Saturday, March 22, 2008

Concord home heating oil prices spike; is it time for a sane energy policy yet?

This chart shows the spike in oil prices during the last two years. These are non-cash prices offered by one of the local oil dealers in Concord. These prices were discounted by $0.10 per gallon if paid within a certain time period.
The cost of living has been on my mind lately for obvious reasons. It has been on everyone's mind. It is becoming clear that the economy is in a real tailspin and for whatever reason, none of our "leaders" seem to want to do anything about it.
A lot of the problems are the fault of ordinary folks who have not been able to catch up with their standard of living. They spent too much, they bought too many things, and now they are paying the price. But that is only a small section of the nation. Many others have had it bad for a very long time and for those folks, it is getting worse.
Here is just one example of how bad things are for normal, ordinary folks like me.
On Wednesday, we ordered 100 gallons of home heating oil for our residence. The quoted price was $3.79 per gallon. On Thursday afternoon when the delivery guy brought the oil, it had gone up 10 cents. In seven weeks, it had gone up 54 cents per gallon. In a little more than two years, the price has gone up 250 percent.
In looking at the overall picture, our household will pay about $600 more this year to heat our home than we did last year. I'm hoping that the latest delivery of oil will actually be the last one for the year but I'm not so sure. Sometimes, we have to have the heat on in April. In previous years, we have been able to ride through the spring with very little oil. This winter though blew the doors off the budget without the spike in oil prices. If we have to get more before it starts to warm up, that $600 price will go to $800 or $1,000.
At the same time, without going into specifics, our household income has stagnated and is less than it was the previous year. We are thankfully hanging in there due to creative budgeting and savings tactics on my part while at the same time paying down long-term debt as fast as possible. But I know a lot of folks who are barely holding on and I can just imagine how bad it is for them.
As we come to the end of this winter, let's not forget what we have gone through. This is an election year. Incumbents and challengers will be begging for our votes. While elected officials were pontificating about the home heating set asides they were able to line up for poor folks just a few months ago, the rest of us have been getting hammered due to their refusal to come up with some sane national energy policy which benefits all Americans. They have refused to enforce anti-trust laws and refused to put any kind of cost controls on the energy businesses. We are paying for their negligence.
The costs of heating our homes, commuting to our jobs, powering our homes and jobs, and putting food on the table, have skyrocketed. The result of the last few years has been a massive transfer of money from the majority of Americans to a handful of energy companies. And this isn't Wall Street - this is one sector of the economy. We need look no further than ExxonMobil posting a record $43 billion profit last year. That's not good business; that's predatory capitalism at its worst.
For more than 30 years we have had energy problems and beyond a few token suggestions, nothing has been done about the problems. Businesses are, thankfully, making advances in hybrid car technology and solar panels. But that isn't enough. And the costs of these two items are often prohibitively high and out of reach for most Americans, even if they could amortize the cost over a number of years.
When shopping for a car last year, I compared the prices of hybrids and high mileage non-hybrids. Since I was commuting about 130 highway miles per day to get to work, it seemed worth the time to do some math to see if the hybrid would be beneficial or not. As it turned out, even with the better mileage, the hybrid was just too expensive and did not provide the long-term cost savings. It broke even after seven years. Hybrids only get about 45 miles on the highway or just a bit higher than the 35 to 40 mpg high mileage non-hybrids will get if you stay within the speed limits. If I was doing 130 miles in city or back roads driving, the hybrids, which get around 60 in the city, would be worth the extra money. But with highway miles, the hybrid just wasn't worth the added expense. As well, the tax deductions put in place to encourage hybrid purchases were expiring and not renewed, despite their popularity and the Democrats controlling both houses of Congress.
Solar panels are a similar situation. About six years ago, I did a story about a guy who had a two-family home in Massachusetts and installed solar panels on his roof to supply power to heat the hot water for both apartments. There were tax incentives for the installation and if I recall correctly, after eight to 10 years, the expense of the panels were to be paid off, with unlimited, free hot water, warmed by the sun, after that time period. However, you need to have the initial $5,000 to have the panels installed. Those same panels are probably double the cost now. Had our nation thought about forcing [or recommending] that home builders install these panels into new homes during the housing boom, the nation could have radically lowered the cost of energy on many of these homes with little or no noticeable cost to the homeowner. I mean, what's $8k to $10k when you are buying a $500k house? If there were more tax incentives, the end result may have cost $0 to install, depending on how the language of the incentive was written. The flood of solar panels installed on thousands of new homes would have created thousands of jobs and lowered the price of the panels, long-term. This would have been a heck of lot more responsible and equitable then giving oil companies tax breaks. With Democrats in Congress trying to rescind those tax breaks, the oil companies will just pass that on to us. Heaven forbid they give back any of the $43 billion they basically stole from us.
If we go back into the past, we can see that some have suggested changes to the nation's energy policy. In his 1976 presidential campaign, Oklahoma Sen. Fred Harris suggested completely nationalizing the energy system in order to lower prices for consumers. This may have been a bit far-fetched and way too populist for the American people at the time since Harris placed fourth in the Iowa Caucuses that year and dropped out after not winning in Wisconsin, his firewall state. After being elected president, Jimmy Carter suggested that Americans turn down the heat, wear sweaters, and drive less, after gasoline shot up from 35 cents a gallon to 60 cents. The kings of the Middle East, where a good chunk of the oil is, began living high off the hog, encouraging random acts of terrorism with their wealth, while many of America's powerful elite served them as masters.
It's time for some sweeping changes. We are beyond conservation. Many of us are already doing that or will be soon due to the very high costs of energy. The answer is clear: We need regulation. And if the Democrats are not going to offer the sweeping changes the people of the country need, the people will have no other choice but to look elsewhere. Our lives depend on it. It really is that simple.
Many of my conservative friends will say that my complaints are just a part of living in America in this day and age. Any solutions that regulate a free market business, they will suggest, smacks of Socialism and is against everything the nation has always stood for. But I will respectfully disagree. When working families and seniors have to choose between food, gasoline, and home heating oil, there is a problem. When even after cutting back to save money, you're still not breaking even, there is a problem. I, thankfully, don't have it that bad. But others do. It is time for some real changes.

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