Importing Brazil’s Oil Policy
barges.And because America has increased its oil imports, other nations have increased their drilling. Included among the top ten sources of U.S. crude oil imports are Saudi Arabia, Venezuela, and Iraq. Human rights in these nations are not very good. So how much concern do you think they have for the environment when drilling for oil? Is it more or less concern than America would have?Not only have environmentalists suffered from these policies, but so have consumers. Drilling for our own oil is cheaper than importing it.Environmentalists and consumers have also suffered from ethanol policies. Making corn ethanol requires more energy than other fuels, which defeats the environmentalists’ goal of getting away from fossil fuels. And the consumer has to pay more for food when crops are used for ethanol
production instead of food production.Despite corn ethanol’s shortcomings, the federal government has been subsidizing its production in response to the lobbying efforts of environmental groups and agricultural corporations. That it has to be subsidized is evidence that market forces have not responded positively to it. If corn ethanol were economical and efficient, consumers would demand it and producers would supply it.President Reagan best summed up the government’s view of economics: “If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.”Subsidies to promote uneconomical and inefficient sources of energy waste taxpayer dollars. The free market will embrace any viable energy alternatives to fossil fuels that are clean, economical, and efficient. But until those alternatives are developed, fossil fuels are the lifeblood of our economy.Despite failed energy policies, those in government still blame the oil industry for high prices. There have been federal investigations to denounce and indict “greedy” oil executives. But the investigations consistently clear the defendants of any wrongdoing.Blaming the oil industry is an easier sell to the public than reality.First, global demand for oil has been increasing, especially in China and India. When demand rises, prices increase.Second, Obama’s anti-drilling policies have driven down the production of domestic crude oil and gasoline. When supply decreases, prices increase.Third, the government has been taxing oil companies at every level of production. When oil companies have higher costs, prices increase.Taxes contribute more to the price of gasoline than oil company profits. The government profits more from oil than the oil industry. So who is the “greedy” one?Oil companies have made record profits in the last few years because of the record amount of oil they have been selling, not because of how much they have been charging for it. Oil companies have a profit margin of about 9 percent on gasoline. So they make about 9¢ in profit for every dollar of revenue. That’s lower than the 13¢ average of companies in the S&P 500 index.America needs to make a change. What we should be importing from Brazil is its oil policy, not its oil.
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Bill Costello, M.Ed., is a U.S.-based education columnist, blogger, and author of Awaken Your Birdbrain: Using Creativity to Get What You Want. He can be reached at www.makingmindsmatter.com
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