles instead of gasoline. That's fine except switching to natural gas may be impeded by the fact that accessible domestic gas supplies are running out.

By far the reasonable and most sensible fixes can be accomplished immediately and have immediate paybacks such as helping to clean up the environment, slash trade deficits, reduce dependency on nasty foreign regimes, finance research into new technologies and bail out Detroit.

1. Mandate increased fuel efficiencies of at least 10 miles per gallon for every vehicle and within two years require all new cars sold in the U.S. to be hybrids. Subsidize Detroit to do this which would help its failing auto makers.

Measures should also be considered, such as subsidies, to help retire the nation's gas guzzlers more quickly. Why? The country's 245 million Cars and SUVs use 55% of the oil consumed every year.

And if all these were replaced with vehicles that were at least 10-miles-per-gallon more efficient, the country would cut oil consumption by four million barrels daily, eliminating $189.8 billion, or 27%, from the total trade deficit.

2. But another measure is essential in tandem with fuel efficiencies: an increase in gasoline taxes to keep prices high. This is because studies show that fuel efficiencies don't necessarily decrease consumption but increase it because the same money can buy more tankfuls. So the combination of fuel efficient cars, and more expensive gasoline, would lower consumption rates even faster.

3. The next step would be to earmark higher gasoline taxes for research into alternatives.
4. Continue to subsidize ethanol, mandate flex-fuel engines (at a cost of $100 per car) and force oil companies to offer ethanol or other bio fuels at every gasoline station. Choice at the pumps will keep oil refiners and distributors honest through competition, now non-existent.

Instead of concrete measures, however, we have a President who doesn't get it and his successor, John McCain, who will rely on White House announcements or coziness with the dreadful Saudis to ease the pain at the pumps.