Fundamental Astuteness

The Essence of Astuteness: Non-Partisan Intellectual Honesty

Congress’ April fools joke on the Oil Executives

with 3 comments

Yesterday, congress grilled the 5 top oil executives, hoping they would explain why energy prices are so high, and why consumer appreciation is so low.

During the hearings, the usual attitudes were prevalent: Greedy business people exploit the middle class for their own profit, and government needs to do something about it. Congressman Emanuel Cleaver reminded the nation’s top 5 oil executives that “The anger level is rising significantly.” edward-markey.jpgRepresentative Edward Markey of Massachusetts stated that: “On April Fool’s Day, the biggest joke of all is being played on American families by Big Oil,”

Here is the real story behind April Fools that congress doesn’t know: That the government had more to do with creating the energy problem than they do with solving it. Why? Because the government, insisting on protecting the environment based on the flimsy evidence from the global warming movement, taxes gas per gallon. It was $.32 a gallon last time I checked. That raises the cost of gas by so much for all of us. If the government would stop taxing gasoline, gas would be about $2.80 a gallon. That would be a good start.

On top of that, the government keeps oil companies off limits to the multi-billion barrel oil reserve in Alaska and 85% of our coastal drilling opportunities, again in the name of protecting the environment. So instead we have to buy oil from overseas: mid-east-oil-001.jpgCanada, Saudi Arabia, Iraq, etc, just to name a few. That drives up costs even more, since we have to pay for not just the cost of drilling the oil, but also for the shipping from around the world as it reaches our ports. If the government would allow us to drill our own oil more, that would lower our prices here at the pump. That’s because a basic law of economics states that the more you have of a thing, the less it costs. Take shoes, for example: People in this country used to be hard pressed to afford a good pair of shoes. They were hard to make and very expensive. Yet, as the production of shoes streamlined, they became more plentiful, and thus, cheaper overall.

The idea of production brings me to another aspect of April Fools folly–Refineries. It is reported that since the late 1970’s, the Federal Government has not let a single new refinery be built in the United States. That means that as ours wear out, we must have more and more of our fuel refined elsewhere. In foreign countries (So much for democrats promises to keep jobs in the United States) To cover the costs of shipping to the foreign country and back, prices at the pump must be raised. Surely with all the digital technology, we could find ways to vastly improve our refining process by using updated computers and sensors to make the process more precise and efficient. But the politicians won’t let us do it. So the people scream louder, and the politicians point the finger more at the Executives, reminding everyone of the “record profit” that the oil companies made last year.

Which brings me to one last point: We in America need a new attitude on rich people. The media, along with select classes of politicians, portray the American CEO as a greedy, conniving, impostor who seizes and exploits poor people’s resources for his own benefit. But this characterization is improper for two reasons:

First, businesses depend on us for our voluntary cooperation. They can’t use force. Only government can. For a business to succeed, the people must be willing to buy his products at the price he asks. It is only when the people do this that the CEO can succeed. Thus, any success a business has depends on the consumer. If the consumer caused the company to succeed, and to make evil profits, then what logical role does the federal government play in causing them to “not succeed”?

Secondly, we need rich people. They provide employment for all kinds of folks. Yet that was only possible by letting them make a profit so that they could have money left over to hire us. For providing jobs to untold millions, don’t CEO’s deserve to be highly compensated? Why should companies be investigated and punished if the people voluntarily decide to buy their wares? No one is forcing people to buy gas or oil, so neither should the government use force in return, whether it be in new regulation, taxes, or price ceilings.

CEO pay could be ‘worse’. George Mason University Economist Walter Williams put it well:

“When Jack Welch became General Electric’s CEO in 1981, the company was worth about $14 billion. Through hiring and firing, buying and selling decisions, Welch turned the company around and when he retired 20 years later, GE was worth nearly $500 billion. What’s a CEO worth for such an achievement? If Welch was paid a measly one-half of a percent of GE’s increase in value, his total compensation would have come to nearly $2.5 billion, instead of the few hundred million that he actually received.” 

oil-well-01.jpgIf government would get out of the way, let us drill our own oil, and refine our own fuel, costs could be cut, (since we wouldn’t have to pay for the shipping from foreign countries) and jobs would be created (since we would be doing our own drilling and refining). With the increased supply of fuel in the market, prices could be reduced. But I bet it won’t happen soon.


Because government bureaucrats know best.

Especially on April Fools Day.


Written by Astuteness

April 3, 2008 at 11:00 am

3 Responses

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  1. Hey David,

    I enjoyed your post. I just have one thing to add. If politicians really want to solve the problem of overusing fossil fuels, they would stop subsidizing the oil industry first.

    The International Center for Technology Assessment found that had the feds not subsidizing the oil industry both directly or indirectly, gas may have cost as much as 15 bucks in 1998.

    Here’s their press release:

    I actually posted this on my blog regarding the whole subject of government and environmentalism:

    So I think the politicians either have no brains or are trying to create problems so they can talk about solving them.

    Anyway… I believe I’ve met you through speech and debate. I hope I can see you sometime soon. God Bless!



    April 15, 2008 at 10:36 pm

  2. […] Brian of The BrianFactor for linking me up to his blog. He has commented on this blog before in this post. Brian is an acomplished speaker and debater from the highschool NCFCA speech and debate league. […]

  3. I found lots of intresting things here. Thanks!

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    June 7, 2008 at 10:37 pm

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