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Kelpie Wilson: Let Them Freeze in the Dark

Let Them Freeze in the Dark

By Kelpie Wilson
t r u t h o u t | Perspective

Tuesday 08 November 2005

Every time conservationists have criticized the energy industries for the pollution and climate destruction it takes to pull oil, coal, gas and uranium out of the ground and turn it into energy, the retort is always the same: "You eco-freaks want everybody to freeze in the dark!"

Only in a society with no concern beyond next quarter's bottom line can such an accusation stick. Far from wanting everyone to freeze in the dark, conservationists are concerned with the long term sustainability of civilization, and they promote renewable energy that won't destroy the only planet we have to live on.

But still we hear it. In Congress just the other day, Texas Rep. Ted Poe, arguing for his bill to end the off-shore oil drilling moratorium, said we must open up these areas, "Otherwise, Madam Speaker, we will freeze in the dark. That is just the way it is."

Rep. Poe and the politicians who support opening the Arctic Refuge to oil drilling all insist that tapping these sources will reduce America's dependence on foreign oil, but they fail to recognize that these are America's very last reserves of oil and gas. When we use them up - and all the oil from the Arctic Refuge would fuel the US economy for less than a full year - then where will we be? We will freeze in the dark, ladies and gentlemen. That is just the way it is unless we get serious about renewable energy now.

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Up until now, freezing in the dark has always been a "someday" thing, but after this year's hurricane season devastated domestic oil and gas production, suddenly we face real shortages of heating oil and gas for our furnaces this winter.

Heating oil supplies are even lower than expected post-Katrina-Rita because refineries have concentrated on producing gasoline to knock pump prices down at the expense of filling the nation's heating oil reserves. Government analysts predict that people will pay an average of $360 more this year to heat their homes. Some, obviously, will pay much more than that, and for the poor, any increase will be far more than they can afford.

If you are poor and have to choose between heating and eating, LIHEAP (Low Income Home Energy Assistance Program), is where you can try to find help. But LIHEAP is chronically under-funded. Typically only about 75% of those who apply get any assistance before the money runs out.

This year, there is even less money budgeted for the program, and Senate Democrats and moderate Republicans were defeated in their attempts to add funding for LIHEAP to the just-passed budget reconciliation spending measure.

Last week some Republican senators decided to appeal to the quaint notion of "noblesse oblige" and asked that oil companies voluntarily donate a portion of their profits to fund the heating assistance program for the poor. They gently suggested that such a move might soothe the angry mobs that would soon be demanding the heads of oil companies, and failing that, of senators.

But Energy Secretary Samuel Bodman, speaking for the Bush administration and the Oil Lords, sniffed and declared the proposal very too much like "a tax."

This year's hurricane season was far from devastating to oil company earnings. The sky-high gas prices that followed the storms produced Category Five profits. In fact, shutting down refinery capacity was just the medicine prescribed by energy analysts when industry profits flagged in the mid-nineties. See Energy Hog Lessons for the details.

Rumblings about price gouging have led to several Congressional proposals for a windfall profits tax. Democratic Sen. Jack Reed of Rhode Island said he will introduce a measure this week to add $2.9 billion to LIHEAP through a temporary windfall profits tax. Sens. Byron Dorgan, D-ND, and Chris Dodd, D-Conn., will try to insert a more permanent 50 percent tax on the sale of oil over $40 a barrel into the tax portion of the budget reconciliation bill later this month. Their proposal would give cash back to consumers in the form of an income tax rebate.

The price-gouging talk has also led the Senate Energy and Commerce committees to summon oil company CEOs to a hearing that will take place this Wednesday. Executives from Exxon Mobil, Chevron, ConocoPhillips, BP and Shell will be asked to justify their post-hurricane profits.

The companies are on the defensive. They are expected to say that their profits are not unusual or excessive. Senator Dorgan's windfall tax proposal would allow companies to first deduct their costs for oil exploration, investment in refineries or in alternative sources of energy, so they might not end up paying any tax at all. Companies will say they are already doing these things and so a windfall tax is unnecessary.

But are oil companies really making the investments they would need to make in order to keep us all from freezing in the dark a decade or two from now? Congress wants oil companies to spend a lot of money on oil exploration, but all indications are that there is not a whole lot more oil out there to find, and what exists is in increasingly remote and hard to develop places, like the Arctic or deep off-shore in the hurricane-prone gulf.

It is easier and cheaper for oil companies to invest in acquiring other companies that hold proven reserves than to invest in exploration. That's why Congress went ballistic when China tried to buy Unocal earlier this year. Unocal had a healthy backlog of proven reserves in its portfolio.

We should not forget that the number one business of publicly traded oil companies is not to produce energy but to keep their share prices high. In the first three quarters of this year, Exxon Mobil spent $12.3 billion on exploration and refinery investments and $12.1 billion repurchasing its own stock.

This is why we the people should demand a windfall profits tax. But we should not support a tax that would just put a few hundred dollars back in each of our pockets. That might help pay this year's heating bills, but it won't deal with "someday."

The solution is to direct windfall profits tax dollars to a renewable energy development fund to create the new energy infrastructure that will bring us heat and light after the oil runs out. If we trust in the oil companies to do the job or wait around for "the market" to get it right, we are not going to like the result. The only warm and well-lighted rooms will be in the gated fortress communities inhabited by the Oil Lords.


Kelpie Wilson is the t r u t h o u t environment editor. A veteran forest protection activist and mechanical engineer, she writes from her solar-powered cabin in the Siskiyou Mountains of southwest Oregon. Her first novel, Primal Tears, is forthcoming from North Atlantic Books in Fall 2005.

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