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The Gas Prices We Deserve


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http://www.realclearpolitics.com/articles/...s_they_des.html

 

By George Will

 

WASHINGTON -- Rising in the Senate on May 13, Chuck Schumer, the New York Democrat, explained: "I rise to discuss rising energy prices." The president was heading to Saudi Arabia to seek an increase in its oil production, and Schumer's gorge was rising.

 

Saudi Arabia, he said, "holds the key to reducing gasoline prices at home in the short term." Therefore arms sales to that kingdom should be blocked unless it "increases its oil production by one million barrels per day," which would cause the price of gasoline to fall "50 cents a gallon almost immediately."

 

Can a senator, with so many things on his mind, know so precisely how the price of gasoline would respond to that increase in the oil supply? Schumer does know that if you increase the supply of something, the price of it probably will fall. That is why he and 96 other senators recently voted to increase the supply of oil on the market by stopping the flow of oil into the Strategic Petroleum Reserve, which protects against major physical interruptions. Seventy-one of the 97 senators who voted to stop filling the SPR also oppose drilling in the Arctic National Wildlife Refuge.

 

One million barrels is what might today be flowing from ANWR if in 1995 President Clinton had not vetoed legislation to permit drilling there. One million barrels produce 27 million gallons of gasoline and diesel fuel. Seventy-two of today's senators -- including Schumer, of course, and 38 other Democrats, including Barack Obama, and 33 Republicans, including John McCain -- have voted to keep ANWR's estimated 10.4 billion barrels of oil off the market.

 

So Schumer, according to Schumer, is complicit in taking $10 away from every American who buys 20 gallons of gasoline. "Democracy," said H.L. Mencken, "is the theory that the common people know what they want and deserve to get it good and hard." The common people of New York want Schumer to be their senator, so they should pipe down about gasoline prices, which are a predictable consequence of their political choice.

 

Also disqualified from complaining are all voters who sent to Washington senators and representatives who have voted to keep ANWR's oil in the ground, and who voted to put 85 percent of America's offshore territory off-limits to drilling. The U.S. Minerals Management Service says that restricted area contains perhaps 86 billion barrels of oil and 420 trillion cubic feet of natural gas -- 10 times the oil and 20 times the natural gas Americans use in a year.

 

Drilling is under way 60 miles off Florida. The drilling is being done by China, in cooperation with Cuba, which is drilling closer to South Florida than U.S. companies are.

 

ANWR is larger than the combined areas of five states (Massachusetts, Connecticut, Rhode Island, New Jersey, Delaware) and drilling along its coastal plain would be confined to a space one-sixth the size of Washington's Dulles Airport. Offshore? Hurricanes Katrina and Rita destroyed or damaged hundreds of drilling rigs without causing a large spill. There has not been a significant spill from an offshore U.S. well since 1969. Of the more than 7 billion barrels of oil pumped offshore in the past 25 years, 0.001 percent -- that is one-thousandth of 1 percent -- has been spilled. Louisiana has more than 3,200 rigs offshore -- and a thriving commercial fishing industry.

 

In his "Gusher of Lies: The Dangerous Delusions of 'Energy Independence,'" Robert Bryce says Brazil's energy success has little to do with its much-discussed ethanol production and much to do with its increased oil production, the vast majority of which comes from off Brazil's shore. Investor's Business Daily reports that Brazil, "which recently made a major oil discovery almost in sight of Rio's beaches," has leased most of the world's deep-sea drilling rigs.

 

In September 2006, two U.S. companies announced that their "Jack No. 2" well, in the Gulf 270 miles southwest of New Orleans, had tapped a field with perhaps 15 billion barrels of oil, which would increase America's proven reserves by 50 percent. Just probing four miles below the Gulf's floor costs $100 million. Congress' response to such expenditures is to propose increasing the oil companies' tax burdens.

 

America says to foreign producers: We prefer not to pump our oil, so please pump more of yours, thereby lowering its value, for our benefit. Let it not be said that America has no energy policy.

 

[email protected]

Copyright 2008, Washington Post Writers Group

 

 

Interesting article I agree with the premise we have chosen to have high gas prices.

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I'm in favor of allowing more drilling, but I don't see that this necessarilly will lead to lower prices. Presently we use roughly 22 million barrels of oil per day. 9 million come from domestic sources, mainly Exxon-Mobil. 13 million we import, mainly from Opec. I don't see the domestic oil companies giving us a "hometown discount" on the oil they drill for here. They charge the market rate. It would lead to less dollars being exported to the OPEC countries, which would probably strengthen the dollar, but there's variables there. We don't know how OPEC would react. They could restrict their output, restrict their sales to us, or devalue the dollar by refusing to buy anymore T-Bonds, or pressure the Chinese to stop or they'll restrict exports to China. Overall, we'd likely be better off if we allowed more drilling and became oil independant, or even a net exporter. That would likely lead to lots of positive economic effects. But I don't know if a lower price of oil is one of them.

