Thanks to Obama, Gas Jumps in a Flash
Bush’s order was, of course, immediately dismissed by the “experts.” Reuters waved away the action as “a largely symbolic move unlikely to have any short-term impact on high gasoline costs.” Barack Obama’s campaign lectured that if “offshore drilling would provide short-term relief at the pump or a long-term strategy for energy independence, it would be worthy of our consideration, regardless of the risks. But most experts, even within the Bush administration, concede it would do neither.”
The movement left was even more dismissive. ClimateProgress.org blasted The Washington Post for failing to headline their story about the order “Offshore Drilling Raises Oil Prices.” In response to Bush’s assertion that additional offshore extraction could equal current U.S. production in 10 years, they editorialized: “Yes, and monkeys could fly out of my butt” (emphasis in original).
There was just one problem: reality. Even though, as critics were eager to point out, any additional American drilling was years in the future, oil prices immediately went into free-fall. By Friday, July 18, the price of a barrel of crude had dropped to $128.94, a 12% decrease. A month later, on August 14, the price had fallen to $115.05. In spectacular fashion, Bush’s academic and media critics were proven seriously wrong.
For commodities traders who’d been pricing oil based on a supposition of scarcity, the potential for millions of additional barrels on the market hit like a thunderbolt. The simple act of putting America’s resources on the table popped the oil bubble, and a stunning price drop followed in short order. By election day, November 4, the price of a barrel of crude had plummeted to $70.84 — a 51% decrease in less than five months.
But wait. I can already hear the cries of, “Uh uh! The price dropped because demand fell off! Haven’tcha ever heard of the Great Recession?”
Problem is, all of that happened months prior to the collapse of Lehman Brothers and the beginning of the financial crisis on September 15, 2008 (price of crude: $95.52). Oil prices actually spiked at the outset of the economic mess, peaking at just over $100/barrel on September 30 before falling again. They reached a bottom price of $30.28 on December 23, a jaw-dropping 80% off the July peak, less than a month before Barack Obama took office.
Speaking of which: Obama had been president-elect for all of five days when he announced his intention to rescind Bush’s order. Oil prices started going up again in January of 2009 and steadily increasing ever since. Obama Energy Secretary Ken Salazar announced a highly restrictive offshore leasing policy last December, and the Bush executive order was officially reversed on February 8, 2011.
The price of crude that day was $85.85. By April 19, it had risen to $107.18, with no end in sight.
Update: On his PJ Xpress blog, Ed Driscoll adds “CNN Neuters Obama” and a president’s impact on oil prices.
Has a country heretofore ever refused to use its own natural resources? Numerous wars have been fought in order to use OTHER nation’s resources. But we refuse to use our own. This is NUTS.
You are absolutely correct, in terms of stated government policy, it is nuts.
But these are clever, competent and tough people who seek to achieve their goals. They are not nuts.
One can only ask, what are their true goals?
Their true goals? Probably to retain our natural resources while we have the economic means to buy the resources of others. Think of it as a second strategic reserve.
But that’s assuming they are smart with longterm vision. More likely its just plain stupidity and a neurotic focus on enviroweenie propoganda.
Either way the public will pay high prices
“But these are clever, competent and tough people”
I see these words used a lot in reference to this administration, but have yet to see any evidence that this is true.
Acually they are all 3 words…granted not in a positive way
So far they have gotten away with bringing America to her knees and no one is daring to fight back…Americans do not pay much attention until someone hits their money. Gas prices might might I say, open some eyes..
We need a candidate that has moxie, knowledge, and “fire in the gut” to bring us through this
NO NO NO RINOS NONONONO, ie..brown, snow i could go on and on…
It’s obvious to me that their true goals are the destruction of the American middle class and of the American-born working poor.
We need to focus the blame for high fuel places on the Obama Administration, and nowhere else!
Gas Pump Activism: Print This Poster!
The price will have to fall. Otherwise the Arab nations will not be able to support the lifestyles to which they have become accustomed.
They are at present feeling the ‘pinch’.
“but the actual explaination is far more prosaic. Limited supply plus growing demand equals higher prices. That’s a formula so simple, even a community organizer should be able to understand it.”
Ahem. The Federal Reserve has purchased or printed over $4 trillion in currency and US treasury bonds in the last 3 years, and the petrodollar economies are linked to the dollar through their foreign exchange reserves. This is why they are running 30%+ inflation in those countries, just like in late 2007 to 2008 before our last crash.
I think this makes a tad more sense when compared to our current inflationary horizon, wouldn’t you say? Or did we somehow have magic demand growth during the incredible presidency of Jimmy Carter and his reign of 15%+ interest rates? Seriously, do you guys actually believe that Volcker’s overnight rate of 21% required to end inflation was caused by supply and demand or that the market would ever let it get to that point naturally?
Puhhh–llleeasssee.
We’re seeing price increases across the board in everything, not just energy or products which depend on energy. Given that global growth is worse than anemic, you guys have to point to how 3% growth in global GDP in a year translates to a 30-100% increases in commodity prices and agriculture prices that mimic the oil price rise exactly. There are no sugar, wheat, beef, rice, gold or silver moratoriums enacted by the Obama presidency, and yet the price of all of those things have skyrocketed with negligent GDP growth.
negligent? . . . Oh! negligible!
Correct. I occasionally do make errors when dead tired. It’s a deep fault of mine.
In all seriousness though, lets look at the behavior of global commodity indexes and then see the amount of oil produced in the United States. Then look at what the oil “permitorium” (which I definitely do not approve of) has done to this supply. You would have to concoct the most ridiculous supply curve imaginable to justify these prices. We also exist on a global market, and U.S. oil production peaked in the 1970s. We do not control enough of the world’s supply to be responsible for this kind of behavior.
And to the poster below, yes ethanol subsidies radically increase corn prices. But gold, silver? I just rattled off a few prices. Browse the commodities index at your leisure and go down the list. Raw materials and commodities are *not* so impacted by energy prices that they rise in linear fashion with them. It’s highly manufactured goods are where you can expect to see that kind of behavior because of all the stages in the supply chain.
Unless you can explain on a case by case basis why thousands of prices are seeing the same extreme upwards action with historically minor supply changes, might there be a systemic reason for it?
The dollar index is at an all time low and there is a -0.90 correlation with that index and the markets. Never in my life have I seen all assets so correlated as I have now. We can gripe and moan about the Obama administration all day long (and we should), but blaming oil prices on the “permitorium” is really missing the elephant in the room.
#3 Aaron bernard says: “There are no sugar, wheat, beef, rice, gold or silver moratoriums enacted by the Obama presidency, and yet the price of all of those things have skyrocketed with negligent GDP growth.”
While inflation is definitely playing a role, most of it is driven by the decline of the dollar and the increase of energy prices. However, your claim that the fact that these other items are also seeing skyrocketing rates while there is no Obama moratorium is spurious at best.
