|
|
|
|
|
May 5, 2006
By Mike Barnett
Editor
Tired of guessing how much higher the price of gas and diesel is going to be tomorrow than today? Tired of taking out a home equity loan every time you fill the tank? Think fuel prices are coming down anytime soon?
Then let's play the blame game.
•It's Big Oil's fault, Part 1.
They're making record profits, right? But how big a profit were they making when oil was $20 a barrel? Oil is a commodity, just like corn, wheat and soybeans are commodities. Farmers make more profit when corn, wheat and soybean prices are high, so why shouldn't Big Oil? It's basic economics, based much more on the functions of supply and demand rather than Big Oil company greed. Let's give big oil a pass on this one.
• It's Big Oil's fault, Part 2.
Gasoline is not a function of oil pumped out of the ground. Rather, it's a product of the commodity that's pumped out of the ground. Big Oil has been accused of not investing money into new refineries so they can keep the price of gas artificially high. Maybe that would be a good place to plow back some of those record profits. Hmmmmm....
• It's the consumers' fault.
Yep. Americans love their pickups and SUVs. We love our big homes and our air conditioning. Consumers in developing countries are craving the same things. No wonder world demand is skyrocketing.
• It's the bureaucrats' fault.
Partly. Those guys have developed a maze of regulations that say different formulations of fuel are needed for different areas for "smog control." Rules regulate where and why and how new wells can be drilled to "protect" the environment. Hey, that's their job. And we all like clean air and water. But maybe a little common sense here would go a long way.
• It's the politicians' fault.
Sure it is. Everything is the politicians' fault. I've heard a lot of blame coming from a number of politicians about who's causing high gas prices. But I haven't heard those same politicians suggest that we lower the price of gasoline by lowering the gasoline tax.
• It's the farmers' fault.
That's what media reports said this last week. Gas prices are high because of ethanol.
The reason, the reports say, is that ethanol is replacing the additive MTBE in gasoline, and there's not enough to go around, resulting in high gasoline prices.
And that's pure baloney. A recent Energy Information Administration statement said the use of ethanol, replacing the additive MTBE, will account for only pennies of the price of gasoline.
So enough of this blame game. Pure and simple, the high cost of crude oil is the major reason for high gas prices. And barring a major recession in this country or the world, it doesn't look like energy prices are coming down anytime soon.
It's true agricultural producers have a huge stake in the energy arena. Like the consumer, they are fighting the burden of high fuel costs, but on a much larger scale. On top of that, farmers and ranchers have to deal with high price of energy as it affects inputs such as fertilizer and irrigation costs.
However, farmers can play a big part in our nation's energy solution. They are the producers of ethanol, biodiesel and other biomass fuels. And as high energy costs continue, they will play an even bigger role in future.
Look at what's happening already. U.S. ethanol production is ramping up rapidly. Some 97 facilities are already producing ethanol and 35 more are under construction, some in Texas.
The new plants will add 500 million gallons of production capacity before July and another 900 million gallons during the fall.
The farmer can play a huge role in helping our nation gain energy independence, but he can't carry the load alone. Truth is, big oil, consumers, bureaucrats and politicians all play a part in the high cost of energy. So instead of playing the blame game, let's all work together to ensure our nation's energy future.
