How to Determine Gas Prices in a Year

I don't want to mislead with my title. I don't own a crystal ball and can't predict exactly what fuel will cost at certain times. However, we have all been studying fuel prices rather closely the last few years and have begun to be able to see linkage between certain events and gas prices.

For example, as prices hit an all time high and hovering around $4.00 a gallon in the early part of the summer, House Republicans declared they were have a "staycation" like many other Americans and taking care of business by focusing on energy. The theme of the ad hoc Congress was "drill here, drill now" and the public and media took notice of the action. So did the oil speculators who lowered the price of oil per barrel, which showed up in our gas prices.

Another example was Senator John McCain declaring that he was changing his historic position of being opposed to domestic drilling and stating that everything should be brought to the table for consideration (biodesel, coal, etc.), including exploiting oil in the United States. He placed particular emphasis on the latter because of how that view stood in contrast to the Democrats position of avoiding all domestic drilling. The results was the further lowering of gas prices.

So, oil futures are based on projected consumption (demand) and projected supplies. The lack of oil in this country is not based on scarcity (which is created by nature), but because of shortages (which is based on government policies). With that, the single biggest factor about future supplies and prices of oil is the government. Oil speculators are convinced that the Democrats are hostile to domestic production (just look at their voting record and stated postions) and that the Republicans seem to take the pursuit seriously. With that, here is a quick breakdown of the future of prices:

• If the Democrats win both the Congress and the White House, expect gas prices to grow exponentially. I project them to more than double the current $3.00 a gallon level by the elections of 2010. That $6.00 a gallon rate could be rather conservative.


• If the Republicans win both the Congress and the White House, expect a rather significant drop in gas prices as long as the Legislative Branch makes domestic drilling a top priority. If they do that, you could see prices back around $2.00 or even less within two years.
  
• If you have divided government where different parties dominate the Legislative and Executive branches, you will likely see prices remain about the same with a continued upward trend.
  

Don't be fooled by arguments that passing legislation that encourages domestic drilling won't immediately lower prices. We know that serious discussion alone can achieve that. If Americans are concerned about lowering gas prices, they should be very deliberate about the way they vote.

A few weeks ago gas prices began to rise at a rapid rate. This was about the time the media began to declare that it was unlikely McCain would win. It is largely based on futures.

So what about the recent drop in gas prices? Everyone is thrilled with them going below $3.00 a gallon in many parts of the country. Why this is happening is the "bad news" to this otherwise exciting news. The current financial crisis is now having a direct impact on gas prices. Oil futures project that we are going to have people driving less, companies transporting fewer goods less often, and factories demanding less energy because of projected manufacturing declines. The good news of lower fuel costs is actually an omen of bigger economic problems.

Watch the headlines and observe gas prices. You will see the link. Think carefully how you vote, because it could profoundly impact your financial future.

Kevin Price articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media.

Kevin Price is Host of the Price of Business (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at HoustonBusinessShow.com. Visit the archive of past shows here.

2008 Elections as a Referendum for Democrats

Thanks largely to the media, Senator Barack Obama and his fellow Democrats have succeeded at making the 2008 election a referendum on George Bush and (by party affiliation) Senator John McCain. We are told that the current economic challenges we face are directly related to the policies of George W. Bush. However, to do such, would be to presume we live in some monarchy without checks and balances. Congress is, in our Constitution, the first branch of government and the President cannot do anything without that legislative body.

In 2007, the members of the Legislative Branch, in both Houses, went from a majority of Republicans to a majority of Democrats. Interestingly, those were not the only changes that transpired.

In 2006, with Republicans in the White House and in both Houses of Congress...

• Consumer confidence stood at a 2 1/2 year high. People were buying more and feeling better about their economic future.


• Regular gasoline sold for $2.19 a gallon. This price is far too high, but would be a dream price compared to current levels.


• The unemployment rate was 4.5%. Economists define this as "full employment." This economy was extremely hot and the demand for quality employees was at an all time high.


• The Dow Jones hit a record high. 14,000 and higher. Americans were optimistic about the future on both Wall Street and Main Street.

In 2008, with Democrats now in the majority of both Houses of Congress...

• Consumer confidence has reached a low that it hasn't seen in years


• Gasoline is hovering around $3.50 a gallon


• Unemployment is up to 6 percent -- a significant jump.


• Americans have seen their home equity drop by over $10 trillion nationwide


• Approximately one percent of American homes are in foreclosure.


• The Dow Jones has dropped to below 10,000 points for the first time in four years.