Gold and silver prices a re skyrocketing because the incompetence of this administration have sped up the inevitable economic decline and eventual collapse that 50+ years of the nanny state can not avoid but result in. Many Americans are hedging their bets against the dollar becoming worthless paper, by buying gold and silver. That’s why those prices are through the roof, and climbing higher. There will soon be a moratorium on those purchases as these crooks try to defy economic reality.
Sugar, wheat, rice, and beef, in addition to the usual government price hiking schemes, all need energy – gas – to be moved to market. Gas prices up means they cost more. I notice you left corn off the list. Afraid we might point out most of it is being wasted making ethanol because of the left’s demand for food to be turned into inefficient energy?
Absolutely correct. The current price of oil has little to do with demand or supply and everything to do with the disastrous decline of the Dollar at the hands of the Federal Reserve.
Apples and oranges. There is more than one inflationary mechanism at work. All are expressions of supply vs. demand, but not in identical ways. Agricultural production was seriously disrupted by the past winter of very non-AGW weather, and we will doubtless be seeing effects from that for many months yet. Oil is inflating because of, in some parts of the world, increasing demand for a relatively constant supply, and in other parts such as the US, relatively flat demand but artificially limited supply. Both imply, even demand, price inflation. We are also starting to see inflation in non-petroleum, non-agricultural products. That inflation would seem to be due to debased currency. In short, we’re being hit with something approaching a perfect storm of inflationary causes. Eliminating any one cause won’t stop inflation; a concerted effort on several fronts will be required. Given government recalcitrance, we’re unlike to see any efforts at all.
Absolutely spot on. You can take a graph of the recent run up in oil prices and overlay the St. Louis Fed’s graph of the explosion of the money supply due to The Bernanke and his QE2 and they match beautifully.
If “supply and demand” is such an obviousity, what happens when the supply of dollars grows hugely? Gosh, wouldn’t one think that the price of a dollar (in oil, say) declines?
Or, to put it another way, if you’re going to blame “speculators” — just where did all the Goldman-Sachs commodity traders get all the cash to put into oil futures? Couldn’t be the Fed handing them stacks of newly-printed $100 bills in exchange for Treasuries now, could it? Sheesh.
EVERY time this happens — and it’s happened many times over the past century — everyone always trots out the “emerging economies are ramping up supply” if not “Peak Oil!” canards, while ignoring the elephant in the room: when you try to print your way out of a fiscal mess, you get inflation, and inflation always starts with the price of oil.
Oh, wait…so you’re saying the explosion in prices (but it’s NOT INFLATION! say the mandarins in D.C.) is NOT due to a growth in demand, and a constriction in supply, of oil? It’s just because Obama’s fed has pumped $900B of worthless paper into the money supply?
Oh.
Well, that’s ok then.
/snark off.
You HAVE heard of the concept of multiple causation? This is not an either-or question: BOTH of Obama’s policies are at fault — you have a constriction of supply AND a devaluation of the currency. BOTH work to raise the price, measured in dollars, of that commodity.
Sheesh. This isn’t rocket science. Any neighborhood kid with a lemonade stand understands this stuff: including the permitorium idiocy (if you recall the story last year about the kid whose stand was shut down due to the lack of a street vendor license).
The United States produces 2-3% of global oil.
Explain how cutting percentages of that will impact prices by 100%.
I did not put forward a straw man and say that there wasn’t multiple causation, merely that your story is just that. A convenient story that does not withstand basic scrutiny.
Yet again, unless everyone wants to make the “perfect storm” argument again, just like the 1970s when the oil economies had inflation prior to unrest, or just like 2007 when the Egyptian army was baking bread because of 30% inflation, or just like 2011 when the Egyptian regime was toppled because of a combination of factors, one of which was 30% inflation and the fact that a previous government was toppled in Tunisia because of a protest about….. inflation.
How many more long-winded sentences are necessary to explain this?
This has happened over and over and over again in history: monetary expansion creates leverage in the financial system which allows future resources to be consumed in the present because of false price signals. Scarcity is created by consuming more resources than the market–or supply and demand–would naturally create. In short, inflation creates artificial demand which can create artificial supply.
But really, explain how even a 1% decrease in oil supply is responsible for these prices. Then concoct an example for everything else. Then, for every story of “unrest” in a major exporting nation required to explain supply disruptions, go look at what the inflation rate is in that nation is and the ratio of their FX dollar holdings to GDP.
And if the permitorium on oil drilling was lifted, not only off the American coastlines, but also within our borders, then we wouldn’t have this problem, because there is more oil located under our borders than all the OPEC countries, combined! But, no, we can’t even access that oil, and even if we could, now, there is not enough facilities to refine it and store it! We’re screwed.
Most of that oil is only profitable at over $150 a barrel though. So, no, there will be no easy fixes to this and “Drill Baby Drill!” truly is the mantra of idiots if they think it will fix the problem.
Republicans should not stand behind it because when they ascend to power, we will definitely drill and prices will still rise, not fall. They just may not rise as rapidly.
“Peak” oil isn’t about running out of oil, it’s about being able to supply at a certain price. The U.S. hit “peak” oil in the 1970s and it has a very predictable, mathematically well-defined trajectory, not just in the aggregate, but on individual wells as they go to depletion.
Absent any new major reserves of cheap oil ($27-$40 bbl, which we haven’t found in a very long time), the world hit “peak” production in pricing terms of oil in 2007. The fossil fuels that America has a hyperabundance of is natural gas, and we don’t power our cars off of it.
“Supply, meanwhile, has fallen off, not only as a consequence of the turmoil in Libya and other oil-producing countries, but also thanks to the Obama-ordered moritorium on drilling in the Gulf of Mexico — and the recenly ordered moritorium on future drilling anywhere else off the American coasline.”
It is criminal what this administration is doing to the economies of the states in the Gulf of Mexico. We could be generating literally thousands of jobs AT NO COST TO THE FEDERAL GOVERNMENT by just letting companies drill again in the Gulf of Mexico. And our economy would really take off if we would allow drilling anywhere in the United States, either on land or off the coast. This is what happens when you have a president and an administration that is held hostage by the enviro-Nazis that control them.
And if I hear about windmills one more time I’m going to throw up. Windmills can’t do squat to generate enough power for a large town, let alone a major city. And to get that power to a major city has been proven to be very, very, costly. Even T. Boone Pickens has thrown in the towel on windmills. They are great for generating small amounts of energy for a lot of money, but, hey, if that’s what you want, knock yourself out. But Obama and his green gang (not to mention General Electric, which makes these windmills) are married to this idea no matter how inefficient or costly it is. And for that alone this guy should be thrown out of office.
