Sure, there is nothing President Obama can do at this very moment to bring the price of oil down. The issue for the past $20 rise in crude oil is Iran, and a belief that we have our own Cuban missile crisis on our hands -- except this time it is getting harder to think about how we can avert further escalation.
That means you can't release oil from the Strategic Petroleum Reserve to bring oil down. In a war between Iran and Israel, you may end up needing every drop of that oil if things go awry.
But the idea that we can't influence the price at the pump over the next few years is just plain technologically and empirically wrong, and that's what makes this moment so maddening.
Tonight, I'll have the CEOs of Westport Innovations (WPRT) -- recommended this morning by Bank of America Merrill Lynch -- and Clean Energy Fuels (CLNE) on "Mad Money." These two companies almost singlehandedly are providing the alternative that could MOST certainly bring down the price of oil if there were more than just off-handed references to this obvious alternative.
Right now, the president can't help himself. He is so negative on fossil fuels that he can't mention them without mentioning alternatives. He can't bring himself to say, "We need to make it so our policy is to use natural gas to create energy security and to do battle AGAINST OPEC."
Yes, we want a president, from one party or the other, who simply says, "We must smash OPEC's hold on oil and the way to do that is to use our bountiful natural gas as THE surface fuel in our country."
This goal is hard for our president because he has committed the country to electric cars, something that, frankly, can't affect the price of oil for decades. This goal is also hard for the president because, I believe, deep down inside, he wants higher fossil fuel prices because there will be less of it used.
But that's what makes this moment so unnerving. The technology to drill for and produce natural gas has well exceeded our ability to use and store the fuel. We are relegated to burning the stuff off -- flaring, rather than using it-- because we haven't endorsed the fuel for broader use.
Many people feel that natural gas vehicles are fanciful, even as they are in abundance in many countries. Further, there is a sense that it is too expensive to liquefy and use for heavy-duty vehicles.
All of this is false -- patently false.
We have the technology, we have the engines, and, with some encouragement from Congress and the president, we could put the incentives in to make it so that natural gas is adopted as quickly as diesel fuel -- something that took less than a decade to become the dominant fuel for trucks.
How would nat gas bring prices down? Heavy-duty trucks use 25% of our imported oil. If these trucks all switched to natural gas, we would be importing far less oil -- so much less that it would surely cause the price to drop.
Of course, it is unrealistic to presume this can happen without government incentives. Yes, the payback is one year given the 40-to-1 disparity between the price of a gallon equivalent of liquefied natural gas and diesel. That's historically off the charts and it has to do with the sinking price of nat gas every bit as much as it does the soaring price of diesel.
So, if the ratio holds, and I think it will, as older engines are retired, perhaps trucking companies will switch to the newer nat gas engines to save money over time.
But without a government policy that encourages truck switching, say cash for old diesel-burning trucks or a subsidy for nat gas engines that actually makes them so cheap that you want to scrap your diesel engines, it's not going to be fast enough to affect prices.
We need a sign from Washington that the fuel is abundant and practical. It could be as simple as to say, "The military has to go nat gas so we are not hostage to the Middle East for our fuel." Or how about, "The Post Service is going to use nat gas." Oh, and if you think this is all fanciful, the government has been spent billions to encourage electric cars and ethanol use, and neither can even hope to dent the price of oil. Plus, corn-based ethanol is causing tremendous food inflation.
In other words, we support the worst and most impractical strategy. We do nothing to support the practical and the immediate solution.
So, yes, we can't change the direction of oil this month or maybe even this year. But believe me, if OPEC knew we were serious about nat gas, it would bring down prices on its own accord to keep it competitive, and that would mean a great deal to car owners in this country.
Alas, I am reluctant to blame the president too much here, even though he's doing very little to help this cause. That's because the Republicans seem just as obtuse, even as they are more pro fossil fuel. This is not about "more drilling." We have enough nat gas already. It's about fuel switching and none of the candidates seem to recognize the possibilities.
It's a total failure of imagination for the Republicans. It's an ideological blockage for the Democrats.
In the end, we have it within our destiny to affect the prices.
We simply don't seem to want to do it.
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