Drill here, drill now, they say. Any amount of extra oil that we can find and extract will help lower gas prices, they say. Drill ANWR! Drill the Straits of Florida!
And while they bray and whine about liberal interference, the oil companies are laughing and chuckling at just how naive these pro-drill stalwarts are because...
A record 1.6 million barrels a day in U.S. refined petroleum products were exported during the first four months of this year, up 33 percent from 1.2 million barrels a day over the same period in 2007. Shipments this February topped 1.8 million barrels a day for the first time during any month, according to final numbers from the Energy Department.
The surge in exports appears to contradict the pleas from the U.S. oil industry and the Bush administration for Congress to open more offshore waters and Alaska's Arctic National Wildlife Refuge to drilling.
But shouldn't we be stopping these exports if we're so short of oil that we need to drill in environmentally sensitive areas, President Bush?
The White House said it was against requiring U.S. oil products to stay at home.
"Forbidding exports of U.S. petroleum reduces the incentive for domestic suppliers to produce, and could potentially lead to higher prices if U.S. production or refining declined," said White House spokesman Scott Stanzel.
But, wait a minute. Hasn't the Bush Administration consistently said that more supplies would help bring prices down?
While the administration argues that more supplies would help to bring down prices, U.S exports of diesel fuel in April averaged 387,000 barrels per day, up almost seven-fold from 59,000 barrels a day in the same month a year earlier.
U.S. gasoline shipments in April averaged 202,000 barrels a day, the most for the month since 1945, when America was sending fuel overseas to ease supply shortages in other countries during World War II. Gasoline exports in April 2007 were almost half at 116,000 barrels per day.
Residual fuel exports in April were 377,000 barrels per day, the fourth highest level for any month, and up 10 percent from 344,000 barrels per day a year earlier.
So our President, on the one hand, is saying that we need to hurriedly drill in environmentally sensitive areas in order to increase supplies to drive down prices while, at the same time, he approves record levels of fuel exports to foreign countries.
This may make sense to conservatives if for no other reason than George Bush is saying it, but the logic of this man they call President confounds me every time.
And all the while, the oil companies rake in billions and laugh to themselves.
-link to story
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23 comments:
I'm so upset about the way all of this is being handled in the media and the fact that more people don't bring up this kind of information.
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thank u rick.
Yet your man Obama thinks we should drill off shore now.
anon, fyi, we're drilling off shore already. obama, if i recall, is for an expansion of offshore drilling in areas that it already exists and NOT for drilling off of Florida's SE ocast.
Err, Sorry Rick, im not with you on this one. Of course, it’s not as simple as saying that, if we allow more offshore drilling, the oil companies will have America’s energy problems solved in a few years. It takes time to discover oil, but they’re getting much better at finding it.
The technology for oil prospecting has improved dramatically, and it's a fact that due to restrictions on drilling, much of America’s coastline has never been fully explored, let alone with the latest technologies. Saying offshore drilling won’t bring down gas prices is demonstrably wrong.
The price of gas dropped has come down almost 40 bucks a barrel since the President dropped the executive order that prohibits drilling. reality. How much more will it drop if we actually start drilling and producing oil? One of the reasons why oil got to 150 bucks a barrel was because markets predict the abundance of a commondity in the future, and forsaw greater demand coming for a product from China and India without increasing sources of supply. You can take it to the bank that if Congress opens up drilling the price of a barrel will come down, and gas prices will drop as well, even without realizing a drop of that gas for years. That's how markets work, my friend.
Anon,
If I'm not mistaken oil prices have fallen because we are actually consuming less. Lower demand lowers prices. Also people are driving slower, using more public transport and carpooling.
THAT is much more effective than adding more oil to the IV. To say that what Bush says carries any weight is bull. Just look at the Georgia conflict. Bush spoke, Russia continued plowing forward.
BAC, just because the President happens to think it doesn't make it stupid. There's a number of reasons the price of oil has dropped recently, including those you state. But you cannot discount the fact that potential increases in domestic supply is part of the mix.
