(May 21, 2008) With the almost daily rise in gasoline prices threatening the lifestyle of every American, the question on many people's minds is, where will it end?
According to the U.S. General Services Administration (GSA), the average retail price for gasoline in 2002 was $1.35 per gallon and crude oil averaged $24.09 per barrel. On May 21, 2008, crude oil hit a record $130 per barrel, and many stations were already selling Regular gas for over $4 per gallon.
Goldman Sachs predicts crude oil will hit $200 a barrel in two years. This could translate into $6 per gallon at the pump.
These high gas prices threaten to seriously impact driving habits, air travel, food purchases and just about every commodity we're accustomed to. Replacing a meal with a "big snack" is not something Americans are accustomed to doing, but, if gas prices go much higher, it may become a sad reality for some.
What are the chances of gas prices rolling back in the near future to anywhere near the 2002 levels? The answer, I believe, is very good, and nil. Depending on what we do or don't do.
If we do nothing, things are likely to get a lot worse. If we act now, we can greatly reduce gas prices, not in ten years or some distant future, but in a matter of months.
We're currently sitting on one of the worlds greatest oil reserves. What's stopping us from taking advantage of it is the modern scourges of political correctness and worrying about what others will say.
In one fell swoop we can drastically reduce the price of oil, reduce some of Americans' outrage over the Iraq war, and greatly diminish the power of OPEC (Organization of the Petroleum Exporting Nations).
We're in Iraq right now -- let's use it to our advantage.
Taking control of oil fields is not necessarily an "either us or them" situation. There's enough oil in Iraq to satisfy the needs of the U.S. and Iraq. The 2.3 million barrels of oil a day Iraq currently produces is a small fraction of its vast oil reserves. Iraq's proven oil reserves are currently estimated at 115 billion barrels, the third largest in the world, behind Saudi Arabia and Iran. At its current rate of production, Iraq would take over 130 years to use up its reserves. (By then, we'll probably be driving cars on hydrogen broken down from ordinary water.)
The sad truth is that in the middle east, oil money seldom, if ever, goes to "the people." In that region, oil generally makes the sheiks and crooked ruling parties or families rich while the people remain at poverty levels.
Iraq is already showing signs of going down that precise path of corruption and indifference to it's own people. On March 7, 2008, two Senators, Carl Levin, D-Michigan, and John Warner, R-Virginia, said in a letter to the Government Accountability Office that Iraq has "tremendous resources" in banks worldwide but is doing little to improve security and reconstruction efforts.
The letter said, in part, " ... we believe that Iraq will accrue at least $100 billion in oil revenues in 2007 and 2008 ... Our conversations with both Iraqis and Americans during our frequent visits to Iraq, as well as official government and unofficial media reports, have convinced us that the Iraqi government is not doing nearly enough to provide essential services and improve the quality of life of its citizens."
The U.S. could give Iraqi oil money back to the Iraqi people by taking control of the oil fields and making sure the oil money goes for essential services. Then, by upgrading existing refineries, building new ones, and greatly increasing oil exports, they could drive the price of oil down substantially.
For our troubles, we'd get enough oil to put our economy back on its feet; a small price for the Iraqi people to pay for being given freedom and an improved lifestyle they've never before experienced. To be generous, we might even offer to pay cost price. Either way, this would reduce the price of oil for Americans even further.
It's hard to say how far the price of gas at the pumps would fall, but I don't think going back to the $2, or even $1.50, per gallon levels would be out of the question.
What's more, as an added benefit, reducing the price of oil globally would put a damper on OPEC's grip on the oil market, and, who knows, maybe some of its members will have less money to contribute to terrorism.
What's the downside to this scenario?
Well, OPEC would hate us. But then, some of their members are the very same despots who hate us already, and the rest aren't exactly in love with us either. So there really isn't much of a downside here.
A long-term solution that offers lower gas prices, lower air fare, lower food prices, and lower prices for just about everything. Oh, and now we'll at least know why OTEC (Organization of the Terrorism Exporting Nations) hates us.
Of course, we'll also have the usual critics shouting, "See? We told you all along Bush went into Iraq for the oil." To them, my answer would be, "That Bush, what a genius!"
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