Rep. Maxine Waters recently threatened oil companies with nationalization. Venezuela’s nationalization of its oil resources demonstrates this to be a very bad idea. In fact, any politician so deeply ignorant of economics, as to suggest that America nationalize its oil resources, has revealed themselves to be unfit for office.
The best way to address the energy crisis is through a mix of measures:
1. Issue permits and tax incentives for new nuclear power plants to be built.
2. Issue permits for new oil refineries (no major US refinery since 1976).
3. Open the entire Gulf of Mexico for exploration and development.
4. Open the Atlantic and Pacific coasts for oil exploration and development.
5. Mandate that tax incentives for alternative energy be tied to oil ‘exploration & development’ fees.
6. Don’t drill in ANWR. Leave it as a strategic reserve. But do allow inland exploration and development of oil resources.
7. Review relevant laws to ensure adequate and reasonable safeguards for environmental protection.
8. Pass legislation with mandatory imprisonment for lawbreaking owners and upper management.
9. Provide tax incentives for technology development in solar and offshore wind power with yearly reviews for possible inclusion of promising new technologies.
Long-term energy independence:
10. No government funded technology initiatives are needed; let capitalism work its magic.
11. Continue research into bio-fuels but it’s stupid to use corn, a food stock, for a fuel source.
12. Windfall taxes discourage investment in exploration and development and increase imports. The way to ensure ‘reasonable’ profit is to increase supply.
There. Simple. Complete.
If Congress passed legislation addressing only items 2 and 3, the very next day the price of oil would drop $10-15 a barrel. The more items implemented, the greater the drop in the price of oil.
To get the economy moving:
1. Submit and approve a balanced federal budget.
2. Increase interest rates at least a full point to strengthen the dollar.
3. Lower federal tax rates by 2-3 points in each tax bracket so as to stimulate the economy and counteract the slowing effect of an increase in interest rates.
Since this is an election year, don’t look for this to happen any time soon. As always, the longer the Feds wait, the more painful it is going to be when they are forced to do something. They are waiting until political pressure escalates to the point of providing political cover.