I do not want to overly simplify. I know there are plenty of guilty parties in both parties. However, the United States was clearly better off with Republican majorities in both Houses of Congress and in the White House. My vote in this race will be every bit as much a referendum on the Congress as it will be on the White House.

Kevin Price articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media.

Kevin Price is Host of the Price of Business (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at HoustonBusinessShow.com. Visit the archive of past shows here.

Congressional Democrats Show Priorities When It Comes to Working "Over Time"

Senator Harry Reid (D-NV), Majority Leader of the US Senate, has declared that he and his Democratic colleagues will work "around the clock" to solve our financial crisis. In a very real sense, this shows where his party's values and priorities are.

Of course it is all good and well that the Congress that played a pivotal role in getting us in this Wall Street crisis, would do something about getting us out, but the same Democratic leaders have not been nearly as interested in helping average Americans with a crisis that has been equally challenging to most. That is the raging rise in gas prices that has seen exponential growth, especially since the Democrats have taken over both Houses of Congress.

During the summer recess, many Republican Members occupied the US House and demanded Congressional action on our energy situation. Drill here, now, every where, and there too. Meanwhile the Democrats were dismissive about it and more interested in pursuing reelection rather than the needs of the vast majority of their constituents. They didn't see an energy crisis, but an opportunity to reduce demand on gas which would help conserve the commodity and lower pollution. It was a "good" problem that the "gasoline addicts" in this country needed. Tell that to the average American who was looking for relief and needed a break.

It is interesting that a party that has marketed itself as the "party of the people" will show up in mass to address Wall Street's concerns, but took a vacation when it came to the biggest issue facing average Americans. To me, it is unconscionable and they do it with a very straight face.

Instead of being embarrassed by their elitism -- going to premiers of Al Gore's "An Inconvenient Truth" in fleets of SUVs and lecturing the rest of us to take a bus -- they behave as though they simply know best and it would be better if we did what we were told. With the Democrats, average Americans get gouged while Wall Street gets a hand out, and they are for the people? You have to be impressed by their unction.

There is plenty of fault to go around in our nation's current financial crisis. Republicans, Democrats, Congress, White House. However, the Democrats hypocrisy when it comes to their treatment of the issues of Wall Street and the average American, they appear to be for the average person in their public relations, but for the elite in DC and Wall Street when it comes to their policies. I hope we remind them of that in November.

Kevin Price articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media.

Kevin Price is Host of the Price of Business (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at HoustonBusinessShow.com. Visit the archive of past shows here.

What Happened to the Democrats?

A few weeks ago November was expected to be a bloodbath for Republicans. Republican members of Congress were choosing to retire rather than face extinction, recruiting new candidates was becoming a nightmare for the GOP, and historians were predicting the biggest landslide victory for the Democrats pursuit of the White House since 1984. On that year, Ronald Reagan won every state except Minnesota, the home of the Democrat nominee. Now, John McCain has a slight lead by virtually every major poll.

So what happened to the Democrats?

Barack Obama. The Democrats have faced buyers remorse ever since they bought into an Obama candidacy. Increasingly it is becoming clear that, if Democrats knew in January what they know now it is highly unlikely he would be their nominee. Reverend Wright’s rampages on the horrors of America, Michelle Obama believing the US is fundamentally “mean,” Barack Obama’s love for everything European and fundamentally low view of those things that make up common America.

Energy. Americans have always had this view that they would never tolerate the ridiculously high gas prices common in Europe, but we have been doing exact that. Furthermore, Democrats have indicated that those prices are a good thing. They believe we Americans are mere addicts and need to be cut off from our supplies and force to conserve. They are more frightened about drilling more here and now than being dependent on countries that sponsor terrorism. In other words, their energy solutions blame Americans when they should blame the policy makers. That is what Republicans have been doing as they occupy an empty House of Representatives and teach Democrats lessons in energy economics. That is what McCain has done in choosing Sarah Palin (the government of Alaska which is home to our best source of domestic drilling). Energy is serving as a huge divider between Democratic candidates and voters.

International affairs. When Russia attacks one of our strongest allies in Eastern Europe, Barack Obama calls for “restraint” on both sides and says that the UN Security Council should handle it. Of course, Russia is a member of that Security Council and has veto power, making it toothless in dealing with Russia. It is these kind of foreign policy gaffes that are making Obama look unprepared verses McCain who looked extremely Presidential as he denounced Russia and said that the US should take reasoned but unilateral action.

