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$2 a gallon?
Posted at 1:31 PM on June 16, 2008
by Bob Collins
(82 Comments)
Filed under: Energy
Do you think you'll ever see $2 a gallon gasoline again? Rep. Michelle Bachmann of Minnesota's 6th District thinks you will, if the U.S. "sends a signal" that more oil will be pumped out of the ground.
She held a news conference in Woodbury today (interestingly, it was at the gas station which usually has the lowest prices in town) to push her "No More Excuses Energy Act," which opens up more land for drilling
Bachmann says it would take about four years to get prices down to $2 a gallon.
Last week Bachmann told Politico that gas prices are now the #1 issue for her constituents:
As a matter of fact, in the parade we were at last weekend, people were shouting from the sidelines: "Drill in ANWR! Drill in ANWR!" One woman was sitting in one of those lawn chairs, and she had a piece of cardboard, and she had written on it, "Down with global warming freaks." I mean, these people are just ready to find someone to shake and say, "Help me with my gas prices."
Back when the price of a barrel of crude was $37 (it's around $140 today) in 2004, the U.S. Energy Department said opening up sections of Alaska to drilling would lower the price of a barrel of oil by 50 cents.
In May the energy department issued another report on ANWR, calculating an peak of 780,000 barrels a day. The report, which is being used by Republicans to justify opening ANWR to drilling, nonetheless contains this sentence:
Consequently, ANWR oil production is not projected to have a large impact on world oil prices.
One has to be careful in predicting the price of gasoline. Just ask Nathan Schaffer, a manager of the group that tracks gasoline refining and marketing for PFC Energy, a consulting firm in Washington. About 18 months ago he figured if a barrel dropped below $50 a barrel, gas prices would drop to below $2. That prediction didn't work out so well.
In today's news conference, Bachmann presented Diane and Gary Baran, two Woodbury residents who described their concern about gas prices.
Who are the Barans? He was a 2006 delegate to the Republican State Convention and an early Bachmann supporter in her bid for Congress. Both are longtime Republican activists in the 6th District.
It's not unusual to display political supporters at a news conference. On the other hand, they'res not exactly the average man-on-the-street.
Comments (82)
I almost think it would be worth passing the act... just to prove her wrong. Almost.
There is only so much oil in the ground, so even if pumping more oil now would lower gas prices to $2.00/gal we are only post-poning the inevitable. It will eventually run out. That may be a long time from now, but it will run out. The question we need to ask ourselves is this: Do we want to want to address the issue now, or leave it for later generations to have to deal with? I hope we do better at answering that question when it comes to oil then we did fot the national debt and social security.
I'm sorry, but Bachmann has got to be the worst and most naive congressional rep. this state has ever seen.
Bachmann is just a tool. Us rate of oil consumption is 20 billion barrels a day. ANWR holds 4.3 billion barrels. It wouldn't even last a day.
There is a 95 percent probability (a 19 in 20 chance) that at least 5.7 billion barrels of oil are recoverable. There is a 5 percent probability (a 1 in 20 chance) that at least 16 billion barrels of oil are recoverable. The mean (expected value) estimate is 10.3 billion barrels of recoverable oil.source However that estimate was done in 2000 when the price of a barrel of oil was somewhere around $30. The current price of oil is almost 5 times that so estimates should be substantially higher.ANWR is just one source of additional oil that is currently unavailable because of purely political considerations.
Bachmann's proposal is nonsense on the face of it, since the market for petroleum is world-wide and ANWR wouldn't make a significant dent relative to global demand. Her cute little dig at global warming is a dead giveaway that her intent here is to pander for votes by setting up drilling in ANWR as a strawman for her to whack at.
Still, in a state where Tim Pawlenty's veto of a tax increase on gasoline was overridden and in a political climate where the voters actually seem skeptical of gas tax cut nonsense from the likes of John McCain and Hillary Clinton, Bachmann's choice of issue here might not serve her that well, if El Tinklenberg can talk some sense to the voters instead of nonsense.
I think Mr Baran is being sized up for a political smootch.
Funny, I sat in my front lawn with my parents on Sunday and watched a procession of monster vehicles speed on by without a care for the amount of gasoline they were consuming.
Bachmann's proposal is nonsense on the face of it, since the market for petroleum is world-wide and ANWR wouldn't make a significant dent relative to global demand.Really?
On June 15,2008 Saudi Arabia increased their production of oil by 200,000 a day in response to a request by the United Nations to relieve world oil price pressures.
