Oil deja vu

Oil deja vu - The Boston Globe: "THE SIGHT of oil company executives being grilled by senators brought back memories of the 1970s, when the first big run-up of gasoline prices repeatedly provoked congressional outrage, culminating in the passage of a windfall profits tax in 1980. The senators and the country as a whole have yet to grasp the lessons of either the 1970s or today's price spike: Americans are no longer masters of the oil markets and need to wean themselves from dependence on gasoline and other petroleum products.

It's true, as the senators noted with scorn, that oil company executives are well compensated and that company profits, when expressed in dollar terms, are huge and markedly higher than they were a year ago. But as a percentage of income, oil profits aren't excessive; 10 percent is typical. Microsoft reported a 32 percent profit last month.

Consumers, of course, have a choice about whether to buy computer software. Most people feel trapped in an oil consumption rut; they have to buy a certain amount of gasoline each week and, if they heat with oil, have the tank filled up at regular intervals.

It was just this way in 1973 and 1974 -- when gasoline prices shot up from 35 to 60 cents a gallon in the wake of the Arab oil embargo -- and after the Iranian revolution in 1979, which was followed by gasoline prices soaring to a high of $1.60 by 1981. Abetted by Americans' profligate use of oil, foreign suppliers took control of the price.

High demand in China, India, and throughout the world, not constraints on supply, are driving up the price today, but the result is the same -- anguish at the gas pump and for people who heat with oil or natural gas and the prospect of a financially draining winter.

Some senators were talking about another windfall profits tax, but who's to define windfall? There should be more federal money available to help poor people pay their heating bills, but that could be found by restoring the tax cuts Congress gave to rich people like the oil company executives.

A more enduring solution would be for the country to return to the conservation measures of the 1970s, with ample tax credits and direct assistance for the purchase of efficient furnaces, other alternative energy systems, and improved insulation. The nation also needs tougher vehicle mileage standards and incentives to encourage the purchase of fuel-efficient cars. And the gasoline tax should eventually be raised so that prices of gas are permanently higher and Americans once and for all stop relying on gas-guzzling transportation.

Congress repealed the oil windfall tax in 1987, after gasoline prices had fallen back below $1 a gallon. Americans let the pain of the 1970s slip out of their memories. It's back with a vengeance, and blaming big oil only forestalls the day when an oil price jump no longer provokes a national crisis."