Sarah Palin. Palin is arguably the most strategic choice for VP I have ever seen and I have been watching Presidential politics closely since the 1970s. She accentuates Republicans best issue (energy), she electrifies women voters who are angry over the treatment of Hillary Clinton, she is more Conservative than the rank and file could hope for (bringing many of those disenfranchised voters back to the fold), and she is obviously a very savvy campaigner.

A few months ago Republicans looked destined to suffer further loses in both Houses of Congress as well as the White House. I believe the Democrats have their work cut out for them when it comes to the Presidency and we could all be surprised by the make up of the Congress.

Kevin Price articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media.

Kevin Price is Host of the Price of Business (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at HoustonBusinessShow.com. Visit the archive of past shows here.

Energy, Competition, and a Simple Lesson in Economics

For quite some time many Democrats and virtually everyone in the extreme environmentalist movement have discredited Republican calls to increase domestic drilling. Obama in particular has been very dismissive. Repeatedly he has told voters that we could begin building rigs today and it would have zero effect on gas prices for at least six or seven years. My sophomore economics professor would beg to differ.

When I took my first macroeconomics course in college, I remember the professor saying something that is considered unorthodox by many liberal economists today. He stated that “monopoly is virtually an impossibility today. As long as there is the possibility of competition, preexisting business must behave competitively. About the only way you can have a monopoly,” he argued, “is when the government sanctions such (e.g., utility companies).” The professor went on and noted that as long as businesses can enter the market place, the so-called monopolies have to keep prices down and products at a high enough level to deter competition.

For several years our US government has protected the virtual monopoly that has existed in the Middle East when it comes to oil. The Saudis, Iranians, and other energy powers have known that we will protect our trees before we help our families with lower gas prices. Therefore these competitors have driven prices without consequence. For years, the United States hasn’t even had a serious discussion on the subject of increasing oil supplies. Until now.

Now, what seems out of the blue, is a dramatic drop in oil prices. A few weeks ago it was close to $150 a barrel. Now, it is around $115. Obama is right, oil prices wouldn’t “drop a penny,” instead it has been tens of dollars and more should soon follow. Talk alone is beginning to break the foreign monopoly on oil. Our foreign competitors do not want a single drop of new source oil to be produced in this country. That is why they are increasing supplies in order to lower our prices. It isn’t because they suddenly like us. Our competitors hate the possibility of competition. What the liberals don’t understand is that competition works. Our foreign competitors get it. The Republicans who are occupying the US House and demanding more action on drilling understand it. But the liberals do not.

This only reaffirms my conviction that we need Presidential and Congressional leadership that understands simple economic principles. If our members of Congress don’t understand how competition works, they should do something else for a living. The same expectation should be there for any person who would be our President. We need leadership that understands the power of the market place and will harness that power to make the US energy independent and economically free.

In fact, I am fairly confident that if the Democrats occupy the Congress and the Presidency, I expect an exponential increase in oil prices. If Republicans win both we will see a rapid decline. If we split government, expect a stalemate. I think I know what most Americans desire.

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The Green Case for Domestic Drilling

Recently Republicans in Congress have done an excellent job of making the economic efficiency and national security arguments for increased domestic drilling. Democrats attempts to blame the speculators, "make sure the tires are filled," and calls to drill where the energy industry already has leases is falling upon deaf ears. Voters seem to know that those acres have been so thoroughly exploited that the translated cost per gallon to explore them will be higher than current prices. The industry needs access to new locations and it is pounding that drum effectively.

The current Republicans in the House are occupying empty Chambers and are demanding Speaker Nancy Pelosi to call Congress back and to tackle the energy crisis. Pelosi is invulnerable in her reelection efforts and has told other Democrats to make her the "fall guy" for failing to take action on energy. Republicans, like Congressman Kevin Brady of the Woodlands (Texas) and Ted Poe (of Houston) and others are reminding their colleagues that there already was an up and down vote on whether the Congress should immediately pursue an energy policy instead of taking a vacation. That was their vote for adjournment. If you voted for adjournment (which passed by only one vote), you voted against Congress immediately dealing with energy. If you voted against adjournment, you voted for Congressional action. That message may be getting through to voters and Republicans are beginning to look like that brash group that took over the Congress back in 1994.