ANWR would supply 1,000,000 barrels of oil a day.
Ms. Backmann has a point. If ANWR and the coastal areas of the U.S. were opened for exploitation, the world price and the U.S. price would drop substantially.
However the greatest fall in price will come when pension funds cease speculating on the commodity futures market.
Is this really the face of the Republican party? I voted for Bush twice, and I just can't believe "more drilling" is their A-game. I'm really surprised that the "more nuke plants and fewer (via oil) American-funded fascists/dictators/terrorists" line of reasoning never caught on.
Brenda,
According to Energy Information Administration, in 2006 the US consumed about 20.5 million barrels of petroleum a day, or a about 7.48 billion barrels a year. According to a report on ANWR by the USGS, "the total quantity of technically recoverable oil in the 1002 area" (the area proposed for drilling in ANWR) "is 7.7 billion barrels of oil (mean value)." So, according to these figures, if all recoverable oil could be extracted at once, we'd have just slightly more than a year's worth of oil, according to the 2006 consumption levels. However, I believe I read somewhere on the EIA website that approx. 600 million barrels would be extracted per year from ANWR, which is enough oil for about 29 days, if I did all of my calculations correctly.
GregS,
Total world oil production is something in the neighborhood of 84 million barrels per day, so if you do the math adding another million BBL of daily oil production from ANWR would lower the price by 1/84 * $4.00 or about a nickel a gallon. And that's assuming demand remains constant, a very big if. That's why Bachmann's claim of a return of $2.00/gallon gas by drilling in ANWR and elsewhere in the U.S. is utter nonsense on the face of it.
With all this quibbling over what the impact would be, has anyone asked Rep Bachmann how she came up with her numbers - and the promised drop to $2/gallon? Frankly, on its face, it appears she pulled her numbers from the same place that produced the 'terrorist safe haven zones' a year or so back...
Updated original post with EIA May 2008 study that concluded ANWR would have little impact on world oil prices.
Also, I notice the National Review cited the report, claiming 1.4 million barrels a day in ANWR. In looking at the report, however, I find EIA says production "peaks" at half that.
Lots of playing with numbers going on here.
whoa!!!!!!
what ever happened to if gas prices go up use less gas, ride a bike, walk, buy a scooter?
digging holes in alaska is NOT the answer.
Total world oil production is something in the neighborhood of 84 million barrels per day, so if you do the math adding another million BBL of daily oil production from ANWR would lower the price by 1/84 * $4.00 or about a nickel a gallon.David,
Nothing could be further from the truth. Oil and gasoline prices are extremely sensitive to very small changes in supply and demand. A refinery in Texas going off line for a week, can spike oil prices nation wide. The Saudi's increasing supply by 200,000 barrels a day is expected to create substantial downward pressure on prices.
I feel for people whose lives are made harder by higher gas prices (truck drivers especially), but I think high gas prices are ultimately good for this county. Our strength is inventing and procucing new technologies. High gas prices make developing alternatives worthwhile. In the mean time we have to find targeted ways to help the people that need it, without just prolonging our dependence on oil. Drilling in the US, no matter how much oil we can get out of the ground, is only a short term fix.
Whenever I drive through the cities it seems to be rush hour. Oddly, all of the cars are larger than mine, and about 19/20 cars carry only one person. It probably sounds cruel and crazy, but I think gas prices aren't high enough.
Here's my rationale. If you take a sterile auger plate and smear a dirty q-tip on it, bacteria will start to grow. Assuming simple growth by division, there will be 6 bacteria, then 12, then 24, then 48, etc. Eventually, they run out of food and some die, some go dormant, and some eat eachother.
Same think happens with chickens, only the time scale is slower.
I don't want that to happen to human culture. I want my daughter to have something to inherit when I die. The sort of reckless consumption that Bachman (and sadly Hillary and McCain re the gas tax) are advocating is flat out stupid. It make no difference how much oil in ANWAR, the coasal regions, the oil shale, or the tar sands - no difference at all. The oil there is finite.
The only "infinite" sources of energy on a civilization time scale are the heat from the center of the earth, sunlight (wind, waves, and cellulose are all sunlight), the tides, and nuclear fusion (assuming it ever works). Bring me a candidate who pitches the long view, one that allows my grandchildren prosperity (I'm 30), and I'll vote for them.
Rep. Bachmann said, however, that merely indicating we would open ANWR to drilling would lead to the lower gas prices; not the actual drilling.