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As far as I'm concerned the price of oil is 100% controlled by OPEC and the major US and British oil companies, and has been for the last 50 years.

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If we were to drill here, thus reducing the demand from OPEC, they'd raise their prices (I can only imagine) and would possibly counter any difference in total oil usage costs of the US since we'd probably still be needing to get some of our oil from them.

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I'm in favor of allowing more drilling, but I don't see that this necessarilly will lead to lower prices. Presently we use roughly 22 million barrels of oil per day. 9 million come from domestic sources, mainly Exxon-Mobil. 13 million we import, mainly from Opec. I don't see the domestic oil companies giving us a "hometown discount" on the oil they drill for here. They charge the market rate. It would lead to less dollars being exported to the OPEC countries, which would probably strengthen the dollar, but there's variables there. We don't know how OPEC would react. They could restrict their output, restrict their sales to us, or devalue the dollar by refusing to buy anymore T-Bonds, or pressure the Chinese to stop or they'll restrict exports to China. Overall, we'd likely be better off if we allowed more drilling and became oil independant, or even a net exporter. That would likely lead to lots of positive economic effects. But I don't know if a lower price of oil is one of them.

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As far as I'm concerned the price of oil is 100% controlled by OPEC and the major US and British oil companies, and has been for the last 50 years.

 

It's not a hometown discount but and an increase in the oil supply along with an increase in refining capacity would lower cost of a barrel of oil and the cost of a gallon of gas but of course we can't drill and we can't refine and the ones who prevent us from drilling and refining lead the whining over the cost of gas.

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I'm in favor of allowing more drilling, but I don't see that this necessarilly will lead to lower prices. Presently we use roughly 22 million barrels of oil per day. 9 million come from domestic sources, mainly Exxon-Mobil. 13 million we import, mainly from Opec. I don't see the domestic oil companies giving us a "hometown discount" on the oil they drill for here. They charge the market rate. It would lead to less dollars being exported to the OPEC countries, which would probably strengthen the dollar, but there's variables there. We don't know how OPEC would react. They could restrict their output, restrict their sales to us, or devalue the dollar by refusing to buy anymore T-Bonds, or pressure the Chinese to stop or they'll restrict exports to China. Overall, we'd likely be better off if we allowed more drilling and became oil independant, or even a net exporter. That would likely lead to lots of positive economic effects. But I don't know if a lower price of oil is one of them.

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As far as I'm concerned the price of oil is 100% controlled by OPEC and the major US and British oil companies, and has been for the last 50 years.

 

It's not a hometown discount but and an increase in the oil supply along with an increase in refining capacity would lower cost of a barrel of oil and the cost of a gallon of gas but of course we can't drill and we can't refine and the ones who prevent us from drilling and refining lead the whining over the cost of gas.

The point is that right now, we're not getting a hometown discount on the 9 million barrels per day that we do drill and/or refine here. Why think that we'll get a discount if that amount goes up to 14 million barrels per day. The logical conclusion is that we wouldn't. We'd be paying the oil companies or OPEC the same price for the extra 5 million barrels. The shareholders of the oil companies will make an extra 500 million per day. That's better than paying OPEC the 500 million, but it doesn't automatically change the price we pay for a gallon of gas, or anything else that's effected by the price of oil. The supply wouldn't necessarilly change. OPEC has in their history controlled their supply. If they wanted to they could add an extra 10 million barrels or more a day right now. But they don't, so as to control the price. They don't mind. Oil in the ground is a better investment for them than US dollars.

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The laws of supply and demand don't change. However, there is a lot of red tape regarding trade agreements that make this problematic.

 

If you want to see an almost immediate decrease in gas prices, gas taxes should be repealed. We would likely see a drop of a dollar or more almost instantaneously. Of course we'd have to cut spending elsewhere.

I agree with that. Those gas taxes, as I understand it, go mainly towards the upkeep of the infrastructure. I would think that we could do without that revenue for a few months. Or the FED could create some of their money and replace the oil tax. Help that market in the same way that they've tried to help the credit market by creating money and throwing it to the banks and investment houses. But, wherever they go, if we had a leader with any brains, he'd repeal all Fedeal gas taxes, and encourage the States to follow suit. Just for some short-term relief. For 3-4 months. This gas price does seem to be helping to push the economy in the wrong direction. It's changing people's spending habits big time.

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I guess we disagree, Pierre. I'm no economist but my undertandign of what economist say is that supply and demand impacts the long term price of oil. On the short term, the price will also move due to actions of speculators. I could be wrong but I think much of the run up the past few months is because of speculators. I wouldn't recommend buying oil right now.

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ANWR, even if we drilled there and were as efficient as possible in getting oil out of the ground, would account for less than 1% of global supply.

 

I agree that OPEC will raise gas prices if we did this, regardless. They won't want us to get cheaper oil.

 

If anything, I would like to see more refineries built in this country. We have very very few, and it takes a long time to get new gas on the market to cause a change in prices. I think that building a couple more refineries within US borders would help at least somewhat. The problem is, gas companies are in no rush to spend more money on these facilities, because it would cost them a good amount of money, and then lower their profit margins.