I'm not insisting you agree with the policy. I'm not sure I do. But, if you can hang your hat on debatable science as to the causes of global warming, or better yet, that it will inevitably end the world, how can you refuse to acknowledge a much less remote, and much more definite, correlation btween supply and demand?
It is the Law of Supply and Demand, after all...
Nonee,
I don't disagree that Bush lifting the moratorium helped but the Anon poster listed that as the main reason for the drop while not listing anything else.
Your right though, its supply and demand. There is less demand therefor prices go down. Right?
I agree, BAC, Bush's moratorium was not the sole reason why I think crude has dropped in the past couple of months. Reduced consumption also helps the price drop- but why? Because that collective move by consumers increased the amount of available supply on the market.
That's all well and good, but production is a more important factor (within the context of a healthy economy) in terms of how the price of a commodity is determined. We need to exploit our oil resources wherever they happen to reside, just like any other country does. They practically had a national day of celebration in Brazil recently because of a major oil find off of their coastline- we should do the same when we find our oil off Florida's coasts.
Anonymous @ 6:42: tell me, do we also cheer when those hurricanes blow through in August and September and the beaches are littered with debris and oil for tourist season? With that kind of foresight, sounds to me like you also voted to cut property taxes, too.
Increase offshore drilling in the areas where drilling is already occurring, but leave Florida beaches, why BTW, help give us lower taxes, alone.
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Rick, a percentage of whatever oil is embedded within the Outer Continental Shelf will ultimately wind up on our beaches if we don't do anything to extract it- oil seeps are a natural phenonmenon. UC Santa Barbara did a study several years ago which demonstrated that OCS drilling reduces seepage of oil onto our coastlines- believe it or not, drilling is eco-friendly. Not to mention that the giant oil rigs become hosts to huge underwater reefs of aquatic life. And for those that don't want to view oil rigs off the coast, the normal line of sight on a clear day from the beaches is about 12 miles, so that shouldnt be an issue since most rigs are outside of that viewing range.
Here's the link to that study, if you're interested.
If gas price keeps its upward trajectory, its a good bet that there won't be many people driving as often to those beaches.
And yes, FWIW, I voted for that property cut because I understand that there is a substantial amount of waste and money spent on unecessary/illegitmate expenditures within Florida's state budget.
Sorry, here's the link.
Here is what I don't understand. Why is it that we move this conversation forward agreeing or disagreeing despite not having any real data about the topic. Here is what I mean.
4:24 Anon cites the following as causes of oil drops (which, btw, was substantively off-post, but let's ignore that):
1. Companies are better at discovering oil.
2. Tech for oil exploration has improved.
3. Offshore cites have been off the table.
I guess this could be true. But Anon does not point out any information to support this. What are those improvements? How can you be sure that they are significant enough to substantially improve efforts? Are you basing this on any deep understanding of oil exploration R&D or just something you believe to be the case?
4:24 Anon continues with:
4. Saying offshore drilling won’t bring down gas prices is demonstrably wrong.
Really? Demonstrate it then. Something tells me that an elementary understanding of supply and demand are not sufficient in fully grasping the complexities of a market filled with anomalous producers, consumers, and set in a time frame of global political? There is a constant sense that the dynamics of the oil market are simpler than they really are (more oil = lower price) and this is reductive in the worst way.
Obscuring complexities doesn't make them go away.
5. The price of gas dropped has come down almost 40 bucks a barrel since the President dropped the executive order that prohibits drilling.
Um, have you factored in the strengthening of the dollar? Or that as of June there had been an eight month in a row decline in travel?
More importantly, why are these real data points less significant in your economic price model than some voodoo, pseudo-psychological pablum from a discredited, lame-duck President?
I'm not saying I have the answers or a complete picture. But repeating my constant refrain, you are lying to yourselves if you think you do.
- g
And regarding this "gem"
"production is a more important factor (within the context of a healthy economy) in terms of how the price of a commodity is determined."
First of all, prove that this is the case.
Second, what exactly is a healthy economy?