Theoretically, the Saudis say they'd increase supply by 200,000 barrels a day should lead to lower prices. The price of oil today fell .67 a barrel.
Some have said the answer to higher energy prices is higher energy prices. Is that still true? Will innovation and the drive to find another way to power our lives be stifled by trying to make it 2003 again?
And, btw, why are electricity prices lower than a year ago?
I think drilling in untouched wilderness to get a few more years of cheap gas is short sighted and dumb.
I'm willing to consider more offshore drilling. Couldn't that be a place for compromise?
//Oddly, all of the cars are larger than mine, and about 19/20 cars carry only one person. It probably sounds cruel and crazy, but I think gas prices aren't high enough.
As I've noted here before, people SAY they're concerned about high prices, but they're really not doing that much to mitigate the effect and reverse the trend, based on my anecdotal observations of people passing me -- especially you, Wisconsin -- while I"m doing the speed limit.
Have we really reached the point in the U.S. where slowing down by, say, 5-10 miles per hour is a sacrifice we're not willing to make? Where exactly ARE we willing to sacrifice in this country now?
I was listening to a radio talk show on the subject last week and a caller called to say he's slowed down.... from 80 to 75, and noticed the difference in his mpg.
"Why don't you drive even slower?" the talk show host asked.
"Because I really don't LIKE it when people pass me," he said.
Oh, well, then.
Updated original post with EIA May 2008 study that concluded ANWR would have little impact on world oil prices.Ms. Bachmann is talking about much more than ANWR. She is also advocating off-shore drilling.
The Chinese are drilling 50 miles off our coast in the Gult, why can't we?
I agree with Brian's sentiment. Yeah, it'd be nice to pay two bucks a gallon again, but at what long term cost?
For some time, Peak Oil theorists have predicted:
"... large increases in oil prices as a result of oil production reaching a peak and then starting an irreversible decline; if this is correct, then the peaking of oil production could be viewed as the fundamental cause of oil price increases since 2003, with other factors such as the Iraq war having more influence on the timing of the price increases rather than their ultimate severity."Wouldn't it be nice to see politicians advocating personal responsibility instead of rallying behind the hyperbole of some quick-fix, flash point issue?
On a related note, did you see this blurb in today's WSJ?
Oh my - all these numbers that really don't mean anything. It all depends on what side you want to believe. Gas will never be $2 a gallon, I will promise you that, no matter what Ms. Bachman is willing to shovel our way.
I simply use less gas, it's easy, everyone should try it. I know, we all need to drive (not really), so try this: go the posted speed limit and don't stomp on the go-pedal when accelerating - things that simple can save you 10-15% on gas. Sorry, I threw in a number there myself....
/Rep. Bachmann said, however, that merely indicating we would open ANWR to drilling would lead to the lower gas prices; not the actual drilling./
SO BOB ARE YOU SAYING WE ARE BLUFFING SAUDI TO PRODUCE MORE OIL?
I think drilling in untouched wilderness to get a few more years of cheap gas is short sighted and dumb.I would bet that I am the only one here to have stepped foot in ANWR. It is a beautiful place - south of the coastal plain. The Brooks piedmont is incredible, south of Brooks is breathtaking ----- but the coast plain is little more than a white Wal-Mart parking lot that stretches to eternity.
"Spoiling ANWR" consists of placing 40 or so gravel pads about the size of a football field in an area as large as southern Minnesota.
The environmentalist hype about ANWR is nothing about religious Puritanism.
Do you think it will ever ger back to the point where train travel will become the main way of getting accross the country again? I've been thinking about that lately. That doesn't seem like a horrible thing to me. Not that I'd WANT to take the train... but you don't always get what you want I guess. Maybe that's a lesson we could all take to heart a little more. It would help with our credit card problems too.
Why isn't Ms. Backmann criticised for her "aye" vote on H.R. 6074: Gas Price Relief for Consumers Act of 2008?
That bill is more hype than her calls for additional drilling.
Is it because people like Keith Ellison and Nancy Pelosi also voted "aye"?
You got me there Greg. I've never been to ANWR, and probably will never get to go (unless my wife changes her mind about the ideal vacation). I will withdraw the dumb comment.
"The Chinese are drilling 50 miles off our coast in the Gult, why can't we?"
Please stop repeating this, it's wrong.
Thanks,
Bobbydole
How would increasing domestic oil production lower the cost of a barrel of crude both domestically and globally?
