The Price to Be Paid

By Alan Caruba

I’m betting that, by the end of 2008, Americans will have adjusted to gasoline that costs $4 or more per gallon. We won’t like it, but we will accept it as the price one pays to live in a world that is filled with oil, but one where it resides mostly in nations unfriendly to our welfare and ambitions, as well as in difficult places such as the ocean depths.

Europe which has no such oil reserves save those in the North Sea off of England has long since paid large sums of money for the gasoline it requires, importing much of it from Russia, a nation that oil and natural gas has helped sustain through seventy years of horrid history under Soviet communist domination and now in the new version of czarist control by Vladimir Putin and his friends.

Russia, like so many other oil-rich nations, however, has demonstrated that political control of oil is a recipe for mismanagement and corruption. Ironically, it is the Saudis and the Gulf states that have invested more wisely in their vast oil and natural gas industries, planning ahead to transform themselves into financial centers and even tourist destinations. The African oil nations remain despotisms wracked with internal mutinies and factions. In South America, it runs the gamut from Venezuala's declining capabilities to Brazil's massive new discoveries.

Meanwhile, Americans are finally coming to the realization that they have permitted those who prefer to keep Alaska and our offshore areas “pristine” bastions devoted to creatures such as caribou, polar bears, and loons that could care less whether we are forced to pay exorbitant amounts of money to fuel our cars, keep our trucks on the road, and heat our homes.

These same folks, environmentalists and those who hate America’s success, have no problem proposing that massive wind “farms” be erected in those same offshore areas where one can watch them try to generate a mere pittance worth of electricity if only the wind will keep blowing. It doesn’t keep blowing all the time no matter where these monstrosities are located. Wind power is one of the most idiotic forms of energy and exists only because of massive subsidies and government mandates. They must be backed up by those wonderful old-fashioned coal-fired plants or, God willing, by the construction of more nuclear ones.

In the May issue of Energy Tribune, editors Michael J. Economides and Robert Bryce devote its pages to Alaska and other places around the world that are going to be more and more in the news as the price of oil and natural gas continues to rise. This is because investors, watching the value of the U.S. dollar decline, are putting their money into commodities futures. In an article by Ron Oligney, the author recalls that, “Almost as soon as the Trans-Alaskan Pipeline System construction was complete and oil began to flow in 1977, the talk around our dinner table and across Alaska turned to the next great pipeline project—the Trans-Alaskan Gasline System.” Today, thirty years later, it has not been built.

I suspect that Alaska is going to emerge as a major political issue in the months and years ahead. Unfortunately for the voters, all three candidates have drunk deeply of the environmental Kool-Aid and the two Democrats have voiced deep antipathy to the only thing that will provide any measure of national energy security, Big Oil. It costs billions to drill for oil, to transport it via pipelines, to refine it, and to make it available to people who need to drive to work.

Americans need Big Oil's enterprise and their investor dividends, but Congress insists on thwarting every effort they must make, every dollar they must risk, and every job they provide, by making them the enemy. If you want to see what a real enemy looks like head south and take a look at Venezuela's Hugo Chavez.

Congress, seeking to divert attention from its decades-long, appallingly stupid energy policies, prefers to drag Big Oil's executives before its committees, demanding that they abandon the capitalist notion of making a profit and, in the case of Rep. Maxine Waters, threatening to nationalize them. This is what communists and others do.

As Robert Bryce says, “America has never quite known what to do with Alaska. For many, the state—far from the lower 48, cold, and largely unpopulated—is more a notion than a place. That may help explain why oil and gas development in Alaska carries so much political baggage."

The Bush administration has just declared the polar bear, currently a thriving population, as “threatened” under the Endangered Species Act, claiming that a computer model of global warming in fifty to a hundred years will be bad for them. This ignores the cooling cycle the Earth has been in since 1998. This puts Alaska's oil and gas reserves in its vast offshore areas off-limits to any exploration and extraction.

Billions of barrels exist beneath the Alaska National Wildlife Refuge and offshore. Americans are going to want to get at it. They are going to become more and more vocal about it as the price of gasoline increases and they will be years away from getting any once the drilling begins.

Alaska is preparing to sue the U.S. government for depriving Americans of the riches Congress refuses to access in as little as 2,000 acres of the Refuges’ 19.5 million acres.

Meanwhile, in the rest of the world, in places like India and China, the demand for oil is growing as their economies grow. China cannot build coal-fired electricity generation plants fast enough to keep pace with its billion-plus population and India is planning an ambitious program of nuclear plants for its billion-plus population.

In the United States, we make it as difficult as possible to build a single new plant.

It’s a new era of prosperity and America, so accustomed to being the wealthiest place on Earth, is going to have to make some changes—and soon—if it wants to be a player. It needs to scrap its idiotic ethanol program. It needs to open up its offshore areas to exploration and extraction. It needs to drill in ANWR.

There is a price to pay for being stupid. We are all going to pay it until Congress and whoever occupies the White House next January begins to listen to the rest of us.