One was an oilman from Texas, the other a high-paid energy executive. Despite that, or perhaps because of it, for seven years George W. Bush and Dick Cheney have been unable to persuade Congress and the public that domestic oil drilling is an answer to America’s energy needs.
With the clock running down on his presidency, Mr. Bush made one last push Wednesday by calling on Congress to end the 27-year moratorium on most offshore drilling. With oil at more than $130 a barrel, gasoline over $4 a gallon and the broader economy threatened, the White House is betting it can finally break a decades-old Washington deadlock between those who favor domestic oil exploration and those who say conservation is the key.
The question is whether Americans are feeling enough pain at the pump to force their elected leaders to go along, and whether it will make any real difference if they do.
“If Congressional leaders leave for the Fourth of July recess without taking action, they will need to explain why $4-a-gallon gasoline is not enough incentive for them to act,” Mr. Bush said Wednesday in the White House Rose Garden. “And Americans will rightly ask how high oil ”” how high gas prices have to rise before the Democratic-controlled Congress will do something about it.”
This isn’t my area of expertise (!), but I keep hearing that the prices are due to futures buying, in effect, speculation on the future value of oil. If that’s the case, how will drilling do anything but provide more artificially high-priced oil?
Bush’s question is a great one (and one Dems are scared to death to answer). How high are they going to let the price go? I think some of them (NYC, San Fran, Seattle types) would be OK with $7 or $8.
in answer to 1, speculators have only so much money, if their is more oil percieved to be available in the future than they control the market will colapse thus lowering the price. This happened to the Hunt brothers when they drove up the price of silver to astronomical heights and then watch the price colapse overnight driving them to near bankrupcy.
the prospect of more oil comming on the market will drive the price down as the current suppliers try to keep their hold on the market by decreasing their price, to keep other producers from entering the market.
Words Matter:
Bingo! you get the kewpie doll. Just make sure you aren’t holding any oil futures on Nov.4. This smells like politically motivated market manipulation. ( exactly what have George Soros and company been up to lately?)
It’s also looking like it’s gonna backfire. I’m gonna make popcorn and watch.
It is long past time for America to become free of its dependence on Arab oil. People in Louisiana live with the risks of drilling onshore and offshore every day. Katrina, not oil drilling, damaged southern Louisiana. The rest of the country now needs to step up to the plate and start drilling where ever oil is known to exist. Drill here, drill now, pay less.
For those who don’t understand market economics, the futures trading is all part of supply and demand, but it is betting on what the supply, and hense the demand, will be in the future. Right now prices are high in the futures market because people are betting that the price is going to keep rising because the supply is going to remain tight, and even tighter. If we drill now, or even if we only credibly announce that we are going to drill, the forecast for future supply of crude will alter. If the Traders think the supply might increase in the future they will start to look at their shares of oil at $140 and decide to sell them now before the price drops, thus causing the price to drop. It will spur a rush to sell to beat others to the new futures equilibrium point.
That’s how the market works. Increasing our supply for the future through drilling will decrease the price of oil. But knowing that fact now will also decrease the price in the future’s market now, thus giving us an instant benefit. If prices can be driven up through speculation it can also be driven down.
Let me put it THIS way: We can’t afford NOT to drill for oil! We also can’t afford NOT to seek the resources we need wherever we can find them, and that means alternatives to oil at the same time we’re producing the gasoline and heating oil that we need! Let’s BUILD those new refineries with the new technology that we now have, and at the same time insist that Congress take action to prevent excess profiteering in the oil market.
Cennydd, I was with all the way until you said “insist that Congress take action to prevent excess profiteering in the oil market”. Thhere is no such thing as excess profiteering. That is a populist and socialist myth. The oil industry, which is the only effective means of getting gas to us, is a capitalistic enterprise. It is a business. Business make profit. No one on this earth has the right to declare what profit is too much. No one has the capability of determining what profit is sustainable either.
If you try to impose price controls you drive down supply. Try it. It works EVERY time. If you punish or tax industry out of some mythical “fairness” (when the actual base is anger and envy) you will either drive them out of that business or they will find a way of passing the cost on down…to you.
PLUS, there is absolutely NO EXCUSE whatsoever to complain about oil industry profits when their profit margin is 6%. That’s right. 6%! It’s the Government that takes the biggest chunk out of our wallet with the price of gas. 14% and higher. So you are asking the Hell’s Angels to keep an eye on the Shriners.
Congresscritters have no interest in profit, just reelection.
Markets can be manipulated by entities that have lots of cash and motivation to do so. Do you think that there might be some entity in europe or the middle east with lots of cash and a desire to manipulate elections in the U.S? (not to indulge in conspiracy mongering or anything…)
Aggressive opening of domestic resources to exploitation would catch the speculators who are driving the price of energy up with their pants down.
The problem is that a democrat controlled congress is beholden to environmental religionists, and it will never happen unless the voting public wakes up and gets a clue, which would change the makeup of congress. Thats why I think the “crisis” will be over after election day.
5$ /gallon gas is a really big clue-bat.