It is pretty simple.
Today, a barrel of crude sells for $140. If our domestic production is increased by two million barrels a day (ANWR and off-coast production), the effect do several things:
1) Lower global price by increasing supply.
2) Increase government revenues, thus lowering the budget deficit (and thus strengthening the dollar by lowering our international borrowing)
3) It would cut the trade deficit by one-seventh ($100 Billion) thus strengthen the dollar.
Since oil is traded in dollars, the price of crude would drop just from the change in our budget and trade deficits.
You got me there Greg. I've never been to ANWR, and probably will never get to go (unless my wife changes her mind about the ideal vacation). I will withdraw the dumb comment.Go now before gas gets too expensive.
You can drive the entire way to DeadHorse (Prudhoe Bay). It is a fantastic drive. If you go plan to spend some time in Cold Foot or Wiseman (ANWR's front door).
South of Antigan Pass the road is GREAT. North of that depends on the weather.
I got caught in the worst blizzard of my life at Antigan Pass on July 4. Expect snow storms year around on the north slope.
I'll wait and make my trip to AK when gas is $2. I can't wait!
Anyone else read about Craig Venter, of sequencing the genome fame, feels his company is 2 years away from developing a bacteria that will eat carbon dioxide and produce fuel?
Chinese drilling off Cuba - "Please stop repeating this, it's wrong." - BobbyDole.
Bachmann's right. We in the 6th District are looking for someone to shake alright--and it's Michele Bachmann. As in shake some sens into her vacant little head. Problem is, Bachmann hasn't held an open meeting with constituents since being elected to Congress. Not one. So it's been kinda hard to find our congresswoman for the past year and a half. If she's not posing for staged photo ops with old veterans, she's holding one-way news conferences or tele-town hall meetings where she controls the dialogue. Pretty sad.
GregS--In case you haven't noticed, even Dick Cheney has admitted he lied about China drilling off the coast of Cuba:
http://tinyurl.com/4bklyr
Don't hold your breath waiting for Michele Bachmann to admit she lied though:
http://tinyurl.com/489sn4
A quick google searched for "china drilling oil" turned up this:
Cheney's false comment on oil drilling attacked
Video of Bachmann repeating Cheney's lie.
Whether the Chinese currently have drills in the mud off Florida is immaterial. They have still been granted concessions by the Cuban government that our own government will not grant to U.S. firms.
"Whether the Chinese currently have drills in the mud off Florida is immaterial. They have still been granted concessions by the Cuban government that our own government will not grant to U.S. firms."
Ok so what concessions?
"Jorge Pinon, a senior energy fellow at the University of Miami specializing in Latin America, said Cuba has awarded offshore oil leases, or concessionary blocs, in its offshore waters to six oil companies — none of them Chinese — and soon may announce an agreement with Brazil's state oil company, Petrobras."
and..
"She said China's oil company, Sinopac, has conducted exploratory drilling on a lease on land in western Cuba, but is not involved in the offshore development."
In 2005 India and China combined used less than half the oil the U.S. did -- despite having eight times the population. As their economies grow, so will their demand for oil. We can't do much about others' demand. But it seems pretty obvious we could control our own a little better.
Ratcheting up the supply is a dubious solution. If Michelle wants to save money on gas, buy a bus card.
I don't know--is it the gas prices or Ms. Bachmann that sparks a lot of interest? Or the toxic combo of the two?
I notice nobody thus far - including Rep Bachmann - has addressed one of the other critical factors in the high commodities prices we're facing today:
The weak dollar.
Between our trade deficit & our federal deficit, the world is awash in dollars - and its beginning to look like they don't want very many more. If we start buying back our dollars, their value will go up. As dollars go up in value, commodities priced in dollars - like oil, gold, wheat, etc will fall in price.
Unless Rep Bachmann's plan to drill includes some serious fiscal reorganization in the US, it won't do squat to lower the prices of oil - and thus gasoline.
Nothing could be further from the truth. Oil and gasoline prices are extremely sensitive to very small changes in supply and demand.
GregS, if that was truly the case, then the recent 475,000 barrel a day drop in U.S. oil consumption should have had a huge effect. Obviously, it hasn't and I think you, like Bachmann, are trying awfully hard to wish something is true that just isn't.
David and BobbyDole,
Save your breath. GregS has never allowed reality to disabuse him of his opinions.
