Here We Go Again

In another push to put the blame of high oil and gas prices on the Congressional Democrats President Bush yesterday urged congress to move quickly on lifting the ban on domestic offshore oil drilling. The Senate is currently gridlocked on a variety of energy bills with the Republicans claiming that they want an “open debate” and accuse the Democrat majority in the Senate of limiting amendments to avoid a vote on offshore drilling (Moscrip, Lara, “Bush pushes Congress on oil drilling“, CNN Money, July 30, 2008 ).

The President remarked: “American drivers are counting on Congress to lift the ban and so are American workers…I’ve lifted the ban, I’ve done my part, all Democrats have to do is allow a vote, they should not leave Washington without doing so.” (Moscrip, Lara, “Bush pushes Congress on oil drilling“, CNN Money, July 30, 2008 )

Sorry Mr. President…you haven’t done your part. Your part was to devise an energy policy for the 21st century that would have us weaning ourselves off of oil and gas and moving to more renewable energy technologies. Your administration has failed miserably at that part and now, when the chickens come home to roost, you want to blame Congressional Democrats for the whole situation. Remember, the Democrats have only controlled Congress for just under 2 years. You’ve been at the helm of the ship for almost 8 years. Our reliance on oil and foreign energy sources should have become painfully obvious after September 11, 2001 and you had the opportunity to lead us away from that reliance to a more independent energy future. But you chose not to. If anyone is at fault it is your administration and the Republican Congressional majority (as well as previous administrations and their failure to act as well).

Now the Congressional Democrat response is pretty lame as well. Senator Harry Reid suggested that the President “focus on releasing oil from the strategic oil reserve, speeding up production in areas already open for drilling and cracking down on oil traders.” (Moscrip, Lara, “Bush pushes Congress on oil drilling“, CNN Money, July 30, 2008 ) To me this sounds so weak as a response. Releasing oil from the strategic oil reserve will do nothing to really impact the cost of a barrel of oil and cracking down on oil traders falls into the old argument that it’s the “evil” oil speculators who are responsible for the current cost of oil. No Senator Reid…it’s something called supply and demand market forces. Stop playing populist politics at the level of the President and rise above the fray. Be honest.

As for speeding up production in areas already open for oil drilling…that I agree with. Oil companies are sitting on a lot of leases and doing nothing with them because they figure that the President and this administration will do everything in their power to get them more land (whether it’s offshore or not)…and then they can sit on that as well. The oil companies are raking in the profits at this point…why would they want to see the price of oil go down? Consider that Exxon-Mobil just announced that their second quarter profit rose 14% to 11.68 billion dollars (Werdigier, Julia, “Rising Oil Prices Lift Exxon to Record Profit“, The New York Times, August 1, 2008 ) Even if Congress repealed the ban on offshore oil drilling it would have zero impact on prices at the pump today. It takes years to develop a new oil field to the point that the oil reaches the market and on top of that, remember that this is a global market. The oil found in any new offshore field could just as easily be sold to India or China or to some other country who’s willing to pay top dollar for that oil. Americans need to tighten our belts, conserve, and develop and deploy new automotive technologies like better hybrid cards, electric cars, wind power and solar power to help reduce our consumption of oil and gas. That’s the long term solution to this energy crunch. But don’t ask the President or Congress to act…they’re much more interested in playing politics than doing something substantive to address this crisis.

What’s Really Driving Gas Prices These Days

The New York Times has a good opinion piece about what’s really driving gas prices these days. The Republicans and President Bush would like us all to think that it’s because we don’t have enough domestic oil drilling while the Democrats would like us to think it’s the “evil” oil speculators, or the “evil” oil companies, but the reality is that it’s basically a case of supply and demand. With regards to the “evil” oil speculators the Commodity Futures Trading Commission, the Federal Reserve and the Treasury and Energy Departments all concluded that “speculative trades in oil contracts had little to no effect on the rise in prices over the last five years.” (“Gas Price Follies“, The New York Times, July 28, 2008 ) Additionally, additional oil drilling, as I have noted in the past will do nothing for the price of gas at the pump in the short or even near term. The New York Times editorial notes that “Republicans should know that allowing more offshore drilling might marginally trim oil prices — in about a decade (emphasis added) — while sacrificing important environmental protections.” (“Gas Price Follies“, The New York Times, July 28, 2008 )

The fact is that we need to switch to alternative, renewable, energy and as we move in that direction we need to focus on conservation. You know conservation…that thing that Vice President Dick Cheney said “may be a sign of personal virtue but it is not a sufficient basis for a sound, comprehensive energy policy.” Well, Mr. Vice President, it looks like you were wrong on that one. And the editors of the New York Times agree with me: “Americans must burn less oil and find alternative sources of energy that do far less damage to the environment.” (“Gas Price Follies“, The New York Times, July 28, 2008 )

Give Credit Where Credit is Not Due

So Senator John McCain has now credited the recent $10 drop in the price of oil to President Bush and his amazing policies.  As Senator McCain claims:

Ten days ago, Bush lifted a 1990 presidential ban on offshore drilling and urged Congress to do likewise. “The price of oil dropped $10 a barrel,” said McCain, who argued that the psychology of lifting the ban has affected world markets.

“McCain Credits Bush for Drop in Oil Price”,MSN, July 23 2008,http://www.msnbc.msn.com/id/25816555

Well, all I can say to that is — bzzzzztttt — wrong answer. Sorry Senator McCain I don’t think the fact that President Bush has lifted the executive order banning drilling offshore on the continental shelf has had anywhere near that much effect on the price of oil — not so long as the Congressional ban on offshore drilling remains in place. On this one you’re way off target. If anything, this administration has done nothing substantive to help drive the price of oil down. If anything it’s the slowdown in the American economy, a little bit of strength in the U.S. dollar, and conservation by Americans as a whole which has slowed consumption of oil stocks and have driven the price down.

It’s sad…at one time I really admired Senator McCain as an maverick and an independent thinker — one who wouldn’t just follow the party line blindly. Unfortunately, it looks like that John McCain has left the building.