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Drilling or Speculation?
Drilling or Speculation?
George W. and John McSame would have us all believe that the solution to high oil prices is to open up the national preserves and the coastal waters of the U.S. to as much drilling and exploration as possible. They seem to think that will bring down oil prices because the rise in prices is a direct result of supply and demand. In other words, prices are high and going higher because there is not enough oil being produced to meet the global demand. Therefore, oil is a scarce commodity. Scarce commodities have high price tags.
There are two problems with this line of thinking.
The first is that, it is estimated that all of the oil reserves that lie under American soil and American waters constitute about three percent of the yearly global demand for oil. Three percent. That’s it. And when the oil is drilled and flowing through the pipeline, it will not stay in the U.S. It will go into the global pool and be sold all over the world.
So, the oil sucked out of our soil will more than likely go to India or China. (Did you know that the lion’s share of oil coming through the Alaskan Pipeline is consumed overseas, mostly in Japan? Almost none of it stays in this country.)
AND, once the oil companies find new oil reserves, it will take about SIX YEARS for that oil to make it to the pipelines. So, even if ALL of the oil pulled out American soil stayed in America, it would take SIX YEARS for it to have it’s negligible effect on the economy.
Obama and the Democrats, on the other hand, believe the experts, including the current administration’s oil industry experts, who say that the high cost of oil today is a direct result of speculation. That is why the price per barrel increases dramatically when people fear that the oil rigs and refineries in the Gulf of Mexico are going to damaged by oncoming hurricanes.
When we hear that Hurricane Beelzebub is bearing down on the oil rigs off the Texas shore, does the price of a barrel of oil immediately go sky high because there is a sudden increase in global demand? No! Even the oil companies concede that, in situations like that, the prices go up because of speculation. Investors SPECULATE that there might be a disruption of the pipelines. SO, the prices increase IN ANTICIPATION of disaster! Supply and demand has nothing to do with it.
Today, when the world got wind that The United States Congress was beginning debates on whether to do something to curtail oil speculation, the global price of oil suddenly plummeted by over three dollars per barrel to its the lowest point in over two months! Now, did the global supply suddenly increase today? Did the global demand suddenly take a dramatic downturn?
No. What happened was the actions of Congress today scared the living crap out of the speculators, and prices tumbled.
Talk about immediate results!
Now, I ask you, would like to see gas and home heating prices start dropping next week, or would you rather wait six years?
That’s what I thought.
You know, somebody really ought to tell John McCain about this. Don’t ya think?
posted on July 22, 2008 7:05 PM ()
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But yeah... it's too bad it has to happen out of sheer necessity than by choice.
You are so right.I think you are almost as smart as my Father.
Laurie
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