On an overcast southern California afternoon, I rolled my Honda Accord V6 to the fuel pump at a local Chevron station. I quickly remembered those emails blasts calling for a boycott of Chevron and Exxon/Mobile stations to force fuel prices down. That worked well. A few yards away the employees at the car wash were diligently drying off newly washed vehicles. Out of the nine vehicles being wiped down, six were of the sport utility variety.
While stepping out of my car, I scanned the faces of the customers who were waiting to climb into their rejuvenated vehicles. Who are the ones driving the SUVs, I thought? It was difficult to tell because cheerful expressions upon their faces were missing like George Bush from news headlines. A couple of frowns, one gentleman was sitting with his arms and legs crossed, another was staring off into the distance. One lady was looking down blankly at her cell phone.
I swiped my credit card, verified my zip code and proceeded to fuel up on 89 Octane in the automatic fashion I’m accustomed to. Then I realized that I was filling up at $4.01 per gallon. I pulled out my camera phone to record this historic occasion. For the first time it cost me over $50 to fill up my gas tank. Shaking off sticker shock, I chuckled and shook my head, thinking, I’m glad I’m not rolling in an Escalade.
So how did we get here? A revolution took place after Ronald Regan took office in 1980. At that point Americans had lost confidence in their government. John F Kennedy was assassinated in 1963, the Vietnam War was largely seen as unnecessary and costly in both lives and capital, in 1972 OPEC launched an oil embargo that brought the US economy to its knees, Richard Nixon was impeached for his involvement in the Watergate scandal, and the fall out of the OPEC embargo resulted in double digit interest rates under President Jimmy Carter’s tenure.
A malaise swept across America that enabled Ronald Regan to sweep into the white house on a platform that government was the enemy and change must come from the American people vise-a-vi the private sector. By encouraging business development in the private sector, by propping up large companies, a trickle down effect would take place putting money in people’s pockets. Change was indeed on the way.
One of the first things Mr. Reagan did after entering office was to remove the solar cells installed on the White House roof and gut Carter’s solar program that was seeking to achieve 20% of America’s energy through sun power by the year 2000. Carter’s notion of “conserving” was seen as running counter to Reagan’s “consumer” approach to help stimulate the economy.
"In June or July of 1981, on the bleakest day of my professional life, they descended on the Solar Energy Research Institute, fired about half of our staff and all of our contractors, including two people who went on to win Nobel prizes in other fields, and reduced our $130 million budget by $100 million," recalls Denis Hayes, the founder of Earth Day, who had been hired by Carter to spearhead the solar initiative.[1]
Reagan and Congress stopped pushing new auto efficiency standards, acceding to Detroit's desire to leave them at Carter-era levels. They let the solar tax benefit expire, and the young solar industry went belly-up.
It was time to let the markets work their magic and stop all this government tinkering, Reagan and conservatives said.
But what’s interesting is that as Carter was touting solar energy, he was also deregulating price controls on the oil and gas industry. Regan took the credit for untying the hands of the oil industry to charge “market” prices. However, Carter also pushed a "Windfall Profits Tax" on the belief that decontrol would bring higher prices and, thus, higher profits to oil companies that "really don't deserve them.”[2] Later congress quietly repealed the Windfall Profits Tax.
Now the oil companies are able to dictate price unabated. Congress reduces fuel efficiency requirements for automobiles, and in 2002 small business operators, whether they are farmers, contractors or Realtors received a $25,000 tax deduction if the car they buy weighs over 6,000 pounds or more – a light truck or SUV.
Below is a graph showing fuel efficiency standards since 2002 and into the future. The United States is in last place with regards to fuel efficiency for automobiles.
Figure 1: Actual and Projected Fuel Economy for New Passenger Vehicles by Country, 2002-2018.
American leadership should be placed on the side of a milk carton. Or perhaps a billboard should read, “Have you seen this country?” only to display a map of the United States.
Simply put, the US government since Carter, since the assassination of John F. Kennedy, has been working more so in the best interest of the petrochemical industry and its cousin, the military industrial complex than for the best interest of the American people.
What we are witnessing at the pump today is a culmination of successive administration's (both Republican and Democratic) intention to successfully keep Americans hooked on obsolete technology while espousing free markets, jobs and patriotism.
Jobs surely have been created: in India and China as a matter of fact.
The US market truly is as free as the American Bald Eagle - $4 gas and climbing, an endless war in the Middle East, crumbling housing market, low consumer confidence, mounting household debt, blue states, red states and a deregulated media that is focused more on ratings than on the facts.
How did we get here? Perhaps the blank stares of those people at the car wash may explain it.
