The oil industry is a complex behemoth and efforts to regulate it or further tax it come with their own set of pitfalls. The better antidote – one that saves money, lives and the environment – is to show the oil industry that a profit model built on the premise of insatiable demand is going the way of the Edsel.
Consumers can be forgiven for feeling like puppets on strings manipulated by the oil industry.
In good times and bad, it seems we lose.
Last year’s record oil prices sent gas to more than $4 per gallon and helped drive Exxon to record profits of $45.2 billion. Chevron, another market leader, also set a record: $18.7 billion in profits.
The two companies’ revenue combined for 2008 exceeded the gross domestic product of all but 16 countries.
A year later, the pendulum has swung the other way; oil prices this week dipped below $35 a barrel and industry profits are down. Yet prices at the pump are again cresting $2 per gallon.
Some analysts are predicting the price will hit $2.50 by spring and that’s not counting a possible 29 cent rise in state gas taxes and a proposed 10 cent increase in federal.
We’re told gas prices are rising because the industry cut production in response to the economic crisis and because refineries traditionally conduct annual maintenance on their facilities at this time of year.
But those explanations do little to erase the feeling we’re being hosed.
A year ago, when the industry was awash in a geyser of profits, then-presidential candidate Barack Obama – and locally U.S. Rep. Edward Markey – touted the idea of a windfall profit tax.
Obama’s plan was to use the tax to provide families with a $1,000 energy rebate. Chances of a windfall any time soon are remote. So the idea has faded.
But whether or not the government is able to siphon more industry gains, the best tool for bringing these numbers under control is already in consumers’ hands: Conservation.
The more we can lower demand, the greater the downward pressure on prices.
Some of this effort will involve changing our transportation habits – choosing more fuel-efficient cars, lowering speeds on the highway and using public transportation.
It will also involve reducing fuel consumption at home, in schools and at work.
Marshfield recently adopted a policy for its schools that all outside lighting will be turned off during the daytime and classroom doors will be kept closed to conserve heat during the winter. We hope to see similarly simple but effective changes in towns and cities throughout the region. Such initiatives are important bolsters to the $80 million energy efficiency initiative in the stimulus package signed into law on Tuesday.
Recent government statistics show American motorists use almost 400 million gallons of gasoline a day.
The U.S. Department of Energy suggests simple changes – such as not exceeding highway speeds, avoiding jackrabbit starts and keeping tires properly inflated – could cut fuel consumption by an average of 15 percent. That would save about 60 million gallons of gas a day.
The oil industry is a complex behemoth and efforts to regulate it or further tax it come with their own set of pitfalls.
The better antidote – one that saves money, lives and the environment – is to show the oil industry that a profit model built on the premise of insatiable demand is going the way of the Edsel.
Find the Department of Energy’s fuel efficiency Web site here.