It's hard to listen to either President Bush or Candidate McCain without laughing when it comes to energy policy. The latest silliness is Bush's demands that Congress open up drilling rights in off limits areas both offshore and in Alaska by the fourth of July or answer to consumers why gas is at $4 a gallon. Even by the normal standards of Washington pandering, this one is a dinger.
Leaving aside the obvious little problem that there's a lag time of what, at least a decade between a lease and oil on the market assuming they started drilling on July 5th, there's the inconvenient truth that oil companies are sitting on massive leases with which they are doing precisely nothing . . .
Of the 90 million offshore acres the industry has leases to, mostly in the Gulf of Mexico, it is estimated that upwards of 70 million are not producing oil, according to both Democrats and oil-industry sources.
One Democrat staffer said if all these existing areas were being drilled, U.S. oil production could be boosted by nearly 5 million barrels a day, although the oil industry said that number is far too high and one government agency said it was impossible to estimate production.
Why not just come right out and say, "Look, I've only got a few months left in office, so I'm going to do everything I can to larder up my buddies at the oil companies before I ride off to Texas."
Meanwhile, the Bush administrations plan 1A, begging the Saudis to pump more oil, doesn't seem to be working either . . .On Monday, the global oil market shrugged off the news, pushing up prices. Oil was up $1.38 to settle at $136.74 in New York on Monday.
The Saudis, who considered the meeting a success because of the high attendance, announced a production increase of 200,000 barrels a day and an expansion of their output capacity if needed in coming years.
But news of the immediate production increase had already been absorbed by the world market for oil. Some experts had anticipated that the Saudis might announce a bigger increase.
Saudi Arabia, the biggest oil exporter, is the only country with the ability to significantly increase production quickly.
Rather than finding areas of agreement, participants in the one-day meeting in this coastal city on the Red Sea illustrated the sharply diverging views on what has caused oil prices to double in the last year to the $130- to $140-a-barrel range.
Consumer nations, led by the Britain, Japan and United States, see more supply as the answer to higher prices. But most producing nations are either reluctant to or unable to pump more oil, and they say a big reason for the price inflation is speculation. Everyone agreed that surging demand in the developing world was a major factor.
Why the Bushies think this will work is anyone's guess. The fact is, OPEC counties are rolling in cash. Iran and Venezuela are special cases: Their leaders have so mismanaged their economies (including diverting huge sums to stirring up trouble in their respective regions) that they could actually use more hard currency. But for the Gulf states, the oil is worth more in the ground at the moment than it is in the bank. So what's their incentive for pumping right now?
Bush has jawboned about speculators but done nothing about it. He could fix that in about ten minutes by releasing a big chunk of of strategic reserve. That would cure the problem by tomorrow afternoon, if that is indeed what it is.Over the longer haul, America may indeed be at a tipping point. Our high per capita use of energy, both directly and indirectly by our hugely wasteful eating habits is hugely expensive and in direct conflict with the accelerating appetite for energy in two economies, India and China, that together account for half the world's population. There are only two choices open to us over the next twenty-five years:
- Develop other sources of energy: nuclear, wind, solar, etc. Stripping Canada of its oil shale isn't really a long term solution.
- Dramatically curtail both the growth in and use of energy at the industrial and individual level. That means different transportation choices. It also means big changes in what and how we eat.
Tags: Oil, price of gas, ANWAR, Energy Policy, Saudi Arabia, John McCain
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