“Congresscritters” DO have an interest in profit…..if they’re in the pockets of the oil industry magnates and their Washington lobbyists. Has anyone taken a look into this lately? Any freebies and all expense-paid trips to Acapulco? Take your pick…..it’s happening behind the scenes! All a part of “doing business.”
Congresscritters have no interest in profit, just reelection.
Why do you think they want to get reelcted? Maybe it’s the power to control and tax us. And if you think they don’t profit by their power and position in the ordinary way you should check out how they spend the money.
And whether you call it profit or not, they’re still taking more money from you at the pump than the oil companies. And they haven’t done a lick of work to get that gas there. It’s all gravey for them.
Cennyd, to indulge your paranoia a little, what exactly is the agenda of these oil industry magnates who have congressman iin their pockets? Do they want the price of oil low, as it was in the 80’s when many drillers went out of business? That doesn’t seem rtight. So, doo they want the supply of oil tight so that the price will stay high and they can reap huge profits? Makes some sense.
But wait a minute. Didn’t the oil execs complain about Congressional restrictions on exploration? Now they want to drill. But that will increase the supply, lowering the price and lowering their profits. That can’t be their grand scheme. It must be a fake out. They’re in cahoots with the Democrats who only pretend to hate them and want to sieze their profits, while the pro-drilling Republicans are really the oil companies’ worst enemy. Yeah, that’s the ticket. The want the public to believe that Bush is in their pocket while it is actually the Dems who do exactly what the oil companies want. making it look like it’s hurting them, but really it’s hurting us.
The bastards!
You know, it’s really too early in the morning to be drinking the hard stuff.
“For seven years George W. Bush and Dick Cheney have been unable to persuade Congress and the public that domestic oil drilling is an answer to America’s energy needs”
Not only that, but GW Bush has had an executive order in effect banning the very sort of coastal drilling (e.g., off the coast of Florida) his supporters say is overdue. Go figure.
I [b]knew[/b] it had to be Bush’s fault somehow.
But I seem to recall the left has been calling for higher gasoline prices for years, from an environmental perspective, as it would increase urbanization, promote [government controlled] mass transit, and make tree’s more huggable.
Congress has always been corrupt. thats why we periodically get a chance to vote them out of office.
Wasn’t that executive order put in place by his predecessor? I’m not versed in Constitutional Law, but I don’t see why a President couldn’t invoke the same authority to overturn standing Executive Orders. But I understand that Bush is reticent to act that boldly. Personally, I wish he would excericize the fullness of his authority in issuing overturning past executive orders and also in ignoring baseless Supreme Court decisions, as Jefferson shoul have done with Marbury v. Maddison.
Lifting the limitations in question would likely have very little impact on the price of gas. Using Bush Administration Energy Department estimates of the amount of oil available, a reasonable conclusion is that it would reduce the price of gas by [url=http://ourfuture.org/blog-entry/offshore-drilling-comes-empty]six cents a gallon[/url], by 2025.
Further–and worth noting–the oil companies are not actually doing drilling with the permits they already have. I can’t track down the cite, but something on the order of sixty percent of the oil drilling permits issued in the last seven or eight years are not actually being USED. Oil companies hold the permits, but they have not yet decided to actually drill for oil yet.
It’s pretty obvious that the ability to get drilling permits is not what is currently limiting the supply of oil.
And yet, Tel, the congressional Democratic leaders are calling for OPEC to increase THEIR output saying it will lower prices drastically, by around $.56 a gallon.
If their increase will lower prices, how come increasing OUR output and supply won’t lead to decreases of the same amount? Democratic rewriting of logic, IMO.
By the way, the ‘permits’ the oil companies hold are for drilling IF they find oil. They get the lease first to allow for exploration, then can go ahead. Not everywhere for which they gain permits leads to new oil finds.
Jim Elliott <><
[blockquote]If their increase will lower prices, how come increasing OUR output and supply won’t lead to decreases of the same amount? Democratic rewriting of logic, IMO.[/blockquote]
First, It’s not “logic”, it’s relative QUANTITY. OPEC can in theory increase the supply by significantly more barrels per day than even the most optimistic estimates of the production from ANWR. Increasing our output BY THE SAME AMOUNT would decrease price by the same amount–but the proposed measures won’t increase our output that much.
Second, if we’re lucky, OPEC can increase the supply fairly quickly and without significant new extraction expense. If permission to drill in ANWR and offshore in Florida started tomorrow, that oil wouldn’t show up on the market for eight or ten years.
(Caveat–I say “in theory” and “if we’re lucky” because I’m not convinced that the OPEC nations have as much spare capacity as people think. I honestly DON’T think that OPEC can make that much of a difference in prices.)
[blockquote]By the way, the ‘permits’ the oil companies hold are for drilling IF they find oil. They get the lease first to allow for exploration, then can go ahead.[/blockquote]
Which doesn’t change the fact that they’re NOT using those permits to explore right now–they’re just holding them. With prices this high, the incentive for the oil companies is to lock up the rights for the future while keeping production low enough that prices stay high.
