James V. Zedak – 4/30/06

This page was last updated on April 30, 2006.

We created this oil monster; James V. Zedak; Beaver County Times; April 30, 2006.

Below is a detailed critique of the subject letter.

“As Americans see gasoline prices and fuel oil prices rise dramatically, and the costs of everything else we buy and use rising accordingly, we should realize that the ensuing hardships from these increases are our own fault.

“Thirty years ago, Americans received a warning that fossil fuels, this country’s lifeblood, are a very precious commodity that must be recognized as such, and we ignored that warning as we sat in long lines waiting for fuel due to shortages.

“Our politicians are to blame for not demanding or pressuring for more fuel-efficient vehicles, for not pressuring to develop alternate fuel sources and for permitting environmentalists to go overboard to the point we pay the increased costs of multiple blends of fuel throughout this country.”

[RWC] I guess Mr. Zedak forgot about the CAFE (Corporate Average Fuel Economy) standards enacted by Congress. Congress does deserve a great deal of responsibility for the current situation, however. Here are just a few points to consider.

· Reduced emission requirements resulted in decreased fuel economy.

· Reduced emission requirements resulted in decreased supply of gasoline, diesel, heating oil, et cetera plus higher manufacturing costs.

· Prohibition of certain octane enhancers resulted in higher manufacturing costs and decreased supply.

· EPA regulations governing refineries – and “not in my backyard” sentiments by residents – made it nearly impossible to increase manufacturing capacity.

· The requirement for non-fungible local blends of gasoline made local shortages a reality and increased distribution costs.

· Regulations make it very difficult for oil companies to do any new domestic oil and gas exploration and production.

· Water-going vessels transporting products between domestic ports must be American flag vessels. This increases transportation costs.

I’m not passing judgment on the above points. I’m only pointing out that Congress has done nothing over the years to increase oil and gas supply. To the best of my knowledge, every piece of legislation has had the effect of decreasing supply, increasing demand, and increasing manufacturing and distribution costs.

“Our automakers are to blame for not developing much more fuel-efficient vehicles and alternate fuel engines, and now they are facing costly direct competition from foreign manufacturers that have had much more fuel-efficient vehicles for years.”

[RWC] Businesses tend to build what customers want to buy.

“The petroleum industry is to blame for not building refineries in other areas of the country instead of concentrating the majority of refineries in one location. Motorists are to blame for demanding gas-guzzling behemoths that, in most cases, serve no practical purpose if other than trying to impress others as one goes to the store, church, work or vacation.”

[RWC] As noted above, it was not the oil industry’s idea not to build new refineries. I worked for an oil company for nearly 23 years and federal, state, and local laws made it virtually impossible. Even increasing the capacity of existing refineries and/or modernizing them tended to be extremely difficult. In fact, the economics resulted in us actually closing our smaller refineries in places like Illinois and Wyoming.

“I guess Americans will now have to realize the hard way that we’ve created the monster we now live with and we’re paying for that creation.”