Klaus Rohrich  Bio

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Stupid is as stupid does!

Dems looking to nationalize oil

In a desperate effort to garner public support the Democrats in Congress are pandering to disaffected drivers by tearing a page out of the Hugo Chavez and Vladimir Lenin playbook.  Congressional Democrats have come up with a proposal to national all oil refineries in the United States, believing this move will bring about an immediate drop in the price of gasoline and other fuels.

One wonders if the Democrat geniuses in Congress have thought this through.  If the U.S. government were to unilaterally seize control of American oil refineries, then the government would in effect become an oil company, as these refineries would have to acquire crude in order to refine it.

So the first challenge would be for the government to find a safe and secure source of crude, something for which the Democrats are famous for resisting in both houses.  Then the government would have to buy the crude at prices lower than the oil companies are currently paying as world prices are currently hovering in the $130 per barrel range.

Once the oil was acquired, presumably at a discount, the government would then have to ship it to its U.S. refineries.  This would force them to either buy new tankers that would be government owned or lease the tankers to ship the oil.  Given that the U.S. government has been known to pay as much as $462 for a carpenter’s hammer and over $200 for a toilet seat, the prospect of getting the crude to the refineries could wind up driving the price of gasoline up, simply due to exorbitant shipping costs.

Once the government managed to get the crude to the refineries it would then enter a series of businesses totally unrelated to gasoline or similar fuels.  Since crude oil consists of a mixture of different hydrocarbons that must be separated in order to produce gasoline, the government refineries would churn out items such as petroleum gas, naphtha, kerosene, lubricating oil, heavy gas for fuels and residuals, such as coke, asphalt, tar and a plethora of other hydrocarbon based compounds.  All of these would then have to marketed.

At this stage, the government would have to make sure the gasoline it refines meets with regional standards that apparently differ from region to region in the U.S.  The fuel would also then have to be stored and eventually delivered to wholesalers, where capitalism would once again kick in.  What’s to say that the U.S. government, if it managed to produce gasoline at a much lower price (which it won’t) could then control the resale value of their product.  The implication here is that the government would also have to open its own gas stations or impose massive price controls, which they could do, anyway, without the need to go into the refining business. 

The reason they do not impose price controls, is that it would result in an immediate shortage of fuel, as oil companies would simply divert their product to markets that were profitable.

As for the plan to nationalize refineries, the legalities and costs involved would ensure that the price of gas stayed in the $5.00 per gallon range for generations.  Since the 5th Amendment of the Constitution of the United States forbids the government from illegally seizing the refineries without fair and just compensation to their owners, i.e. the oil companies, in nationalizing refineries under the doctrine of eminent domain, the government would start off with hundreds of billions of dollars worth of debt that would have to be repaid with interest.

What about staffing?  Would the government also nationalize the workers in the refineries?  In changing employers from oil companies to the government would the workers be allowed to keep the same pay structure, benefits and retirement plans?

These are all questions that no one on the Democrats’ side of Congress ever seems to have considered in floating such a wild and improbable hare-brained scheme.  A simple Google search of oil refining would have given the Dems enough information to realize that the idea is totally and completely stupid.

But then, to quote the great philosopher Forrest Gump, “stupid is as stupid does!”