The Federal Government has spent billions of dollars over 30 years researching and experimenting with wind energy. And if you want to generate some electricity for a farm or a few houses, great. But for anything else, it’s a loser. The Holy Grail of wind energy is a bust, and the sooner Obama and his ilk realize it, the better.
Windmills: Simulus money used to help pay for installation of windmills made in China. Green jobs?
http://legalinsurrection.blogspot.com/2011/04/stimulus-to-fund-3-huge-wind-turbines.html
Oil drilling clampdown in Alaska too.
http://legalinsurrection.blogspot.com/2011/04/choking-our-oil-supply-one-permit-at.html
Shell Oil Company has announced it must scrap efforts to drill for oil this summer in the Arctic Ocean off the northern coast of Alaska. The decision comes following a ruling by the EPA’s Environmental Appeals Board to withhold critical air permits.
Yes. And I am not saying this was right, just an observation, but up until now, American presidents have tried to stay on the good side of the rulers of Saudi Arabia, who (’til now) have been Americans’ ‘ace in the hole’ on oil pricing. If oil prices got too high, they could notch up production and cool off prices. But several weeks ago Saudi Arabia appealed to Mr. Obama and Mrs. Clinton NOT to pressure Mubarak of Egypt too hard. For better or worse–another conversation, but actions have consequences and the knee bone is connected to the thigh bone–this MAJOR DIS put Mr. Obama in the Saudis’ bad graces. What is the chance that the Saudis will help him out? An ice cube’s chances in the Arabian desert. But on the other hand, maybe Mr. Obama doesn’t care since he wants gas prices to skyrocket http://michaelehline.amplify.com/2011/04/22/video-obama-says-wants-high-gas-prices/
Oh, President Obama is right. Speculators are, in fact, exactly who are at fault for our plight:
Those who speculated that a man with no legislative record behind him would be the right man for the job of defending the law;
Those who speculated that a man whose academic and professional career were purposefully hidden should be trusted on account of his obvious intellectual gifts;
Those who speculated that a man who said energy prices would necessarily skyrocket because of his decisions would be worthy to guard our nation’s energy policy.
Oh, yeah. The speculators are precisely whom we should blame for this problem, and they are getting what they deserve. Unfortunately, the rest of us are getting it, too.
And in the salons of the Regressives they are still blaming ol’ Georgie for all our problems because, you see, the problems he left for the country were so broad and deep that it is going to take eight years for our Messiah to straighten this mess out and this is why he must be reelected.
OH amen!!! That is most clever. I may have to borrown this!
To his slow learning supporters, this is known as bad luck.
“Leading from behind”. It’s the Obama way.
Ya’ know, I never really made the connection until now.
He’s patterned himself as being the “Hindmost”. This is the title of the “leader” of the Puppeteer species in Larry Niven’s Known Space series of SF novels. Since they are racial vegetarian cowards (albeit intelligent, manipulative cowards), the “leader” leads from the rear of the herd.
Again, I ask. . . . .WHERE ARE ALL THE REPUBLICANS WHO SHOULD BE SCREAMING ‘ Drill, Baby , drill!” ??!!
Not one peep out of any of them. . . where is the great “Sarahacuda”? Even Jim DeMint is silent. . . this issue should be out there 24/7. . . Am I disgusted with ALL of them? Hell, yes!!
“Limited supply plus growing demand equals higher prices. That’s a formula so simple, even a community organizer should be able to understand it.”
Oh, Dear Liar does know. But these neo-feudalists (i.e., marxists of whatever church) do not want serfs to move around. Keep them tied to the manor.
BINGO!!!!
it’s all about mobility (that key ingredient of federalism that allows individuals to choose by means of fleeing an unfavorable set-up towards one that fits his needs)
crappy airplanes falling apart in the sky (unions fix and inspect)
crappy airline traffic controllers falling asleep on the job (unions)
crappy airline security standards (frank luntz, oops, janet napolitano)
— no one flying—-> self-imposed mobility restriction
crappy green cars (40 miles per charge; catch fire in garages) that would keep somebody from escaping the liberal black holes from which they are foisted
sky-rocketing oil prices that affect everything
this, if not totally intentional from the regime, is certainly a welcome consequence of the statist in chief
And his National Labor Relations Board wants to bar Boeing from building a new plant in a right-to-work state instead of its home state of Washington (non right-to-work)? Disgusting. Who are these guys and how do THEY get to decide? Do they think this is going to create JOBS? Don’t look now but the number of right-to-work states has just ticked up to 23. Great article about this in the WSJ today.
Answer to Q in my 9:35 post http://pajamasmedia.com/ronradosh/2011/04/25/how-the-obama-administration-is-using-executive-power-to-support-union-goalswhat-the-nlrbs-recent-complaint-reveals/
Makes perfect sense! Let this criminal organization (The Obama Regime) investigate itself for ‘illegal’ criminal activity.
This shall work flawlessly, since, they have already pledged to protect “their people”.
And I’m so reassured that they will punish all offenders they find! Haaahaaahaaa!
Like giving a free candy bar to the muslim wearing an explosive vest to leave your store alone.
Don’t you think this goes a little beyond an insult to intelligent people?
Oh! Wait………
OPEC’s power is not that they have all the oil, it’s because they can supply oil for a lower price than anyone else. Their objective is to set the price high enough to maximize their profits but low enough so that other countries won’t drill for their own oil. That price depends several factors, including how willing other countries are to drill for oil.
Hence, if the US has a government that is unwilling to drill for oil, anywhere, anytime, OPEC can raise the price of their oil almost without limits, knowing that the US is not going to take any action other than to pay the higher prices. Also, when Bush opened up offshore drilling, OPEC lowered the price, not because there would be oil in 5/10/20 years, but because it was indicative that the US was willing to start going after its own oil, and OPEC had to lower the price to discourage that.
Almost any action that the government takes now to increase oil production will cause the price of oil to fall, regardless of how long it will take for that oil to reach your gas station, because OPEC will react.
It has nothing to do with “better!” The pimps who own Obama want to destroy the US middle class and American culture.
Story out now on an ice breaker for an oil company ordered by EPA to cease operations off the Alaska coast. It might harm the residents in a town 70 miles away. The noose tightens. Holder and the media scum will have to work a little harder to make Obama and the rest of Democrats look normal.
Destroying a nation ain’t easy.
The Marxists want us out of our cars on public transportation; they want us out of the suburbs & into the city. That’s the point of the so-called green jobs: energy rationing & taxes on oxygen.
http://slapblog.com/?p=12418
There are some who will even think the left’s desire to abolish fossil fuels is a noble gesture designed to protect the planet. Hogwash, follow the money. This is another attempt to move the money from big oil to big green. And Obama’s and Al Gore’s friends, Soros and the Chicago carbon bank, are in line to make the big money this time. It’s a done deal, as less and less people are truly concerned. Enjoy your New Venezuela Norte.