Anonymous @ 8:25 and 8:35-
Your points are well taken, and of course we should not accept any proposition that anyone advances without both ample evidence and logic to support it. But these are blog posts, not doctoral dissertations or scholarly articles. I can't possibly analyze every possible metric that can possibly influence global oil prices in one blog post. My first post cited Bush's removal of the moratorium, but a subsequent poster complained I didn't reference any other possible reasons why crude was declining. I think we have to put blog posts in their proper perspective- they're meant to be short and sweet, not in-depth analyses.
I think it's incumbent upon all of us to do the legwork, the requisite research, and think about the complexity of the oil production issue with foresight before we opine- that's what ive attempted to do. The same goes for your second question about what exactly constitutes a "healthy economy". I have an idea about what that would be, but I really don't have the time (nor the desire) to write about it in the context of a blog. True, my statement is a broad proposition, but I think it remains true nonetheless.
My sense is that an understanding of the economy that preferences the GDP as a metric is an insufficient one.
I am not alone on this, the creator of the metric Simon Kuznets himself noted, "The welfare of a nation can, therefore, scarcely be inferred from a measurement of national income as defined above."
Look, if we honestly care about the economy, why don't we follow the model we employed during the Cold War. Then, we faced a threat and launched the Space Race, an endeavor that still pays dividends (in terms of the investment in computer technologies).
Why not begin a Green Race, in which we can in ten years make similar strides? Green technologies represent the next big accomplishment that this country could work toward and may lead the way to regaining the status as a global leader in science.
Or, should we just pay more at the pump, because say what you will about drilling, the price of oil will ultimately always go up.
- g
PS Nonnee, debatable science? I disagree with but respect you. But tell me you aren't serious.
This is relevant, and sorta funny:
http://www.motivemag.com/pub/news/Stephen_Colbert_Explains_Offshore_Drilling_to_um_Himself.shtml
Am I missing something? It does say exports of "refined oil products" not unrefined (crude oil) products? It is clear that the US may be importing crude and with specialty petro-chemicals and supplying gasoline to places like the Caribbean it actually exports refined products. So what? What does this have to do with drilling offshore? Oil from offshore will just reduce our imports of foreign crude. It will have nothing to do with refined oil products exports.
I don't see what this has to do with drilling for crude oil?
IMHO, the oil industry of late has had a very good record of not having spills from platforms and there is a national security issue of reducing our dependency on foreign oil. Furthermore, there is also the issue of reducing exports (dollar outflow) and providing jobs for American roughnecks and such. The pollution issue doesn't cut it with me. It is like saying it is ok to export our pollution to other countries.
Steve: Did you read the article?
While the administration argues that more supplies would help to bring down prices, U.S exports of diesel fuel in April averaged 387,000 barrels per day, up almost seven-fold from 59,000 barrels a day in the same month a year earlier.
As to your last point, well, again, just read.
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Gus, I didn't mean to discount the science per se, I have no argument with the physical laws involved in the GloWarm debate. My only intent was to point out the comic circumstance of claiming without doubt that a scientific theory with a prospective focus (as opposed to evolution theory, which takes a retrospective approach) that results in the extinction of earth, but denying the operation of economic laws dealing with a much shorter horizon.
And one other thing. Let's stipulate as to the current President's weaknesses in higher-level brain function. But don't act like he invented the invisible hand. Or any other hand, for that matter. It cheapens the discussion.
Might as well use the cootie defense.
Nonnee,
One of the things that I think you have rightly pointed out is the value of being careful with words. So with that...
1. Theory, by definition, is predictive. A theory that cannot predict is not robust. The theory of evolution, while explaining the past, also explains the future. The IPCC, composed as it is of scientists who keenly care about such things, have earned the right to be taken seriously(especially in light of the fact that they have been criticized for being too conservative).
2. Economic Laws. Economics have no "laws" to the extent that "laws" are typically constructs put in place by top-down social systems. Calling economic dynamics "laws: incorrectly clarifies what is a very confusing interchange of seemingly countless variables.
