A Windfall Of Failure In Domestic Energy Policy

Last May, with the price of a barrel of oil well over $100 and the American consumer furious at the price of a gallon of gas at the pump, Congress was looking for political cover.

Of course, the problem was not the absence of a congressional energy policy. No, it was the domestic oil companies that were really gauging the consumer and keeping prices high that was to blame.

As a result, the Senate Judiciary Committee would summon the top executives from the petroleum industry for a Congressional inquisition. As these executives would correctly pointed out to our astute public servants, the fact is that foreign companies and governments control the overwhelming majority of the world's oil. In fact most of the price Americans pay at the pump is the cost paid by the American oil company to acquire crude oil from someone else.

In addition, it was apparent from the hearings that if anyone is "gouging" consumers through the high price of gasoline, it is federal and state governments, not American oil companies. On average, 15% percent of the cost of gasoline at the pump goes for taxes, while only 4% represents oil company profits.

Despite these facts, Barack Obama campaigned for the Presidency on the populist message that oil company profits were too high. He promised to "make oil companies like Exxon pay a tax on their windfall profits, and use the money to help families pay for their skyrocketing energy costs and other bills." The plan was to provide a $500 per person emergency energy rebate from the windfall profits of big oil.

However, the margin of profit for oil companies never did show a profit windfall. In fact, the 8.3 percent profit margin in the gas and oil industry was pretty small in comparison with the 14.5 percent profit margin enjoyed by the electronics and appliance industry, the 18.4 percent margin for big pharma, or the 19.1 percent margin for alcohol and tobacco.

Now, just six months after the Congressional energy windfall profit tax hearings last May, the price of a barrel of oil is in sharp decline. It has already lost two thirds of its value and the bottom in the price of a barrel of crude oil is still hard to find. As a result, President-elect Barack Obama is going to break another campaign promise. There will be no windfall profit tax on big oil or consumer energy rebate plan in 2009.

The real truth is that there has not been a domestic energy policy in the United States for decades. The current domestic energy policy is only based on the hope that other countries will produce enough oil so that the price in America will not get too high.

This is because there are Congressional limitations in exploring additional domestic supply. According to the Department of the Interior, 62 percent of all on-shore federal lands are off limits to oil and gas developments, with restrictions applying to 92 percent of all federal lands. Meanwhile, alternative energy solutions are still more than a decade away.

So, eventually, the price of American energy will rise and the Senate Judiciary Committee will again call hearings for political cover. Once again they will summon all the top oil executives to assess the blame. We should remember that its just a cynical, political game in which there is no Congressional shame.

The Race For The Bounty Of The North Pole

At the end of last summer, the ice at the North Pole was found to have melted at a record level. The Northwest Passage, the long-sought shipping route through the Arctic, even opened up briefly for the first time in history.

Indeed, last summer, like the summer of 2005, broke all records for loss of summer sea ice in the Arctic Ocean and the Greenland ice sheet. In September 2007, the Arctic Ocean had 23 percent less sea ice than the previous record low and Greenland's ice sheet melted 19 billion tons more than its previous record. Scientists worldwide are still trying to figure out why the Arctic is warming and ice is melting faster than computer models predict.

In 2008, satellite data from recent weeks has shown the rate of ice melt over the North Pole to be even faster than last year. Scientists now believe the chances of a totally ice-free North Pole in the summer of 2008 are greater than 50:50 because the normally thick ice formed over many years at the Pole has been blown away and replaced by huge swathes of thinner ice formed during a single Arctic year.

The result of the melting ice over the North Pole raises the prospect of being able to extract valuable oil and mineral deposits which have until now been impossible to extract because of the thick sea ice above.

So, various countries are now engaged in a worldwide race to claim the North Pole as their own. Russia, China, Norway, Canada, and the United States are all on an international collision course to stake their claim to the new bounty of an ice free North Pole.

Consider that the US Coast Guard is already planning its first operating base in the area. Also, the Reuters news agency reported last week that "A U.S. Coast Guard cutter called "Healy" has embarked on a three week Arctic voyage to determine the extent of the continental shelf north of Alaska and map the ocean floor, data that could be used for oil and natural gas exploration.

The ultimate goal of the United States mission will be to create a three-dimensional map of the Arctic Ocean floor in a relatively unexplored area known as the Chukchi borderland. The Healy will launch again on September 6, when it will be joined by Canadian scientists aboard an icebreaker, who will help collect data to determine the thickness of sediment in the region. That is one factor a country can use to define its extended continental shelf."

It is an International race to claim the bounty under the melting ice cap of the North Pole. It is destined to become contentious and the controversy has only just begun.

For more on The Race for the Bounty of the North Pole, Read: Russia Claims The North Pole on eWorldvu.com.

Energy Bill: Democrats Vacation, Republicans In The Dark

The approval of the United States Congress from the American public is so low (around 10%), that it may be difficult for it to go any lower. Of course with House speaker, Democrat Nancy Pelosi calling for a summer vacation without a vote on the energy bill
and Republicans holding meetings in a dark House chamber in protest, a further decline in Congressional popularity could yet still be achieved. Republicans may even shut down the U.S. government in September to force a vote on offshore drilling. This dubious action would then delay senior citizens from receiving their monthly social security checks in the fall.

Yes, a Congressional approval rate of well below 10% could still happen. Of course, the sad reality is that this prediciment of today is exactly the problem. Democrats on vacation and Republicans in the dark is exactly the way American politics have looked on the issue of a national energy plan for several decades. Democrats don't want to look for new energy anywhere. They don't want to drill, don't want to go nuclear, don't want coal. They want a world of wind and solar power and hybrid cars. Its a world that someday may exist but doesn't today. Therefore, the Democrats live in the world of tomorrow while everyone is living through the energy pain of today. When the reality of the energy problems of today becomes too great, the Democrats blame big oil, oil speculators or Saudi Arabia. Then they proceed to go on vacation, which makes their lobby, the big business of environmentalism happy.

In contrast, the Republicans are just totally in the dark. They are energy clueless. They would like to drill everywhere. Backed by the money of big oil, they have never put forward an agenda to make America energy independent or promote real energy efficiency. Its a sad record for a party that has been in power for eight of the last ten years.

So, McCain wants to drill for more oil when he did not want to drill before. Obama did not want to drill but he may in a limited fashion now. Mccain wants more nuclear power plants while Obama only wants to release the petroleum reserve. Both are careful not to anger their Party's powerful special interests.

So, its Republican big oil against Democrat environmentalism, paid for at the pump by the average American. There is still no coherent national energy policy and despite the recent news headlines nothing much has really changed today.

The Democrats have gone on vacation and the Republicans are looking for energy answers in the dark, as public approval of their performance continues to go lower. Its the same old story just on a different day.