Hillary Clinton: Let's Get Real About Oil Prices

Editor's Notebook -- Human Greed, Not Oil Companies, to Blame for High Prices

By Rake Morgan

Here's some advice for my good friend, Hillary Clinton. 

Over the past few days, I've been deluged with those "Let's Not Buy Any Oil on September 1st" emails. The idea, say the authors, is that if everyone in the US does not buy oil for one day, we will economically hurt the oil companies. Fine, let's hurt 'em! But that's still not going to lower our energy bills.

Here's how I responded to one person who sent me an email, asking me to support the one-day "boycott" --

Sorry, but this is one of those "feel good" ideas that is not really going to have the impact you hope for. . . 

Nothing would please me more than to "sock it to" the big oil companies. Yeah, I'd love to get indignant and force those global monoliths to eat crow. . .or worse. And I suspect that many of us on this prestigious email list will find it hard to afford the increases in home heating oil that will hit us hard in New Hampshire this winter.

However, from my perspective, it isn't just the oil companies that are the issue. Everyone "doing his/her part" should also include the following --

* Trading in our gas-guzzling SUVs for more efficient cars. (heard that one before?)

* Stop building McMansions and live in more reasonably-sized, energy efficient homes. (heard that one before?)

* Stop wasting fuel using private transportation when public transportation is available -- how about taking the bus into Boston? How about car-pooling? How about NOT buying a car for every driving-aged member of the household? (heard that one before?)

* Putting political pressure on our legislators to support alternative energy sources and getting the US to sign the Kyoto Treaty and transition away from oil dependency (heard that one before?)

* Stop buying 350HP motor boats that waste fuel, pollute our lakes, endanger others on the water, and are TOO NOISY, not to mention banning ATVs, dirt bikes, and snowmobiles. (maybe you didn't hear this one before!)

Heck, this list could go on, but we've heard this stuff for at least 30 years and no one "buys it" or really wants to change their lifestyle to save fuel. It's easier and personally less inconvenient to attack the greedy oil companies and the oil exporting countries. But, really, it's like blaming the chef because you're obese when it's YOU who ordered the fettucine alfredo every time you went into his restaurant. Or blaming the tobacco companies for your lung cancer when it's YOU who refused to stop smoking, etc. etc. (OK, I still order the alfredo AND I used to smoke.) The fact is, if you want to lower your energy costs, you just have to use less energy.

We tend to think that oil demand is price elastic -- it's not. The demand for oil is more related to increases in the standard of living around the world -- especially in countries like China and India -- than price. Growth in their automobile, aerospace, military, consumer manufacturing and urban development sectors are putting greater demands on world oil supplies. That's what is driving up the price (along with some political and environmental factors).

Ironically, because we import their cheaper goods and export US jobs to lower our manufacturing and service costs, we play a significant role in increasing energy demand in those countries. It's not oil company "greed" that's to blame for our higher oil prices, it's primarily the universal, human drive to have more, buy more, and live "better."  We've been doing it in the West forever -- now those giants in the Orient are also learning to live well (and will pay the price, just as we have). And wait until our "friends" south of the border all get on that fast-track to material well-being. Then you will really see energy prices go up!

Hillary Clinton needs to resist those knee-jerk, feel-good solutions to high oil prices and the energy issue in general. Going after the oil companies is NOT the solution. Continued efforts at conservation, development of alternative energy resources, and a healthy dose of reality about human nature and the developing economies in China and India would be far more effective.

Cheers!

Rake