There are already a whole lot of services and organizations ready to help you with your peaceful transition to Obama’s New World Order.
CCX – Chicago Climate ExchangeForestry Carbon Sequestration
Federal Reserve Bank of Chicago – Detroit Branch
Cost-Effective Carbon Restrictions
http://www.chicagofed.org/webpages/events/2007/cost_effective_carbon_restrictions.cfm
Council of Foreign Relations,
ShoreBank in Chicago,
Joyce Foundation,
Franklin Raines,
Goldman Sachs
Emerald Cities Collaborative
Union of Concerned Scientists
Environmental Defense
http://www.carbontradeex.com/carbon-tradeex-america.aspx
Did anybody read Aaron Bernanrd’s post, or are you all too busy blaming Obama that you don’t want to read anything that might make you question blaming Obama? It’s called Confirmation Bias, fellas, read up on it. At least dispute what he offered rather then blathering on about Marxists trying to destroy our country.
My question is, if “Limited supply plus growing demand equals higher prices.” then why, “Even though, as critcs were eager to point out, any additional American drilling was years in the future, oil prices immediately went into free-fall”?
Care to propose something other then oil speculation for that phenomenon?
P. Ami,
How much do you know about futures markets?
The proverbial 800-lb gorilla is the billions upon billions of deficit spending since the attainment to power of Pelosi/Reid and then Obama – upwards of Five-Trillion Dollars in the four-years of the 110th and 111th Congresses, that is driving future inflation that we are seeing the footprints of today, and subsequent devaluation of the Dollar that is driving the prices of all commodities higher and higher.
Higher energy costs impact all other commodities, and the devalued Dollar impacts energy, especially when the Saudis set the price of oil on how much after-inflation revenue they need to maintain their current accounts, and future costs of keeping a lid on a restless population.
What you call “speculation” is really just conventional horsetrading over the oil price by by both spot and futures commodities traders, based on those two simple variables: supply and demand. The price declines so dramatically when a moratorium is lifted for a number of reasons.
First of all, some oil drilling can start in weeks and months rather than years. Think of the rigs idled when the president shut down drilling in the Gulf last year. Those rigs stayed around for some time waiting for the moratorium to be lifted, and many are still available even now despite the siren call of the Brazilians and others. Secondly, as was mentioned above, OPEC countries set their production based on American production. The more we drill, the more they drill to get a piece of a diluted market. When we drill less, OPEC can drill less as well and make roughly the same amount of money.
Finally, what you call speculation can be irrational as well as rational. When traders have a real fear that oil supply, however low it already is, will decline tomorrow or next month, they understandly will pay more for a barrel, creating a bubble that seems quite unreal, irrational, even mercenary when the supply suddenly widens and it pops all over everyone’s face. If you had a 6-month-old baby and were living in a beseiged city with only so much baby formula, how much would you pay for a carton of formula? $50? $100? $200? And if the seige was lifted and baby formula poured into the city, how dumb (but how understandable) would paying $200 seem then? A silly analogy, but maybe it helps.
Incidently, I don’t think Bush’s lifting of the drilling moratorium in July 2008 completely explains the plateauing of oil prices between Sept.-Dec. 2008. The recession started in Dec. 2007 and smart observers saw an economic slowdown coming for even a few years before that. The moratorium helped, but the recession (especially the unprecedented freezing of the credit market) also played a big role in the drop in oil prices in 2008.
So how long does America have to put up with this idiocy? Well, I’ll tell you how long. For as long as a majority of the American electorate remain in a state of blithering ignorance. Obama, his democratic community organizing machine and his slobbering media propagandists could convince this crowd that global warming sunk the Titanic.
Just one tiny nit to pick: China actually DID have a stimulus program, almost as large as the US. And in terms of GDP, it was actually much larger.
And, China is now working through a very severe bout of inflation, a bout that imperils their entire economy.
Barack Obama’s man made gasoline price predicament :
Open ANWAR for drilling and to produce our own oil instead of buying it from foreign countries at inflated costs while keeping the speculators at bay and to keep our money right here in America
Add up items #1 thru #8, putting the most emphasis on #8 and you will have the cost of America’s gasoline costs:
1. http://www.youtube.com/watch?v=MlfmvwxxgHM
2. http://therealrevo.com/blog/?p=44337
3. The President of the U.S. is now giving $2.84 Billion taxpayers dollars to Columbia to build an oil refinery. I thought we needed jobs here in the U.S.? This President is a complete loser and it now shows he hates America.
U.S. Gov’t Agency Plans $2.84 Billion Loan for Oil RefineryIn Colombia
4. http://wizbangblog.com/content/2011/03/11/enough-oil-to-completely-replace-all-imports.php?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+Wizbang+%28Wizbang%29&utm_content=My+Yahoo
5. http://canadafreepress.com/index.php/article/35840
6. As Your Gas Climbs To $5 a Gallon Obama’s EPA Blocks Access To 27 Billion Barrels Of American Oil – http://www.americans-working-together.com/together_we_can/id36.html
7. Is Saudi Arabia mad at Barack Obama for allowing Egypt to fall? http://grendelreport.posterous.com/saudi-slashes-oil-output-pres-obama-launches
8. The problem that contributes the MOST to high gas prices is Quantitative Easing (QE2) by the Obama administration and here is why: http://www.futuresmag.com/News/2010/11/Pages/Oil-after-QE2.aspx
Printing more money tends to push down the value of the dollar. While that would tend to help U.S. exports, it also risks pushing up the price of oil and other commodities, threatening an inflation surge that could be difficult to stop if the economy picks up.
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Well high prices does do one thing.
It moves more money to the current oil suppliers to prop up their (generally) anti US, anti Christian, anti freedom, states.
I remember when the low oil prices were really crimping the style of Chavez, Iran, et al. Hard to pay off your peeps, buy weapons, support terror when prices are low.
Yes, the decline of the $ is the biggy. If you are sitting in Saudi Arabia getting paid in $$ and you see the value of the $$ crashing, OF COURSE you are going to ask for more $$ for your barrel of oil than you did yesterday, plus a little extra for the fact that the $$ is about to crash even more. Ben Bernanke at the Federal Reserve is crashing the $$ on purpose, despite Treasury Secretary Tim Geithner’s recent WHOPPER that he stands behind a strong dollar. LIAR, LIAR, PANTS ON FIRE. His nose is getting longer and longer…. (Question: just how STUPID does he think we ARE????)
