Date: August 15th, 2008

THE PROBLEM IS NOT THE OIL IN OUR FRYERS

By Lloyd M. Gordon
GEC Consultants, Inc.

The Restaurant Operator is heavily affected by crude oil prices. We see a drop off in customer patronage by those using autos for destination dining due to the over $4 price of a gallon of gasoline.

The ineffective attempt to solve the problem of rising oil prices by sacrificing the corn crop to the manufacture of ethanol has caused wheat farmers to plant corn as a money crop instead. Our industry is now suffering from the shortage of both corn and wheat for food production. Prices of flour have sky rocketed. All products, and there are loads of them, that contain corn in one form or another have seen a significant price rise.

Therefore, not only is our Industry losing sales potential as customers eat at home, but the cost of a host of products are rising rapidly, and we are now faced with a “delivery tax” added to our invoices by the vendors who deliver these higher priced products.

National security hawks say the quick fixes touted by the campaigns of U.S. Sen. Barack Obama (D-Ill.), the presumptive Democratic nominee, and his Republican rival, U.S. Sen. John McCain (R-Ariz.), miss the bigger picture: America needs a comprehensive plan to wean itself from Middle Eastern oil, and fast.

McCain advocates allowing states to open up offshore sites previously closed to drilling. Obama wants to reduce replenishment of the strategic oil reserve, the Energy Department's emergency stash.

Both candidates also tout more comprehensive policies, but they back these interim solutions as a way to address painful gasoline prices hovering at $4 per gallon.

Such salves are meaningless without long term planning.

We should not be interested in interim solutions, the long-term position has to be to become independent; we must get off of this dependence on foreign oil.

Priority One
The first priority should be to enact legislation to require America’s eventual transition to the manufacture of cars that run on alternative fuels.

Continued dependence on foreign oil subjects the United States to the potential threat of a cut-off in supply. An Iranian blockade of the Straits of Hormuz, through which much of the Middle East’s oil must travel, would have immediate and catastrophic consequences.

Likewise, President Hugo Chavez of Venezuela could follow through on threats to stop oil sales to the United States, though the prospect is unlikely given that Venezuela is as reliant on America’s oil purchases as America is on Venezuelan oil sales.

Both major U.S. political parties should stop politicking and instead of work out a comprehensive plan with real teeth..

"Congress is still dithering about drilling, refining and building nuclear power plants," a former oil executive said. "'We can't drill our way out of this,' many chant. No, we can't. But we can drill, refine, generate, reuse, reduce and recycle.

Priority Two
Remove a tariff of 54 cents per gallon on importing sugar ethanol from South American and Caribbean nations. The tariff satisfies American farmers producing corn ethanol, but sugar ethanol has proven much more efficient to manufacture, as well as less damaging to the food supply.

The tariff makes little sense given the exigencies of petroleum security, said Ami Greener, an energy policy specialist. Brazil, which is friendly to the United States, is a major sugar producer while Venezuela, which has cozied up in recent years to Iran, is a major oil supplier. We are
penalizing a friend and aiding an enemy. I'd rather see our money going to Brazil than Venezuela.

Priority Three
There are a number of alternatives, including tax credits for using alternative fuel, research into more efficient coal use, the use of windmills and natural gas, and the development of electric cars.

That doesn't necessarily count out drilling off-shore or in Alaska, but it must be done in context.
Reliable sources say we have 2 to 3 percent of the world’s oil reserves, but we use 25 percent, and it won't reduce the difference by drilling or with political slight of hand.

While I take environmental issues seriously, some groups have made environmental concerns the determining issue when formulating energy policies and considering which energy-related legislation to support.

It is the responsibility of every human, from every walk of life to protect the environment for ourselves and for the generations to come. There is an urgent need for promoting domestic energy security, increasing fuel economy and supporting the development of new methods of renewable energy.

I agree with those who have long opposed drilling in Alaska's wildlife refuge. Politicians have used it as a political straw man, throwing it out there knowing it's not going to happen.

Even government figures show that the drilling would have a negligible impact on prices.

In Florida, one of the states that could authorize offshore drilling should it receive congressional sanction, U.S. Rep. Debbie Wasserman Schultz declared her opposition in a recent mailing to constituents. "I am interested to know what you think about this topic, especially now that energy prices are increasing," she wrote.

Edwin Black, whose book on the topic, "The Plan," is due to be published in September, said the key is a better educated public. "We have a confused public and an uninformed media that doesn't know what questions to ask and politicians delivering malarkey and false promises," he said.

It is time for restaurant operators to vote their financial interests. The next few months should be spent deciding which congressmen and women will truly represent you in 2009 and beyond.


Best wishes for a prosperous business year,

Lloyd M.. Gordon
GEC Consultants, Inc.



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