BobbyDale,
I linked you to two articles that clearly stated China has signed off-shore leases with Cuba. If you have an issue with the veracity of the reports take it up with CNN and the Saint Petersburg Times.
David,
The drop in U.S. oil consumption is encouraging, but one should not expect an immediated drop in the price of crude because the price is being sustained by speculation, not supply and demand market forces.
Institutional investors have flooded the commodities market with $100's of billions in new investment.
This is a bubble that needs to break before oil prices will gravitate to market levels.
See BusinessWeek: Are Pension Funds Fueling High Oil?
GregS, you can't have it both ways by first claiming that the price of oil is extremely sensitive to demand then saying that it isn't in this particular case.
FWIW, the price of oil, like housing, will only go down if people can no longer afford to pay the bill. From what I can tell, people are still paying for their gas and at least keeping up with the minimum payments on their credit cards.
Am I the only one who thought her comments about "building more nukes" seemed odd in a news conferense about the cost of gasoline?
We don't have to wait for Washington to act on this. We can buy that scooter, or take the bus/train, or get that hybrid or smaller vehicle. Me. I'm going to Hartland, MN Cenex station today to promote E85 and biodiesel.
All are good ideas that we can do NOW -- and most reduce air pollution, too, which is my gig. So let's go, folks. Less talk, more action.
GregS writes "I linked you to two articles that clearly stated China has signed off-shore leases with Cuba. If you have an issue with the veracity of the reports take it up with CNN and the Saint Petersburg Times."
GregS needs to take a refresher course in reading and critical thinking.
The articles do not clearly state that "signed off-shore leases" exist, but talk of plans to lease--from the sounds of the more recent accounts, the Chinese failed to get the leases, which went to other firms.
The one article does mention that a Spanish firm was to use Chinese drilling equipment. Quite a different thing.
Dick Cheney was big enough to admit that he was wrong. Too bad GregS isn't able to do the same.
GregS, you can't have it both ways by first claiming that the price of oil is extremely sensitive to demand then saying that it isn't in this particular case.The current price of oil is affected by a speculative bubble which by its nature defies the governance of supply and demand.
The thing about bubbles, is they do not last hense the economic genius of Calvin Cooledge and Bill Clinton collapsed with stock market.
I cannot understand what is so difficult to grasp about the basic wisdom of increasing domestic production.
Given our massive trade imbalances and short supply of oil, I would think the good would be apparent.
GregS needs to take a refresher course in reading and critical thinking. - The articles do not clearly state that "signed off-shore leases" exist, but talk of plans to lease--from the sounds of the more recent accounts, the Chinese failed to get the leases, which went to other firms.Ollie, read it again. This time turn off your partisan filter.
This is what I read from CNN
"NEW YORK (CNNMoney.com) - Plans for foreign oil companies, some from India and China, to drill off the cost of Cuba are prompting calls from lawmakers to ease environmental restrictions that prohibit coastal drilling in most of the U.S., according to a report Tuesday."
Perhaps you read something else.......
The fact remains Cuba is extending rights to others that the United States will not grant.
Parse and spin all you want....the fact still remains.
GregS, if it's all speculation then what difference would pumping more oil make? That's what I mean about you trying to have it both ways. The sad fact is that even with a drop of U.S. consumption by half a million BBL of oil a day, overall world demand is keeping pace and keeping the price of gas high.
The real savings to be had is in making improvements to the U.S. auto fleet's average MPG, improving public transit, and changing the way we live with regard to how frequently and far we drive. If Michele Bachmann was a real leader with long-term vision she'd be promoting real change rather than pushing election-year baloney.
"The current price of oil is affected by a speculative bubble which by its nature defies the governance of supply and demand."
There may be speculation in the market that is driving up the cost of oil. But it is not the only cause of high oil prices. High oil prices are the result of many factors, including basic supply & demand, currency valuation (i.e. weak US dollar), speculation (the 'bubble'), global conflict and/or weather (some would say this drives the speculators).
What Rep Bachmann hasn't explained very well is how the announcement of new north american drilling would impact the market. She says the mere announcement will calm markets & drive prices down - eventually back to a point that would support $2/gallon gas. This is incredibly difficult to believe. For one thing, her claim does not reflect the ongoing growth in demand for more oil. In short, holding a press release at a gas station with $2/gallon printed on a sheet of cardboard does not make it a realistic claim. What is perhaps most depressing is that people are buying into her argument - apparently without analyizing its plausibility.