Also, BTW, what is a SPECULATOR??? Sounds nasty, right? Maybe not. Let’s say you think the price of rare comic books is likely to go up, but they are still relatively cheap today. So you buy some. Your friend sees the same thing is likely to happen, so he buys some. Doesn’t matter whether you really want the comic book for yourself because you like comic books to collect, or whether you plan to “flip” your purchase by selling it at a higher price to someone else next year. In part, your purchase is motivated by the expectation that the price will go up. Congratulations! You are a SPECULATOR! The price goes up because people think the price in the future will go up. Here’s the thing: the Federal reserve WANTS this to happen because they are more scared of deflation (when nobody buys today because they think the price will be lower tomorrow) than they are of inflation. But our dear leader is using the fact that speculators are reacting rationally to the very real expectation that gas prices will go up to demonize them. And by the way, surprise, surprise, to try to deflect our attention and blame someone else FOR SOMETHING HE HIMSELF HAS SAID THAT HE WANTED TO BRING ABOUT!!(Remember the “I want gas to go to $10/gallon speech???)Disgusting. (LOL, next time I’ll let you know how I REALLY feel. Enjoy this lovely spring day, friends. http://slapblog.com/?p=12418
And I wait and wait for the inevitable tirade from the progressives “Oh you knuckle dragging right wing fools don’t you understand that even if we did start drilling this afternoon none of these wells would come on line for years and years and therefore this drill baby drill idea is idiotic and will solve nothing right now in reducing prices, you people are so stupid.”
Oh wait I guess it already started.
There is plenty of wind for wind power just plug into the progressive movements headquarters throughout the country and we will have more than enough energy to supply the entire world forever.
Øbama suggested ya’ll trade in your inferior ride. Excellent idea. National Trade-In Day is set: November 2nd, 2012.
If you set out to destroy the American economy and, thereby, its civilization, would you do anything differently than Obama has?
Considering the deleterious effects of Obama’s decisions, only one motive can be imputed…
The government has been pouring hundreds of billions of dollars down the rathole of “green energy” for nearly thirty years. All of this effort has produced almost zero energy and zero jobs except in those organizations funded by the U.S. government for the purpsoe of “developing” green energy.
None of this matters to the Left since “being green” is just a sham. The real goal is to use enviromental regulation to expand government power into every nook and cranny of private life and establish draconian controls over the use of property.
This is why everyone in the MSM is so relaxed about gas prices hitting four bucks and beyond. The more of a “crisis” this becomes (in their view) the more there is a need for regulation of energy producers in the name of “fairness.” Of course all of this just applies to American energy producers. Apparantly we are very keen to buy, buy buy oil from Brazil and their state operated oil company, Petrobras.
Our “energy policy” if that’s what you can call it is like one of those M.C. Escher prints of starways that go up and down and ultimately nowhere.
yes, speculators are betting that 0bama will not do anything to resolve the oil issue so they know, not really speculate, that prices are going to remain rather high. If we actually started to drill new wells the speculators would then know oil would be in the pipelines soon in the future and the price would drop, so they would drive the price down…funny how that works, huh?
BTW, the last time the left used this argument, if we actually had drilled in the rest of the gulf, off CA and the East Coast and around FL that oil would now be in the pipeline and your dear reader would not be dealing with the results of his “Under my policy, energy prices will necessarily skyrocket” causing energy costs to skyrocket. Sells good to the far left, the rest of the nation will eventually decide they don’t like that.
We fast on the way to ZimBob’sWay where even the poor make Billions a year….unfortunately lunch costs a couple of trillion…..
btw leftoids, this is akin to voting to raise the property taxes on your landlord by 1000% (him being an evil rich dude) and then complaining that he is raising your rent because the taxes are now higher than what you pay.
Government, government, government – everywhere you look, government. The department of Energy: created during the energy “crisis” in the seventies. How’s that worked out for you? The Fed, here to watch over the economy and currency; that’s worked well. The EPA, here to… well, pretty much anything they want, or don’t want. Then there’s the IRS with its wonderful, ever-flexible, amazing library of regulations; holding out the ever-available promise of funding the wildest dreams of politicians, bureaucrats, academics, and all other manner of star gazers and mystics; the ever-present breeding ground for mosquito-like bureaucrats and clerks available to give life instantly to wonderous organizatiins such as the DOE in the seventies and our new healthcare overlords today. Pick a problem – energy, healthcare, inflation, housing, banking & finance, manufacturing (automobiles or anything else), immigration, education, – and you’ll find a government organization behind it. Individually, they have all failed. The government is so deeply entwined and integrated into everything we do the that the collective failure of its agencies has become catastrophic. It and they are bringing us down.
Green Hell is here. Leftists, Socialists, Greenies – the differences between them are window dressing. They hate the success of the West and want to punish it: Jihad in disquise.
“By April 19, it had risen to $107.18, with no end in sight.”
I can think of an end in sight: the end of a barrel. And I’m not talking about one full of oil…
I was reading an article on chicago.cbslocal.com about the high price of gas.
Out of over 200 comments, I estimate 70-80% of people are fed up. (Many commenters are not from Chicago, it is true).
Seems to me that all the opposition to 0 has to do in 2012 is dig up some old Carter-era gas line photos and videos, and juxtapose them with 0′s pronouncements that he wants higher gas prices.
The drilling moratoriums will be lifted in time for the next presidential race. Obama knows he can’t get reelected when everyone is pissed off about high gas prices.
The congress, for decades, has been the driving force (legislation) that allows for all the corrupt manipulations of oil…not Obama, though I wish that were so and a presidential election would end it. Oil has long become the weapon of choice for advancing a myriad of governments political, economic and social special interest agenda’s. It is with the most serious reckless disregard toward national secuirty that they do so! That is how braisen and corrupt the government and the Wall Street community has become. The whole realm of oil corruption is much larger than A sitting president.
I’ve been following this stuff pretty closely and it appears that
(1) supply is not limited but is excess
(2) demand is not growing, it’s actually falling.
Care to try again?
Hint: Speculators are part of the problem. Certainly not THE problem. But part of it.
Obama wants to end special tax breaks for energy companies. I say OK, but only if it is revenue neutral, by lowering another tax to offset it. Best candidate, with present high gasoline prices, why not offset the repeal of the tax breaks by a lowering of the gasoline tax. That would end a special interest tax break, and we all would benefit with lower gas prices. And it would take away a good excuse for obama to enact a disguised tax hike.
Maybe I missed it, but I didn’t see anywhere here a mention of the fact that Obama’s moratorium on drilling is illegal. It was declared so by a federal udge last year, but, in typical Obama fashion, he flouts the law as he has done on so many fronts. Gangster Government indeed.
Jeez, don’t you guys listen to your front-runner, The Donald. In a recent interview (show on Colbert), he said it’s just a matter of demanding that the oil producing countries increase their output. “I’d look them in the eye and say, The fun’s over,” he said. “It’s so easy.”
Jeez, Trump certainly can’t do worse than the guy in the White House today. Obama intentionally wants high oil prices. His policies intentionally drive up the cost of oil. I’d take my chances with Trump.
Salazar is Secretary of the Interior, not Energy
Republicans better be cautious on this issue.
