America needs an Apollo-scale program to shift to renewable energy and more efficient vehicles.
By Robert Kuttner
Web Exclusive: 05.01.06
The American Prospect
America needs an Apollo-scale program to shift to renewable energy and more efficient vehicles. Politicians of both parties, particularly Republicans, are scrambling to deal with the voter pain of $3-a-gallon gasoline. President Bush wants a $100 tax rebate to help consumers pay for more costly fuel and more tax credits for people who buy (mostly Japanese-made) hybrid cars. He has revived the recurring Republican idea of drilling in Alaska's wilderness. He proposes to suspend federal purchases for the national petroleum reserve. ''Every little bit helps," Bush said, rather pitifully. Next, he'll be wearing Jimmy Carter's sweaters.
Democrats' ideas include the proposal by Senator Robert Menendez of New Jersey to suspend temporarily the (industrial world's lowest) federal gas tax of 18.4 cents a gallon to be offset by an excess-profits tax on oil companies, a federal investigation of price gouging, and demands that Bush ''jawbone" his chums at the oil companies and in Saudi Arabia and Kuwait. Senator Ron Wyden of Oregon wants oil companies to start paying long-avoided royalties for petroleum drilled on federal lands.
The oil companies, meanwhile, are practicing damage control. Their full-page newspaper ads show (accurately) that oil profits as a percent of sales are modest. But wait a minute: the higher the retail price, the higher the profit -- and the percentage stays the same. They could make the same claim if gas went to $10 a gallon. Their profits relative to invested capital are off the charts. ExxonMobil just released its first-quarter profits: more than $8 billion -- its highest ever. ExxonMobil CEO Lee R. Raymond, who recently retired, was paid $400 million last year.
The oil companies argue that the main culprit is temporary bottlenecks in refining capacity (caused in part by those pesty environmental regulations) and that their astronomical profits are necessary because much of their boodle gets plowed back into oil exploration. But that's exactly the problem. The political and financial dominance of the oil industry, and the related premise that we mainly need more drilling, just reinforces the national illusion that we can keep running our economy on fossil fuels.....