Their solution is domestic drilling and they fault the Democrats for not allowing it to happen. If we drilled more here, they say, prices would go down and all would be well and good. As is often the case, they are completely full of shit. Here's why.
Take a look at this graph.
The blue line shows the average price of gas in the United States. The red line shows the average price of gas in Canada. The green line is the price of crude oil. Canada is a net exporter of oil meaning they export more oil than they consume. They export around 3.3 million barrels a day and consume 2.2 million barrels a day. So, even with their abundance of oil and smaller population, they still have higher prices than we do. In other words, drilling and keeping more of their own oil hasn't helped them at all. They still pay more for gas.
So why are gas prices so high and why can't drilling help us? To put it simply, that's the marketplace for oil. Whatever extra we would produce would be insignificant in comparison to what the world consumes. In addition, OPEC would likely cut production to match what we were producing.
"This drill drill drill thing is tired," said Tom Kloza, chief oil analyst at the Oil Price Information Service, which calculates gas prices for the motorist organization AAA. "It's a simplistic way of looking for a solution that doesn't exist."
Simplistic indeed...almost as if a child came up with it.
It's pretty clear to me what needs to happen. The first thing we need to do is unshackle ourselves from the global marketplace. This can be done with new forms of energy. Unfortunately, one party is stomping their feet and acting like a red faced bully on this one. The second thing we need to do is reveal that the oil industry is gauging prices. That's why I'm happy to report that President Obama is looking into this issue. In fact, I think this investigation should be on the same level as Harry Truman's quest to eliminate fraud and price gauging in the defense industry. Ending oil subsidies for oil companies should also be part of this.
Finally, we need to simply stop buying gas. Easier said than done, I know, but it is a way that the free market can fix this with less demand. I've made a conscious effort to not use as much gas. So has Last In Line. People need to adjust their behavior and maybe bike, walk or take a bus. Lord knows there are many Americans who could use the exercise.
37 comments:
Speaking of other people's simplistic solutions - a task force on oil company greed and market manipulation is just about as likely to have an impact as more drilling.
The biggest reason why oil prices are up is that the dollar is down. Hmm, wonder what could've caused that?
Look at your chart again Marxy. See that peak prior to "Teh Won's" inauguration? Do you remember what caused the prices to go back down?
Looking at your comment, anonymous, Do you remember how to spell? Don't play coy, Juris. Why exactly is the dollar down?
The people that cry for more drilling would be wise to look at our neighbors to the north. They have less people and consumer less gas yet still pay higher prices. Perhaps if another form of energy were introduced into the "free" market the stranglehold that oil has on our world might loosen a bit? Nah, that would make too much sense.
That was deliberate sasquatch. In fact, I had to override the spell checker to make it happen.
Now that you've tried to ignore the point—and I'm calling you on it—how about answering the question?
It's called supply and demand. Perhaps you've heard of the concept?
Uh...I think that's what Mark called for when he said that we should stop buying gas so I guess I don't understand. Did you miss that part?
Regardless of your political position, what exactly do you expect POTUS to do to lower the price of oil?
Appoint a commission? Discuss releasing strategic oil reserves? Smoke-and-mirrors?
Personally, I say we use all the Mid-East oil while we can. I'll pay a little more to ensure that the US still has oil after everywhere else has run dry.
Price goes up, Mark rides a bike, demand goes down, supply goes up, price goes down.
This ain't rocket science kids.
Oh, and are we going to use spell-checker as a foil to a viewpoint?
Reallly, speling meens vary littl as longe as your thinking cleerly.
Now that was funny, Dan!
The problem with gas is that it is an inelastic good. Consumers can only do so much bike riding. Demand can drop off so much with all of the commercial shipping we do in this country. Honestly, we have to take the necessary steps towards alternative energy in tandem with a review of our oil industry.
Mark, you ignorant slut. It takes about 1 minute of googling to find out how much higher gas taxes are in Canada than the US. Why is gas in Canada so expensive? For the same damned reason that California gas prices are so much higher than in Texas: it's the taxes, stupid. It's government policy, not oil company greed in Canada.
Anyone with more than half an ounce of common sense and experience would realize that just from looking at how closely the price lines parallel each other.
Simplistic indeed...almost as if a child came up with it.
As is so often the case, your own words are so much more self-referential than you seem able to grasp.
And you wonder why I call you an economic ignoranus. Sheesh.
I'm well aware of the higher taxes in Canada, Larry. That doesn't change my point about "drill baby drill" being completely ineffective at lowering prices. Even if we became a net exporter (like Canada), we'd still be shackled to the global market.
Again, step outside of the "gubmint bad-ugh!" narrative for just a moment.
