What Will Congress Do About Gas Prices?

Slowly, the “plans” are trickling out from our elected representatives.

How will they “save” us from high gasoline prices? Americans should no of no tough times. No belt tightening. No conservation. Cheap gasoline is our right.

Right?

I’ve heard of at least one “plan” - which is to suspend the federal gasoline tax for two years. To make up for the shortfall, the oil producers would face a special “profit” tax.

That makes sense, right?

Tax the companies who are spending billions of dollars to find the crude.

It’s getting increasingly expensive to find new crude. The Alberta Oil Sands has the second largest reserve in the world but many of the smaller exploration companies are bowing out of the race to explore there because the costs are so enormous. They can’t make any money.

Jim Jubak, on MSN’s Money, explains the problems facing the Russians:

Russia’s older west Siberian fields are in decline, following the path of such fields as the North Sea. Russia has promising fields in eastern Siberia, but developing those is expensive. The fields are hundreds of miles from anywhere, making it costly to get workers and equipment to the fields and then support them in one of the world’s more hostile climates. And then there’s the additional cost of getting the oil and natural gas from remote wellheads to market.

How expensive is expensive? Leonid Fedun, the vice president of Lukoil, Russia’s largest independent oil company, recently estimated that Russia needs to invest $1 trillion over the next 20 years to keep production in the range of 8.5 million to 9 million barrels a day.

Recently, a large crude find was discovered off the coast of Brazil. But it’s in the deepwater, which means it will take only the most advanced technology and the best of the best exploration companies to get the crude out. And none of that comes cheap:

Getting oil out of Carioca will require oil companies to go beneath 6,500 feet of water, then drill through 9,800 feet of rock and sand, and then through 6,500 feet of salt to get at the oil. That’s possible with cutting-edge technology, but it’s mighty expensive and time-consuming.

Estimates of fully developing the Tupi field, which involves similarly challenging geology, run to about $50 billion. Count on a decade before these fields reach full production.

Billions and trillions of dollars.

And the US Congress wants to tax the very companies that are going to be tasked with finding these new supplies? What’s in it for them then?

There is no easy fix to the energy crisis- though Congress will try and find one. That’s when we should all be REALLY afraid.