In Praise of $100 Oil
"So what do you think about $100 oil?"
It's a question I've been asked a lot lately. I'm Oklahoma's energy secretary, and I've also been in the oil and gas industry for more than 25 years. So I'm supposed to know something.
Still, it's a tough question to answer without stepping into a minefield. "It's a mixed bag," I tell the reporter on the other end of the phone line, settling on a phrase that has a nice ring and seems to sum it up simply.
I know that even in Oklahoma -- the fifth largest oil- and second largest natural gas-producing state in the nation -- there are more oil consumers than producers, and high gasoline prices make consumers irritable. Work commutes here are long, job requirements and lifestyle make the pickup truck the vehicle of choice, and the population isn't all that rich. Paying an extra 50 cents at the pump means belt tightening for most. And I don't want them taking that out on my governor.
At the same time, $100 oil bolsters Oklahoma's overall economy, which -- notwithstanding decades of efforts to diversify -- is still anchored in the oil and gas industry. Hundred-dollar oil puts money into the pockets of our hard-pressed farmers and ranchers who receive monthly royalties for the oil extracted from their lands. It also fills state coffers, allowing investment in needed programs -- to educate our children, make health care more available, repair a worn infrastructure and generate new wealth.
Of course, for non-oil producing states it's a different story. It's all about higher heating bills and pump prices, squeezed budgets and profit margins -- at a time when the mortgage crisis is roiling the markets, threatening consumer spending and making for an economic outlook that is uncertain and unsettling. Add to that the unhappy fact that $100 oil means more money for those oil-producing nations that wish us ill and you've got a pretty distressing tale.
Yet, with a certain detachment from the immediate pain, there's a case to be made for why $100 oil is good for everyone. Like the old remedy castor oil, it's hard to stomach, but it's good for us.
For one, it will hasten the development of more fuel-efficient vehicles, because -- even if Congress fails to require them -- consumers will demand them. It will also give confidence to investors otherwise reluctant to bankroll new technologies and the infrastructure needed to diversify our portfolio of transportation fuels and vehicles.
In short, $100 oil will do what we, as a nation, have failed to do since the last oil crisis, in 1970's: reduce our dependence on foreign oil, and reduce the growth of our greenhouse gas emissions.
The writer has been Oklahoma's energy secretary since 2003. He is also principal architect of the state's biofuels and wind initiatives and president and CEO of Jolen Operating Co.