GregS, if it's all speculation then what difference would pumping more oil make?Developing new sources of oil are long term; bubbles by their nature are short term.
As for improving the efficiency of the U.S. fleet, that is a great idea already under way. Look at the trends in auto sales.
Why should the government get involved when the solution is already in motion.
As for public transit......are you kidding? Once the University line goes in we will have spent $1.4 Billion to convert rubber wheels to steel wheels. Not a great use for tax payer dollars.
Telecommuting....now there is a 21st century solution to a 21st century problem.
What Rep Bachmann hasn't explained very well is how the announcement of new north american drilling would impact the market. She says the mere announcement will calm markets & drive prices down - eventually back to a point that would support $2/gallon gas. This is incredibly difficult to believe. For one thing, her claim does not reflect the ongoing growth in demand for more oil.First of all Ms. Bachmann is not the only politician to make outrageous claims. Congress just passed a law allowing the United States to sue OPEC.
Where was the NEWSCUT article on that?
The only problem I have with Ms. Bachmann's approach is the ill-advised claim of $2.
Other than that she is right on the beam.
Ms. Bachmann is talking about reducing gasoline prices HERE, not abroad. And while the price of oil is influenced by global prices, it still is affected by local market prices.
One does not ship North Dakota crude to China. One ships it to Pine Bend.
An increase in domestic production will reduce domestic price. It may not lower it substantually under world price, but it will lower it.
Developing new sources of oil are long term; bubbles by their nature are short term.
Peak oil is the long term future that we need to start planning and preparing for now.
As for light rail, think of it not as just a transportation line, but as developmental infrastructure.
"One does not ship North Dakota crude to China. One ships it to Pine Bend."
But it is priced by global commodities markets. If demand for oil in China goes up, the folks in Pine Bend will pay more for NoDak oil, or have none.
Also, an excerpt from George Will's column today:
"In a previous column, I stated that China, in partnership with Cuba, is drilling for oil 60 miles from the Florida coast. While Cuba has partnered with Chinese companies to drill in the Florida Straits, no Chinese company has been involved in Cuba's oil exploration that close to the United States."
http://www.washingtonpost.com/wp-dyn/content/article/2008/06/16/AR2008061602041_2.html
"Parse and spin all you want....the fact still remains."
Both of those articles you linked are from over a year ago. Maybe you would like to get some more up to date information from the article I linked to.
Thanks,
Bobbydole
I have a bone to pick with Bob.
Both the articles linked above to substantiate the claim that "opening up sections of Alaska to drilling would lower the price of a barrel of oil by 50 cents." were written in 2004 when the price of a barrel of oil was dramatically lower.
The availablity of oil is driven more by the market price of oil than by geology. The higher the price, the more oil is recoverable.
Now we all may be skeptical of Ms. Bachmann's $2 estimate but the fact remains there is more oil at $80/barrel than at $30 and the higher the price the more additional supply affects the price downward.
Peak oil is the long term future that we need to start planning and preparing for now.There is 13 Trillion barrels of oil on this earth. We have used one Trillion so far. The first Trillion was cheap, the next Trillion is more expensive, but the simple rule of economics applies. There is more oil available at $140 a barrel than $30.
"As for light rail, think of it not as just a transportation line, but as developmental infrastructure."
Absolutely agree. LRT is mainly about tax-breaks for politically connected developers. The StarTribune Co. was the primary beneficiary of the Hiawatha Light Rail line.
"In a previous column, I stated that China, in partnership with Cuba, is drilling for oil 60 miles from the Florida coast. While Cuba has partnered with Chinese companies to drill in the Florida Straits, no Chinese company has been involved in Cuba's oil exploration that close to the United States."This partisan parsing of the language reminds me of Barack Obama's gaffe over his "grandfather" liberating "Auschwitz".
The truth of the matter was - his uncle's unit moved into Dachau. The details of his off-the-cuff remarks were inaccurate but the essence of what he said was correct.
You can spin all you want but the facts remain the same. Cuba is allowing what we do not..
GregS --
The facts do not remain the same. Don't you see that?
You started out by saying,
"The Chinese are drilling 50 miles off our coast in the Gult, why can't we?"
Which, of course, was completely wrong. Since then you've dropped the most important parts of your original position, the Chinese, and the Drilling. Now you're just saying the more correct,
"The fact remains Cuba is extending rights to others that the United States will not grant."
Now if you would have said that in the first place I wouldn't have even posted anything, of course you probably wouldn't have said it because it doesn't really mean anything.
