August 18, 2005

And Now Big Oil Gets Big Subsidies

Governor Blagojevich reacted to record gas prices by asking President Bush to open the Strategic Petroleum Reserve.

The latest runup in gas prices is a classic supply and demand problem, and not being a big oil state (although those of you from southern Illinois know we are a small oil state), Illinios is essentially on the demand side of that equation. So, the only long-term answer is to reduce our demand by using less gas. That helps immediately by buying less of those $3 gallons, and in the long term by reducing demand pressures, particularly if others in the country and world take similar steps.

What are the steps? No surprises - making cars that go farther on a gallon of gas is the single biggest step. The average fuel efficiency of American cars actually declined with the 2005 model year. Transit and alternative fuels are also important parts of the mix.

Of course, big oil is raking it in these days. Between April and June 2005, BP recorded profits of $5 billion, and ConocoPhillips earned $3.1 billion in profits. ExxonMobil’s second quarter profits of almost $8 billion shattered records, giving the company more than $15 billion in profits in the first half of 2005 alone. This is on top of the company’s record $24 billion in profits in 2004.

Did Congress help by including vehicle fuel efficiency requirements in the energy bill passed last month? No, but they did provide at least $4 billions in subsidies to the oil industry. Talk about priorities.

No comments: