In one of the most blatant displays of self-serving “feel good” legislation, designed to impress voters rather than assisting in solving the problem of rising gasoline prices, the House of Representatives has voted to give the government permission to sue OPEC over oil production quotas.

The facts:

The United States has very little legal jurisdiction over OPEC (Organization of the Petroleum Exporting Countries); an international cartel made up of Iraq, Indonesia, Iran, Kuwait, Libya, Angola, Algeria, Nigeria, Qatar, Saudi Arabia, United Arab Emirates, and Venezuela, which is headquartered in Vienna, Austria. OPEC seeks the membership of Bolivia, Mexico, Sudan and Syria while Sudan and Ecuador are actively seeking membership.

OPEC controls or affects an estimated 40% of the world’s oil while the large oil companies (some state-owned or controlled by sponsor countries) affect over 90% of the world’s oil.

If the government wanted to exert pressure on OPEC, they would have done so through our state department and our relationships with member states or through the oil companies which operate in the United States marketplace.

The current gasoline crisis is not a result of feedstock oil prices, but rather a function of refinery capacity and production plus the demands of certain states that require mandatory use of custom-blended “smog fighting” oxygenated/vapor-pressure grades.

Any fine or imposition on OPEC levied on OPEC will be distributed among the members who will adjust feedstock producer wholesale prices accordingly; and will be reflected somewhere in the price the public pays for plastics, chemicals and gasoline, all of which are based on petroleum feedstocks.

The government is being hypocritical as they are reaping a federal and state revenue windfall as higher pump prices results in increased tax revenues. The thought of cutting taxes is fundamentally abhorrent to the government, so they point the finger elsewhere.Classic misdirection. It should be noted that even states claiming that petroleum taxes collected at the pump are reserved for transportation-related purposes often raid these funds to cover government spending when it is time to reduce the budgetary deficit.   

To further illustrate governmental hypocrisy, many states are exploring a mileage surtaxes on vehicle usage to make up for the loss of petroleum-based tax revenue when consumers switch to hybrid vehicles.

If the government want to solve the problem, they would insure that new refineries are built in states showing the biggest increases in gasoline prices. They would also provide temporary consumer relief by reducing the taxes paid by the consumer at the pump — perhaps as tax rebate. And they would provide emergency waivers on emission standards to allow gasoline to be imported from other less-stringently controlled states who may have a surplus of production.

And as a national defense measure, demand that refining capacity be increased to the point where any scheduled maintenance or minor production disruption does not result in a revenue windfall for the refiners and wholesalers.

Merely taxing or fining the oil producers, refiners, wholesalers and retailers is simply taxing or fining the consuming public. The old saying that “corporations pay no taxes, they are paid by the end-user individuals,” has never been truer.

What can YOU do?

Do not take it out on the man at the pump. The retailers, especially those branded by major corporations) have very little discretion in pricing. In some cases their price is set as a percentage of the "rack price" set when the product is pumped into the transport trailers. Most are hard-working businessmen getting pummeled from both ends.

Research the subject on your own. Ask questions. Perhaps your neighbor is an old-timer with knowledge of the oil industry.

Write your representative and explain that you do not need feel-good legislation, you need more refineries to be built. You do not care about solar and wind power as much as you care about re-invigorating the nuclear power generation industry. 

Urge your local and state governments to turn a deaf ear to the the special interest lobbying and actually approve permits for refineries.

Encourage your local refiners to expand capacity. Since most refineries may be located in industrial areas, perhaps the condemnation of adjacent property is of worthwhile benefit to the municipality as a good investment (rent the property to the refinery) and which may have national defense implications.

And, believe the old truism “the government loves tax money” and will do anything to increase their revenue supply. Let them expand their revenues based on increased refining capacity which leads to increased usage…not by merely increasing prices.

— steve

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