A Stronger America: Part 4 – Energy

This is the fourth in a five-part series on things I would do today in order to be assured of a stronger, freer, more prosperous America 25 years from now. In our previous three installments we have talked about overhauling the tax code, reasserting the role of fathers in a stable, free society and repairing the public education system.

Today, we’re going to talk about energy.

My daughter loves Cheez-its crackers. She came by that affinity honestly. My dad loved them, too. (It’s a recessive gene. I’m not a big fan.)

She doesn’t eat them to excess. Typically a handful in a coffee cup while she chills out after school or does her homework. But we are never without a box of Cheez-its. I bought a box Sunday when I went to the store.

My dad, were he alive to have gone to the store with me on Sunday, would have found his beloved box of original flavor, noxious yellow Cheez-its. But he would also be confronted by the giant leap forward we have taken in Cheez-its technology since he died. He might select the milder White Cheddar Cheez-its, or perhaps if he was in a saucy mood the Hot & Spicy Cheez-its, or the Cheddar Jack Cheez-its or the Pepper Jack Cheez-its. If he wanted to play a game with his granddaughter, he might select the Scrabble Cheez-its that have letters and point values cooked into the surface of the crackers.

The Cheez-its section in the cracker aisle at the grocery store got me thinking. If someone had a serious Jones for Cheez-its crackers and bought out the shelf, how long would it take for the stock to be replenished? Answer: depending on what time of day the Cheez-its marauder hit, as little as a few hours. The route driver for Kellogg would refill the shelf and if he had to short another store for a day, he would do so until he could rebalance his stock.

So here are some more questions. When is the last time there was a cheese cracker shortage? When has there been a sudden, sharp spike in the price of Cheez-its? Who in the government decided that there was a need for Cheddar Jack Cheez-its? Answers: never and no one.

If Kellogg can keep Cheezits on the shelf, and figure out that someone will buy Hot & Spicy Cheez-its, why is our energy policy such a mess? You know the answer. The more the federal government tries to “do something” about energy, the worse things get. Oil is just part of it but it’s a big part.

Oil prices quadrupled in 1973 as a result of the Arab Oil Embargo. But what most people don’t know is that the actions of the Arab oil producing states took only seven percent of the world’s oil supply off the market. Yet we suffered in gasoline lines.

What this proves is that what you do on the margins in the market for a commodity such as energy has a huge effect on the available supply and the prices that we pay.

So why do we not add marginally to the world’s supply of oil by drilling in 1,900 acres of the Arctic National Wildlife Refuge or on the Outer Continental Shelf or in the shale formations of the mountain west?

Do we really believe that we can just not produce any more oil? Environmentalists block oil production, apparently unaware of the fact that it’s part of the environment. For centuries, oil was a nuisance. It oozed out of the earth and smelled bad for no apparent purpose. But American entrepreneurs figured out how to refine oil into usable fuels and lubricants. The result was an explosion of economic growth, burgeoning industry and the expansion of prosperity, all made possible by the cheap and efficient energy that comes from oil.

Note that I said entrepreneurs. The government had little role in the commercialization of crude oil.

Energy is fungible. If we drill up all of the oil, the supply will tighten and the market will send a signal that it’s time to spend money and effort commercializing some other form of energy. And that won’t necessitate some massive program handed down from Washington. People trying to get rich will go to work finding ways to satisfy the market’s demand.

Except for scale, energy is no different than the cheese cracker business. Our lawmakers should go to the store, look at the shelf and buy a box. They might learn something.