Let Us Now Praise Beneficent Big Oil

Well, crude oil prices are dropping like a stone and consequently gas prices at the pump are falling too. The US average price is $2.30/gallon. I see that in NJ you can find gas as cheap as $2.05/gallon. I'm sure out in the midwest you can find it for below $2. This means that pain at the pump is down 23% on average and more in many circumstances. Naturally there are very few stories in the media about the beneficent oil companies or our President's capable, or even benign, economic policies. I don't hear Bill O'Reilly admitting he was wrong about price-gouging and offering apologies to ExxonMobil. Too much to hope for I guess.

In hindsight it is even clearer that what many of us were attributing the spike in gas prices to was correct:

• Hurricane Katrina wiped out a big portion of the fuel importing/refining/distribution infrastructure.
• The 2006 energy bill that effectively banned MBTE and mandated more ethanol as of May caused a substantial interuption in the supply chain of fuels.
• Increased demand from China and India created greater competition for crude shipments.
• Inflationary monetary policy helped to boost commodity prices.
• Rampant speculation by traders drove crude oil prices beyond fundamentals

Finally, an amen chorus of Peak Oilers and Global Warming nuts, aided by the media, fueled the hysteria. Even today, as the price of oil stands at $54, many of the supply problems persist. Hugo Chavez's Venezuela is struggling to produce as much as it once did after cashiering massive oil industry know how in the form of PDVSA employees who participated in the general strike of 2003. Nigeria can't seem to stop militant attacks on its oil industry infrastructure. Russia is using oil as a means of diplomacy and restricting shipments to Europe. There is still a premium imbedded in the price of oil that accounts for various and sundry geopolitical messes (sure, throw in Iraq here, if you like).

Many businesses and users of oil had to find energy substitutes when oil was at $80, but with it back at $55 many are all too happy to switch back to the stuff. All those investors in alternative energy are sweating too. Their little green ventures that looked like the next Google when oil was in the stratosphere are going to be losing money every day that oil continues to slide. No doubt Vinod Khosla is moaning to his allies in Congress to give ethanol another political shot in the arm - it is no coincidence that ethanol seems to be getting a fresh push in the halls of the Great Sausage Factory, as is an attempt to permanently ban drilling for oil in the barren wasteland of ANWR.

Oh well, it is a little too depressing for those of us who see hydrocarbon technology as a blessed benefit that has sprung from the creative font of the human mind (and that should be a welcome part of diverse landscape of energy sources). The best that we can hope for is that people remember all of the caterwauling for what it was, a bunch of misinformed blather and phony baloney, the next time we have a spike in fuel prices.