"the island nation has partnered with a number of nations proficient in deep water drilling, there's not been any action since June 2004 because the deep water drilling equipment is needed elsewhere, Pinon says. And some of the companies have expressed reservations about how to turn the potential crude into product: Cuba doesn't have the refinery capacity and the Cuban embargo prohibits it from coming to the U.S."
There is 13 Trillion barrels of oil on this earth. We have used one Trillion so far. The first Trillion was cheap, the next Trillion is more expensive, but the simple rule of economics applies. There is more oil available at $140 a barrel than $30.
Um GregS, $140/barrel oil certainly isn't going to lead to cheaper gas at the pump, so you're going off the rez now into non-sequitor territory I'm afraid. There's more oil in Alberta's tar sands and Colorado's oil shale, but it's not going to be cheap enough to lower the cost of gasoline.
If there's so much oil left in the Earth, then what are the opp costs of getting it, and how would that help or hurt, the main concern of the article, gas prices?
And I agree with Brenda, Bachmann is a tool.
BobbyDole,
You are correct the Chinese are not actively drilling for oil off of Cuba.
The fact remains Cuba is extending rights to others that the United States will not grant.
Bob - interesting and thought provoking points about Americans sacrificing. Recently I had a great conversation with a few Aussies who were talking about consumption of water in Australia. They talked about how they needed to sacrifice and change their ways...we compared and contrasted Americans and oil at present. It was quite interesting. Their basic point to us: change and get over yourselves.
Driving on any road is evidence enough that people are not changing their driving habits!
Um GregS, $140/barrel oil certainly isn't going to lead to cheaper gas at the pump, so you're going off the rez now into non-sequitor territory I'm afraid. There's more oil in Alberta's tar sands and Colorado's oil shale, but it's not going to be cheap enough to lower the cost of gasoline.David,
You confusing two issues being discussed here. The first issue is increasing domestic production to lower the price of oil for the United States.
The second issue is peak oil.
What you are missing is the fact that ANWR and oil shore oil is still relatively cheap recoverable oil. Increasing production of this oil now will substantially benefit the United States both from a supply and a balance of trade perspective.
The next matter is Peak Oil.
We all now as the price of oil increases, more oil become available....but that is an issue for the long term. We are discussing the short term.
GregS, it wasn't me who confused the issue by going off the rez into a non-sequitor about more oil being recoverable at $140 a barrel, it was you.
We've previously covered how you can't have it both ways when you first claimed the price of oil is so sensitive to supply that a million more barrels a day of U.S. production would lower the cost of gas at the pump significantly. Then, when I showed how an actual half-million barrel a day drop in U.S. oil consumption did nothing to lower the price of gasoline at the pump, you switched gears to then say it was the fault of speculation. So obviously, the price of oil isn't that sensitive to what are relatively minor changes in supply.
The bottom line is that Bachmann's line is fundamentally wrong on the economics of oil, period.
The bottom line is that Bachmann's line is fundamentally wrong on the economics of oil, period.Really?
So what you are saying is:
1. When the price goes up due to a supply shortage, the remedy is NOT to produce more oil.
2. When there is a speculative bubble due to short supply, the remedy is NOT to produce more oil.
3. When the price of oil increases due to a weak dollar, the remedy is NOT to maintain the expensive foreign oil imports.
Sorry, I will go with Michelle even though she's a tad optimistic on the $2 thing, she's still moving in the direction of sound economics.
I should have typed:
3. When the price of oil increases due to a weak dollar, the remedy is to maintain expensive foreign oil imports.
"Tad optimistic", GregS? It's more like Bachmann is engaging in wild exaggeration. There's no way opening up ANWR will impact oil prices significantly because:
1) you're not talking about a huge increase in supply, as I noted back when I said that adding another million barrels a day to current world production of 84 billion barrels a day would only lower the cost of gas by about a nickel a gallon.
2) oil is an international commodity, so where it's produced doesn't matter when it comes to price. Sure, the domestic oil producers will profit (hell, they are already!) as El Tinklenberg said in response to Bachmann's proposal, but it sure won't lower the price at the pump as Bachmann claims.
3) speculation is a factor, but keep in mind that the inventories of oil/gas/diesel are low and that there isn't any hoarding of oil going on like you typically see in commodity bubbles. World demand for oil is growing and the supply hasn't. Eventually prices may come down, but they will only when people stop paying when they can't afford the asking price. So far at least, we haven't hit that price point yet.
