“That conclusion — drilling makes no difference — is meant to give cover”

Charles Lehardy is reacting to yet another mainstream media piece shilling for the Obama administration:

Oil-rigA new study by the Associated Press finds that during the past 36 years, US oil production increases did not correlate to lower US gasoline prices at the pump. When we produced more oil, the prices we paid for a gallon of gasoline did not drop. (see article here)

The dishonest spin put on this study is that drilling makes no difference: Oil is that rare, magical commodity not subject to the normal laws of supply and demand. As CBS and other news outlets put it:

It’s the political cure-all for high gas prices: Drill here, drill now. But more U.S. drilling has not changed how deeply the gas pump drills into your wallet, math and history show.

That conclusion — drilling makes no difference — is meant to give cover to the Obama administration’s active program to close off or sharply curtail US oil exploration and production on most federal lands, including off shore. As the President keeps saying, US oil production is up on his watch. What he hasn’t said is that most of those increases have occurred on state and private lands where the Obama administration has been unable to block exploration.

But the AP study only tells part of the story.

Oil prices are in fact kept artificially high by the Saudis and other members of the oil producing states. They constantly adjust their outputs higher or lower to maximize the cost of a barrel of oil, something they are able to do because they control such a large percentage of the world supply. They operate exactly like the De Beers family does in controlling the prices of diamonds. Gem grade diamonds are not particularly rare, but retail prices are kept high because De Beers and its many confederates tightly control how many diamonds are on the market at any given time.

But if the US were to suddenly discover a wealth of gem grade diamonds here in this country, that discovery, and those diamonds once they were put on the market, would shift the balance of power. The same is true for oil.

As long as our government refuses to permit the vigorous development of US oil resources — and with new technologies that can extract oil from oil sands, oil shales and deep off shore wells, our theoretical share of the total world oil supply keeps increasing every day — the US has no power to shift world oil prices, except by reducing consumption. Developing our domestic oil supply would gradually shift the balance of power in what is now a very one-sided game.

What’s needed is a national mandate to develop known US oil resources and to explore for more, a mandate that could not be held hostage to every political whim in Washington. Such a program would have a stabilizing effect on the world oil markets.

But more importantly, a serious program to develop our own oil resources would gradually reduce the amount of oil we purchase from the Gulf states, making us less dependent on their unstable regimes.

Charlie’s got more and it all makes good sense.  If someone can counter his arguments, then please, by all means, do so in the comments.

What this does for me is confirm Obama’s radicalness, confirm why it is that he must not be elected again.

There’s so much at stake.

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Posted by on March 24, 2012.
Filed under Obama Regime, Oil.
I blog more regularly at my own place where plain thoughts are delivered roughly. My about page gives you more on who I am.

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  • GarandFan

    Many today think that the “price” of a barrel of oil comes pretty close to the “cost” of getting it.  Either they don’t remember, or weren’t around in the early 70′s when OPEC doubled the price of crude overnight.  Not because of rising “costs”, but just because they could.

  • MichaelLaprarie

    I’ll say this again – Obama is a dupe for the environmentalist theories involving “peak oil” and conspiracies by major oil companies to sandbag efforts to develop fossil fuel alternatives.  He believes that the oil supply is dwindling and we must break free from oil because 1) the major oil companies will drive civilization to ruin when the oil runs out, all in pursuit of profits, and 2) we are destroying the planet with pollution from petroleum and its derivatives. 

    Obama believes we must save ourselves by switching to clean, green, alternative energy sources.  He also believes that only government can make the switch happen, through regulations that cripple domestic oil production.  It’s a deliberate plan to manipulate the market by making oil and fuels refined from oil so expensive that windmills and solar cells and electric cars become lower cost alternatives.  And of course it’s all for our own good.