The economic case for increased domestic drilling is simple. It will quickly lower gas prices by increasing future supplies. What most Democrats fail to realize is that the threat of increased production can lower prices. A thorough debate on the subject in the last few weeks has already lowered the price per barrel to around $116 at this writing, from being around $150. This is without a vote and without new exploration. This is merely due to rhetoric. Imgaine the impact once we increased drilling. Our current prices are based on futures. With the Republicans winning the recent debate, the future looks brighter for oil supplies and we are seeing it at the gas pumps.

The national security argument is just a logical. Many Democrats are arguing for tapping into the Strategic Reserve in order to help lower prices. This has only served as a reminder to voters of how dependent we are on foreign oil. In 1970, we imported 24 percent of our oil. Today it is nearly 70 percent and that number continues to grow. If foreign countries decided to stop supplying us, we would be in a true crisis. Security, as well as prosperity, are wrapped up in our energy future.

Republicans now need to make the moral case. Increased domestic drilling is the green thing to do. For years we have been told by environmentalists that this planet is little more than a "big blue marble." Simply put, environmental disasters on any part of the planet has an adverse impact on the entire planet. If that is the case, who better than the United States to increase drilling? Right now, Cuba and Venezuela are eyeing off shore drilling opportunities near the United States. Do we prefer their technology, safety standards, and labor over that of the US? Any time the United States can take the lead on drilling; people, animals, and prestine environments are better protected compared to the means of any other country.

I have suggested this to Members of Congress and others for quite some time and it seems the argument is beginning to have some traction. I visited with Rep. Kevin Brady (R-TX) about this last week and he has assured me that it will become an important argument Republicans will use as the GOP continues to take over the empty House Chamber. All I can say is it is about time. With the moral case joining the economic and national security arguments, the Democrats could find their hopes for the 2008 elections running out of gas.

Republicans Look Like Young Turks of 1994

Remember the "Young Turk" Republicans of the early 1990s that eventually took over the Congress? Led by than Congressman (and future Speaker) Newt Gingrich, Republicans took on the Congress at every turn. It pointed out the corruption that was seen through out the Congress. Members wrote hot checks on their Congressional checking account without consequences and these Republicans reminded voters of such disgrace. The GOP changed the power and structure of committees, taking away the autocratic nature of chairmanships. Virtually every day members of the GOP went on to the House floor denouncing the Democrat's behavior, regardless if Congress was in session at the time.

This approach offered promise to a country that had grown tired of a corrupt and "do nothing" Congress that had ruled the country under one party for decades and resulted in the "Revolution of 1994." These vigorous members saw a net increase of 54 House seats in that election, and a pick up of 8 seats in the US Senate. But it didn't stop there, Republicans won 472 legislature seats around the country, the mayor's office of two big Democrat cities (New York and Los Angeles), and the GOP took control of 20 state Legislatures. The Republican Party became the majority party over night.

The issues against the Democrats in this Congress is even bigger than those in 1994, in my opinion. We have a credit crunch that is being solved by bailing out lending institutions and having the government going further into the banking industry. We have had the price of gas almost double since the Democrats took over just two years ago and they want to solve our energy problems by demanding to make sure we fill the air in our tires. We are successfully waging a war on terror in Iraq and the Democrats are demanding that we pull these troops out before our task is completed.

The energy issue alone is important enough that the Congress should have done what many Americans are choosing to do -- saying "no" to a vacation. Republicans took the House floor today without lights and with little hand held cameras and denounced their Democratic colleagues for failing to do their job. The Democrats went home to run for their political lives and will have a horrible record to try to defend. Yes, it is beginning to look like the good old days!

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What's Up With Oil?

Oil prices are dropping and people are beginning to wonder why. Sure, $136.64 a barrel is still ridiculously high, but it is significantly less than the $150.00 that, a few weeks ago, seemed inevitable. Furthermore, you would be hard pressed to find a period during this time of the year when oil prices dropped. This is, after all, sumer time. Summer, when people go on vacations and consume gas at its highest level during the year. Ironically, that is exactly one of the reasons oil prices have gone down. People are consuming less gas now then they typically do during the summers. Oil prices are driven by speculation -- whether or not people will be buying more or less oil in the future. The decline in summer travel is just such an indicator.

There are other factors that are affecting the price per barrel:

* A major presidential candidate has announced that he supports more domestic drilling in the United States. John McCain has stood against such expansion and his announcement has become a warning shot over the bow of foreign countries.

* McCain's statement may have contributed the to announcement by the Saudis that they may in fact increase production. That too affects the way speculators look at oil.

* Now virtually everyone is embracing alternative energy. I have noticed that even the largest oil producers in the world are now beginning to look into alternatives. Just today I saw an ad by one of America's biggest oilmen, T. Boone Pickens, discussing his company's expansion into wind energy.

