2008 Woodie Awards
$36,130,000,000: That Is A Lot of Zeroes
Editorial Staff: Saint Louis Post-Dispatch
Issue date: 2/6/06 Section: Opinion
Profits at Exxon Mobil jumped forty-three percent last year to $36.13 billion. That is $36,130,000,000.
It may seem crass to praise windfall profits at America's biggest oil company while consumers are paying $2.35 for a gallon of gasoline. But those profits are good news for everyone.
Exxon is raking in billions because oil is selling at nearly $67 a barrel, as opposed to $20 or so during most of the 1990s. Oil prices are set on a worldwide market. No oil company controls them. Even OPEC has lost much of its clout over them. To see the real villain in this piece, look in the mirror. All of us are using too much oil.
Oil is precious today because the world is using more and more of it, mainly due to growth in Asia. Demand exceeds the capacity of oil wells to produce, thus the price goes up.
The solution is twofold: We must produce more oil while using less.
Those sky-high profits provide a rich incentive to produce more oil, the key to lower prices. Tax those profits away, as some suggest, and you will get less oil. The upshot: higher pump prices and poorer consumers.
More production may ease the crunch over the short run. But ultimately, we will not drill our way out of the problem. The Energy Department predicts that world demand for oil will jump nearly fifty percent by 2025. We probably cannot find that much new oil. So, the best answer lies in conservation, and alternative fuels.
There is also the threat of war. Oil ties us to the most volatile parts of the world, populated by dictators, revolutionaries, terrorists, and religious zealots along with millions of ordinary folks. The Iranian zealots are developing nuclear weapons and threatening to cut oil exports if the West tries to stop them.
President Bush sees this. "America is addicted to oil," he said in the State of the Union address. But his solutions are inadequate. Yes, we need more research into ethanol production, hybrids, electric and hydrogen engines, as the president recommends. But that is not enough.
We need a full court press, starting with tightened fuel economy standards for cars and trucks. Many American cars today can run on a mix of eighty-five percent ethanol and fifteen percent gasoline, but few gas stations sell it. We need bigger subsidies for alternative fuels, for hybrids and ethanol-capable vehicles.
If government were run rationally, we would finance those subsidies through a higher tax on gasoline. Higher prices discourage waste. We saw that in the plunge in SUV sales as gasoline prices jumped last year. Unfortunately, higher gas taxes are politically impossible.
The United States invaded Iraq for many reasons. But we would not be there if Iraq and its neighbors exported only bananas. If Mideast oil supplies were ever threatened, we could find ourselves in a war that would make Iraq look like a practice run. America needs to kick the oil habit, and soon.
It may seem crass to praise windfall profits at America's biggest oil company while consumers are paying $2.35 for a gallon of gasoline. But those profits are good news for everyone.
Exxon is raking in billions because oil is selling at nearly $67 a barrel, as opposed to $20 or so during most of the 1990s. Oil prices are set on a worldwide market. No oil company controls them. Even OPEC has lost much of its clout over them. To see the real villain in this piece, look in the mirror. All of us are using too much oil.
Oil is precious today because the world is using more and more of it, mainly due to growth in Asia. Demand exceeds the capacity of oil wells to produce, thus the price goes up.
The solution is twofold: We must produce more oil while using less.
Those sky-high profits provide a rich incentive to produce more oil, the key to lower prices. Tax those profits away, as some suggest, and you will get less oil. The upshot: higher pump prices and poorer consumers.
More production may ease the crunch over the short run. But ultimately, we will not drill our way out of the problem. The Energy Department predicts that world demand for oil will jump nearly fifty percent by 2025. We probably cannot find that much new oil. So, the best answer lies in conservation, and alternative fuels.
There is also the threat of war. Oil ties us to the most volatile parts of the world, populated by dictators, revolutionaries, terrorists, and religious zealots along with millions of ordinary folks. The Iranian zealots are developing nuclear weapons and threatening to cut oil exports if the West tries to stop them.
President Bush sees this. "America is addicted to oil," he said in the State of the Union address. But his solutions are inadequate. Yes, we need more research into ethanol production, hybrids, electric and hydrogen engines, as the president recommends. But that is not enough.
We need a full court press, starting with tightened fuel economy standards for cars and trucks. Many American cars today can run on a mix of eighty-five percent ethanol and fifteen percent gasoline, but few gas stations sell it. We need bigger subsidies for alternative fuels, for hybrids and ethanol-capable vehicles.
If government were run rationally, we would finance those subsidies through a higher tax on gasoline. Higher prices discourage waste. We saw that in the plunge in SUV sales as gasoline prices jumped last year. Unfortunately, higher gas taxes are politically impossible.
The United States invaded Iraq for many reasons. But we would not be there if Iraq and its neighbors exported only bananas. If Mideast oil supplies were ever threatened, we could find ourselves in a war that would make Iraq look like a practice run. America needs to kick the oil habit, and soon.