President bush has asked that we allow drilling in ANWR, and off the coasts of Florida and California, for the sake of lowering the price of Oil. He’s making an argument that what is driving high oil prices is short supply. This argument is one that is refuted by OPEC, and many economists, but it’s undoubtedly part of the equation.
I still think speculation is what’s driving insane prices, through loose regulation on trading of oil futures (more here).
But I’m willing to consider throwing Bush a bone here. I’m perfectly willing to allow both coastal drilling and drilling in ANWR on the following conditions that apply to all oil from these sites:
- Cannot be exported to any other nation either by the producer or any reseller. (We export to Canada and Mexico)
- Current exports cannot be increased.
- Must be sold at cost (i.e. cannot be traded on the futures market, and cannot be marked up for profit), I might be willing to allow markup if all profits are donated to universities explicitly for developing alternative fuel sources.
- All drilling operations are audited and inspected to insure no inflation of costs to drill the oil.
In addition within 5 years:
- We import no foreign oil whatsoever.
- All oil produced from US sources may only be sold in the US and all surplus must be held in reserve, not sold on the world market.
- All oil produced from US sources must be priced only by US demand, not by world market pricing.
Effectively what I’m saying is that if we want to remove dependence on foreign oil and drive down fuel prices, we must remove ourselves from the world oil market. If we’re going to drill additional sources in the US, this is the only acceptable reason to do so.
Of course, this would cause incredible losses for multinational oil companies. And we all know that’s not going to happen.
3 comments so far...
Hahahahaha… This cracked me up.
We export to Japan and other markets through LNG, not just crude oil.
Super-majors (oil companies) now control only 6-7% of the world’s oil. State run oil companies in Saudi Arabia, Venezuela, Columbia, Russia and the African nations control >94%. They have learned to kick out the oil companies and keep all the marbles for themselves.
The US government is making more in oil taxes than the oil companies are in profits; something they never seem to mention. Think about who wants to keep oil prices high and why? They criticize the oil companies and laugh all the way to the bank. Think they will do anything about speculators? Not unless the public outcry reaches the point that they might be voted out of office (both parties). Those tax dollars are supporting the bureaucracy. Do you really think they care about you or me?
Even if we restricted exports, we don’t have the refining capability to process additional crude oil. No new refineries = dependance on other countries.
Profit margins for petroleum products are less than many other industries including banking, pharmaceuticals, health care and many others. Do we dictate how much they can make too? Welcome to Marxism.
Even opening all areas to exploration, we will not meet US energy demands. Nuclear needs to be an option too.
People need to realize that energy = civilization. When you flip that switch and the lights don’t come on, how has your life changed. Think Phoenix would be habitable without air conditioning? Most of the southwest would become uninhabitable. Communications, transportation, agriculture and all the things that support civilization require energy. Without it, we become a third world country. Wind and solar will never supply enough to meet our demands. Geosynchronous satellites beaming microwave power to earth would work, but NIMBY always rules it seems.
Most people that want to limit energy consumption and production don’t realize what they are asking for. Too bad it won’t be our generation that pays the price - maybe will will, but I doubt it.
You’ll notice that I did not blame oil companies for high prices. I don’t think they are responsible. Whatever other objections I would have to the practices of oil companies, they have kept gas prices consistently low, and prices were declining in real dollars until 2003.
I agree the US makes more in taxes than the oil companies do in profits, at least until late 2003. I haven’t seen the break down at current prices, but I’m will to believe it’s at least equal these days. here’s a link that talks about it.
I wrote a more in depth post later, but this was my snarky response to the call for additional US drilling. It wasn’t mean to be a serious proposal. The point was that additional US drilling would do nothing to lower prices, which was the supposed point of these changes. We simply don’t have enough reserves in the US to make any serious impact on the international prices of oil. And short of pulling ourselves off of the world market, pricing is not ours to set.
Personally I do believe that at the very least pharmaceutical and health care companies should be limited in how much profit they can make on their products and services. But lets not pretend that they already aren’t regulated for price. Patents serve as government protectionism on price, and when they are gone, profits revert to what every other commodity item gets, essentially pennies over production price thanks to generics. Regulations on pricing do not equate to marxism. We all saw exactly what happens when you deregulate energy prices. Enron. Yet somehow we aren’t suffering under communist rule.
Large groups of people were living in Phoenix long before air conditioning was around, although they were certainly less comfortable. The valley is indeed perfectly habitable even in summer heat, especially if you take advantage of intelligent home design, which air conditioning largely eliminated the need for.
Any way you want to state it, we’re going to eventually end up using the sun and hydrogen to power our needs. We may not be there yet, but we need to focus on moving to those sources as soon and as efficiently as possible.
Limiting consumption does make a lot of sense, and there are a lot of possible avenues to doing so. Almost all electronics currently in use can become much much more efficient. There are still a lot of easy gains to be made that do not require significant lifestyle changes. Hell, incandescent light bulbs are still in heavy use.
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