George Will on "Soaring" Gas Prices


As sure as daffodils bloom, the media decry soaring gasoline prices every spring. Washington Post columnist George Will notes:

The next wave of stories about "soaring" gas prices will predictably trigger some politicians' indignation about oil companies' profits. The day after Exxon Mobil's announcement that it earned $39.5 billion in 2006, Hillary Clinton said: "I want to take those profits, and I want to put them into a strategic energy fund that will begin to fund alternative smart energy, alternatives and technologies that will begin to actually move us toward the direction of independence."

Clinton's "take" reveals her confiscatory itch. Her clunky "toward the direction of" suggests that she actually knows that independence is as chimerical a goal as Soviet grain production goals were.

Interestingly, Will goes on to report:

In the 20 years from 1987 to 2006, Exxon Mobil invested more ($279 billion) than it earned ($266 billion). Five weeks after the company announced its 2006 earnings, it said it will invest $60 billion in oil and gas projects over the next three years. It will, unless a President Clinton and a Democratic-controlled Congress "take" Big Oil's profits, which are much smaller than Big Government's revenue from gasoline consumption.

Will also properly dismisses "peak oil" alarmism:

In 1971, according to M.A. Adelman, an MIT economist, non-OPEC countries had remaining proven reserves of 200 billion barrels. After the next 33 years of global economic growth, Adelman says, those countries had produced 460 billion barrels and had 209 billion remaining. As for OPEC countries, in 1971 they had 412 billion barrels in proven reserves; by 2004 they had produced 307 billion and had 819 billion remaining.

Note the adjective "proven." In 1930, U.S. proven reserves were 13 billion barrels. Then we fought a global war, fueled the largest, most sustained economic expansion in history and achieved today's electricity-powered "information economy." Today, America's proven reserves are about 30 billion barrels—not counting the perhaps 15 billion in the field discovered last year in deep water 175 miles off Louisiana's coast.

America produces about one-quarter of the 20.6 million barrels of oil it uses a day. Unfortunately, just as liberals love employees but not employers, they want energy independence but do not want to drill in the "pristine" (read: desolate) Arctic National Wildlife Refuge ( potential yield: 10.4 billion barrels) and are reluctant to countenance drilling offshore.

Whole Will column here.

My recent reporting on gasoline prices here and peak oil alarms here and here.

Disclosure: I still have those 50 Exxon Mobil shares. Also, Exxon Mobil has been a periodic supporter of the Reason Foundation. I don't know when the company last made a contribution nor for how much–that's not my job. If Exxon Mobil wanted to give the Foundation a few more (or even more than a few) no-strings-attached bucks to support Reason's ongoing defense of free markets and free minds I'm pretty sure that our development folks would be happy to accept.