"Drill, Drill, Drill" A Continuing Series

By Pejman Yousefzadeh Posted in | | Comments (9) / Email this page » / Leave a comment »

It's nice to see that John McCain is in favor of removing the ban on offshore drilling (note the popularity of the proposal). I know that this kind of policy proposal is going to run into a partisan buzzsaw but it is impossible to take seriously the Obama campaign's argument that a removal of the ban on offshore drilling only serves to benefit oil companies. It appears that we have to delve into Economics 101; prices are high because demand outruns supply. To remedy that, we need to drill for more oil so that we can bring supply and demand into balance. I suppose, of course, that if someone has connections with the Magic Oil Fairy, we could avoid all of this but I kind of doubt that this is the case and it should be noted that the Obama campaign has come up with no proposals whatsoever aimed at increasing the supply of oil in order to alleviate current price pressures.

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"Drill, Drill, Drill" A Continuing Series 9 Comments (0 topical, 9 editorial, 0 hidden) Post a comment »

"It appears that we have to delve into Economics 101; prices are high because demand outruns supply."

Do you discount the speculators theory? I recall just a couple of weeks ago Blackhedd argued on the front page that speculation was contributing as much as $50 to the price of oil.

Also - Would McCain's proposal really accomplish anything? He is in favor of handing control back over to the states and I've always been under the impression that the coastal states are the most vocal opponents to off-shore drilling.

They do it over time, but it is still the concept of equalization of markets.

Now also found at The Minority Report

If it is true, making more resources available immediately pops the bubble. If it isn't true bringing more resources online changes the expectations for future availability of oil and rationally moves prices lower. Either way, more resources is the right policy decision.

As for handing it back to the states, yes it will. Charlie Crist flipped on the issue just last night, so Florida is now on board with the proposal. Of course, with Castro and the Chinese drilling just off his coast in the same location he claimed represented a hazard, that position ceased to make sense anyway. The proposition isn't as broad as I think appropriate, but I'll take it.

*the difficulty with the theory is that it isn't even a theory because it isn't testable. We use markets to determine prices because no committee, no matter how well informed, with what economic models, can tell you what the price of any given commodity ought to be.

Sometimes a politician takes a position that patently defies common sense. Usually this is a result of the politician being beholden or hostage to a single interest voter group. When this happens, the contortions required to maintain a plausible position become increasingly visible and absurd. It is the job of the opponent in this instance to pound that politician over the head with the issue repeatedly.

That's exactly where Obama finds himself right now. Anyone with high school economics can see the common sense value of increasing domestic production to ease oil prices. Polls show the public overwhelmingly approve of offshore drilling; the wisdom of the crowd shows thru. Yet Obama cannot take this position because the environmental left is a key pillar of his support.

He will eventually change his position. He must, if he wants to win this election. Until then, we need to pound him with this issue daily, and make him look as foolish as he deserves to look.

"If all men were just, there would be no need of valor."
- Agesilaus

I think this time the buzzsaw turns out to be glass and McCain's position turns out to be steel, maybe even diamond encrusted.

and hence directly subject to the laws of supply and demand.

I realize that is news to Democrats, but perhaps they need time to become familiar with facts. Let's make the equation simple; more domestic drilling equals less foreign dependence and more supply.

Plus, you folks in states such as Florida, look towards Alaska. Not only will you continue to be free from state income tax but an annual check is in your future.

But it's all about the evil oil companies; you know those tens of thousands rig, refinery and distribution workers. Go Obama! Punish the knaves!

"Nec Aspera Terrent"
bene ambula et redambula
Contributor to The Minority Report

Speaker Nancy Pelosi (D-CA):"There are 68 million acres in America where oil and gas companies have bought the right to drill ... They are just sitting on them." (Press Conference, 6/10/08)

DCCC Chairman Chris Van Hollen (D-MD): “And in fact, there are 60 [sic] million acres of federal land that are currently leased to the oil and gas companies that are sitting idle.”(CNN’s Late Edition, 6/15/08)

Natural Resources Committee Democrats:“In an effort to compel oil and gas companies to produce on the 68 million acres of federal lands, both onshore and offshore, that are leased but sitting idle…”(Release, 6/12/08)

After searching through two pages of false claims I finally found the following:

Wall Street Journal: “Companies don’t know how much oil is under the lands they lease, so they buy up large swaths in hope that a fraction will work out. Much of the area that isn’t producing, they say, doesn’t have oil or gas in commercially viable quantities. Moreover, bringing a new field into production can require years of mapping, testing, drilling and construction – during which time the land would show up in statistics as being ‘not in production,’ even as companies spend millions or even billions of dollars to bring it on line.” (6/16/08)

There are more 'facts' at the GOP site

One can hope that someone out there will call out this lie.

I've talked about this with a few people.

Apart from just not producing, such exploration is VERY expensive. A more economical option would be for Congress to take its thumb out of its [censored] and let the oil companies drill off-shore and in ANWR, where they KNOW there is oil.

Of course, that might take an executive order.... hint hint....

Now, I still hold that we drill wherever we find oil and if there is no oil there, it's a great place for a nuclear power plant or a wind farm.

Dependence is Slavery.

They have been known to sit on leases. Right now Alaska has a major beef going with Exxon, the leaseholder on the Pt. Thompson prospect near Prudhoe Bay, over their not bringing the field to production. Late in the Murkowski Administration, we cancelled the lease to Exxon, and, of course, Exxon being Exxon we're in court with them over their claims for hundreds of millions of dollars because of it. It's just their typical "we can afford more lawyers for a longer time than you can" game. I'm not anti-oil company by any means, but I've had enough dealings with them and seen enough of how they behave to not go around telling anybody that they're nice guys. That said, they don't have to be, they simply act in their perceived interest, so you'd best know your own interests and understand theirs when you deal with them.

In Vino Veritas

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