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Pain in the Gas, Pt. 2
Author: BobR    Date: 03/02/2012 13:35:12

On Wednesday, I wrote a blog about why gas prices are high, and why there is nothing a president can do about it (nor a presidential candidate). In short, the reasons are:

  • Oil is a commodity, and trading oil shares largely sets the price of crude
  • Refineries are closing, driving down supplies so that throws the supply/demand equation out of balance
  • Drilling here will take years to get oil online
  • Most of the untapped oil here in the U.S./Canada is more expensive to process

There are some more things to consider as well when contemplating the high price of oil and politicians. One of the things I touched on regarding the trading of oil shares on the commodities market is that the perception of a potential shortage is as bad as - if not worse - than an actual shortage. Therefore, it is in the interests of those that make money off of oil to continue the meme that the Middle East is volatile area and could explode any moment into all-out war. One of the most frequently cited examples is that Iran is close to achieving a nuclear weapon. But what if they weren't? There is some evidence to suggest that Israel has already destroyed their capability:
The mega-leaks website, WikiLeaks, has partnered with the hackers cooperative Anonymous, to publish internal emails of the American strategic intelligence company Stratfor. In one of the hacked emails, Stratfor officials discuss information obtained from one of their sources who reports that Israeli commandos, in cooperation with Kurdish fighters, have destroyed Iranian nuclear installations.
In one of the emails from November 2011, Startfor officials discuss the explosion at an Iranian missile base near Tehran and quote a source who "was asked what he thought of reports that the Israelis were preparing a military offensive against Iran. Response: I think this is a diversion. The Israelis already destroyed all the Iranian nuclear infrastructure on the ground weeks ago."

There is no way to know if this is true, but if it is, then one has to wonder at the rationale for keeping this suppressed. It certainly does not help crude oil prices to continue the charade.

Another news item belies the false notion that "drill here, drill now" will lower gas prices. While the U.S. may indeed be the largest importer of crude oil, we are actually increasing the amount of "oil products" (eg: gasoline) that we export:
The U.S. exported more oil-based fuels than it imported in the first nine months of this year, making it likely that 2011 will be the first time since 1949 that the nation is a net exporter of such goods, primarily diesel.

That's not all. The U.S. has reversed another decades-long trend. It began producing more crude oil in 2008 than the year before and accelerated that upswing 3% in the first nine months of this year compared with the same period in 2010. That production has helped reduce U.S. imports of crude oil by about 10% since 2006.

So much for President Obama hindering oil production. So both statistics show that expanding drilling into environmentally sensitive areas will not help. Business is business, and if an oil company can keep prices high by exporting diesel, then it will.

Which leads to the final notion: We want lower prices. We want jobs in America. Certain people clamor that expanding drilling in the U.S. will do both, when all evidence shows that it won't. The only way it will work is if the federal government nationalizes the oil companies or sets in pricing regulations, both of which are antithetical to the Republican philosophy. Since oil is also a "fungable" commodity, there is no way of knowing where gas that we pump into our tank started out. It could be Canadian oil, or it could be Middle Eastern oil; there's no way of knowing.

We CAN, however, determine the country of origin for most of the other products we buy and use. For the most part, it's printed right there on the label. To be honest - most of those labels say "Made in China". To those who clamor most loudly for building a pipeline to create jobs and provide oil from non-Middle Eastern countries I pose this question: Do you also refuse to buy products made in China? Who do you think is one of Iran's biggest supporters outside of the Middle East? (answer: China).

You actually have a choice when we buy clothes or hardware or electronics. Do you buy American, or do you buy from a country that supports one of the "axis of evil" countries? Think about that the next time you are listenting to your iPod while getting gas.

39 comments (Latest Comment: 03/03/2012 02:54:59 by trojanrabbit)
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