Editorial

From our local paper.


On Tuesday, the 13-nation OPEC oil cartel announced that its members would cut production by more than a half-million barrels per day to drive up prices. There are two responses to the news.

America could join the moronic chant led by Rudy Giuliani at the Republican convention and "Drill, Baby, Drill" in the hopes of increasing supplies. Or, it could see the cartel's act as a clear sign that the world's oil-producing nations have no intention of ever letting oil prices decline to the level that made America's gas-hungry lifestyle affordable. In that case, the answer is obvious. It's time, past time actually, to switch fuels.

The price of a barrel of oil, which hit $145 in July, fell below $103 earlier this week. The drop, OPEC's minister said, was caused by an oversupply on the world market. That statement could only be made by a spokesman for countries awash in money, thanks to a more than five-fold increase in the price of oil in the past decade.

The United States is believed to have about 3 percent of the world's remaining oil. That's too little to have much influence on price manipulation by OPEC nations. If the United States produces more, all OPEC has to do is turn its faucet down to drive prices back up. There's a limit to that, of course. Many OPEC nations need a steady stream of oil money to placate their angry citizens and keep their ruling governments from toppling. But they can work around 3 percent, especially since consumption by India and China will continue to increase.

The primary cause of falling oil prices is declining demand. The answer to OPEC's latest turn of the screw lies in continuing to reduce demand as rapidly as possible by increasing efficiencies and using substitute fuels that are easier on the environment.

If the U.S. response is "Drill, Baby, Drill,'' OPEC nations, some of which use oil money to finance terrorists, will laugh all the way to the bank.





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Comments
"America", white man?
By Anonymous on Thu, 09/11/2008 - 11:32
20080911/OPINION/809110327
809110327
article_title:
Drilling is a good way to get higher oil prices
article_pubdate:
20080911
Sounds like you errantly stumbled into that collectivist thinking again. You really are quite prone to that, Mr. Monitor editor(s), ya know. It's AmericaNS, that's a plural comprised of individuals, each capable of their own thought and action. (Well, maybe most people) In fact, that's what has primarily driven price down of late - each person taking due note of the huge price spike, and out of economic self interest (greed?), made decisions to drive less, drive like it's not 1999, and buy gas-sipping vehicles. (And don't forget AmericaNS' new competitive sport: hyper-miling - all the efficiency of a Prius, all the sport of chess, without all the extra coin of a Prius) As price remains high, this behavior will continue, which will put further downward pressure on price.

As you dutifully noted, there is only so much OPEC nations (rulers) are willing to do to throttle back production before their greed (and fear) takes over, at which point they scramble for ways to cheat on their OPEC brethren. (Hey, this is just like a marriage! Except, there's probably sex.) Then there are all those other non-OPEC producers who are already falling all over themselves to produce more oil ASAP to take advantage of these historically astronomical prices. And what do you think that will do, is doing, to price? Now add some extra production from U.S. companies, and you start to see a different painting of a different picture. Why, could it be "Starry Night"? Just a month or two ago, weren't their Chicken Little experts shouting "gasoline prices will hit $7 - $8/gallon by year's end"? The oil apocalypse draws nye. Or, is it?

Any how, if what you want is less use of oil, then you should also WANT these high prices. That's what drives the behavior of conserving a resource. But you'll have one hell of a time explaining that to people heating their homes with the stuff, not just going for Sunday jaunts in the family wagon (or do you use a Prius?). "I see (icy) cold people." I wonder if they read newspapers, or do they just burn them to stay warm?

Of course, people can do many things to solve this problem too. I don't understand the reluctance, because the paybacks are so high you would consider them obscene if generated on Wall Street. There's the same old mundane act of adding insulation, changing fuels, and installing super-high efficiency furnaces. Move further beyond the collective bounds of sheople decency vis a vis zoning and good-neighbor-etiquette, a daring sole can add solar space and water heating on the cheap using plastic film and flimsy wood or plastic framing. But the horror .... it doesn't look colonial, or even that most uncouth of domestic domiciles: the split-ranch. But if done, this could virtually eliminate the demand for heating oil. I bet price would really fall then, which could then fuel another spate of SUV purchases. But eventually, as oil reserves keep shrinking, more and more individuals will see the evil of their ways, BECAUSE OF HIGH PRICE, and spurn petroleum.

I wonder how Mid-East terrorists will fund their rage then: rendering whale blubber, or perhaps selling solar beanies to power our minds?
- C. dog e. doG

Dimwitted...
By Anonymous on Thu, 09/11/2008 - 08:06
20080911/OPINION/809110327
809110327
article_title:
Drilling is a good way to get higher oil prices
article_pubdate:
20080911
Speaking of dimwitted, let's talk about the unbiased, econmic geniuses at Monitor staff. Michael Economides wrote a great article about the price of oil. In short, Economides explained that there are four components to the price of oil; 1. how much $$ does it take to activate the stabilized flow of oil; 2. the discount rate involved with risk, the risk of dealing in energy militant countries like Russia, Iran and Venezuela; 3. economical radicals in the U.S. and Europe that have set an environmental agenda which is counterproductive to the production of oil and 4. speculation. In short, he feels the real price of oil should be just over $50 per barrel. Item 3. listed above adds about $30 per barrel and Item 4. adds about $25 per barrel. We could help our cause by drilling more AND working on alternatives to oil.

Drill Baby Drill....?
By Anonymous on Thu, 09/11/2008 - 06:57
20080911/OPINION/809110327
809110327
article_title:
Drilling is a good way to get higher oil prices
article_pubdate:
20080911
If that convention chant didn't prove to the nation that the Greed Oil Party is in the pocket of Exxon et al. then nothing will. There is no hope for this dimwitted nation.