Welfare Fuel

As the price of a barrel of crude oil hovers in the high sixties, Chathamites are feeling the pinch at the pump.
One common response is to band together to find the cheapest fuel, to support the retailer that is gentlest on the
pocket book, and to complain mightily on forums and lists and to politicians of all stripes.

It is an interesting response that has nothing to do with the high price of fuel.

Those who believe that fuel is traded on an open market, and that their consumer choices will have an impact on that market fail to recognize that fuel is the most heavily subsidized product in their market basket and that petroleum has successfully externalized its true costs. Before we punish the high priced retailer (who is livingon the proceeds of potato chips and lottery tickets in the first place), we need to recognize that this economy is powered by welfare fuel.

As a society we have agreed on the need to subsidize our fuel use.

The first externality we have allowed is in the form of security. During the oil shock of the seventies the Carter
Doctrine allowed for a massive U.S. military presence in the Persian Gulf. Even in times of peace we see fighter jets
escorting oil tankers out of those difficult waters. We do not ask the purveyors of oil to pay for this service, rather, we pay for it on April 15th, when we mail our checks into Uncle Sam. The price at the pump is miniscule when compared to the price we pay for oil security.

In this country we have agreed to leave government out of health care. One of the results of this is the lowest fuel prices on earth. Wherever one sees government involvement in health care, one sees significantly higher prices at the pump.

Someone has to pay the cost of asthma, and other respiratory problems that result from our fuel usage. Instead of paying for the health effects of petroleum at the pump, we pay for those when we mail our checks into our health care plan providers.

A newly apparent subsidy to the petroleum industry is starting to arrive in our insurance premiums. Now that we must re-build the Gulf Coast, which was destroyed by climate change brought on by our use of fossil fuels, we get to pay for our petroleum not at the pump, but when we mail our checks into our insurance carriers.

None of this speaks to actual government handouts to the petroleum industry in the form of tax credits, rebates on drilling “dry holes,” waivers of lease payments in exchange for economic development, etc.

The fact is that when we are driving around on petroleum, we are consuming a fuel that is on welfare.

Those who do not wish to do so can find a simple alternative in conservation. Drive less. Carpool. Shed your inefficient SUV and get a hybrid. Move closer to where you work. Ride a bike. Walk. Telecommute. Combine errands. Stop burning the fuel in the first place.

None of these alternatives involve whining about the high price of fuel and have everything to do with reducing our dependency on a welfare product.

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Jon Van Gerpen, Professor, Biological Engineering, University of Idaho