Meanwhile, Democratic spokespersons blame greedy oil companies, OPEC, oil speculators…and, of course, Bush.
An article in the latest (July 7th) issue of Nation magazine looks at this, and reaches some reasonable conclusions. The first thing they say is that the main reason for increasing oil prices is…DUH!...supply and demand. Worldwide oil production has peaked, but demand continues to climb inexorably, particularly in Asia. But, they say, Bush has made things infinitely worse by introducing a high level of uncertainty about availability of current supplies, given the possibility of yet another war in the Middle East with Iran. Furthermore, the Iraq War, and existing sanctions on Iran have held down output from both of those oil-producing nations, exacerbating the supply/demand problem.
Without the bungling of Bush in Iraq, and his saber-rattling with Iran, world oil supplies would be much less threatened. Oil speculators are betting that there is a 50-50 chance that we will invade or at least attack Iran. If we do, Iran has made it clear that they will disrupt oil deliveries from the Middle East, driving oil prices up to well over $200/bbl. That is the basis for the rampant speculation that is causing the current price explosion. Bush could reduce that speculation tomorrow if he announced that the "military option" with Iran is off the table. Instead, he has done the opposite, with his saber rattling and calling for "regime change" just as he did in Iraq.
If the original intent of the Iraq War was, as many believe, to ensure US control of the Gulf and to create a stable political environment for increased oil production, then it has obviously been an unmitigated disaster, because it has had exactly the opposite effect. Add to that the escalating tensions with Iran, and it is hard to imagine how any US foreign policy could have done more to increase oil prices.
Of course, prices would have increased even without Bush's idiocy, and we all must take some blame for that. Jimmy Carter saw this coming 29 years ago. In his "Crisis of Confidence" speech on July 15th, 1979, he said:
"This intolerable dependence on foreign oil threatens our economic independence and the very security of our nation. The energy crisis is real. It is worldwide. It is a clear and present danger to our nation. These are facts and we simply must face them."
He proposed a sweeping program to reduce our dependence on foreign oil, through conservation, investment in public transportation, and a number of alternate energy programs. But we didn't listen. We let Reagan scuttle all his visionary programs, and we let OPEC suck us in with temporary low prices.
It's called rope-a-dope.
Or maybe that old adage TINSTAAFL..
We should have known better.
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Comments: 15
Amory Lovins at the Rocky Mt. Institute says that America was able to end the oil crisis of the 1970s mostly by efficiency. We did buy small cars (although that has since been ridiculed) and reduce demand. But then, as Lovins notes, we forgot what we had learned, and pushed inefficient SUVs and large trucks. Personally, I was sorely disillusioned to see engines and vehicle size grow larger after the first Gulf war - during which public service ads urged Americans to drive slower in order to save gas.
Americans today are conserving more, but not as a national plan or sense of patriotic duty. We simply are hurting economically. But maybe, this time we will think through this a little more than reacting to McCain's assertion to drill off the coasts. Lovins' plan calls for (like Carter) conservation as the first stage of a comprehensive energy policy. "Lightweighting" vehicles with carbon composite material (like Boeing used in its new 787 airliner) could double transportation efficiency at little or no extra cost. Vehicles made from this material can be as large/comfortable as today's small SUVs.
At any rate, reducing demand through efficiency - and ultimately alternatives (hydrogen) is the best approach.
Anyone interested in this topic (and everyone should be), should read Lovins' book:
Winning the Oil Endgame
I would say that there are many reasons that oil prices have risen to the point they are today.
I have heard of the "enron loophole" which although I'm not quite sure what it is exactly, it supposedly allows energy companies to dabble in the futures of the markets they are involved in (please correct me if I'm wrong).
And if that is so, that is just stupidity on an enormous scale, of course they are going to try and get the prices of their product to rise by manipulating the markets.
So lets close up that loop hole first then start drilling here and now to get our future energy prices lower.
Join the 1,158,326 people who have signed the petition at
http://www.americansolutions.com/actioncenter/petitions/?Guid=54ec6e43-75a8-445b-aa7b-346a1e096659
Lets support upcoming companies like www.pacificsunlight.net that through their ingenuity are allowing people of all economic status to be able to afford alternative energy.
Your article helps open up the situation. Thank you.
And all it's cost him was taxpayer dollars (not his own) and the blood of our soldiers (again, not his own). They still shoot people for treason, don't they?
Steve...Amory Lovins has been a rational voice in the wilderness on this issue for a long time. Thanks for the book recommendation.
Dan...Even if we close the Enron Loophole, there will still be speculation in the oil market because there is a perceived supply/demand imbalance long-term. Regardless of how much we drill, we are not going to affect that imbalance significantly, and I fear that if we start drilling and strip mining the last of our domestic supplies, we will breed a sense of complacency and "business as usual, high prices are only temporary" thinking. I think that is the road to disaster. We need to bite the bullet and start solving this problem NOW. And then, maybe we could even do a litttle drilling to ease the pain during the transition.
Verie...the lack of transparency in oil politics is definitely a problem. The government is not leveling with us.
Stephanie...speculation is causing the current price bubble, but it is caused by a perception that, long term, we have a supply/demand problem. And I think that perception is correct. If it were not, the speculation would collapse of its own weight.
In addition, fully integrated companies (those that own oil production, refining and product sales) can direct profits to any of those arms of their business by manipulating the prices they charge themselves.
So whether we have US refining capacity has little to do with the price of gasoline.
Nice article.