If you listen to right-wing AM talk radio, or watch FOX news, you'll get the impression that the reasons for the price of fuel being so high are many, and that they are mostly to be blamed on environmentalists, Nancy Pelosi and - if you're listening to Anchorage talk radio - Governor Sarah Palin.The reality, though, is far from that. Far more of the dollars you pay at the pump go to commodity and futures speculators than go to taxes, meeting the requirements of regulators and environmental laws, and so on.
Here's what John Ponder of the Pensito Review has to say about it:
Drilling off the coast of California, Florida and elsewhere would increase domestic oil production by 7 percent by 2030, according to the Energy Information Administration. But “because oil prices are determined on the international market…any impact on average wellhead prices is expected to be insignificant.” There is no short-term benefit to drilling, says the EIA, because it would take at least five years for oil production to begin. (Source: Center for American Progress.)
On the other hand, in a single step tomorrow --- closing the Enron Loophole --- Congress and George Bush could create an overnight drop in oil prices of between 25 and 50 percent. This is according to testimony before a Senate Committee two weeks ago by Michael Greenberger, the former director of Trading & Markets for the Commodities Future Trading Commission (CFTC), the government board that oversees commodities markets.
"Yes," Greenberger testified, "overnight [closing the Enron Loophole] will bring down the price of crude oil to get at least a 25 percent drop in the cost of oil and a corresponding drop in the cost of gasoline. Some people estimate 50 percent."
Greenberger's testimony was brought to light by an investigation into the Enron Loophole by Keith Olbermann on MSNBC's "Countdown" last week:hat tip to Bradblog...
image by Darkblack
Update - 3:30 p.m. Sunday: The Anchorage Daily News Politics blog has two videos of Sen. Ted Stevens introducing the proposed Feinstein-Stevens legislation, one of several bills already or about to be introduced. Their bill, in the words of Fairbanks Daily-News Miner reporter, Robert Dillon, "is more limited in scope than some of the other proposals floating around the Senate. Sen. Obama will be introducing his own legislation this coming week.
The Begich campaign can't let Sen. Stevens get away with this shameless piece of fake bipartisanship. Both he and Sen. Feinstein, perhaps the closest thing the Democrats in the Senate have to Ted, enabled the Sen. Gramm legislation back around the turn of the century to be enacted in the first place. It has cost Americans hundreds of billions, perhaps more.
Commenter kelly at PA, says, "both nationally syndicated talk show host Randi Rhodes and our very own Shannyn Moore(KUDO 1080am) covered the Enron Loophole and Michael Greenberger's Congressional Testimony before Keith Olbermann did. Keith's producers listen to Randi's show everyday and much of his material, while great, is often covered just after Randi! 2 weeks ago, Shannyn was talking about the oil speculators and how 1. There IS NO SHORTAGE of oil; 2. There are no gas stations in the US that are out of or rationing gas; 3. US refineries are operating at 89% capacity; 4. Oil Producers have increased drilling since 2000 by 66% while gas prices have continued to rise; 5. Only 10.5 million of the 44 million leased offshore acres of known reserves are actually producing oil and gas.
"Bottom Line...The Enron Loophole was closed with legislation tucked into the farm bill. BUT...the problem is again with Bush cronies NOT enforcing the law."
6 comments:
Great Blog...however, both nationally syndicated talk show host Randi Rhodes and our very own Shannyn Moore(KUDO 1080am) covered the Enron Loophole and Michael Greenberger's Congressional Testimony before Keith Olbermann did. Keith's producers listen to Randi's show everyday and much of his material, while great, is often covered just after Randi! 2 weeks ago, Shannyn was talking about the oil speculators and how 1. There IS NO SHORTAGE of oil; 2. There are no gas stations in the US that are out of or rationing gas; 3. US refineries are operating at 89% capacity; 4. Oil Producers have increased drilling since 2000 by 66% while gas prices have continued to rise; 5. Only 10.5 million of the 44 million leased offshore acres of known reserves are actually producing oil and gas.
Bottom Line...The Enron Loophole was closed with legislation tucked into the farm bill. BUT...the problem is again with Bush cronies NOT enforcing the law.
We need ch ch ch cha chan chang change changes!!!
thanks, Kelly!
I'm about to do an update, and will include your comment.
Philip,
Here's a couple of other articles discussing the role of speculators in our energy markets:
F. Wm. Engdahl:
http://tinyurl.com/3lxgmz
Int'l. Herald Tribune:
http://www.iht.com/articles/2008/06/12/business/speculate.php
Boston Globe backgrounder:
http://tinyurl.com/47u357
Best, Ray
I don't know.
Over the past few years crude oil prices have been increasing by a larger factor than gasoline prices - which I understand to be the reason why refining is less profitable right now. If oil prices drop by 50%, I doubt we'll see a fully proportional drop in gasoline prices. On the other hand, if oil prices just remain where they are now, I bet gasoline prices will increase steadily until it forces Average Joe Commuters to crowd into buses.
The libertarian in me thinks we should just let this all work itself out, and that it would be futile to try to curb oil speculation. But then I wonder why oil has been speculated SO high when there aren't any clear and present supply issues, and refining is the current bottleneck. Then the conspiracy theorist in me remembers that we're supposed to be having a recession now, and major investors have probably established short positions in various companies that rely on consumer spending. Pushing up oil prices hastens economic downturn (every time oil prices rise, the markets fall). So maybe the speculators will sell oil, but not until they're good and satisfied that it's done its job tipping over a vulnerable economy. [\conspiracy theorizing]
so, if we tap into domestic reserves like never before, as the republicans suggest -- won't this just leave us, after a decade or two, more dependent on foreign supplies than ever?
i've been bicycling most everyplace year round. it's a lot easier and more fun than i thought it would be. i still drive a bit, but cut my miles driven from 13,500 in '06 to 4,400 in '07. shooting for 2,000 this year and 1,000 next year. so i'm actually spending less on gas now than when it was $2.50. everyone who is inclined and able ought to be doing the same. and if you think you're not able to do it, challenge yourself to try harder! think of it -- you could bank palin's $1,200 windfall.
I firmly believe that the answer to the oil problem is conservation, new drilling, alternative sources, etc. No one sound bite will solve the problems.
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