The marxists manipulated the price of gasoline from about $4 to below $2 in two months of 2008, and they will do it again in 2012.
Does anybody think for a fraction of a second that the Saudis, the Mullah’s, the Russians, Chavez and Gadaffi Duck don’t want little lenin back for 4 more years in 2012? And you can damn well be assured that if they want the price of oil to be low, it will be.
It’s guaranteed that the gas will be reasonably priced by nov 2012.
OK lets blame the President, not the gas companies setting the prices not the car companies for not getting the electric car prepared in time to make this a competing factor. Let’s see what their earning are for this year. I love the fact that they made $40 Billion last year lets see how high that number is this year considering non of the major companies gave their blue collar workers raises which is over 80% of their work force.
Steven….what you forget is that everything is relative to something. May I suggest you take those billions of dollars of profit you referenced and then determine the average operating burn rate in the oil producers industry. I’m sure you would advocate for capitalism to operate on an annual net zero bottom line by employee distribution of profit. Thats the good ole social justice way and to hell with companies being able to finance future growth and modernization or other uncontrollable costs. Job security means nothing until a company is bankrupt then, blame the companies management.
The foresight of the social justice ‘followers’ begins and stops at their eye brows!
It is very easy to say OH those evil oil companys for making such a hugh profit. In your ignorance what you fail to see is that they are selling millions of gallons of oil with a low profit margin on each barrel of oil. If I owned a company and only sold one widget @ 6% profit my profits for the year would be nothing compared another company that sold millions of widgets with the same profit margin. As for electric cars there great if you live in the city beyond that they are worthless, no one wants or will buy them. Blame Odumbo you bet he closed down drilling. The US government came out and said the USA has more energy reserves than any nation on this planet yet the environmental wackos and Odumbo refuse to develop them. It is people like you that have ruined this country
“…non(sic) of the major companies gave their blue collar workers raises…”
And you know this how?
“…non(sic) of the major companies gave their blue collar workers raises…”
And you know this how?
Commodity prices, and gold, and silver, are affected by multiple factors, a prime culprit being the Obama Administration’s intentional devaluation of the USD.
But regarding the price of oil, and thus refined products, consider that OPEC came into existence in 1960 and had no substantive effect on oil prices until the 1973 Yom Kippur War, when for the first time OPEC intentionally limited supply. I remember when my 1972 Plymouth Road Runner, with its Chrysler 440 big block, and 21 gallon fuel tank, needed more than $10 to fill and I cried. After that, the genie was out of the bottle and wasn’t going back. OPEC has had occasional trouble controlling supply, “cheaters” like Nigeria exceeding production limits, but with booming worldwide demand AND the exit with malice aforethought of the United States from exploiting its own oil reserves, getting the highest price for leaving the oil in the ground was never easier.
OPEC limits production to raise prices and to raise its profits.
Democrats in Congress and the White House and spineless Republicans limit production to raise prices and to worship the environmental god who has filled the vacuum left by the departure of the Creator that Jefferson named but Obama and his ilk do not.
OPEC and the Democrats have identical tactics but different justifications. In both cases, however, the effect is the same: skyrocketing fuel and energy costs.
This is perhaps the one Democrat article of faith that cannot be accomplished by their old reliable battle cry of class envy. The Democrats cannot raise energy costs then give rebates to their core constituents courtesy of “the rich”, because if the Democrats did so, the core constituents would continue buying and burning the hated carbon fuels. Therefore, the core constituents must be hurt, and hurt bad, in order for the plan to starve off carbon fuels to succeed. And yet the core constituents never give it a thought. They’re incapable of critical reasoning.
obama has pledged all of the U.S.A.’s natural resources,cites,banks,timber etc. to China as collateral for our debt. and also to disarm the populace so when they come and take it, it will be a cakewalk them!
Apparently, you people don’t understand the international oil market.
They have been shuttering refineries due to lack of demand, not supply. And yes the price is controlled by speculation. Take Econ 101.
Read wikipedia about derivatives and then go to the website for the International Bank of Settlements. Hello, the rest of the planet Earth calling, America is only 300 million of the 6.7 billion living here.
As a member of “you people”, this people would like you to confirm that restricting supply by forbidding drilling in Alaska, offshore Alaska, Pacific, Gulf and Atlantic Coasts, Rocky Mountain and Montana/Dakota Bakken shale has no effect on prices.
Please, no undocumented comments about shuttering refineries [when the U.S. has to import refined products, there not being sufficient domestic refineries to satisfy demand, there being absolute environmental roadblocks to building new refineries], no insults about Econ 101, nothing about derivatives, nothing about Enron, nothing about the Bank of International Settlements, nothing about real estate and nothing about the Bank of Singapore.
Just confirm that Obama deliberately keeping close to one trillion barrels in the ground has no effect on prices. Thanks!
You fail to recognize that like most things theses days, oil, a commodity is manipulated by the global market….not the U.S. market. Due to a lack of knowledge, most American’s believe that the oil produced by American companies, CONUS or foreign is sold and exclusively to the U.S. domestic market…..WRONG! If that were the case, domestic oil producers would go broke overnight….not to mention the horrible national security problems created in the mid term, by depletion ratio’s. Oil goes to wherever the money is globally and when the demand goes low or high the price of the commodity goes up. Ponder the latter if you were to be in business to maintaion a good profit line.
Oil is a complex commodity controlled by many factor’s, even those you stated you don’t want to hear about. They are all connected together to regulate global reserves, consumer demands AND profits.
American’s are ‘spoiled’ by the government subsidies to the oil industry and enjoy the lowest fuel prices of nearly any country globally. I’m thinking its high time to follow the wishes of so many and turn off the faucet to those subsidies and let American’s pay for their fuel what all other countries do.
Bottom line! American’s oil in the ground or out of the ground will not reflect on the dirt cheap oil and engine fuels the people demand and think they can have with ‘domestic’ oil. It has remained largely in the ground since the late 50′s as oil (barrel) prices have vascilated from very low to very high over the times regardless of consumer market demands. Domestic or foreign produced, oil is a global political game…not a domestic game! I supose that Obama ‘could do’ what Chavez in Venzuella did by nationalizing it but, that would not even give the people the cheap fuel they demand.
Mr. Thomas: please confirm that restricting supply by forbidding drilling in Alaska, offshore Alaska, Pacific, Gulf and Atlantic Coasts, Rocky Mountain and Montana/Dakota Bakken shale has no effect on prices.
Please, no comments about “lack of knowledge”, no comments about oil being a “complex commodity”, no comments about “Americans are spoiled”, no comments about “dirt cheap oil”, no comments about “vascillation”, no comments about “global political game”, no comments about “nationalization”, no comments about “subsidies”.
Just confirm that Obama deliberately keeping close to one trillion barrels in the ground has no effect on prices. Thanks!