Honestly, we have to take the necessary steps towards alternative energy in tandem with a review of our oil industry.
Honestly, this is feel good claptrap but I agree with you in principle - we should be in an all out R&D war to find alternative energy that is:
1. portable/transportable
2. Cheap
3. plentiful
4. Store-able
I would suggest you stop blaming oil companies. They make less than the government on their own work!
Now, nothing comes close to fossil fuels. These 4 items are the 'Holy Grail' and the first group that can get there (maybe cold fusion someday) is going to change the world. Solar, wind, tidal, geothermal are all fine for special areas but they aren't yet cost-effective or reliable for any significant energy usage worldwide.
This part cracks me up:
Simplistic indeed...almost as if a child came up with it.
It's pretty clear to me what needs to happen. The first thing we need to do is unshackle ourselves from the global marketplace. This can be done with new forms of energy.
I couldn't stopping laughing and shaking my head at your irony!
'Unshackle ourselves from the global marketplace. This can be done with new forms of energy' - Like? You have an idea of what new forms of energy there might be...say harnessing dimensional black holes?
Just raising the price of one type of energy to make other less efficient and more expensive technologies languish in the market does not make them a good idea or even desirable.
Mark, can you not read your own graph? When crude oil prices came down, gas prices came down in both the US and Canada. And if you were well aware of the higher taxes in Canada, then why in the world were you going on about their gas prices being consistently higher than ours? What was the point? Or are you just used to blathering to kids from a position of authority? I don't know what you teach, but it's quite obviously not logic.
The points Mark is trying to make are pretty straightforward:
1) Gas prices are linked to crude prices.
2) We're in a global market, so even if you're a net oil exporter, when crude oil prices go up worldwide you pay relatively more for gas. Because oil is fungible and oil companies sell it to the highest bidder. It's supply and demand.
3) The amount of oil we'll get from the "Drill, Baby, Drill" plan is insignificant -- a mere bubble in the grand scheme of things -- and it won't come online for many years, most of it not for a decade. So it won't reduce gas prices this summer.
4) The price of crude is up because demand is up, and instability in the Middle East is causing speculators to bid the price up. Meanwhile, oil companies are pocketing huge profits (ExxonMobil up 69% this quarter).
Having lots of oil doesn't mean it's cheap for your country. Iran needs nuclear power, even though they could use oil to generate electricity, because they can sell that oil for more than the cost to generate the equivalent amount of electricity with nuclear. Their economy took a big hit when gas prices went down.
If American companies drill oil off the coast of Florida and the Chinese are willing to pay more for it than Americans, the oil companies will sell it to the Chinese. Drilling American oil won't guarantee that we'll get it: the highest bidder will get it.
That means we could despoil every inch of coastline along the Gulf and never see an extra drop of oil in America, if the Chinese were willing to pay for it. Because it's a free market, and forcing oil companies to sell American oil only to Americans is, um, unAmerican.
Yep, that's it, blk. Larry, I don't know what else I can tell you. These are the facts. Drilling here will not solve anything just as drilling in Canada hasn't solved their price issues either. Do you deny that this is the case? If so, refute the facts that blk and I have detailed. You can't simply blame the taxes. THAT'S what is illogical. And simply wrong.
"Even if we became a net exporter (like Canada), we'd still be shackled to the global market."
Hold on. I disagree with this statement completely. It may or may not affect the total argument; however, as a self-sufficient oil producer/consumer we would absolutely NOT be shackled to the global market.
Am I missing something?
Upon further reflection, I decided to introduce the idea of crude oil/gasoline self-sufficiency into blk's post.
1) True. Gasoline is a component that must be produced from crude oil.
2) No, we are not. My fanciful assumption is that we are indeed, as a country, oil/gas exporting. If I assume that we are self-sufficient, then I can safely ignore the rest of your statement.
3) This is the exact same argument that has been given for the last 40 years. The 'fruits' of the object of the 'drill NOW!' crowd [as opposed to your winning - drilling now won't solve anything- argument] would have been producing oil ever since the first time your counter-argument was brought out.
4) Given the sufficiency premise, this point is irrelevant.
An excellent point you then make, is that we could produce every drop of oil the US has available, just to sell it elsewhere at the highest profit.
That's true. And that is the market allocating resources to the ones that need it the most. Either they will produce wealth with that oil/gas, or they will go bankrupt for their stupidity. With any luck, they will use it to invent a workable solar panel, or perhaps a better mousetrap.
But the 'bigger government' theory would see that money go to the 'government' to allocate the money. Which works great if your government is inherently smarter that the aggregate brainpower of the marketplace.
