With economic indicators uncertain and Americans worried about their standard of living, the record-high price of oil has recently garnered attention as a possible cause of the weak economy. The Bush administration’s senior economist, N. Gregory Mankiw, has blamed latent economic insecurity on energy prices. However, there is debate about the role that energy prices play in the economy and about possible policy solutions for the increasing costs. Here is a sample of what America is saying about oil and energy.
San Jose, CA –- San Jose Mercury-News – Jay Bookman (syndicated)
August 24, 2004 – Op/Ed – link not available
"The standard solution [to the problem of high oil prices] proposed by the oil industry, the U.S. Chamber of Commerce and others is to encourage the development of domestic sources of oil through tax incentives, the relaxation of environmental laws and most of all by opening the Arctic National Wildlife Refuge to oil drilling. That’s also the approach embraced in the Bush administration’s proposed national energy policy.
"However, that line of argument is a fraud. There is no government policy – and no conceivable mixture of government policies – that could boost domestic oil production enough to make a difference. The oil just does not exist."
Atlanta, GA – Atlanta Journal Constitution
August 23, 2004 – Editorial – link not available
"Each time the [oil] price climbs to another record, as it has done steadily since July, it increases the temptation to raid America’s insurance policy against a catastrophic interruption of the foreign oil supply. To give in would be a mistake….
"[Opening the Strategic Petroleum Reserve] is too big a risk to take. What if it did not work? Or worked only temporarily? Not only would precious oil have been siphoned off, but the task of replenishing it could be difficult."
Kansas City, MO – Kansas City Star
August 23, 2004 – Editorial – link not available
"China’s rapidly increasing thirst for oil is driving up global demand for petroleum….
"China’s dramatic increase in energy consumption—coupled with political problems in the oil-producing countries of Iraq, Russia and Venezuela—could have dramatic negative effects on the U.S. and world economies….
"The recent surge in oil prices could hurt economic growth in the United States. Given China’s soaring demand for crude, weaning America from its dependence on foreign petroleum is going to be even more important."
San Francisco, CA – San Francisco Chronicle
August 22, 2004 – Letter to the Editor – link not available
"There are plenty of early signs that inflation is picking up. Like the war in Iraq, the Vietnam war was conducted off budget. This, together with higher oil prices, led to the inflation of the 1970s. Add to this a weak dollar, for the time being propped up by China and Japan, and all the ingredients are in place for a return of inflation in the near future."
Boston, MA – Christian Science Monitor
August 20, 2004 – Letter to the Editor – link not available
"[The] lack of a working national energy policy is the cause [of slow growth].
"No new refineries and no new nuclear plants have been built in the US in the past 30 years. New electric power plants have been stymied by endless regulations."
Milwaukee, WI – The Daily Reporter – Donald Croysdale
August 25, 2004 – Op/Ed – link not available
"Virtually all available oil supply sources are being tapped to the maximum. Saudi Arabia has perhaps a million barrels a day left, but that is about it. New supply can be made available in time, but it usually takes three to 10 years to bring new supplies on stream. So unless there is a worldwide recession, or a significant slowing, demand will be keeping pressure on available supplies. So it should be no surprise that oil prices have zoomed to nearly $50 a barrel in recent weeks.
"We, as contractors, and our employees, face larger energy costs than do most businesses and individuals, given the distances we travel. With the expectations for tight supplies and high demands, contractors should consider ways to even out energy costs, incorporate adjustment clauses where feasible and employ conservation techniques. While common sense says our elected officials should be opening up new oil and gas fields, don’t count on new supply sources any time soon. Higher energy costs and widely fluctuating prices are likely here to stay."
Bangor, ME – Bangor Daily News
August 31, 2004 – Letter to the Editor – link not available
"Fighting in Najaf will increase public sentiments against us in the Middle East and strengthen the hand of terrorist elements. The recent rise in oil prices is a direct barometer of the increasing likelihood of terrorist attacks due to the battle being fought around Najaf. If this battle continues or spills over outside of Najaf, it may turn into a struggle that will have a negative effect for many years to come."