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Jewish World Review March 20, 2000/ 13 Adar II, 5760

Charles Krauthammer

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Consumer Reports



A Nation of Oil Addicts -- LET'S SEE: (1) Flush and prosperous, America goes on a decade-long, gas-guzzling SUV binge. (2) Out of deference to calving Arctic caribou, the government declares off limits for exploration the largest oil repository in the United States. And (3) a brand new $5.5 billion nuclear reactor on Long Island is shut down and dismantled before selling a single kilowatt of electricity, part of a general "China Syndrome" panic about nuclear power.

Oil consumption up. Oil exploration stymied. Oil substitutes shackled. Surprise! Gasoline prices are high.

Pump prices are hitting $1.80 a gallon, and the politicians are scurrying about, expressing outrage and looking for villains. We have been here before. When gasoline prices last spiked in 1996, President Clinton, ever feeling our pain, ordered Energy and Justice Department investigations to find out why. A few months later, the reports concluded that high prices were caused by--brace yourself--high demand and tight supply. (Alas, not price gouging by the oil companies.)

Why do oil prices periodically spike? No mystery: backsliding on conservation, irrational restrictions on oil exploration and a nuclear phobia that keeps us from substituting uranium for fossil fuels. OPEC sees all this, watches supplies tightening, seizes the opportunity for a windfall by restricting supply even more, and presto!--oil hits $30 a barrel.

What to do? Some Republicans have decided to take a whack at Clinton's 4.3 cents-a-gallon gas tax. Oh, the courage. Aside from the fact that repeal, literally, won't make a dime's worth of difference at the pump, it betrays a total misapprehension of the problem. The reason we are in our current state is not high, but low gas taxes.

The other industrial nations pay far more than we do in energy taxes. When the price of oil dropped from $20 a barrel to $10, gas was so cheap that people stopped demanding fuel efficiency in their cars. That was the time to slap on a nice hefty gas tax.

If we had kept the retail price at, say, $20 a barrel by progressively adding taxes as the price went down to $10, we would have (1) encouraged conservation, (2) produced huge revenues for government (enabling a cut in other taxes) and (3) kept the price relatively stable.

That tax could have been lifted gradually as the price began to rise. But the price would not have risen as much, because consumption would have been tempered by the artificially high price during times of plenty.

The other current idea is to lower prices by pumping out the strategic petroleum reserve. Nothing terribly wrong with that. If oil producers abroad are going to artificially lower supply, we can artificially raise it.

It is, however, not going to make much difference to prices. We just don't have that much in the reserve--no more than a 56-day supply.

The only good reason to use the strategic petroleum reserve now has nothing to do with helping the consumer, but a lot to do with making easy money for the U.S. government. Why shouldn't the government sell its oil at $30--and then refill the reserve at a later time when the price falls, as it inevitably will, to $20 or $10? It is about time that government, the eternal spendthrift, sold high and bought low.

These temporary measures, however, will make as little difference at the pump as did the peregrinations of the U.S. energy secretary begging U.S. client states to be nice and raise oil production.

What to do in the long run? Reduce our dependence on oil. Historian Richard Rhodes and nuclear engineer Denis Beller make an unimpeachable case for nuclear power in the January-February 2000 issue of Foreign Affairs. Nuclear is both more efficient and cleaner than fossil fuels. A 1,000 megawatt oil-powered plant produces 300,000 tons of solid waste; a nuclear plant about 20 cubic meters.

Nuclear produces almost no atmospheric pollutants. Oil spews huge amounts of particulates and toxic gases into the atmosphere, including carbon dioxide, a major cause of global warming. Nuclear is safer, too. A European Union and International Atomic Energy Agency study concludes that oil kills 32 times as many people through exposure to its pollutants.

Electric cars are seen as a panacea by some. But unless we go nuclear, all they do is transfer the site of energy- and pollution-generation from the car itself to some central power plant that produces the electricity. If that power plant is fueled by oil, no pollution or conservation saving has been achieved.

There is a way out of our energy dilemma. It involves not idle fiddling now with taxes or petroleum reserves. It involves a rethinking of our energy prejudices. Try selling that in an election year.

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