— Tool of Big Oil

I know I shouldn’t rise to the bait — it’s not as if is taken very seriously in Virginia. But, hey, it’s a slow news day, and stomping out economic illiteracy is always a worthy goal. It seems that the liberal political organization has been holding rallies around the country, including one in Staunton of all places, trying to draw the connection between Big Oil campaign contributions to Republicans and the high price of gasoline. As Chris Graham tells the story at the Augusta Free Press:

Since 1990, the oil industry has given more than $190 million to members of Congress – “and they’ve given three times as much to Republicans as they have given to Democrats,” [ spokes person Nita] Chaudhary said.

“That money has guaranteed a policy that serves an industry over the public. Given that gas prices are off the charts, given the fact that scientists are continuing to warn us that global warming is at a tipping point, and given the fact that we’re in an increasingly uncomfortable situation in the Middle East, we can’t afford the Republican addiction to oil money anymore.”

The first question that comes to my mind is this: Do these people believe this twaddle, or do they peddle it knowing that it’s wrong but figuring that a gullible public will fall for it anyway?

Why are gas prices rising in the United States? It’s called supply and demand. Global demand for oil is increasing, driving up the price of petroleum. The high cost of developing new oil reserves, coupled with political instability in multiple oil-producing countries, has made it difficult to increase production enough to keep up with rising demand. The situation in the United States is aggravated by (a) environmental policies that restrict development of U.S. oil reserves, (b) environmental policies that restrict the development of new gasoline-refining capacity, and (c) the lobbying effort by agricultural interests, not big oil interests, to require the integration of ethanol-based fuel, at considerable cost, into U.S. gasoline supplies.

But there’s more…

“What we’re trying to say is, big oil contributes to Congress – and because of that, Congress is beholden to Big Oil, they get to write energy policy. We’re saying – don’t take any more oil money, and start coming up with sane energy policies. Things like increasing the CAFE standards, putting money into renewable resources, and also energy sources that don’t create emissions like wind and solar,” said Lee Godfrey, a Staunton MoveOn member who organized a Rally for an Oil-Free Congress that was held last week in the Queen City.

There’s an element of rationality in the argument for mandating better gasoline mileage in automobiles — although such a mandate would limit consumer choice by forcing Americans to buy smaller cars, it would reduce gasoline consumption. As for the other nostrums – newable energy, wind, solar, etc. — as desirable as they are, they would have zero impact on the price of gasoline. You see, wind and solar power would increase the supply of electricity, not gasoline! And we haven’t figured out a way yet to produce electric-powered automobiles that anyone will buy.

The other foolishness embedded in the critique is that conservation is good but high gasoline prices are bad. I happen to believe that conservation is very, very good. But common sense tells you that the best way to get people and businesses to conserve energy is to charge them more for it! If’s brow-beating of the petroleum companies succeeded in nudging down the price of gasoline, it would only undercut the larger goal of conservation.

If cared to address the real problems instead of shilling for the Democratic Party, it would focus on the fact that Americans are burning more gasoline because they’re driving more. Duh! Getting people to drive less would require paying attention to dysfunctional land use patterns. Of course, that line of thinking wouldn’t fit the worldview. No one is going to believe that the Big Oil companies are paying off local Virginia politicos in order to perpetuate the scattered, disconnected, low-density patterns of development that forces people to drive more.

Ironically, you could make the argument that is doing Big Oil a favor by distracting people from the real cause of rising U.S. demand for gasoline. Hmmm. Makes you wonder. Could Big Oil be paying to muddy the issues? If you adopted’s conspiratorial mode of thinking, it would make total sense.

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13 responses to “ — Tool of Big Oil”

  1. kingfish Avatar

    Jim- I am no fan of However, they are correct in that the government has not moved agressively to create the conditions for either the publicly funded or privately funded research and development of alternative fuel sources so as to lessen or eliminate our dependence on oil. This is no doubt in the interest of teh Big Oil companies, who have no doubt brought pressure on their purchased friends in the government to make certain this is the case. This is what lobbyists are paid to do. We should not expect Oil companies to act in a way contrary to their own interests. We should, however, expect out government to recognize that the national interest may not exactly cooincide with that of Exxon.

  2. Anonymous Avatar

    Uhhh, the renewable energy sources are tied more closely to use of oil, not gasoline. Gasoline is a refined product used for cars and such. Oil, in a less refined state is also used for heating homes and businesses, instead of electricity…less expensive electricity would would reduce the demand for oil…not gasoline.

    Y’all have gotten so wound up about transportation that I your blog is becoming less relevant to other Virginia issues.

  3. Jim Bacon Avatar
    Jim Bacon

    Anonymous, I have never heard a single person make the argument that solar or wind power would make electricity “less expensive.” There are all sorts of worthy reasons for supporting wind and solar, most of them environmental, but cheap energy is not one of them.

  4. Ray Hyde Avatar
    Ray Hyde

    I have yet to be convinced that changing our land use patterns will have more than a marginal effect on our energy consumption. Furthermore, I’m convinced that it will take a long time and cost a lot of money, so it isn’t very much of a help to current problems. Nevertheless, such a huge problem is going to take a long time to fix, so you might as well start now at whatever small level makes sense.

    Other than that, I agree with ALL of what you have to say in this post.