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Something interesting to think about.

 

After Wilma, FIU offered it's essential employees gas from their reserves. I think it was something like 5 gallons every 3-4 days.

My point here is that FIU doesn't pay the gas tax, yet they sold the gas to their essential employees at the going rate per gallon at that time. Such a deal...

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Anyone that votes in a manner to keep oil drilling from happening in the US should shut up about gasoline prices.

Anyone that votes in a manner to prevent nuclear power from taking over US electricity needs to shut up about both prices and greenhouse gases.

Anyone that thinks that a lowered oil cost would cause OPEC to reduce output needs to learn how to count, OPEC relies entirely on purchases by the rest of the world for their own economic stability. They are happy because demand is high AND supply is high AND prices are high, they are raking it in. Hit them on any front and they are screwed.

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Anyone that votes in a manner to keep oil drilling from happening in the US should shut up about gasoline prices.

That's not fair. We don't have enough oil left on domestic soil to make a difference in gas prices.

 

 

Why is that not fair? The notion that we dont have enough oil to make a difference is very much in dispute . Most extreme environmentalist( and dont fool yourself thay are forcefully represented by powerfull groups) have been opposed to oil drilling in all cases even if it can be done in an environmentally sensitive manner , they are opposed to nuclear , natural gas , coal and so on . Drilling for more oil domestically is one piece of the puzzle . If we drilled for more oil , while moving toward a combination of all alternative energies being developed we could be energy sufficent and we wouldnt have to buy oil from our enemies. Politicians from both parties have made their names grandstanding about the cost of energy but when it is time to actually do something they dont want to take the steps necessary to make more energy available to the American people .

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We need to realize that oil is no longer the solution, and start making efforts now to increase our use of solar and wind technologies, at the very least. If nuclear waste could be disposed of without burying it for millenia, then I would be in favor of building more nuclear plants.

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We need to realize that oil is no longer the solution, and start making efforts now to increase our use of solar and wind technologies, at the very least. If nuclear waste could be disposed of without burying it for millenia, then I would be in favor of building more nuclear plants.

 

Oil is not the solution, but there is near term results, mid-term assistance and long term goals.

 

Short term, increase oil supply

Mid-term, increase efficiency and alternate fuels

Long-term, complete swap.

 

Wind is unreliable and an environmental nightmare. It occupies a large amount of space and those turbines are bird guillotines.

Solar is limited in scope, there are entire portions of the country where it is not suitable, it is a solution for large buildings in certain areas, that is about it.

Nuclear is clean and safe, and you do realize that the raw material used is a radioactive substance that mother nature has buried, not just for millenia, but for epochs. We are the dumbass major modern industrialized nation that does not use this power source.

 

 

Electric cars could work if we built 400 reactors to power the nation, and there is no reason why we couldn't achieve complete emissions-free energy sources within 30 years if we decided to.

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Anyone that votes in a manner to keep oil drilling from happening in the US should shut up about gasoline prices.

That's not fair. We don't have enough oil left on domestic soil to make a difference in gas prices.

 

The 4 square mile site that was explored in AWNR, according to detractors, is worth 'only' 1% of world supply. That is one tiny site, in an area the size of New England that all has the potential to produce even more oil. This potential probably extends into Canada. Even just 1% of world capacity would lower oil prices. This doesn't count the oil we could get out of other banned sites.

 

That said, I would rather we move to liquified coal or even natural gas for applications not covered by simply increasing our electrical grid.

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Who killed the Electric Car?

 

 

Bye, bye General Motors EV1

 

And, what sucks even more is Toyota has sold more than 60,000 Prius', so I cannot get any rebate. But, I'm helping the economy & the planet by driving a hybrid.

 

Electric car isn't dead, we just have electrical generation issues as well, since we won't build enough power plants.

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Who killed the Electric Car?

 

 

Bye, bye General Motors EV1

 

And, what sucks even more is Toyota has sold more than 60,000 Prius', so I cannot get any rebate. But, I'm helping the economy & the planet by driving a hybrid.

 

Electric car isn't dead, we just have electrical generation issues as well, since we won't build enough power plants.

 

Yenta , I believe is refering to the documentary "who killed the electric car?" . good documentary just shows how the powerfull interests in America can squash a great idea

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The electric car was not killed. This is a big f***ing lie. GM made the car and it sold 800 units, nobody wanted it when gas was $0.98/gal.

It only sold 800 units because GM wasn't exactly going out of their way to produce many of the EV1s, or make it easy to find one.

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The electric car was not killed. This is a big f***ing lie. GM made the car and it sold 800 units, nobody wanted it when gas was $0.98/gal.

It only sold 800 units because GM wasn't exactly going out of their way to produce many of the EV1s, or make it easy to find one.

 

The EV1 project, and all of its staff, are still part of GM, and their inheritors are the big vehicle hybrids, and the Volt....

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