    Drilling isn’t a magic bullet, but as the article correctly points out OPEC and other suppliers manipulate the price of oil by tightly controlling how much oil is available on the world market, and attempting to predict how much the market is willing to pay.  If America said, “we’re not playing your game any more” and drastically increased its domestic production, there would be a noticeable increase in oil available on the world market.  And when there is more of something available, people expect to pay less for it.  OPEC would have less power to stop the price of oil from falling because the percentage of oil on the market that they directly control would decline. 

    But as long as America stifles its domestic oil production, it has no choice but to pay whatever price OPEC demands, because it has no alternative to the OPEC oil.  And believe me, OPEC isn’t going to leave money sitting on the table.

  • http://profiles.yahoo.com/u/EU5DQWQTTHTPO4A4ZYSL3AAV2U Adjoran

    Obama lies about energy every time he opens his mouth – even when he tells the truth!  He emphasizes that the US has only 2% of the “proven reserves” of oil, omitting that the known but unproven reserves, and the known shale reserves, total more than Saudi Arabia’s. 

    Market demand is the driving force behind oil prices.  OPEC can adjust their production a little, but only the Saudis have the volume to even temporarily affect the price.  The Arab Oil Embargo of the ’70s was a total flop.  “But, wait,” you may say, “What about all the even/odd days for buying gas and the long lines?”

    Not due to lack of supply.  No, that too was a genius Democratic Congress shutting down domestic production with an insane “windfall profits” tax.  They have always hated oil, capitalism, and America.

    If we aren’t drilling, we not only aren’t producing, we also aren’t finding new reserves.  It’s as if Obama wants America to fail.

  • http://profiles.yahoo.com/u/EU5DQWQTTHTPO4A4ZYSL3AAV2U Adjoran

    Obama lies about energy every time he opens his mouth – even when he tells the truth!  He emphasizes that the US has only 2% of the “proven reserves” of oil, omitting that the known but unproven reserves, and the known shale reserves, total more than Saudi Arabia’s. 

    Market demand is the driving force behind oil prices.  OPEC can adjust their production a little, but only the Saudis have the volume to even temporarily affect the price.  The Arab Oil Embargo of the ’70s was a total flop.  “But, wait,” you may say, “What about all the even/odd days for buying gas and the long lines?”

    Not due to lack of supply.  No, that too was a genius Democratic Congress shutting down domestic production with an insane “windfall profits” tax.  They have always hated oil, capitalism, and America.

    If we aren’t drilling, we not only aren’t producing, we also aren’t finding new reserves.  It’s as if Obama wants America to fail.

  • herddog505

    Oil prices are in fact kept artificially high by the Saudis and other members of the oil producing states.

    Wait… I thought oil prices were kept high by the Koch Brothers.

    I’m so confused…

    /sarc

    This is key:

    Oil is that rare, magical commodity not subject to the normal laws of supply and demand. [emphasis mine - hd505]

    If libs are pressed on this, they will admit that it’s NOT actually about supply and demand, but rather about behavior mod: oil is BAD, and we gotta stop people using it, so we must artificially raise the cost / price such that people STOP using it.  So, I suggest that the more apt comparison is NOT the De Beers and diamonds, but rather cigarette taxes.  Cigs are far from rare, but the government tries to stop people using them by making them increasingly expensive.

  • Plinytherecent

    A comparison:  the Obama administration claims millions of jobs “saved or created” despite a significant reduction in the employed workforce, based on a highly dubious economic theory.  They also claim that gasoline market prices are due to manipulation by ‘speculators’.  However, when presented with a clear argument such as this, where the causes are clear and the market has historically been manipulated (usually to our disadvantage), they refuse to acknowledge any connection between domestic supply and national welfare.

  • Brucepall

    The word, “Speculator” applies to everyone, including yours truly.  If you knew the price you pay for _______ this month was going up next month… wouldn’t you buy more of it now?  Of course you would.  Just like everything else you can put in the blank, it also holds true for gasoline. 

     For you quibbles out there, ask you self this?  Duh, Fill up the ol’ tank today, or fill it up tomorrow at a higher price?  So we by this definition are all “Speculators.”

