Speaker Pelosi wants us to stop putting oil in the national strategic reserve. And of course the republicans want us to open up Anwar for oil exploration.
Anyone want to lay odds on whether if after doing that the oil companies would just tell us prices are high because of a lack of refinery capacity?
Or maybe the excuse would be "special summer cocktails" designed to reduce emissions.
It just isn't as simple as supply and demand. Increasing our domestic supply won't bring down gas prices. It turns out that demand for gas across the country is already lower than it was a year ago. It's not supply and demand, its not OPEC production, and it isn't refining capability.
It's speculators, the commodity traders that are investing in oil.
The price of gas kicked up like 100% after Katrina, from a dollar something to two dollar something and it's never looked back. In all likelihood refining capacity has actually increased since then due to facilities being repaired and coming back on line. The problem is that the news never improved. We went from Katrina to the war to OH MY GOD THERE ARE A LOT OF CHINESE and right from there into summer refining formulas. Every one of those things on their face suggests that the supply is in danger, that oil and gas are scarce and that suggestion is enough to get investors to do something about it. They buy futures, the price goes up, we see the price go up and think OH MY GOD THERE ARE A LOT OF PEOPLE IN INDIA, someone does a news story and the cycle repeats.
It is a self fueling hysteria over fuel.
I am sure that there are legit reasons for fuel price increases. But I have to tell you I am just as sure that we ought to be paying something on the order of $2.25/gal at the pump and that the difference is investment driven.
So back to The Speaker. I don't think we should change procedure on the strategic oil reserve, and I don't think we should open up ANWAR. But maybe we ought to make a big deal out of telling the world we are.
Go ahead Josh, tell me how I am wrong this time.
Friday, April 25, 2008
I Think It's More Complicated Than That
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2 comments:
This makes a lot of sense to me.
It's different than saying, "It's the oil companies fault!!"
Unfortunately, both dem candidates are saying exactly that... and as you said, its a bit more complicated.
Here's an interesting read that supports your theory:
http://www.dinocrat.com/archives/2008/03/01/a-few-more-points-on-oil-prices/
Interestingly, I haven't come across *anything* that explains why the oil companies themselves could be to blame for this.
If you happen to read something like that, please post. Even it its a crackpot theory... I'm curious what the argument is, other than: "they have money, we don't, something funny must be going on"
Or maybe the Chicago School is rubbing off on me...
Maybe I listen to too much NPR/Chicago Public Radio, or because my dad used to be a commodity trader or something, but I thought that everyone knew it was the speculators' belief in all the panic that was fueling oil price increases, not the actual situation on the ground.
Does Josh comment regularly? I don't usually click over for comments...
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