As I said in my previous post, a gasoline tax holiday wouldn't make much, if any, difference in the price of gas at the pump. But if it did lower prices, the U.S. would be joining much of the rest of the world in helping keep demand artificially high. That's a recipe for fiscal disaster, and it distorts the market in disturbing ways.

Many countries - especially in the developing world -- are actually directly subsidizing fuel prices. In the name of helping their citizens cope, they are subsidizing energy waste, subsidizing an addiction to imports, and subsidizing the growth of greenhouse gas emissions.

Of course, as oil prices rise, so do the costs of these fuel subsidies. Many of these countries are also trying to hold food prices steady as the prices of global food commodities soar.

Continue »

Today I received a "Hello Steve" letter from a representative of the Nigerian militant group Movement for the Emancipation of the Niger Delta (MEND). This is the group -- or more likely umbrella of local gangs and groups -- that has been blowing up pipelines and terminals and occasionally kidnapping expatriate oil workers in Nigeria in an effort to wring more oil revenue for impoverished local inhabitants. (For more background, here’s a Post story on the long-running Nigerian insurgency.)

Continue »

American motorists are a hardy lot. The price of gasoline goes up and up and up and gasoline demand keeps nudging up, too. That has defied the expectations of most big oil companies and it suggests that driving is an essential, not discretionary, task and that prices could keep on rising.

But Aspen, Col.-based consultant Philip K. Verleger thinks he has detected signs of change in California. By looking at the records of the California Franchise Tax Board, Verleger notes that the sale of gasoline fell an “astounding” 4.5 percent in January 2008 versus January 2007.

Continue »

Today members of Congress will press President Bush to halt purchases of crude oil by the Strategic Petroleum Reserve in a bid to do something – anything – to tamp down crude oil prices, which have doubled in the last year. The reserve, created in the aftermath of the 1973-1974 oil embargo, has been quietly stockpiling oil in the Louisiana Salt Caverns for three decades, with only a handful of pauses. Bush says the amount of oil being purchased by the strategic reserve – about 70,000 barrels a day – is too tiny to make any difference in oil prices. But members of Congress, including 16 Senate Republicans, say it’s worth a try.

Continue »

President Bush pays another visit to Saudi Arabia this week, but the visit isn’t likely to produce new flows of oil from the world’s biggest exporting nation. That's not just a matter of Bush's own diplomatic shortcomings - it's also linked to changes in the U.S.-Saudi relationship and changes in the kingdom’s view of its self-interest.

Continue »

So did the Saudis rebuff President Bush’s plea for more oil production or not?

The answer appears to be that the oil-rich kingdom made a gesture, but a small one. Initially, after Bush’s meeting with the Saudi king, Abdullah, Bush’s national security adviser Stephen Hadley said that the Saudis would not be increasing production despite Bush's appeal. Then, shortly after that, Saudi oil minister Ali al-Naimi said that the kingdom had decided a week earlier to boost production by 300,000 barrels a day – not because of Bush but in response to requests from 50 commercial customers.

Continue »

Wire services report today that crude oil prices jumped over $129 a barrel in part because of comments by billionaire oilman T. Boone Pickens, who told CNBC this morning that he expects oil prices to rise as high as $150 a barrel before the end of the year. And he said this is partly because of long-term trends – limited global production capacity and strong demand in China.

But buyers beware. Readers beware, too.Just three months ago, on February 22, Pickens told CNBC that oil prices would drop to $85 a barrel.

"I think oil's going to back off," Pickens said during the interview. "The weakest quarter is the second quarter. We'll drop $10 or $15 a barrel in the second quarter. I think we'll be back above $100 in the second half of the year."

Continue »

Oil prices are dominating the headlines, but important developments are rattling other parts of the far-flung energy business, too – including a potential watershed moment for the coal industry.

Last week, in a victory for Kansas Gov. Kathleen Sebelius, her foes in the state legislature abandoned efforts to overturn her veto of a bill that would have essentially forced her to accept the construction of two new coal-fired power plants in the western part of her state. Coal plant plans are drawn up and dropped all the time, but these were different.

Continue »

Abu Dhabi, the largest of seven sheikhdoms in the United Arab Emirates, is swimming in oil revenue - and it's investing some of that money in solar power. That's more than can be said for Exxon Mobil Corp., which rebuffed a Rockefeller initiative at yesterday's annual meeting to nudge the company toward renewable energy. A shareholder resolution sponsored by the company's founding family was easily defeated.

Exxon's stance is an assertion that today's primacy of oil will continue for years to come, and that what the oil giant does best is look for oil and gas, not manufacture solar panels. But Abu Dhabi is doing the sort of forward planning that the Rockefellers wish Exxon would consider for tomorrow. Today Masdar, part of the industrial development arm of the Abu Dhabi government, unveiled plans to invest $2 billion in thin-film photovoltaic solar technology. True, this amounts to about a month of Exxon Mobil's projected capital spending this year. But in the solar world, it's substantial and noteworthy and probably just the sort of thing the Rockefellers would like Exxon to do.

Continue »