Kicking our oil addiction

Robert Legge
Published: June 5, 2008

It was a very effective monopoly. A small group of men met each week, looked over reports of oil inventories and demand and then decided whether members could increase or lower production. They had complete control over the world’s oil price.

OPEC? No. These men were members of the Texas Railroad Commission. That state agency regulated oil production in Texas and because world demand was so small in 1970 and Texas production so large they could effectively control the world oil price.

But two members of OPEC closely studied the monopolistic methods of the TRC and when war broke out in the Middle East in 1973, OPEC used those methods to see if they could manipulate the price of oil.

It worked.

Oil quadrupled in price from $3 a barrel in 1973 to $12 a barrel the next year and tripled again to $35 in 1979. 

By this time, the TRC had no control over the world price of oil. We had a nice run of $3 oil but those days are over. 

The oil shocks of ’73 and ’79 look quaint by today’s standards. After all, gas was still only 50 cents and $1.25 respectively although the short supplies often meant long gas lines. But each time prices moderated and the lines disappeared, we went back to our profligate ways of big, fast gas hogs. 

Meanwhile, the rest of the world started using a lot more oil and during the last decade the world price rose from $10 to more than $130.

Currently about two-thirds of our oil comes from overseas, often from countries not real friendly to us, although only 20 percent of our oil comes from the Middle East.

Even during this scary recent runup to almost $4 a gallon, stations still have plenty of customers. But our economy was built on $2 gas. Our half-trillion dollar fleet of vehicles includes mostly high quality long-lasting autos that cannot be replaced just to get another 10-20 mpg. And that doesn’t include the ripple effect high fuel costs have in almost all sectors of the economy. Yes, we’re in big trouble.

It’s time we got serious about getting off our addiction to a product that is increasingly expensive and prone to sudden disruptions. We’ve had plenty of warning and the longer we put this off the more painful the switch from an oil-based economy will be.

We put a huge effort into sending a man to the moon in the late ’60. We need that kind of effort again, only more so. And $4 gas is perhaps the kick in the pants we need, although it is still cheap compared to Europe.

The first thing I’d like to see is a national consensus that electric cars will be the vehicle of our future. The primary way government can help is to fund research on more powerful batteries that hold a longer charge.

But we can’t wait for the giant oil companies and car manufacturers to save the day. 

I think the real answers are not going to come from them but rather the thousands of tiny research facilities across America. I call them garages.

It’s even happening around here.

I witnessed an electric car converted from an old Mazda in a Rappahannock County garage last week. It drove like a regular car, only quieter. Electric cars do have a high initial price due in large part to the high cost of batteries. But the low operating cost still makes them competitive with gas-powered cars over a lifetime of 200,000 miles.

At $4 a gallon, a car getting 20 mpg costs $40,000 to drive that many miles. An electric car costs about $6,000. As gas prices increase and battery costs decline they will become even more economically attractive.

I’ve also seen a machine made in a Madison County garage developed by two inventors that will produce bio-diesel from locally-grown grains far more efficiently than traditional methods. They have applied for a patent and expect to produce the machine commercially in the near future.

There must be thousands of such research garages across America. The automobile industry began in such garages. We need to unleash that entrepreneurial spirit again.

Robert Legge is an independent columnist and resident of Madison County. His column appears on Thursday. E-mail