Frank…I thoroughly answered your question above. Sorry you’re reading past it!
["The year 2009 was a tough one for the global energy industry given the impact of the global economic crisis on oil demand, with oil prices collapsing from $147 per barrel (p/b) in mid-2008 to $34 p/b by early 2009."]
Did America start drilling everywhere (CONUS) between 2008 and 2009 to result in the drop from $147 per barrel down to $34 per barrel? Did America withdrawing significant amounts national reserves of oil from production back in the 50′S and 60′S, drive the price of foreign oil up in the times? Does American produced oil stay here for domestic use or go to the global markets? Do you know which kinds of oil has the greatest demand versus the most common grade of oil produced here in the U.S.?
Energy companies trade derivatives, i.e. Enron, and they promise a high return, when demand goes down they raise prices to compensate. There is no lack of energy, China does not want our property. Its an investment. It’s all controlled through the Bank of Singapore and a legal treaty that ties us into the Bank of International Settlements. We borrowed ridiculous amounts on mortgages when in reality real estate does not increase at the ridiculous levels of 1999 thru 2008. This caused the current inflation. Money is math, there is no free ride, you can’t borrow forever. U eventually have to pay the piper and that’s what is occurring. Obama can no more control gas prices at the pump then he can control what I eat for dinner. It’s obvious as a fellow american that electing idiots for years would eventually bite us in the you know where.
Hoo! Hoo! Baby you ain`t seen nothing yet!!!
Good page, except you make no mention of the Obama Imposed Inflation (OII).
The main monetary factor for oil trading, and many other things is the American dollar. When dollar gets devalued by Obama Imposed Inflation,the cost of everything we do or buy increases.
Geithner says our dollar is in ‘good shape’, I have to challenge every word he says, and I most certainly don’t profess to be an economist.
You guys should add to the chart by starting when the Polar Bear was added to the threatened list. W was president and oil was $38 a barrel but started climbing the next day.
Cause and effect can be illustrated in both directions as listing the Polar Bear brought the rise in price and lifting the ban on offshore drilling brought it back down. Both took place over a fairly short time and that buries the argument a president can’t do anything to affect the price of gas.
From $38 a barrel to the highest price for a gallon of gas the nation has even seen and back to $38 a barrel over environmental hogwash in one presidents term in office. What a kick in the enviro mantra’s teeth.
Last week OBAMA-MA was out collecting money for re election.We have lost so much of America that took decades to develop.Now this ****** of a president has ruined all most every thing that our country stood for and what people have given their lives for.So this “”trash “” has in 2 years taken away.When are we going to open our eyes and say enough to our elected ass holes .They want our vote and then go do what they want to do them selves.OBAMA-MA it seems has sunk our country to new lows and he still has that JIVE TALKING HALF ASSED SMILE on those black lips as if he is every bodies friend.What is going on in the Middle esat just may begin here with white people saying enough to those that want every thing for nothing..
Whoa, there fellas, Saudi Arabia says there is a glut of crude oil on the world market and they must cut production because there is no where to put it. Who is lying and why would they do that?
Oblamer promised us that under his plan our energy costs would “necessarily skyrocket”. That was at the same time he promised to bankrupt the dirty coal industry. That appears to be one of the few campaign promises that he has kept and everyone is surprised at the obscene hike in gas prices? That dirty coal and oil are responsible for nearly 70% of our electricty generation, and he wants to stop it so you cannot recharge your electric car that he wants you to buy.
Shell oil has had to abandon drilling plans because the EPA has made such tough restrictions that they are unable to comply with them, and the despicable restrictions are very obviously aimed at just that result.
Sign up now to un-elect this fool potus for the good of America and our citizens. Congress needs to defund and end the rule (and ruin) of the EPA.
This Is Yet Another Display Of Obama’s Clear Incompetence And Yet Another Reason To Impeach Him.I Agree With Those Who Wants To Get Rid Of The E.P.A As Well As Many Other non-essential Government Agencies And Position Which Are Breaking This Country On Top Of What Obama And His Administration As Well As The Liberals In Comgress Are Intentionally Doing To Destroy Our Country. They All Need To Be Horse-Whipped In The Worst Way Mercilessly.
Do not forget to mention gas went up to over $4 a galleon during the Bush administration.
And it crashed from $147 to $33 in 6 months just as private sector credit flatlined and global GDP only dropped 3-4%……
Hmmmmmmmmm……..
Those being the prices of bbls of oil of course, not gas prices per gallon.
Gasoline prices have coincided with the rising price of food and most other consumer goods, while the value of the dollars has gone in the opposite direction. This was predicted by economist some sime ago when the Federal Reserve started flooding the planet with printed funny-money stimulus. Demand that the Federal Reserve Bank be audited.
Note to T. T. Thomas, most recent post curiously not permitting a direct reply:
I am not asking for your “thorough answer”.
I am asking you to simply and directly state that not drilling in the locations that I enumerate has no effect on prices.
Can you simply state exactly that?
Just say it. Say “putting one trillion barrels of oil on the market over a period of years has no effect on prices”.
Considering that the U.S. only has 19.1 billion barrels of proven reserves, that would be quite a feat.
So, yes, if you were able to procure more oil than contained in the entire world over a period of years, it most certainly would have an effect.
http://www.radford.edu/~wkovarik/oil/2worldoil.mideast.html
United States Geological Survey of world-wide recoverable reserves indicate 2.3 trillion barrels. North America alone is 400 billion barrels.
These are year 2000 figures, copyright 2003, and do not include very large discoveries in the last decade.
Next feat, please.
See my previous posts above. There is a difference between “proven” and “recoverable.” But you can’t blithely act like we dump a century of reserves on the market over “a number of years.” You damn well can’t pretend that the price won’t rise given it costs 5 times per barrel for extraction.
Those “recoverable” are at $150-$250 / bbl minimum prices to be profitable. If you look at what the futures rate for oil was in 2007 and note that U.S. oil production increased in that year, you will have a datum of proof for that point. But you don’t have to take my word for it, look it up. Oil shale is extremely expensive to produce because the shale has to be melted down to extract the oil which requires lots of energy to do.
So, if you’re saying that we can get a fix for our demand at $7 a gallon gas, I’m right there with you.
Secondly, almost 90% of that North American oil shale is in Canada, not the United States, and not restricted by our permitorium. So you “Drill Baby Drillers” still are off your rocker and still do not understand the concept of volume at a price. Yes, we should be drilling in North Dakota, but for Pete’s sake folks–do the freaking math!!!!
Are all the areas that I mentioned open for drilling, and all the oil companies are refusing to drill, citing your assertions that the fields are not economical?
Or are all the areas that I mentioned closed for drilling, because Obama and Democrats do not wish to allow the oil companies to make the economical or not economical decision?