* The dollar is seeing an increase in value. A strong dollar leads to lower prices, which is great news for consumers of all products and services.

The drop in prices today is at $6 a barrel. We have yet to see it at the pump as retailiers take a "wait and see" attitude. But, I believe that if the US continues to stay serious about energy independence, we will find ourselves enjoying lower gas prices and other "blessings of liberty."

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Kevin Price is Host of the Houston Business Show (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at HoustonBusinessShow.com. Visit the archive of past shows here.

Will Criminal Cases Follow Oil Speculation?

Around a decade ago oil cost around $11 a barrel, now it is hovering around $150. Was there almost a fifteen fold decline in its availability or a similar increase in its demand? Why is there this huge disparity in just ten years? How does it seem like just yesterday that the major headlines for a week was oil breaking $70 a barrel for the first time in history?

The massive increase in the cost per barrel has led to charges of "speculation" and "price manipulation." Some are even beginning to use terms such as "criminal" because of the enormous economic impact due to lost jobs and high prices.

Whether or not they take the extreme move of making this activity "criminal" (like Sarbanes Oxley did with accounting), it is still too early to say; but I think it is safe to assume that some are going to try to figure out ways of pursuing civil action. How, I don't know, but the situation is very hostile for those in this business.

Can the actions of those who set these commodity prices be defended? Let us, just for a minute, give them the benefit of the doubt. These prices aren't made simply on the basis of current supply and demand, but also the future. There is little doubt that supply won't likely increase any time soon, especially with the Democrats in Congress making it perfectly clear they have no plans to let bill that incourage such pass. And demand? Ten years ago, China was a non-player in oil consumption, today it is the number two consumer in the world and growing. Over 1,000 cars are added to its roads daily and demand increases by almost 10 percent annually. It is safe to assume this demand is only going to continue or increase. There has been a comparable increase in demand by India and other developing countries in recent years. These too have driven prices.

I personally think the rise in the cost of oil is not nearly as "wild" or "speculative" as the media would like one to believe. Those who are crying such are typically the same people who are undermining our efforts to increase supplies. Unfortunately, I don't expect reason to prevail, but vengeance. I'm sure that will do a great deal to lower gas prices.

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Energy Losers in Oil Boom

High oil prices have resulted in a boom for some of the largest oil companies in the world. The huge demand created by China, India, and other countries in the pursuit of modernization has created a situation that has led to gas prices that are multiples of what they were a few years ago. As a result, corn prices are exploding due to the pursuit of ethanol and biodiesel is raising the value of untold other agriculture products. Yet, not every energy business has directly benefited. Why? Because high prices has actually reduced demand for the first time in almost two decades.

Two of the biggest losers in energy from high oil process are retail locations and refineries. Both of these type of companies are far more effected by demand than gas prices.

ABC News reports that Exxon Mobile, "the world's biggest publicly traded oil company, said it now plans to sell to distributors its remaining 820 company-owned stations and another 1,400 outlets operated by dealers." Citing ABC, the company also reported that the reasoning behind the decision was because 'As the highly competitive fuels marketing business in the U.S. continues to evolve, we believe this transition is the best way for Exxon Mobil to compete and grow in the future,' said Ben Soraci, the director of Exxon Mobil's U.S. retail sales."

Meanwhile, the Houston Chronicle is reporting that "after three years of record profits, the U.S. refining industry has been confronted recently with a hard truth — that the party may be ending."

"Refiners' profits have plunged this year as record crude oil prices have sharply boosted fuel-making costs. At the same time, higher prices at the pump are softening demand for gasoline and diesel, limiting refiners' ability to pass along the bill."

Ironically, these stories come out rather close to the announcement that the United States is opening its first refinery in decades. There is now a great deal of talk about increasing domestic oil production. That rhetoric may have to become reality in order to create good news for these suffering businesses.

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Solving the Energy Crisis in 30 Days or Less

Since the media loves words like "crisis," I will use it; but it is certainly over used. Furthermore, our problems are not in energy but in policy. We have plenty of energy to fuel our cars and we could cut our prices by close to half in about a month if our elected officials had the courage and desire to do so. The majority in Congress have neither.

Thirty days seems ridiculously short and cutting prices in half, ambitious, but I sincerely believe these are goals that are realistic and should be pursued today. How?

* Congress could simply open a serious debate on making the hundreds of years of oil available in this country subject to drilling (in Alaska, the Dakotas, Florida, etc.).

