Oil drilling has been a favored topic for the past two weeks, with the large majority of letters calling for more drilling. The pro-drilling arguments have generally went along the lines that we need more drilling to lower prices and increase domestic supply. One letter that I talked about a couple days ago was one of the few to look at the demand side and argue that conservation is important too. Many of the letters taken to invoking the laws of supply and demand in a rather simplistic matter, as amply demonstrated today in a letter to the Lincoln Journal Star:
Who is the market-manipulating bogeyman responsible for our high oil prices? You need look no further than the Democrat-controlled Congress that has continually blocked legislation to increase our domestic oil production. As is the case with most all government intervention in the free-market system, it ends up doing more harm than good.
Yes, our energy demands are increasing. Growing economies need energy to fuel growth.
Alternative energy (wind, solar, etc.) makes up just a minimal percentage of our total energy supply output here in the United States. Increasing just this part of the energy supply pie will not be enough to fill our demand needs in the near future. The bottom line is, we need oil! Domestic oil. And yet the government along with environmental extremists have done everything in their power to stop domestic oil supply increases needed to keep up with our energy demands.
The simple laws of supply and demand work in a free-market system. Government needs to get out of the way and allow these laws to work. That’s the way out of this mess.
I actually thought upon reading the first paragraph that this might be a satire since “bogeyman” is a word I would use to describe threats that frighten people, but aren’t actually true. But no, upon further reading it does bear the earnest hallmarks of a pro-drilling argument. The economic terms are a big clue. But really, the laws of supply and demand only seem simple. There’s actually quite a complex interaction that happens. What has been happening recently is that demand has grown (the demand curve has shifted to the right), but supply has remained relatively constant. This means that prices have gone up. There’s about the same amount of oil available, but more people are clamoring for it.
Of course, once prices increase that sends a strong signal to the oil producers to pump out more because there are good profits to be made. High oil prices facilitate recovery of some oil that would otherwise not be economically-feasible, because now it’s worth it to put a little more money in to get the last few drops out. They encourage research into alternative energy sources, both of the fossil fuel type (tar sands, oil shale, etc), and of the renewable sort (solar, wind, tidal, etc). New technologies are expensive to develop, but if oil prices are high then those new technologies are more likely to be price-competitive.
But that’s just supply. High prices also send a signal to the demand-side. People start to look at other transportation options. They invest in more fuel-efficient cars. Why do the letters so often bring up the supply and never discuss the demand? Because here’s the big problem in the United States: we simply don’t have large domestic oil reserves. The U.S. has about 10-12 years worth of oil at our current rate of use. The reserves we really need to plumb are in conservation. For example, in 2004 the U.S. used a total of 140 billion gallons of gas. ANWR is estimated to contain around 11 billion gallons. An 8% reduction in gas use would therefore be the equivalent of drilling ANWR. And we could do it right now, without any possible environmental damages. Heck, why aim small? A 16% reduction would be two ANWRs! And all we’d need to accomplish that would be to raise the average fleet fuel economy from 22 mpg to 25.5 mpg. Basically, our “demand reserves” are huge compared to supply reserves, but they’re not getting much attention. It’s not even like it would cost Congress money to raise the CAFE standards.
So please, if you’re going to talk about supply and demand, then make sure you give demand a fair shake too.
The only energy or oil monopoly in this country is a governmental institutionalized monopoly on our country energy market. The legislative branch has been engaging in anti-competitive energy practices from drilling to building new refineries and much more. They are in clear violation of the
“Sherman Antitrust Act
This Act expresses our national commitment to a free market economy in which competition free from private and governmental restraints leads to the best results for consumers.” http://www.usdoj.gov/atr/contact/newcase.htm#file
Clearly the governmental restraint are in violation of a free market economy and is criminal negligence on the part of the liberal politicians who are the real cartel that profit in taxes more then 3 to 1 to the oil companies that actually work for their money and then have to pay taxes on top of that. So when Oil profits go up the tax revenue increase is 3 times that of the oil companies. So who do you think is the real cartel???
This criminal incompetence of the democrats and legislative politicians anti free market energy economy in allowing American companies to meet American Oil needs is in need of change and with bush opening up offshore drilling it is time that we conservatives take a page from the left wing play book and for us to us the judicial system in upholding our laws and open up drilling.
Why dose the Senate call for investigations on big oil? Because they are trying to transfer the blame off of them by placing the blame on someone else. By placing the blame on the oil companies and keep people from seeing that government is the true problem they are able to offer false hope in an effort to gain more power and money from taxes while eliminating a free market economy in our country and forcing us to send our money to unfriendly Middle Eastern countries.
Why should we drill?
1) Create more high paying jobs for Americans
2) Become energy independent and stop sending $700 billion to middle eastern countries that support terrorism
3) Invest the $700 billion in America
4) $700 billion is 6% of the yearly US economy, and investing this in America would do what to our economy? Lower inflation and strengthen the US dollar?
5) Instantly drop the price of oil because oil Speculators like me would invest in commodity producers that provide the product like Exxon, Chevron, BP, Shell, because this is the smart investment. When Oil Speculators transfer investments the Oil price falls on the stock market.
:-)
[...] continually blocked legislation to increase our domestic oil production” (from a letter I discussed earlier). That knowledge puts these letter writers in the slim majority of American adults (53%) who know [...]