Tough Test for Democrats
by tgirschSeptember 10th, 2008
It looks like there’s a fight brewing in Congress over lifting the ban on off-shore drilling, just in time for election season. And I’ll be the first to admit that it puts congressional Democrats in a tough spot, having to choose to between what’s right and what’s politically expedient. (Three guesses which one I expect them to take. Hint: FISA) The problem here, as is often the case, is a vast disconnect between the public perception and the reality. The public largely supports drilling primarily because they believe it will do two things that it will absolutely not do: put significant downward pressure on gas prices, and contribute to increase American energy independence. Unfortunately, the so-called “liberal media” is doing absolutely nothing to disabuse the voting public of these notions.
A recent pro-drilling report said that opening up drilling could be expected to lower the price of oil by at most $1.14 a barrel — barely over 1% of current prices — and that we shouldn’t expect to see this for about ten years. Further, the more optimistic estimates show that in about ten years, we could produce about 5% of today’s demand via the additional drilling — an amount roughly equivalent to what we currently export. Think about that — we could have just as much additional domestic oil today simply by stopping exports of oil to other countries as we could optimistically expect in ten years from additional drilling. (Why are we exporting it? Because other countries will still pay more for it than we will. So why should we expect additional drilling to change that equation?)
Don’t get me wrong: unlike many Democrats, I don’t completely rule out expanded drilling. Under the right conditions, with the right precautions, and as part of a comprehensive energy plan, some amount of new drilling may very well make sense. But as a knee-jerk reaction to high oil prices that are largely because of instability in the Middle East (courtesy of Guess Who), speculation made possible by energy market deregulation (also courtesy of Guess Who), and dramatically increasing demand from India and China (which can only be expected to worsen), it’s downright stupid.
The bottom line is this: expanded domestic drilling will accomplish very little (if anything at all) with respect to lowering gas prices or increasing American energy independence. About all it will really do is further boost the already-record profits of the large energy companies. Do you really think they’re pushing for expanded drilling out of the kindness of their hearts? They don’t want to drill to lower oil prices; they want to drill because oil prices are high.
But in the media debate, you’ll hear next to nothing about any of that. Instead, you’ll hear talking points repeated over and over again, with no one challenging their veracity. In the end, I expect the Democrats will cave, to their great discredit. And, of course, if they don’t, the Republicans will use this as a bully stick to beat them with, no matter how factually-challenged that stick may be. Why shouldn’t they? It’s not like the media will call them on it.
UPDATE: Here’s a good TIME article on how speculators — often the oil companies themselves, and OPEC — are artificially driving the price of oil upward via the futures market.
Raise your hand if you think that gas prices will magically drop soon after we start more drilling. Then people will say, “Wow! It really worked! Let’s drill some more!”
Well, if the GOP and oil companies get their way, there won’t really be anyplace else where they AREN’T allowed to drill — at least no place with a substantial supply of crude.
And I wouldn’t expect a dramatic drop under any circumstances. The last year has demonstrated that in the US, $3.50/gallon seems to be the breaking point — if gas prices get too much higher than that, people start to really cut back; if they stay at or below that level, they don’t. So there’s really no incentive at all to get prices below the $3.50 level, if people will buy it as fast as they can produce it at that price.