Do you trust that it is?
Now?
When Bush was in charge?
The world market will determine the prices. Consider it something like gravity. It just is. Regardless of the presidential proclamations of Kenya, Thailand, or the USA.
Now, personally, I don't know that the price is yet high enough to justify using our own natural resources. Why not exploit those who have nothing better to offer? But, I do understand that economic balance is a precarious thing, and is tipped by an infinite number of thumbs.
Since none of you seem to be able to explain the huge drop you see in the chart -
Regarding the second post in this discussion - on July 14, 2008, Bush removed the executive-branch moratorium on offshore drilling. At a news conference on7/15, Bush repeated that position and slammed Congress for not removing the congressional moratorium on the Outer Continental Shelf and elsewhere. Crude-oil futures for August delivery plunged $9.26, or 6.3 percent, almost immediately as Bush was speaking. Traders started selling immediately.
http://www.washingtonpost.com/wp-dyn/content/article/2008/06/18/AR2008061800312.html
So Harry Reid said that plan was going nowhere. Now compare his statements to the chart and you can see that he's an idiot and you all are not telling the whole story.
Some points.
1. Mark, stop being dishonest. You said this, and I quote:
"So, even with their abundance of oil and smaller population, they still have higher prices than we do."
Larry rightfully pointed out that Canada's higher prices than us are solely due to taxes, and have nothing to do population or abundance of oil. Yet you were "well aware" of the higher taxes. Ok, then why did you say that sentence? It is quite obviously wrong. How's about just retracting it, rather than trying to blather your way around it? Ego Mark. For the hundredth time, let go of it.
2. Pretty sure you mean "gouging", not "gauging."
3. A humorous choice of words: "The second thing we need to do is reveal that the oil industry is gauging prices. "
Reveal: to make (something secret or hidden) publicly or generally known
So you've already figured out that gouging is happening, and you just want someone to reveal it for you? Way to not prejudge Mark. :) (You may not have meant it that way, but it is the sort of narrative you'd love.)
And blk tries to rescue Mark from incoherence:
1) Well done. True.
2) Again! Well done. True.
3) Maybe true, likely false. As you noted in point 2, oil is subject to supply and demand, like any other good. Attempts to increase the supply, especially the supply in politically stable countries as opposed to the ME, may have relatively quick impacts on crude prices. As rld noted, it's not unheard of.
4) Oh? Do you have some knowledge of which plays a bigger part? (Demand or ME unrest)
>Having lots of oil doesn't mean it's cheap for your country.
Er, yes, you already noted this in point 2. Being a global market kind or precludes oil being automatically cheaper for oil suppliers, doesn't it. And then, you start heading off the deep end:
>Iran needs nuclear power, even though they could use oil to generate electricity, because they can sell that oil for more than the cost to generate the equivalent amount of electricity with nuclear.
Weird, isn't it? Ever heard of the economicic notion of comparative advantage? You'd almost suspect that Iran is richer for choosing to trade their oil instead of burning it for electricity.
>If American companies drill oil off the coast of Florida and the Chinese are willing to pay more for it than Americans, the oil companies will sell it to the Chinese.
Remember your point 2. Supply and demand. Increase the supply relative to demand, and the price goes down. This is true whether the Chinese are buying it or Americans are.
>Because it's a free market, and forcing oil companies to sell American oil only to Americans is, um, unAmerican.
Utter idiocy. See if you can game this out blk. Say we "un-shackle" ourselves from the global market for oil, whatever that means. (I don't think either you or Mark have a clue as to how difficult that would be. Wishes for new energy sources don't power anything.) Further, lets say that, by law, oil found in the US can only be sold in the US. How will you enforce this? If there are any price differences, you have just created a nice healthy black market incentive to sell oil across borders. If Canada has a (non tax) difference in oil prices? I'll just smuggle a couple hundred gallons across the border and make a nice tidy profit vs selling here in the US. I'm amazed at how blithely you can throw out such a statement. "Hey, we'll just wave our magic oil wand, and it will all work! No problem!"
Larry rightfully pointed out that Canada's higher prices than us are solely due to taxes
Wow, you guys just can't take anything for the truth unless it's somehow the government's fault. And you are still missing the point I was making. Good grief.
I'm pretty kind on here when it comes to typos. I will continue to be that way even if you aren't.
And blk tries to rescue Mark from incoherence
You do realize that every time you insult me personally it sucks any minor drop of critical thinking out of your argument. Childish bullies...
Hap, I presented a case study of a country that is a net exporter of oil. This is a fact. They are still paying a lot for gas. It doesn't matter that they producing more than they use. It doesn't matter that there are higher taxes on fuel there. They are still seeing prices go up even with their extra domestic oil. The same thing will happen to us if we drill baby drill.
