Just when you thought you couldn’t afford to go on summer vacation, just when you thought the ONLY answer to rising gasoline prices was a “gas tax holiday“, just as various states are complaining they don’t have enough tax money collected to pay for road work, now oil prices fall to a 3 month low of 121.99 for US Crude and 122.71 for Brent Crude (at noon, central time), with no end in sight.
You heard me, the analysts, the same ones that said we were likely stuck with $4-5 a gallon gasoline or higher by end of summer, are telling us that buying oil commodities is a bad deal right now, and even OPEC anticipates oil prices could fall down to as low as $70 a barrel. That’s less than HALF the $147.27 high on July 11.
July 11 was a Friday. The following Monday (July 14), President Bush dropped the presidential ban on off-shore drilling. Even though dropping the ban had absolutely no impact on reality (no drills running yet), we’ve seen a consistent drop in the price of oil all but one or two days in the last two weeks. We are now about $25 a barrel down from the high, or about 17%. The MSM is desperately working at finding other ways to explain the drop in oil prices (I have YET to see a major news outlet attribute it to the emotional impact of Bush’s action), but the fact cannot be ignored… and Bush’s decision is not the only factor here, it’s the overwelming response of US citizens and the beginning of action by Congress to open up drilling domestically.
People like Patty McIntosh of the Georgia Conseratory would have you believe that off-shore and other domestic drilling is not practical. According to Patty:
Any hope to boost domestic supply from offshore sources is more than a decade away. And even if the U.S. energy picture looks the same 10 years from now, chances are we will not get much relief from these domestic sources. The estimated oil and gas offshore reserves could meet our current needs for only a matter of months.
Comments like this continue to ignore the facts… current prices on oil, and other commodities (or most any market-based financial product for that matter) are always most heavily impacted by what the future is perceived to be, not by the reality of what can be sold today. And statements regarding the size and usefulness of any resource without real data (which no one has) is intended to manipulate everyone with the same false message we’ve heard for over a century: “there’s not enough to last us more than a short amount of time”. Those statements are just baldface lies and anyone repeating them lacks credibility in my book.
The Heritage Foundation published an article today that concurs with our position. It includes reference to an article that was submitted by Professor R. Morris Coats of Nicholls State University (in Louisiana) to the Energy Journal which appoarently (I have not seen the submitted article) provides demonstrable mathematics to support this conslusion. The Energy Journal, however, rejected the article because it states what energy economists have known for decades, which is essentially the same message I’ve been hitting you with today.
Again, it’s not about how much domestic oil we can process at the refinery today, it’s how long we’re going to allow ourselves to be pushed around by foreign interests that is going to impact oil prices. We’ve said this several time before here, and we’ll just keep lather, rinse, repeating it until everyone gets it.
The good news is that McCain is supporting off-shore and domestic drilling, we just need to get him off the dime and support drilling in ANWR. John, you listening???
And our independent friend Joe Lieberman is now supporting domestic drilling. We’re making headway, albeit slowly.
I sent the following message to my three congressmen (everyone should have 3 congresswomen/men, 1 representative and 2 senators). You are welcome to copy and send the same message to yours… I strongly encourage you to contact your congresswomen/men immediately with a message to support domestic drilling.
Our dependence on foreign powers for sources of key raw materials, especially to provide fuel, is becoming untenable. I completely understand the concerns of those that want to protect valuable natural habitats and areas of clean untarnished beauty throughout our country. However, relying on foreign concerns who are intent upon taking advantage of our need for energy resources is simply not working, and in many ways, is starting to make the US seem unintelligent in its dealings and inability to manage its dependence on foreign markets by closing its own internal access to the same resources. I am anxious to see us build and leverage cleaner solutions for energy, and support any efforts to improve these technologies. However, we do, and will continue to for a long time, need access to oil, and we need to keep the money spent on this oil within our own economy instead of pouring it out on the rest of the world and diluting its value.
Please support efforts to open up domestic drilling, including off-shore and ANWR. Please become a leader in a bipartisan effort to make access to domestic oil resources a reality as soon as possible.
Thank you for taking the time to read this, and thank you for your fine work!
Don’t delay. The sooner Congress knows what we want, the sooner they will act. Representatives Link. Senators Link.
Other bloggers speaking to this topic include: BItsBlog (who predicted a mid-summer drop in the price of crude), PowerLine, and hopefully the Sphere link below will have others as well.
My paper with Gary Pecquet of Central Michigan University on ANWR paper is available at
You should also note that Kevin Hassett who has written an article about our work
Start Drilling Now to Lower Oil, Gasoline Prices
at Bloomberg News (http://www.bloomberg.com/apps/news?pid=20601039&sid=aKXUPbwOIOHY&refer=home) is director of economic-policy studies at the American Enterprise Institute, and is a Bloomberg News columnist.
More particularly, he is an adviser to Republican Senator John McCain. So, McCain is hearing the message, but I hope he is also listening.