What if those tree-hugging, lefty, Pelosi-led Democrats had a sudden change of heart and allowed Exxon and others to drill offshore for oil? What would happen to oil prices? Let's say the oil companies were wildly successful and found all of the 10 (or twenty or a hundred) billion barrels of oil that they say are there. Now let's imagine that Exxon brings on a huge new offshore field that's producing 200,000 barrels every day. That's a lot of oil for Exxon, but in a world market that is about 84 MILLION barrels per day, not so much. Especially when Saudi Arabia alone can VARY its production by ten times that amount. Where would Exxon sell it, and for what price?
The price of oil is set on international markets, not domestic American markets. Saudi light, a benchmark crude oil, is quoted along with many other crude oils on international commodities markets around the world. The price is usually quoted at the loading terminal, so transportation is in addition to the quoted price. Furthermore, four months from now, every drop of oil that is produced today will have been sold and refined into end products. That's how short the storage capacity is in the supply chain between oil wells and gasoline stations.
Let's say that the internationally quoted price for oil of the quality Exxon found is $120 per barrel. When they load it into a tanker, that ship can go to Japan, China, India or anywhere in the world. Does anyone believe that Exxon would sell that oil in Louisiana for $85 or even $110 just because it's "American" oil? Not even the most ignorant right wing blowhard would dare to make such a claim. Yet that's what Republicans are asking us to believe when they claim that gas prices are high because "Democrats won't let us drill offshore". Like so many Republican economic claims, this one defies common sense. If Americans would just stop and think (a long shot, I know) this blaming of Democrats for our dependence on foreign oil would be seen for the stupid political trick that it is.
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Comments: 22
We believe that we should be able to get in our car and go where we want, whenever we want. Rising gas prices inhibit this ability. Our rudimentary understanding of the fundamental law of capitalism tells us that if increasing demand is causing the price to rise, then the solution must be to increase supply.
We simply do not and will not grasp that we cannot increase supply faster than India and China can and will increase demand.
This is the undeniable truth. There has never...in the history of the world..been an entry into the global economy anywhere near the size of China's. Not even close. And with the economic development currently underway in India....basically our supply of many materials will be depleted at a faster rate than we can increase production. Copper, aluminum, steel...even potash...building materials...everything it takes to build a modern country.
There is no escape from this. We have to start aggressive conservation and alternate energy development. We should have started it thirty years ago when Jimmy Carter told us the "facts of life," but we let Reagan sweet talk us into continuing our stupid short-sightedness.
Now, it's a crisis. And using up the last of our dwindling supplies is about the dumbest thing we could possibly do. Like the ostrich, we are sticking our head in...not the sand, but up our you-know-what.
This statement is more significant than most people realize. There is a lot of important stuff that comes from oil besides transportation fuel, with fewer options to replace it.
"Well then stop the oil companies from exporting oil."
Spoken like a true Ron Paul Republican. LOL!
Just a thought.............
Damn, That sounds like a plan.
It's the exports from the US that's saving the economey Col. George, and should continue.
Net is the issue, as we get what we in the US need.
Precisely the point that the dim "drill me some cheap oil" nitwits continue to ignore.
Most of the media are funded by advertisers. The ten largest US companies includes oil companies, car manufacturers and financial companies that provide loans to these car manufacturers and invest the profits of these oil companies. Oh, and then there's Wal-Mart, but it's clear that if the media want to remain friendly with their advertisers, they're unlikely to express environmental views. Plenty, if not most of the income of newspapers is generated by ads for positions, car sales and the like. If big advertisers tell newspaper owners that they don't like a certain editor, then the editor goes, without good references. Do you see any of my articles published in the media? It doesn't take a conspiracy, it's pretty obvious if you ask me. Anyway, the more reason for us to speak out and raise the issues in blogs, posts and comments, such as here.
By the way, did everyone see my recent article on offshore drilling? I look forward to see what your views are on it!
No, "they" don't. Everybody pays the same for oil - the international commodities market price. Nobody in the US gets a lower price.