But what REALLY causes such high prices? It isn’t any one thing but a combination of factors that increase oil prices. Supply & Demand is an important part of this. More and more nations are using more and more oil which means we have to out bid other countries to purchase oil. The dollars we use to purchase oil with are worth less today than they were a year ago and that drives up the price. And finally, oil speculators have artificially inflated the price due to a lack of regulation on their practices.
Today, Sen. McCain was scheduled to go to New Orleans to visit an off-shore rig for a great photo op showing how off-shore drilling will solve our high gas prices. Unfortunately it was cancelled due to weather. After all, a hurricane went through the Gulf yesterday. Nobody can expect to fly over the gulf today. Except, the weather in New Orleans today was hot and clear. Four mile per hour winds with a ten mile visibility limit. Seems like today’s weather shouldn’t be a problem for helicopters.
Maybe it wasn’t the weather, maybe he cancelled because at 1:30 AM yesterday the AP reports:
“ NEW ORLEANS — The Coast Guard closed 29 miles of the Mississippi River at New Orleans after a 600-foot tanker and a barge loaded with fuel oil collided Wednesday, breaking the barge in half.
Nobody was injured, but more than 419,000 gallons of heavy, almost tar-like fuel oil spilled from the barge, forming a slick 12 miles long, said Lt. Cdr. Cheri Ben-Iesau, a Coast Guard spokeswoman.” (Note: That slick is now 100 miles long and growing.)
When you are trying to convince people that drilling is safe, you don’t want them to know that 419, 000 gallons can form a twelve mile slick and then have MSM remind you that during Hurricane Katrina 6.5 MILLION gallons of oil were spilled in the Gulf.
You don’t want people to be reminded that while the US consumes 25% of the world’s oil, even with off-shore drilling we only own 10% of the world’s oil. That’s a sizable gap to overcome. Even if we increase domestic production of oil, there is no promise that it will only be sold for domestic consumption. So we have to question how much of an impact that “extra” oil will have on the world market. Will it be enough to significantly reduce oil prices? And since it will be 5 to 10 years before that oil actually gets out of the ground…it is not a quick fix. So rather obviously, as T. Boone Pickens states, “This is one emergency we can’t drill our way out of.”
Think of it this way: I have a pot of soup of soup that will feed 100 people. I have to feed 150 people. If I add one cup of soup to the pot, I can now feed 101 people. I HAVE INCREASED SUPPLY. But, if everyone knows that 49 hungry people are not going to get soup the price of that soup goes up and the addition of one cup will do little to keep the price down. I can also expect to have 10 more people show up in line for soup while I add my one cup of soup, so now 59 people will not get soup today…unless they out bid everyone else for soup. The price of soup is going to go up!!!
This is not to say that off-shore drilling should not be examined. Whether Ecologists like it or not, we may need to drill in new areas; if not today then probably someday. Safety measures have increased over the past several decades. We do need all the oil we can get. But we have to realize that drilling is not a complete solution. It should be a possibility under discussion, not a knee-jerk reaction to filling your SUV. And the dangers inherent in off-shore drilling need to be taken into account. How do we get the oil we need without endangering the coast line. (Take away the Florida beaches and see how many tourists visit and what THAT does to the Florida economy.)
So what can be done to lower prices immediately? Unfortunately, very little. One suggestion has been that we re-instate the regulations that guided the actions of oil speculators. This was an industry that was de-regulated by Phil “The American People are Whiners” Gramm. Recently one of the largest speculators overextended and came up without enough collateral to cover its futures purchases. So SemGroup, an Oklahoma private oil marketing fund declared bankruptcy and sold its oil futures for a loss. Since that time, oil prices have fallen 14% in the last 10 days. If Congress can set new rules that require a larger “down payment” it will help to keep oil prices down. Will it solve all of our issues with high fuel costs? NO!!!!! But as we have seen, it can have a significant impact and in a short period of time. (Note: John McCain insists that the decline in price is because George Bush said he wants off-shore drilling and that was all it took. The Wall Street Journal says it was the demise of SemGroup. The question is…who do you trust? George Bush or the Wall Street Journal?)
The important thing for America is to develop the political will to decide that we HAVE to change how we think about energy. Where we get it from, how we use it and where we intend to get it from in the next year, in the next decade and beyond. That’s the real answer. We as Americans have to realize that the age of unlimited oil is gone and we must move forward to find new ways to power our country.
KNEE JERK DRILLING AND A SUMMER GAS TAX HOLIDAY ISN’T GOING TO CUT IT!
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