It is a contrived shortage in supply, contrived by both OPEC and Obama and Democrats. How about a little “pro-choice” for the American consumer? Or is “choice” only a good thing for that other thing?
Choice is good. I say open them up.
The biggest crime is the dept. of the interior and BLM preventing exploration leases to see what’s available and crazy tax policy on the oil companies which drives up the price even more than it needs to be.
But quite frankly, yes, most of the oil that is low-hanging “fruit” that is economically attractive at even 70-80 bbl onwards is out there in the open already. And they have been drilling it at those prices. Canada has been doing a lot more of it than us.
But here’s the thing. Choice doesn’t matter when trading in the same commodity. Ever.
No one will ever decide to “drill” or “extract” oil at $90, $100, $150, $250 a barrel if the price of oil is $89 a barrel. Given that the lion’s share of that oil costs $150 a barrel to extract, it means to “drill baby drill” it out of the ground would mean that oil would have to stay above $150 a barrel permanently, regardless of how much of it is in the ground.
Of all the many grade classifications (types) of crude oil, Brent Blend found in the North Seas and WTI found in Texas, are the least cost refined crude for gasoline and is priced like gold and platinum on the precious metal commodities. All the other crude grades are progressively more costly to refine for gasoline according to their classifications.
["The U.S. petroleum industry's price was heavily regulated through production or price controls throughout much of the twentieth century. In the post World War II era U.S. oil prices at the wellhead averaged $26.64 per barrel adjusted for inflation to 2008 dollars. In the absence of price controls, the U.S. price would have tracked the world price averaging $28.68. Over the same post war period the median for the domestic and the adjusted world price of crude oil was $19.60 in 2008 prices. That means that only fifty percent of the time from 1947 to 2008 have oil prices exceeded $19.60 per barrel.
Until the March 28, 2000 adoption of the $22-$28 price band for the OPEC basket of crude, oil prices only exceeded $24.00 per barrel in response to war or conflict in the Middle East. With limited spare production capacity, OPEC abandoned its price band in 2005 and was powerless to stem the surge in oil prices, which was reminiscent of the late 1970s"]
If you chart Crude Oil Prices at the [well head] from 1869-2009, adjusted to 2008 USD, the avg is $22.52, avg world $23.42 and median U.S. and World is $17.65.
Use any charts you wish to depict any time frames and you’ll find the same relativity to the cost of crude oil at the well head. Now folks can intellectualize all the supply & demand side variables they want and the most influencial variables are NOT supply and demand today! Even in the ‘old times’ the government stablized pricing especially on the low side regardless of supply & demand. Later on OPEC did the same thing and then abandonded it.
For those who don’t know, Saudi Arabia for example does not market through the commodities market but rather markets country to country using the WTI crude index. However the commodities market is trying to lure SA with a new bench mark standard of ‘argus sour crude’ indexing for better prices.
Simply check the historical charts and correlate “EVENTS” to the cost.
Also, those are year 2010 figures, not year 2000.
There have been discoveries in the last year, but they’re still in that > $150 / bbl price range.
If you are in favor of “open them up”, then we are much closer in policy than I suspected.
One more point on supply versus prices: it is NOT necessary for the U.S. to increase production anywhere near the current import levels in order to have a significant impact on prices. All that is necessary is that the U.S. increase production just enough to tip the scales of world wide surplus versus deficit. As long as there is one barrel too few produced for world demand each day, prices skyrocket. As long as there is one barrel too many produced for world demand each day, prices collapse. And even the declaration of “open them up” is enough to put the fear of God into all the speculators, who are certainly responsible for SOME of the current run-up in prices.
Fair enough.
But there are still feedback effects there. Prices are created at the margins, even in “fake” markets like subprime mortgages or phony-baloney credit booms.
In a long run-equilibrium situation with global growth and our current technology ex natural gas implementation, you’re still looking at $100/bbl minimums until that oil is used up and you move to more expensive oil. That’s because that’s the lowest ‘high price’ America realistically can create internally but you can get pretty continuous curves outside of our borders. Most of the world really is trying to expand production; I would argue the Saudis can’t increase production and they’re the cheap oil. Iraq will almost certainly help long term. What I’m getting at is even when you reduce the margin to what America could produce, today’s gas price would be basically normal in the long run and domestic drilling would be irrelevant (*It isn’t even remotely normal today though). Here is a graph that very much summarizes my views. Notice that much more oil was produced under Nixon than any president in American history (when he ended gold convertibility and caused crazy inflation for the next decade). With sky high prices, we also got more oil in late 2007 onward. But that’s the price floor at which “drill baby drilling” could produce more oil (and it was/is very high).
I think we’re in a bubble right now and that’s why production capacity has not been able to keep up with the Fed’s artificially created demand. Hence my initial criticism of this article correlating prices with a policy prescription and claiming “supply and demand” is responsible.
By his logic, we should say, “George W. Bush signed into policy an economically bullish expansion of oil, and then the stock market tanked! Clearly drilling for oil creates recessions!” There is a causal mechanism that explains a gigantic number of the variables, and it’s global monetary expansion by central banks. The Fed is mainly responsible for this because the banks try to adjust their monetary output so their currency falls at approximately the same rate as the dollar. Anywho, here’s the graph with the dollar, S&P, and oil price overlaid.
You may notice that there is a correlation which remains valid across presidents and policies.
“The day corresponding to that peak, an all-time high of $145.16/barrel, was July 14, 2008. By some strange coincidence, that was the very same day then-President George W. Bush lifted, by executive order, a federal ban on offshore oil drilling.”
So price starts to fall the next day and this is because the supply of oil magically increased at the the stroke of Presidents Bush’s pen?
Sounds like speculators to me!
Dear Dumb Argument: yes, the immediate reaction to Pres. Bush’s order was a cessation of speculation because of the certainty of increased supply. And yes, Dumb Argument, the increased supply was in the future, but so was the oil that the speculators were contracting for! Shocking, isn’t it?
Obama is the only president we ever had that wanted to destroy the country. He’s suceeding. His solution to high gas prices – raise taxes.
i use about 50 gallons of gas a year now a days as i have stopped going most everywhere, so in Europe i would spend 500 dollars a year for gasolines, yet in Europe that 500 dollars also pays for health insurance of government issue, so since i pay 5000 plus a year for health insurance which goes higher and higher, sooner and sooner, i could save 4500 dollars a year not including the deductibles of thousands of dollars if i should even think to use or get “healthy care” with Europes high cost gasoline, seems i could drive to china and back likely many,many times from Europe on savings from Europes high priced gasoline compared to the USA………………stop propagandic horseshet……..
Hey enjoyed the article a lot! I’m not sure if this is real or not but http://www.binladendeathpicture.com has a leaked picture of osama bin laden dead.
Why is obama and gore called “apples”? They”re green on the outside and red on the inside.