The "invisible-hand" is not a law or a theory, but a metaphor (and a bottom-up one at that). Living Nobel Prize winning economists such as Amartya Sen and Joseph Stieglitz question the value of this metaphor in light of the fact that there are powerful stakeholders in the reality of the global marketplace that push that "hand" around. Specific to this discussion, oil producers represent a collusive oligopoly which work to distort the effects of any hand.
There are many other countervailing powers as well, but none of these correct the distortions of the oil market. There are numerous distorting influences, numerous powerful figures some of which do not act in their own economic self-interest (think Russia cutting off natural gas supplies to Ukraine - bad economically, impossible rationally until you factor in political thinking in the equation).
The point is, economics is much more complicated than we can hope to understand (unless we are economists). The President didn't invent the "invisible hand", but he is a part of the structure that ensures it's irrelevance.
- g
Well said Gus. I sit here feeling almost chastised.
The theory of evolution, while explaining the past, also explains the future.
True enough, 'cept that theory's proponent have been ever careful not to evolve us into three headed humans with 12-pound zits (I believe that was left to the anti-nuke branch of the family). They have always, in my ignorant and totally manufactured opinion, acted more like high priests, holding the secrets of the universe and having a good laugh at the hoi polloi's expense come annual convention time. They've never used their power to scare the townfolk.
I do concede, however, that evolution itself is a passive victim of things like global warming and overdevelopment and poor eating habits. I myself am evolving into a sweaty bear with sore feet.
The "invisible-hand" is not a law or a theory, but a metaphor (and a bottom-up one at that). Though I get your point and agree with the implication that the hand is somehow shorthand for stuff we can't explain, using Nobel Laureate economists to disprove its existence gilds the lily.
[O]il producers represent a collusive oligopoly which work to distort the effects of any hand. Fair enough. But you still have to have a "hand" to move, irespective of results. And I agree with you that countervailing forces, some irrational to the naked eye, exacerbate the distortions of the market rather than correct them.
Howeva, nothing you've said denies the perfect functioning of the market. Meaning the distortions you speak of affect the result of the function, and not the function itself. You can change the quality of meat you put in the grinder, but on the other end you'll get ground meat.
I hate economics, and am wholly unqualified to comment on it. That's why I like the invisible hand. And Harvey.
Nonnee,
I think that evolutionary scientists do scare us. Genetically modified crops are potentially very scary, and it's an alarm raised by those who recognize the possibility of Monsanto-produced seeds being unhealthy and naturally superior to non-modified crops.
But you don't even have to go that far. Simple mono-cultures are a source of concern to many.
As to the "perfect functioning of the market", I guess I'd say that I don't completely understand your conceptualization. The oil market is clearly a competitive situation in which powerful sellers have significant market power. As such it is imperfect.
- g
PS I like Harvey too!
Perhaps I got a little carried away, Gus. I shouldn't use the word "perfect' anyhow. I only suggest that all the actors in a market are rational, in that each serves its own self-interest. The seller maximizes its utility by getting the highest price for its good. The buyer maximizes its utility by paying the lowest price for the good. Within that construct, there are the countervailing forces which you mentioned, like market power and collusion, political exigencies, and other seeming externalities. And it is true that only without them, all of them, can you have a perfect market. Such a market doesn't exist,and cannot because the "rational actor" in a perfect market has no conscience. Actors are subject to those types of externalities too-- morals, religion, concepts of social justice, etc.-- and so actors are not equally "rational," creating advantages and disadvantages within the construct.
But, all those externalities may define relative advantages and disadvantages of the players, not of it disturbs the initial condition of any market- that is that a seller will seek the maximum price achieve (to the natural limit of its advantage or disadvantage), and a buyer will seek the lowest price it can achieve (to the natural limits of its advantage or disadvantage).
In that sense, I believe markets are perfect. It is not an academic definition, to be sure. But for me it is distilled to the point that I can reconcile the imperfections.
I have heard sharks referred to as "perfect eating machines." I don't know whether this is true or not, but I know it has nothing to do with whether it tries to eat a surfer from time to time.
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