Posted by Shyam Moondra
President Bush and other Republicans keep repeating one mantra, over and over again, that the only way to achieve energy independence is if Congress passes a bill to open up the Alaskan wild-life refuge for drilling and to extend off-shore drilling rights to cover all of the coastal areas. There are many experts, who correctly believe that the proposal for new drilling in the U.S. is just a gimmic and it will not really solve the real problem. First, the estimates of oil that could be drilled would cover the U.S. demand for just over two years; second, it will take at least 10 years before we see any meaningful quantity of oil; and, finally, it would potentially do serious environmental damage to our coastal areas, thereby negatively affecting the tourism industry. In addition, the oil companies have not taken advantage of the drilling rights that have already been accorded to them, so there is no need for a rush to grant them more drilling rights.
What we really need is a concerted effort on several fronts:
1. It's estimated that a price increase of at least $50 per barrel is caused by speculation and manipulation in the oil futures market by big players such as investment banks, hedge funds, and pension funds that have no commercial interest in oil (as airlines do, for example). One quick way to discourage speculative oil buying would be to increase the margin requirements and to place limits on how much oil these investors can buy.
2. Currently, many oil trades are executed on exchanges that are unregulated (such as ICE), and thus abusive trading practices go unmonitored. It's time Congress close the so-called "Enron loop-hole" and give CFTC the authority to regulate all oil futures trading in the U.S. and ask them to coordinate energy trading regulations on exchanges worldwide.
3. Impose oil windfall profit tax retroactively on the major oil companies and use that money to provide near-term relief to consumers in the form of a tax rebate and also to fund the development of alternative fuel sources and technologies. Congress could also require the major oil companies to invest more in such R&D efforts.
4. Vigorously investigate price-gouging and impose stiff penalties on violators (such as mandatory jail sentences for the CEOs and hefty fines on companies).
5. Congress should provide funding for the development of an extensive public transportation network and infrastructure, so that people don't have to drive their cars so much. This will create millions of construction jobs giving a big boost to the sagging construction sector.
6. The Federal government should invest heavily in the development and deployment of alternative fuels such as ethanol/hybrid, advanced battery systems for cars, wind-mill farms, solar, biofuels, cleaner coal burning technologies, and nuclear (with a safer waste disposal system). These new technologies will create hundreds of thousands of new high-paying jobs.
7. Congress should pass a bill to set very ambitious fuel efficiency standards for automobiles that will considerably reduce the energy consumption and thus bring down the oil price.
8. Explore bringing out lawsuits against oil cartel OPEC, which is acting as a monopoly and thus may be engaged in unlawful anti-competitive behavior in a free-market global economy. The U.S. and its allies could also take tougher trade and diplomatic actions against OPEC countries, denying them the sale of military hardware and high-technology products.
9. Break-up the largest oil companies to foster more competition. Recent misguided mega-mergers have made these oil companies way too powerful enabling them to easily manipulate the energy prices.
10. The U.N. should explore imposing a windfall profit levy on OPEC countries and using that money to provide humanitarian relief to poor countries that now have more and more people who can't afford to feed themselves because of higher food prices caused, in part, by higher oil prices.