    But I’m confused, and I’ve asked this before, if gas consumption is going up, then why is it that we claim gas taxes (especially increased gas taxes) can’t help or transportation funding problem? (Regardless of which transportation “options” you pursue.)

    In other posts you have said the reason is that gas consumption is flat because fuel economy is going up (I don’t see it, I think we have traded lower emissions for stagnant mileage. But driving is cheaper because cars last longer, tires last longer, and our incomes are higher), and in still others you say the number of cars and the number of miles driven is going up. (Because driving is still cheaper today than formerly)

    True, the costs of construction and maintenance may have risen faster than the revenue from gas taxes. True, raising gas taxes will reduce consumption and therefore could be counterproductive to generating revenue. Higher gas prices also mean you can afford to spend more money and more energy out of each barrel of crude to crack the heavy distillates into gasoline and this means higher asphalt prices and higher prices for heavy fuels used to generate electricity.

    For this reason generating more electricity through alternate means will have some effect on fuel prices. (However, unless/until those alternatives are cost competitive it won’t mean that our total energy costs go down.)

    But it is also true that gas taxes are a reasonably effective user pays system: we have just let it get out of date and out of balance. I think that mandating higher CAFE standards is like mandating flush size in the toilet: the result is you get two flushes or two smaller trucks instead of what you need. Raising gas taxes is not the same as mandating a higher price for gas, it is just saying that the system has changed in such a way that the government now deserves a more valuable piece of the action: supply and demand, if you will. It seems to me that if you think conservation is very, very important, then you shouldn’t object to higher gas taxes, unless you are stuck in the Republican mud of ideology that says no new/more taxes.

    This seems inconsistent to me. If you are willing to let people to live where they want, provided they pay their own full and fairly allocated costs, then shouldn’t one of those costs be an adequate tax on gas? If you are unwilling to force people to drive smaller cars isn’t the gas tax a reasonably good way of allocating the costs for bad choices fairly?

    The conspiracy mongers are always hard at work, and here with senior Reublicans right out of the oil patch, this makes for an easy sell on this one. That doesn’t make it right. You are right, inventing the wrong arguments doesn’t help solve the actual problems we face.

  5. Jim Bacon Avatar
    Jim Bacon

    Ray, I have always argued that if you have to raise taxes for transportation, then the gas tax is the most economically rational tax because it encourages conservation. (The other revenue-raising device I favor is congestion tolls.)

  6. Ray Hyde Avatar
    Ray Hyde

    OK, I stand corrected.

    I guess it was the “if you have to raise taxes” premise that threw me, combined with the argument that there is no point in raising taxes until we fix the system. Taken together, that sounds like no gas tax, even if it saves fuel and reduces pollution.

    Then there is the Arlington approach. Increase property tax on vehicles valued above a certain amount and eliminate it for those below that value.

  7. Scott Avatar

    I am in agreement with kingfish.

  8. Anonymous Avatar

    If $3 (and higher) gasoline is not enough incentive for folks to conserve, I don’t know what is. If you look at the data on new car sales, apparently we don’t have enough production capacity to meet current demand for hybrids, etc. The carmakers say they are shifting production.

    BTW, it has been my understanding that Detroit, not big oil, has led the fight against higher CAFE standards.

  9. Ray Hyde Avatar
    Ray Hyde

    Sure, but it is a self interest thing, just the same. They make more money selling big cars than small.

    Today, hybrids are no longer allowed in the car pool lanes, so that incentive is gone. The good news is that at least when they are sitting in traffic the engine shuts down.

    Some automakers are shifting to big hybrids, such as hybrid SUV’s. This makes sense because the biggr vehicles also offer the potential for the biggest savings in fuel. The Lexus 450h comes with 336 HP, and a tax credit for buying a “clean fuel” car. Why someone who can afford an $60,000 car needs a tax credit is beyond me, but there it is.

  10. Anon 12:23 –

    It takes much more price pressure than $3 a gallon to really influence consumer behavior. We’ve been living through $3 a gallon for a year now, and we’re only seeing a slight downtick in SUV sales. Demand elasticity for gasoline is so low that it will take $5 or maybe even $7 gas prices before people start reacting in any significant way.

  11. Anonymous Avatar

    So there ought to be plenty of room for a $0.50 tax.

  12. Anon 12:23 Avatar
    Anon 12:23


    I accept your premise but only if you consider 12 months to be a reasonable time horizon for millions of people to act. After all, a vehicle is not a $200 Ipod or $50 cell phone that an early adopter will throw away to get a new model.

    Many of these people (most?) still have auto loans to pay and if they are upside down on a loan when their car becomes devalued because of its low fuel efficiency, what will they do? They will keep it until they can afford to buy a new (more efficient) vehicle.

    It would be rationale to take a loss on the vehicle and buy a new one if, and only if, you believe that gas prices will stay the same or higher and the math works.

    This is the fleshy, soft underbelly of the argument of those who are impatient for change, now, at any cost, dammit.

  13. Anonymous Avatar

    Right, and all those monsters will get dumped on the market cheap enough to make the gas to feed them seem reasonable, at least for a while. On the down side you would have to take a bath to get rid of one. On the upside, if you live in town and don’t drive that much, then you can get a nice car for cheap and clog up the city streets, escape for the weekend, etc.

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