Spring Break
Strategic Oil Reserve should keep its cap on
By: Joshua Dwyer
Issue date: 9/8/04 Section: Opinion
Created in 1975 after the Organization of Petroleum Exporting Countries (OPEC) imposed an oil embargo against the United States in response to its support of Israel, the SPR was intended to be a safeguard against any oil supplier who might threaten to turn off its oil spigot in the future. It was also created to be an insurance policy against severe disruptions to the domestic oil supply, such as sabotage or a natural disaster, which might cause economic devastation.
The SPR was never intended to displace the inconveniences of a free market that determines the price of gasoline based on the accessible supply and required demand. The Wall Street Journal reported that as the need for crude oil increased in China and India earlier this year, the worldwide supply of oil was less than the new demand. This forced the increase in prices at the pump, not the greed of oil executives in the United States. Additionally, the amount of oil recommended to be used from the SPR may not improve the price per gallon of gasoline by more than a few pennies.
A little perspective is also needed. When adjusted for inflation, the gas prices of today are less than they were in the 1870s, the 1970s and early 1980s, according to msnbc.com. The hysteria regarding the new high prices should be tempered with a little historical understanding.
If certain congressmen were truly concerned with the energy prices that face Americans, perhaps they should consider other less risky alternatives. One of the fastest ways to reduce the cost of gasoline to the millions of Americans who drive automobiles would be to cut the amount of taxes they impose on every gallon.
The federal government charges 18 cents on every gallon and Texas adds an additional 20. This means that of the $1.79 a Texas A&M student may pay for gas, 38 cents of it actually goes to the federal and state governments. Any reduction in these taxes, even if it were temporary, would be immediately felt - and appreciated - at the pump.
Every year, Texas has a tax-free weekend to help people with back-to-school shopping expenses without bankrupting the state or drastically reducing its services. The elected officials should do something similar with fuel taxes rather than increase the United States' potential dependence on foreign oil by selling some of its emergency reserves.
The SPR was never intended to displace the inconveniences of a free market that determines the price of gasoline based on the accessible supply and required demand. The Wall Street Journal reported that as the need for crude oil increased in China and India earlier this year, the worldwide supply of oil was less than the new demand. This forced the increase in prices at the pump, not the greed of oil executives in the United States. Additionally, the amount of oil recommended to be used from the SPR may not improve the price per gallon of gasoline by more than a few pennies.
A little perspective is also needed. When adjusted for inflation, the gas prices of today are less than they were in the 1870s, the 1970s and early 1980s, according to msnbc.com. The hysteria regarding the new high prices should be tempered with a little historical understanding.
If certain congressmen were truly concerned with the energy prices that face Americans, perhaps they should consider other less risky alternatives. One of the fastest ways to reduce the cost of gasoline to the millions of Americans who drive automobiles would be to cut the amount of taxes they impose on every gallon.
The federal government charges 18 cents on every gallon and Texas adds an additional 20. This means that of the $1.79 a Texas A&M student may pay for gas, 38 cents of it actually goes to the federal and state governments. Any reduction in these taxes, even if it were temporary, would be immediately felt - and appreciated - at the pump.
Every year, Texas has a tax-free weekend to help people with back-to-school shopping expenses without bankrupting the state or drastically reducing its services. The elected officials should do something similar with fuel taxes rather than increase the United States' potential dependence on foreign oil by selling some of its emergency reserves.
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