WHAT BUSH CAN DO TO GET CHEAPER GAS

The front page headline in the Washington Post explained it all:  Bush Calls For Probe Of Raising Gas Prices (April 26).

Here is the absolutely perfect opportunity, with the whole country outraged at gas prices above $3 a gallon, to explain to America exactly how Democrats have blocked every single possible effort to increase oil production and reduce gas prices – and Bush calls for price-fixing investigations of US oil companies.

It’s easy to understand why a politician will opt for demagoguery when the truth is against him.  But to opt for it instead of the truth when the truth is on your side – that takes political incompetence to a whole new dimension.

Rather than stupidly demagogue Big Oil, Bush could actually solve the problem of increasingly expensive gasoline.  Here’s how.

1.  Realize the solution lies not with oil but natural gas.  If you get this insight, all else follows.

Yes, we should drill ANWR and build more refineries.  The more oil we produce and refine ourselves the better.  But there is a world market for oil.  The Chinese and Indians and other global folks will be bidding for any oil produced in the US.  (Did you know, by the way, the US is the third largest oil producer in the world, behind only Saudi Arabia and Russia?  It’s that we consume 2½ times more than we produce.)

NG (natural gas) is different.  It is prohibitively expensive and potentially dangerous to ship LNG (liquefied natural gas) by ship around the world.  Thus, however much natural gas we produce, it will not be bid up by the rest of the world.  We get to consume what we produce for ourselves.

2.  The reason natural gas prices have shot up dramatically is the massive switch from coal to NG power plants.  We use NG to produce much of our electricity now, rather than far cheaper coal in order to have cleaner air.  Obviously, the way to reduce the cost of NG is to produce a lot more of it.

3.  The US has not just trillions but over a quadrillion (a thousand trillion) cubic feet of natural gas in the continental shelf waters off the coasts of Florida, Georgia, the Carolinas, Virginia, California, and Oregon.  The governments of these states prohibit its extraction.

One state that loves drilling for oil and gas is Alaska.  That’s because Alaska residents get a share of the royalties paid directly into their bank accounts.  The easy way to get voters in Florida, Georgia, et al to become very enthusiastic about drilling off their coasts is to divvy up the royalties:  the Feds, the states, and individual residents get a third each.

Such royalties are not subject to FICA/Social Security taxes as they are passive income.    Families could end up with thousands of dollars in their pockets every year just for approving offshore drilling.  The average resident of Alaska now receives $2,000 in oil royalties a year;  an Alaskan family of five, $10,000.  Mail box money.

4.  A bill in Congress sponsored by John E. Peterson (R-PA), HR 4318, the Outer Continental Shelf Natural Gas Relief Act, removes federal restrictions on outer continental shelf gas leasing, and could be greatly improved by royalty-sharing with state residents.  Within 3 years or less of allowing continental shelf gas drilling, NG prices could be back to 1990s levels of $2-$3 per tcf (thousand cubic feet).

5.  How this solves the problem of expensive gasoline is through duel-fuel vehicles.  An internal combustion engine running either gasoline or diesel can also easily run on natural gas.  No engine modifications are needed, just modifying the fuel injection system.

In fact, regular engines run much better with natural gas, with less wear and tear (such as on the cylinder compression rings:  unburned gasoline at the start washes the lubricant off the top of the cylinder and dries the rings out). 

All you need is a CNG (compressed natural gas) tank, a regulator and controller, and you’ve got a dual-fuel car.  There are conversion kits available and companies that install them.  They can cost a few thousand dollars, but give folks a 100% tax credit and they’ll be happy to make their car dual-fuel instead of giving the dough to the IRS.

Better yet, a number of car companies now offer a dual-fuel option for certain models, such as the Ford F150 and Taurus, Chrysler Sebring, and Chevvy Silverado.  Honda now offers a natural gas-only model, the Civic GX.  Tax credits are already being given for their purchase.

6.  The "killer ap" with NG/diesel or gasoline cars is called Phill made by FuelMaker Corp.  This is a compressor installed in your garage hooked up to your home’s natural gas line.  The same gas you heat your home and cook your food with fills up your car.  A tankfull will give you around 150-300 miles.

Combine a 100% tax credit for a Phill purchase with tax credits for conversion to or purchase of dual fuel vehicles, and you’ll see an explosion of dual-fuels on the road.  Then you’ll quickly see gas stations installing CNG storage tanks (most city stations are hooked up to an NG for heat and hot water).

Critically important here is that NG-powered engines is a mature, proven technology in use for over 50 years.  Nothing has to be invented.  Unlike hydrogen or fuel-cell cars, it’s ready to go. 

All Bush has to do to is allow oil & gas companies to extract the vast amounts of NG we have within American boundaries, cut state residents in on the wealth, provide tax credits for folks to run NG in their cars, and before his presidency is over the equivalent cost of driving a car will be less than $1 a gallon.

And we’ll be vastly more energy-independent.  We’ll no longer be hostage to Arab oil.

So, George – no more ridiculous demagoguing Big Oil.  No more anti-capitalism.  Solve the problem – for now you know how.