* A few liberal Senators with a history of opposing drilling in this country, coming out in favor of such.

* Hearings on the subject in which Members of Congress strategize with oil industry leaders rather than lecturing them as if they were poorly behaving school children.

If these simple things happened -- without a single drop of new oil being pursued in this country -- the drop of oil prices would be exponential. The threat of the US becoming energy independent would be enough to throw the market into a tailspin. The world knows our ability to produce is legendary and the last thing out international competitors want us to do is produce in this area. A serious debate alone would drive our competitors to making sure it is a moot point. A similar debate in the 1980s led to a dramatic reduction in the price of oil per barrel.

So why isn't it happening today?

* The current Congress has a majority of members who actually want gas prices to be higher. Yes, you read that correctly. Many talk about America's desire for fuel as if it were an alcohol problem. In an environment such as this, you will never get actions that will drive prices down.

* This is going to sound a little conspiratorial, but I believe the majority of this Congress wants high prices, lost jobs, and economic downturn. It is the politics of "us vs. them" and economic decline that makes them believe they could have a more sizable majority in 2009 and one of their own in the White House. The Democrats need economic decline and they are our economy's woes biggest advocates.

I said at the very beginning of this post that the problem isn't energy, but policy. It isn't scarcity (which is caused by nature), but shortages (which is due to poor policy). We need to hold this Congress accountable. Tell them to stop lecturing the executives that represent the energy industry and support the owners of them (the many individuals of all economic groups that own stock in these publicly owned companies). Finally, sign the petition to get this problem solved today. Drill Here. Drill Now. Pay Less. A serious discussion alone could change everything.

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First New Refinery in Decades

There are only a few operating refineries in the country. The bureaucracy to get a license for such is years and the political environments are very hostile to the development of energy independence -- a stated priority of virtually every politician. With the average cost of gasoline approaching $4 a gallon, that might all be changing.

For the first time since 1976, the International Herald Tribune is reporting that the path is being open for the creation of a new refinery in South Dakota. This is the first new one in this country since 1976 and should have the capacity to produce 400,000 barrels of crude from Canada daily. This will certainly contribute to lower energy prices.

In addition to being good for energy independence, it has the potential of creating almost 5,000 short term jobs in the plant's construction and 1,800 long term jobs for those who will work at the plant once completed. The company, Hyperion Resources, has indicated that those jobs will have an average salary of $20 to $30 an hour. Good paying jobs in a part of the country that needs them.

I, for one, am mainly pleased to simply see that the US is taking some small step in the effort towards energy independence. If you want to call $10 billion, the cost for the project, small. Energy independence, which makes our economy strong, our people prosperous, and our nation more secure from our enemies (who are the biggest beneficiaries of our current energy crisis) needs to be at the top of our nation's priorities. Steps like the opening of this refinery are certainly actions in the right direction.

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The Real Reason the Saudis Won't Provide More Oil

The media is up in arms over the fact that Saudi Arabia has told the United States that it won't be increasing its supplies of oil into the market. Talk show hosts have been up in arms, arguing that the Arab nation is gouging the US and other Western countries with high prices. Why don't they just provide more oil? Why be so greedy? Don't the Saudis know what we have done for them? It appears the situation may not be that simple.

According to energy economists, the Saudis are suppose to double its output over the next ten years. However, it is being reported by the New York Times that "capacity will probably stall near current levels, potentially creating a significant gap in the global energy supply" according to government officials and energy executives in both the US and Saudi Arabia. Just recently a friend of mine told me that the stock market advise newsletters were about to release this story. But it is really old news because the article is over four years old.

So over four years this story was out there, but little has been done about it. This is just among a long list of reasons why we have needed a national energy policy. Four years ago gas was a little more than half the price it is today. That was the time to take advantage of important information such as this, but I am sure the politicians didn't want us to be alarmed. Maybe if we ignored it, the problem would some how go away.

The United States is sitting on approximately 200 years worth of oil based on current consumption levels according to most analysts in the energy industry. It is at places we may not like to explore -- Alaska, the coast of California, and the coast of Florida. But our technological abilities to pursue such in a manner that is environmentally sound and with minimum impact is better now than ever and our freedom, economy, security, and future hang in the balance. We should have taken action four years ago. We should have taken action four decades ago. We certainly better take action today.

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Kevin Price is Host of the Houston Business Show (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at HoustonBusinessShow.com. Visit the archive of past shows here.