    What point that has yet to be quantified on this thread is the other half of this transaction equation, that being the value of the US Dollars we use to pay for the products cracked from a barrel of oil.  Sure, sellers of a commodity want the highest price that a market will bare… wouldn’t you if you had it?  

    But, unless you as the buyer have something else to trade in exchange that the sellers value (Aussie, Swiss, or Norwegian currency, ounces of silver, and so fourth) you are stuck using Federal Reserve Notes.

    And guess what my friends?  The value of the US Dollar is falling across the world, and has fallen precipitously across any time interval, of more than a few days, of your choice.  Explains a lot that US consumption has fallen off the cliff, but the price keeps rising, doesn’t it?

    We pay more Federal Reserve Notes for gasoline (and everything else we consume)… cause the meanest most heartless budget cutter in the whole country, Rep Paul Ryan, has proposed a budget that doesn’t even begin to balance our nation’s finances until the year 2040.

    The Democrats, our President and the Senate Majority, don’t even have a budget, nor even a plan to address the shortfall… and haven’t for years.  They just want to continue to spend and borrow even more money  - than the insane debt we have already placed upon the backs of those who can’t say no (the poor, children, and those not yet born).

    Its even worse than that, as bad as it is, cause the price to be paid is now falling on us all… We have seen the last of cheap gasoline (and everything else we consume), and its only going to get worse from here on out.  FWIW

    Semper Fidelis-  

    (Edited by the author – for spacing)

  • http://www.wizbangblog.com David Robertson

    I don’t mean to be the fly in everyone’s ointment, but there is a question that nobody is addressing.

    Is Mother Nature putting crude oil into the ground as fast (if not faster) as Man is taking crude oil out of the ground?

    If the answer to the above question is “No”, then a time will come when the world’s supply of crude oil will run out. So, which region of the world should run out of crude oil first?
     
    I dislike the rising cost of gasoline, too, but as I see it, the USA needs to take a long-range approach to oil production.  The long-range goal of the USA should be to be the last place in the world to run out of crude oil.

    • http://wizbangblog.com/author/rodney-graves/ Rodney G. Graves

      And the answer is: No One Knows.

      What we do know is that Peak Oil has been called repeatedly…  And yet no decade has passed since Petroleum became in industrial commodity in which the proven reserves have decreased.

      • http://pulse.yahoo.com/_425GVKQCLFZMQYYENR7CJBRDVA jb

        No, actually the answers is Most Of Us Do Know.

        There is an abundance of evidence that we are taking it out faster than the Earth is putting it in.

        There is NO EVIDENCE to the contrary. NONE. Only hopeful hypotheticals that might as well be based on leprechauns.

        • http://wizbangblog.com/author/rodney-graves/ Rodney G. Graves

           Show the decade in which the proven reserves of Oil decreased.

  • http://pulse.yahoo.com/_EJGOSD7BRBBY4ZQQEUCFQU4GHU W

    Energy from carbon base products produce in the U.S. far outstrips that of alternative energy. Same applies for the narrower category of “oil”. So if what the U.S. produces and increasing that production which we could do a great many times over, won’t make a difference then alternative energy will make even a far less difference.  So let’s give up on alternative energy right?

    Of course it’s a lie that drilling doesn’t and can’t make a difference. The dirty secret is we exploit a tiny fraction of what we could. Allow a decent amount of exploitation of our resources and not only will gas prices come down but our economy will boom.

    • http://www.rustedsky.net JLawson

      Which is something that must be avoided at all costs.

      Prosperous people don’t need the government to pay for everything, so it’ll make things much harder for incumbents come election time.  How can you promise 20 more weeks of unemployment and increased food stamp allotments when the majority of your voter base doesn’t need them – and know they’ll be taxed out the wazoo to provide them?

  • http://www.rustedsky.net JLawson

    Gas was $3.71 yesterday, $3.81 this morning.

    Hope you’ve got some Change left!