The Real Culprit of Our Gasoline Woes: Environmentalists

by | Jun 3, 2008

Every year the price of gasoline rises as refiners switch over to producing “summer” blends of gasoline and every year virtually everyone blames oil companies for the sky rocketing price. However, virtually everyone is dead wrong. Environmentalists are responsible. What do oil companies do? They spend hundreds-of-billions of dollars each year exploring for, drilling for, […]

Every year the price of gasoline rises as refiners switch over to producing “summer” blends of gasoline and every year virtually everyone blames oil companies for the sky rocketing price. However, virtually everyone is dead wrong. Environmentalists are responsible.

What do oil companies do? They spend hundreds-of-billions of dollars each year exploring for, drilling for, and transporting oil. They also spend vast sums refining oil into gasoline. Without oil companies there would be no gasoline, no plastics for myriad products (including appliances, packaging, and pace makers), no electricity generated with oil, and so on.

In other words, our standard of living would be drastically lower.

What do environmentalists do? They prevent drilling in Alaska and offshore, which leads to less supply and higher prices. They impose regulations that force gasoline producers to produce the “summer” blends.

Gasoline prices then rise as supplies dwindle while refiners make the switch over. Prices rise also because “summer” gasoline is more expensive than “winter” gasoline.

Environmentalists have also prevented new refineries from being built in the U.S. through lawsuits and regulations, to the point where no new refineries have been built in over thirty years. As a result, refining capacity has actually declined in the last few decades while demand has increased. This has contributed significantly to the high gasoline prices we now experience.

In short, environmentalists have done everything they can to make oil and gasoline more expensive and our standard of living lower.

Environmentalists are causing higher oil and gasoline prices and, as a result, higher profits for oil companies. The high profits could help solve the problem, but environmentalists are making that harder also. High profits normally cause rapid expansion in an industry, but this is difficult due to environmental restrictions. Compounding the problem, expansion is hard in many foreign locations as well because much oil production is nationalized under anti-capitalist governments, such as those in Venezuela, Russia, and Iran.

Speculation and greater world demand have also driven up oil and gasoline prices, but these are not fundamental threats to obtaining these products.

By driving up the price now, speculators will make it possible for more oil to be available in the future. Greater world demand comes from countries such as India and China, who have moved slightly toward capitalism, increased the productive capability in their economies as a result, and increased their demand for oil. More capitalism and an increased productive capability will ultimately increase the worldwide production of oil and gasoline. In contrast, as long as the environmentalist threat remains, production will become more difficult and eventually impossible if the threat continues to grow.

Some might think that environmentalists oppose the use of fossil fuels to avoid global warming. However, environmentalists have opposed the production of oil and gasoline since the 1960s, long before they began rationalizing such opposition with the global warming argument.

Furthermore, if global warming was the reason for their opposition to fossil fuels, they would be staunch advocates of nuclear and hydroelectric power. But they oppose these more fiercely than they oppose the use of fossil fuels. In any case, evidence–which environmentalists refuse to acknowledge–shows that man is not responsible for global warming but that such warming comes from the obvious source: the sun. The temperature of the earth’s atmosphere tends to follow the energy output from the sun, which varies over time.

If avoiding global warming is not their goal, what is? We need merely listen to environmentalists to find out. David Graber, a research biologist at the National Park Service, stated, “We are not interested in the utility of a particular species, or free-flowing river, or ecosystem, to mankind. They have intrinsic value, more value–to me–than another human body, or a billion of them.” Environmentalist author Michael Ableman stated, “The assumption that by buying anything, whether green or not, we’re solving the problem is a misperception. Consuming is a significant part of the problem . . . .” Adam Kolton of the Alaska Wilderness League stated, “Drilling the wildest place in America is objectionable no matter how it’s packaged.” The message is clear, environmentalists want to stop production to sacrifice man to nature. If environmentalists are not stopped, the results will be devastating to mankind.

To expand the production of oil and gasoline, we must prevent environmentalists from sacrificing man to nature. We must protect the moral right of oil companies to explore for, drill for, transport, and refine oil. Producing oil and gasoline are enormously complex tasks and cannot be performed while being strangled by regulations and other restrictions. One needs the freedom to think and act on the judgment of one’s mind to engage in any process of production. The production of oil and gasoline are no exceptions.

Brian P. Simpson is an economics professor and chair of the Department of Accounting, Finance, and Economics in the College of Professional Studies at National University in La Jolla, CA. He is the author of A Declaration and Constitution for a Free Society, and the two-volume work on Austrian business cycle theory titled Money, Banking, and the Business Cycle (Palgrave Macmillan, 2014) and the book Markets Don’t Fail! (Lexington Books, 2005).

The views expressed above represent those of the author and do not necessarily represent the views of the editors and publishers of Capitalism Magazine. Capitalism Magazine sometimes publishes articles we disagree with because we think the article provides information, or a contrasting point of view, that may be of value to our readers.

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