Oil costs have now risen over $145 per barrel, which is simply unbelievable and unprecedented in the 
United States. Whenever we’ve had a crisis of this magnitude in the past, our government leaders (the White House and Congress) have always been quick to find a culprit (or two.) And, then all fingers were duly pointed directly at the villain. Often times this meant immediate shifts in policies, sanctions or laws, serious penalties (such as jail time) and an all encompassing public relations campaign aimed at painting the perfect picture denouncing the rogues to our country or the world.
Just think back over the last 30 years to find multiple examples of this. The first major oil crisis in the 70s was blamed almost unanimously on OPEC and when our current oil crisis began last year, the largest oil producers (Exxon, Shell, Chevron, etc.), were crushed by politicians across the country for being “greedy” and profit hungry as they gouged consumers . Think back to the 80s and the villains that were singled out around the savings & loan debacle and junk bond crash (James Keating, Michael Milken and Ivan Boesky come to mind as three). And, of course, our most recent scandal that led to the creation of Sarbanes-Oxley focused on the likes of Enron and WorldCom. Today, we have the sub-prime mortgage mess in which many of the largest predatory lenders like Countrywide are to blame. Through all of the corporate crises, one over riding negative factor is always singled out – a lack of oversight/regulation to protect consumers.
But now, our politicians can’t figure out who to blame. As a matter of fact, neither can the media. This is most interesting and frightening at the same time because unlike all the other crises highlighted above, most of the so called experts believe that there is no relief in site. In fact, some feel that prices will continue to sky rocket to European levels and may never come down. Through my research/reading of about a dozen articles, this oil disaster can be blamed on the following factors all working in harmony together: OPEC has cut distribution to maintain high prices, the U.S., China and the world are now consuming more oil then previously anticipated, the instability in key oil regions (Iraq, Nigeria, etc.) has led to a lack of production, the inability to foresee this problem by Congress/White House is real (laws could have been created to greatly curb consumption and now it’s too late,) hedge fund speculators are betting that oil costs will increase and the inability to create more efficient types of gas though current U.S. refineries exist. I’m sure I’ve missed a few more.
Someone’s got to be the Darth Vader here, though. Politicians cannot go back to their constituents without a culprit in hand (or try to explain all of these confusing factors.) This is all so confusing… and they will have great difficulty attempting to articulate in sound bytes the typical “good versus evil” storyline to constituents. And, telling them how they will make life better will take close to a modern miracle. No, this is a very big political problem that just doesn’t have an easy solution.
Our two presidential candidates aren’t stupid. They see the writing on the wall and have started to aggressively push out various alternative energy policy recommendations. The problem is that there is no quick fix that will soothe millions of American’s pain now, or even a year from now (when we could be paying $6 per gallon or more at the pump.)
We truly have a quandary like none I can remember. Everything in our country (commercial and consumer) is in some way influenced by oil. Recessionary times are here and consumer spending will continue to wane. This spells longer term trouble for our country and it just won’t be fun.
I see Darth Vader driving around town every day: American consumers cruising solo in eight passenger vehicles that get 15 miles per gallon.
Posted by: Steve Shannon | July 08, 2008 at 10:36 AM