What I really don't get is why you guys carry water for the oil companies.
Does disagreeing with you automatically put folks in the camp of Carrying Water for Oil Companies? Sounds pretty black and white.
"The first thing we need to do is unshackle ourselves from the global marketplace. This can be done with new forms of energy."
You're going isolationist with energy? And you're certain we can become energy independent with these new forms of energy?
The president should deal with the US Oil Companies as well as the tree hugging set so more refining capacity can be built in this country. There has not been a new refinery built in this country in 20 years. Remember, basic crude is what lands here and we can have all the crude in the world hit our shores and it doesn't mean much if we are also pinching off supply here at home by lack of refining capacity. The basic crude is just one element in the pump price equation and all we can do at this point in time is store the raw crude until a refinery can actually make fuel from the crude. If we built about ten new refineries in this country, provided our own Oil Companies didn't block your application to build one at EPA and Energy departments or have you shot if you actually did manage to get a permit, we would see prices plummet. OPEC could pump crude till hell freezes over but without additional capacity to make raw crude gasoline, so what? Presidents for 20 years have withheld granting licenses for new refining capacity and limiting competition keeps fuel prices high. OPEC is only marginally affecting fuel prices; what is really driving high pump prices is our inability to deliver refined product to retailers. Grant some refinery licenses, some of them having been pending for more than a decade, then discuss raw crude.
Speaking of an energy plan, this morning I converted a protein shake into gas and I think several co-workers around me were ready to call the Atomic energy commission for inspections. Boo-ya!
In all of your "what needs to be done" talk, you should put forth a workable plan to transition from oil to your new energy source. Generating the energy is one thing, moving it to market is quite another.
The free market will determine the next great energy source...there has to be a demand for it...it may not be able to be forced. People have to want it, not be guilt tripped into accepting it. Somebody will have to be able to manufacture it, move it to market and sell it at a profit and people need to see that it is cheap, efficeient, and preferable to current energy (Ethanol produces slightly more energy than it takes to manufacture it - yeah, great government solution there).
If taxes are no big deal, then tell us what percent of the cost of gasoline at the pump goes to taxes and what percentage of the cost of gas at the pump goes to oil company profits. Go.
Retail gasoline prices are the result of literally hundreds of factors including crude oil supply, global demand, refinery capacity, regulation, taxes, weather, the value of the dollar, etc. Therefore it is impossible to say with certainty what one individual action will do to the overall price. Hell I could blame the falling dollar as well. Oil is priced in U.S. dollars, and the weaker the dollar gets, the more attractive dollar-denominated oil contracts are to foreign investors -- or any investor looking for a haven in the turbulent stock market.
You ignored rld's point as well.
>Wow, you guys just can't take anything for the truth unless it's somehow the government's fault. And you are still missing the point I was making. Good grief.
Mark. Good god. This is about making a coherent point. You wrote an entire paragraph noting that Canada has higher gas prices than the US, despite things that you imply might be advantages for Canada. When it turns out that the higher gas prices is entirely due to taxes, the entire paragraph is meaningless. They pay more for gas because their government has made it so, not because the underlying market charges Canada a different rate than the US. Your ego is really weird - it wouldn't mean I win, or you lose if you removed that paragraph; it would just clarify your point. Why is that so bad?
>I'm pretty kind on here when it comes to typos. I will continue to be that way even if you aren't.
I'm not even sure what you are talking about here. I didn't make fun of you for using "gauging" instead of "gouging". What are you complaining about?
>You do realize that every time you insult me personally it sucks any minor drop of critical thinking out of your argument. Childish bullies...
Heh. "Incoherent" is a personal insult, rather than a descriptor of your post? Ok.. Take it how you want to. I'm curious - when you denigrate entire classes of people for not holding the viewpoints you think are right, as you so often do, does that take any critical thinking out of your arguments? Or does that only apply to people that disagree with you?
>Hap, I presented a case study of a country that is a net exporter of oil. This is a fact. They are still paying a lot for gas. It doesn't matter that they producing more than they use. It doesn't matter that there are higher taxes on fuel there. They are still seeing prices go up even with their extra domestic oil.
The funny part is, I didn't disagree with anything you said there. When you participate in a global market for oil, being a net producer or a consumer doesn't make a difference, because everyone, including you, will be paying the market price for oil. (That's sort of common sense, actually.)
>The same thing will happen to us if we drill baby drill.
This is where you go from fact to opinion. As rld pointed out, the mere perception that the future supply of oil won't be so constrained is enough to ease pressure off the price of crude.
