I think that the US ought to nationalize the ownership of oil, gas and other energy resources on public land. Yes, I know the US owns it all already, but what the government does is auction off rights to drill or explore. Then, if a well is productive, the oil company pays a nominal fee for the extracted oil and the rest of it is theirs. So if the price of oil jumps from $50 per barrel to $100, as far as I know, the oil company gets to keep the extra $50.
As a free-marketer, I fully understand incentive, but I also understand dumb luck. When an oil company makes a business decision to invest the money to pull oil out of the ground at $50/bbl, they have already calculated their ROI and it is sufficient. Are they hedging and hoping that the price goes up? Of course. But the nation's energy policy should be based on more than price speculation by ruthless energy executives.
As for the drilling rights, it is not like we are auctioning off the rights to graze on 10,000 acres of grassland. Oil and gas are non-renewable resources held under publicly owned land and we, the people, should benefit in the run-up of oil prices as much as the Crown Prince of Saudi Arabia, or the stockholders of ExxonMobil. Drillers could be given a percentage of any price increase above some benchmark price to make it worth their while.
I know that other countries do not allow oil companies to extract oil and not benefit themselves richly on the upside. Why should we act differently? This isn't socialism or fascism. It would just be the US contracting out the drilling of our precious resources to third parties. We would own the product and they would get paid for drilling. Kinda like janitorial services or red light cameras.
If I were king, my energy policy would go something like this:
- Start extracting in areas that have previously been placed off-limits while maintaining strict (but not restrictive) environmental controls.
- Streamline the approval process for new energy facilities and get them on-line. Any state or locality that does not want to participate will end up losing out big, by not attracting these new facilities. Let them wallow in their own self-righteousness.
- Allow the price of domestic oil and gas to track worldwide pricing (smoothing out peaks and valleys caused by speculation and daily fears) so that market forces will push development of new energy sources.
- Stop subsidizing ethanol. Period. It is such a waste of money, land and resources. Just write a $250,000 check to small farmers to buy their vote. Tell the large agribusinesses to find something else to grow.
- Allow new nuclear facilities to be fast tracked and to get on line in less than 10 years. Nuclear energy is no longer rocket science and shouldn't be treated as such.
- Open up Yucca Mountain as a storage facility for nuclear waste, regardless of Harry Reid and Nevada's whining. Sorry, greens...
- Work with the nation's electricity producers to upgrade our grid. If we could get more strategically placed nuclear facilities, the grid would become less important, since each region should have enough energy except in dire emergency, but we still need a modern way of transporting energy around the nation (except to those area that don't want to participate.)
Look at how much money Apple has made on the iPhone/iPad/iPod products. Imagine how much money a company could make if they develop the next big thing in energy. Somebody is going to do it if the money is there to be made. Oil companies have way too much power. Move them from the driver's seat to the passenger seat. Stop letting them call the shots.
Want to beat China? Figure out how to do it, get them to build it and then we will sell it around the world. Ask yourself, who makes more money? Apple or Foxconn? China will never get past us by building our products if we don't let them steal the technology from us. But, why beat China? Doesn't a rising tide raise all boats? As we say in the intelligence community, Trust but Verify.
There is so much politics in the energy world. We will need a strong leader and a willing Congress to move forward towards our own best interests. If we look inward, we achieve control of our own destiny. We will not be directly influencing or controlling other nations, so they shouldn't have a reason to complain, should they? (Funny how people accuse us of 'stealing' their natural resources, but NO ONE complains when they cash the check, do they? Only ones that really complain are the ones that don't get a slice of the cash...)
[Cue a loud crashing sound]
Whoa, I just woke up. Deep sleep. Must have been dreaming... Let's see what Drudgereport is saying. Hmmm. Gaddafi Flees Tripoli. Wonder what that will do to the price of oil?