My question is why Americans believe it is their 'right' to have cheap oil/gas for their lifestyle. It is not in the constitution or in the bible for that matter. Until we have the fundamental understanding that even as the U.S. is a great nation, we are not 'righted' to have cheap oil and a SUV. We spend trillions through our government to keep oil artificially low so it can maintain our lifestyle. Is that a right that we should have or do we just expect this type of lifestyle?
Also, just because we increase the global market with more crude oil, does not mean cheaper prices at the gas pump. Although our refiners are producing more efficiently, we still have not built one in over twenty years while supply has been up in the states as well as the world.
Speaking of bubbles...the U.S. economy would be one big bubble too. This economy is mostly built on cheap energy with our transportation and food sectors (largely with our abundant natural resources). We are very naive if we thought that energy was always going to be cheap and the rest of the world energy consumption was going to stay low.
We do have a chance, but we do need understand that energy is not cheap and there are quick fixes around every corner. Of course it is nice to get our commodities fast, but we are going to find out in order to keep some of our lifestyles we will sacrifice instant gratification for more effective transportation. This kind of mind set will produce more employment and make our society better in the long run.
David,
First of all, we are talking more than ANWR. You keep forgetting about the reserves off the U.S. coast; the one the Cubans are not forgetting.
Your argument about there "not being a huge increase in supply" defies logic and any reading of current events. Small inputs do create massive changes. For instance, when the temperature of water goes from 33F to 31F you have ice. Small change in input; big change in state.
It is called, The Tipping Point. Malcolm Gladwell wrote a book on it.
Yes, oil is an international commodity, but small changes anywhere in the world cause massive ripples. Watch the price of oil spike up and down on news of volatility in supply, like the shutting down of a pipeline or an incident off the coast of Iran. Small input, massive reaction. That is why the UN asked the Saudi's this week to raise their production 220,000 barrels a day.
If what you say is true, why did the UN speak to the Saudi’s?
Lastly, speculative bubbles are completely irrational. The Dutch found this out centuries ago when a single tulip bulb sold for more than a farm. Two weeks later it was worth nothing.
GregS, while there are certainly price changes in the oil market due to stampeding lemmings, er, events, what Bachmann is selling is a long-term decline in oil prices, which is utterly bogus given the gradual leveling off of oil production in a world that wants more and more oil that's only becoming more and more costly to get.
Bachmann is selling an increase in domestic production. That makes sense.
Her rhectoric may be overblown but then she is not the only one. I do not see a picture of Keith Ellison here promoting recently passed legislation that he signed to sue OPEC ---- to bring down the price of gas.
But then this is public broadcasting and Keith is safe here.
How about this radical thought - let's collectively as a society, use less gas. GregS seems to want government to step in and make our gas prices all better again. How about we phase out large SUV's, ride a bike, sell the boat, walk to the market, carpool, etc. and simply USE LESS GAS. There are hudreds of ways to use less gas. I spend as much money on gas as I did a year ago because I changed my habits, I adapted to the current situation.
Ok GregS - you always want the last word here, so the floor is now yours.
GregS seems to want government to step in and make our gas prices all better again.Excuse me?
Ms Bachmann and I want the government to step OUT, not IN. It is government regulation and environmental fundamentalism that is inhibiting domestic production
I am all for using less gas. In fact, let's cut our usage in half. But considering we only produce one-third of what we need. Let's get government out of the way so we can lift our production to cover the remainder.
Just think, then we would be completely energy independent. Imagine what our trade balance would look like. It might, just might be positive for the first time in 30 years.
Thanks for the last word Andy.
The USA has some of the brightest engineers in the world, unfortunately our companies are run by sales, marketing and accounting. If we can tap our best resource, our people, we can surely come up with better ideas than poking more holes in the earth for oil for our Expeditions and Surburbans. Sorry, I don't have a lot of faith in the oil industry. I think they need a little competition. Competition is good for the customer. They're the only game in town right now and drilling off our beautiful shores will only be a quick fix to a long term issue. Let's not be short sighted, don't simply buy into what politicans (Bachmann and sadly now McCain) say just so they can get votes.
I know, we could have stopped at an nice clean 80 posts, but I couldn't resist. I say we agree to disagree on this issue. How about KG and those Celtics! Some common ground possibly?
Isn't there some oil ready for drilling out of The Great Lakes Region?
I recently read that Bachmann is in favor of that idea...
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