>What I really don't get is why you guys carry water for the oil companies.
Meaning what, exactly? I don't blindly believe that the bogeyman "oil companies" have fiat power over the price of crude, like you seem to? Guilty as charged. I'm able to comprehend that extracting oil from the earth and converting it to useful forms is a difficult task, and that the resultant cost of such things is subject to many different pressures that range from political to practical? Again, guilty as charged.
Does disagreeing with you automatically put folks in the camp of Carrying Water for Oil Companies? Sounds pretty black and white.
Of course it does. Any time anyone disagrees with the revealed truth of liberal gospel it is obvious that such a person is a witch and must be burnt at the stake.
No one expects the Spanish Inquisition!
Mark, what is it about supply and demand that's so hard for you to understand? You blather on about how Canada's production of oil hasn't cut their prices (and we won't even mention your embarrassing little tax oopsie). Did you ever consider for even a moment what would happen to Canadian (and world) gas prices if Canada stopped producing oil? And so what if the base price is set by the global market? Food prices are set by the global market in wheat and corn. Will you argue that Canada really hasn't gained anything by growing and exporting vast amounts of grain because their food prices have gone up just like ours have? Did you ever consider how many Canadian jobs are created by the oil industry and how much income flows into Canada as a result of oil exports? Honestly, Marcus Erroneous, do you think at all before posting?
Not that everything you posted was ridiculous. I actually agree with a fair portion of it, but then you go and throw crap into it and the end product is about as appealing as a dog crap fajita.
Hap, (again) the original point of my post was to illustrate that drill baby drill won't work. We're getting back into the "gotcha!" and redirect stuff which is quite frustrating. I'm not really down for the distraction of the various tax schemes regarding fuel on a regional and federal level in Canada. Nor am I interested in discussing why they have a tax in the first place. This doesn't have anything to do with ego...it has everything to do with staying on the point of domestic drilling.
I am interested in discussing why drill baby drill won't work. I've presented why it won't work and you agree with some of it but then call the rest opinion. This statement
the mere perception that the future supply of oil won't be so constrained is enough to ease pressure off the price of crude
is not correct. OPEC will simply adjust to account for the domestic drilling. Essentially, we will be punished for drilling because that's how they operate. Now, I'm all for being independent but not with oil. My liberal id card has been threatened several times with confiscation because I think we need to be more aggressive with nuclear power.
You and blk tend to say that it won't "solve the problem".
I don't think it will Solve the Problem either.
But I do think it will help, even if it's just a little bit of help.
If you are ready for a big boy argument instead of the childish taunting, have a read - and then be prepared to discuss.
That's going to hit a nerve Juris..that article is an asstruck full of cool.
Rld, come join me in the "ignored" corner. We'll share our pain together over there.
Wow, juris, a column on the interwebs that conclusively proves you win the argument. How grand!
it proved you couldnt refute the article you moron. go home.
last warned about nerves being struck and Santa's knee jerks in response.
Wow.
Yo, Santa - guess you didn't come prepared to discuss. That's the difference between WRM and the local members of Leftboro Baptist.
Well said, Santa. I already read the original post, juris, when it came out last Monday (being the UK geek I am). As soon as I did, I promptly went out and cut down a tree, took a shit on it, removed my aluminum cans from recycling and put them in the garbage, and threw a bunch of plastic in a public park.
Was that the (childish) response you expected?
Monbiot gets it, and furthermore concedes one of the main arguments of the anti-green case.
Ah, winning the argument...so special, isn't it? Thank goodness he has come forward and fully confirmed what every right wing blogger has said all along about the environment and climate change. Golly, what lucky fancy!
When you are ready to think a little more...um...forward, juris, I'll be here:)
Was that the (childish) response you expected?
It is so hard to tell with you - whether you are actually describing yourself or one of the stereotypes of the other side in your head. Santa provided the most predictable response - yours only slightly less so.
I don't particularly care about Monbiot one way or the other. Generally speaking he is an idiot, but for once seems to have pulled himself up out of the shit. My interest was in Mead's take - because he happens to be a liberal who can think.
btw M, didya here that oil prices came down - at least in part to U.S. consumers buying less gas? So much for your argument about inelasticity of demand!
Every argument you repubelican't's use is loaded up on facts.
Facts are only useful if you are looking for truth. So fuck off, you tea-partying right-wing fat-cats! You just want to win the argument instead of siding with the best way to create a glorious one-world harmony.
When you are ready to think a little more...um...forward
Ah, forward as in progress[ively] I guess.
I am about as likely to believe in progressive fairy tales as Levant ones. It is a bit unusual that you should believe in both.
Post a Comment