Breaking the foreign-oil habit

Politico

April 15, 2012

By: Sen. Bill Nelson
 

It’s possible to ease our pain at the gas pump — if we just keep in mind that prices are part of a bigger story.

It’s a story that starts with America’s reliance on foreign oil, which means outside factors can too easily influence our market.

For example, there’s been unrest in the Middle East for thousands of years. But recent uprisings and the ongoing situation in Iran have led to instability we haven’t seen in a while. Every time we’re faced with this international uncertainty, prices go up and we’re once again reminded why it’s time to get off foreign oil.

Gas prices also are going up, in part because of rampant speculation. This is gambling by a new brand of oil trader that has emerged in just the past decade. These speculators are middle men of sorts, who buy oil futures contracts and flip them like they were condominiums just to get the quick profit.

One statistic is really telling: The share of the oil market controlled by speculators has more than doubled over the past 10 years. At the same time, gas has gone from $1.56 a gallon to an average of $3.90 or more a gallon.

There are ways to curb the price-inflating power of these speculators. One is to put limits on how much of the market they can control. And I’ve introduced legislation that would prevent any single speculator from holding more than 5 percent of the oil futures market. This would lessen the effect one trader could have on the overall price of a barrel of oil, and market prices would begin to reflect true supply and demand again.

Still, even if oil speculators and international unrest weren’t playing havoc with market prices right now, we’d be in trouble. The only way America can get off foreign oil and not fall victim to outside forces in the market is to continue to produce more energy here at home — and eventually alternative fuels.

We’re not self-sufficient, and we need to be. It’s a matter of national security.

Many people, including some of my fellow lawmakers, claim we’ve just got to “drill, baby, drill.” Well, that sounds great, but it doesn’t get at the heart of the problem.

Millions of acres around the country have been leased to oil companies by the government, but they aren’t being used. In the Gulf of Mexico, for example, oil companies lease more than 31 million acres but for some reason are producing oil on less than 6 million of them.

Some lawmakers are trying to use oil from Canada as a partisan political chip in this story. But what they don’t tell you is we don’t require oil from Canada to be kept in our domestic supply and not sold to foreign countries.

To lower gas prices, we need to keep increasing existing domestic oil, keep increasing fuel-efficiency standards and crack down on oil speculators who drive up the price of oil. We can even help balance our budget by ending the billions in special tax breaks that big oil companies receive.

It’s also time to use available technology to make alternative and renewable energy an everyday part of our lives. We have the ability to create an energy culture that doesn’t depend on foreign oil.

Sen. Bill Nelson (D-Fla.) serves on the Senate committees on Budget; Finance; and Commerce, Science and Transportation; Intelligence; and the Special Committee on Aging.
 

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