Of course they are not exploring. They are spending all their free time in Congressional hearings explaining why their 6 – 8% profit margins are so dastardly as compared to the Federal tax profit of 40%.
By the way, how do you KNOW they are not exploring? They may be doing so, after all, that’s how they found the North Dakota oil field.
Let’s conduct an empirical experiment. Let’s drill off the coasts, in the gulf, in ANWR and see what happens to the price of oil. What’s the downside? I have yet to see any environmental damage due to drilling.
[blockquote]I have yet to see any environmental damage due to drilling.[/blockquote]
[url=http://www.incidentnews.gov/incident/6250]Look here.[/url]
[blockquote]Of course they are not exploring. They are spending all their free time in Congressional hearings explaining why their 6 – 8% profit margins are so dastardly…[/blockquote]
Yeah, right. It’s the geologists that are testifying before Congress… or else it’s the executives that actually go out and find the oil…
The futures markets perfectly illustrate the warning, “perception is reality”. Prices are highly affected by rumors and emotions.
Re #21, trying to judge oil drilling safety by Mexican stamdards is like trying to judge nuclear sfaety by Soviet-Chernobyl standards; both are highly atypical. Indeed, one of the causes of the current oil crisis is the gross inefficiency of state oil monopolies, such as in Mexico and Venezuela. Despite vast reserves in Mexico’s Cantarell field, production has been falling.
The real answer to the energy crisis is a full-court press, moving forward on all fronts, as writers such as Tom Friedman have suggested. We need more drilling, nuclear, solar, wind, geothermal, and ultimately fusion. As the world’s largest per capita energy user, how can we ask the rest of the world to drill for our needs without doing it ourselves?
tegularius, looking at the site you directed me to I would have to conclude that the envoromental impact of drilling on the coasts has been substantially less than the average impact by normal shipping, even excluding oil tankers.
Nor have you offered any evidence that those leases have not been used in the past. If they were drilled on and found dry or dried up later that would account for their not being drilled now. We do know that China is buying leases for drilling off the coast of Florida. They at least think there’s oil out there. But I’m that China will be much more environmentally responsible than Exxon.
I’m sure that China will be more environmentally friendly than Exxon. After all, communist governments have a strong track record on the environment.
Regarding China negotiating for oil leases off Cuba, it is certainly not the environmentalists who are responsible for the laws that prevent American oil companies from negotiating for those leases.
Generally, I think of US offshore oil as a strategic reserve–better to keep it unused as long as possible rather than burn through it at the first sign of a crisis and have less down the road if supplies are more severely constrained.
it is certainly not the environmentalists who are responsible for the laws that prevent American oil companies from negotiating for those leases.
It is Congress, under the sway of environmentalist ideas. Any argument that it isn’t environmentalism keeping us from drilling only has to listen to the arguments put forth against drilling off shore. I don’t ever recall such a fanciful argument as keeping them for a strategic reserve. We already have a strategic reserve, except when we are emptying it to lower the price of oil because we won’t allow drilling for more. We have massive amounts of shale oil, Canada has billions of gallons to get from oil sands, and we have mountains of coal, which can be transformed into gas more effectively now than when Hitler did it to fule his war economy. And why are we short of oil? Environmental restrictions. Any other argument is laughable.
[blockquote]It is Congress, under the sway of environmentalist ideas.[/blockquote]
No, the reason American oil companies cannot negotiate for leases off the coast of CUBA is because we have an EMBARGO in place. And the embargo against doing business in/with Cuba was in no way the fault of environmentalists.
(I will also point out that–Cuba aside–the “27-year-old ban” of the title was signed into law by noted environmental nut Ronald Reagan, and the executive order strengthening it was issued by left-wing hero George H.W. Bush. And as governor of Florida, the bleeding-heart liberal Jeb Bush was strongly committed to continuing the moratorium.)
Speaking of reserves, and thinking strategically rather than tactically, what happens to the dynamics of international relations when the cheap oil in the middle east runs out, and we still have billions of barrels of untapped reserves?
Tegularius, off the coast of Cuba is also off the coast of Florida. No one is talking about American companies drilling in Cuban waters. We could just drill a couple miles north of the Chineese. Sheesh. Try making a logical point.
I will also note that an environmentalist argument not to risk damage to the ocean and shore by drilling is less illogical when the demand for oil is low, as in the 80’s when the price collapsed and sent many drillers out of business, than when the demand is high. Banning drilling is a bad idea at any time, but it is collosally stupid when our oil production is low and demand is high, and it is only environmetalist arguments that argue against reversing that bad decision. You don’t have to be a liberal environmentalist to make a bad political decision regarding energy. It was Margarate Thatcher that hepled fund Global Warming science in the 80’s. But it seems you have to be an environmentalist nut to not be able to recognize a bad decision and correct it.
29, well by that time we will be a redeveloping nation and will watch the new first world countires, India and China exploit what was our reserves. Maybe your grandchildren will be able to get jobs washing the drillers cloths, but it will probably have to be by hand.