Obama's 3-Card Monte on Oil Supply

Yesterday, Mr. Obama gave another speech on energy. In that speech, he once again reiterated his stand that drilling in the Arctic National Wildlife Reserve (ANWR) and off the shores of California and Florida won't help lower oil prices. But, he said he was for limited drilling if "politically" it would get us on track for "the "alternative energy initiatives that he has proposed.

OK. I "guess" that sounds reasonable if you "really believe" that "increasing supplies" (by drilling for our own oil) won't actually reduce the price of gasoline at the pump.

But, then, Mr. Obama proceeded to expose his "own lie" about the effect of "increased supply" on high oil and gasoline prices. He did this by proposing a release of 70 million barrels of oil from the Strategic Oil Reserve (SPR) to increase oil supplies (See Full Story). He went on to say that this would reduce the high oil prices and, subsequently, reduce gasoline prices.

So, let me get this right.

America "burns" about 20 million barrels of oil per day. So, in the world of economics according to Obama, releasing 3-1/2 days of equivalent oil usage from the SPR (a total of 70 "million" barrels) will dramatically lower prices. However, increasing "new" oil supplies by an estimated 16 "billion" barrels from the Arctic National Wildlife Reserve and by a minimum of 18 "billion" barrels for offshore drilling won't have any impact on price. So, in other words, Mr. Obama thinks that replacing 3-1/2 "days" of oil usage in America would have more of an impact on gasoline prices "than" any new supplies of oil that could literally keep this country going for 4-1/2 "years" on their own. This is from a guy who actually has 300 people available on his economic team.

Besides the fact that Mr. Obama has "flipped" on his stands on drilling and the release of oil from the SPR (I guess after looking at the polls), he is flatout lying to the American people. His proposal of 70 million barrels, at best, might reduce prices at the pump by 5 cents; and, only for a very short time. Further, the longer it takes to release those 70 million barrels into the marketplace, the less the savings will be at the pump. Drilling in ANWR and off the shores of California and Florida and in the oil shales of Colorado will literally double or triple our domestic oil supplies and buy us the time that we need to convert to alternative energy sources. By drilling in those places that have been blocked by the Democrats, it is possible to increase our domestic oil supplies to above 70 percent of our oil usage instead of less than 35 percent of today. It will also reduce by half, the $100 billion dollars a year (and growing) that is flowing out of this country and into places like Saudi Arabia in order to satisfy our insatiable oil needs. Most importantly, we would reduce the "risk" of serious supply disruptions and the economic disaster that could result from the instabilities in the Middle East, Nigeria, and Venezuela.

The security of the United States is at risk. Oil should not be used like some pawn to garner votes and campaign contributions from the likes of MoveOn.org or Greenpeace or the Sierra Club. This is serious business that should not be treated so lightly that our politicians can take a 5-week hiatus; as they did last Friday. Nancy Pelosi and company are trying to stall past the election; thinking that they will have complete control and the ability to hoist the wishes of their "small" political base of environmentalists onto all of America. For the Democrats, the cost to America for their inaction is immaterial. They see no problem in ramming trillions upon trillions of dollars in ineffective and premature energy ideas onto this country so Al Gore can sleep at night. This is literally crazy and probably the most irresponsible government we've ever had in this country. A government that absolutely hasn't thought through the realities of what they are doing and plan to do.

On Domcestic Oil: The Games Democrats Play

Yesterday, people like Nancy Pelosi and other Democrats used the argument against drilling in ANWR (Arctic National Wildlife Reserve) and off the coasts of Florida and California by saying that the oil companies have federal leases on 68 million acres of land that they aren't using. Yes, they have the leases for exploratory drilling. However, the little secret that Pelosi and the rest of Democrats won't tell you is that the environmentalists, once again, have stopped any drilling on these Federal lands in order to save this insect; that bat; or this endangered bird or plant; and, so on. (Click to see a typical example)

It appears getting the lease is the simple part. Trying to get through the liberal courts and against the wishes of groups like the Sierra Club is another thing. Billions of barrels of oil are effectively being blocked by environmentalists and the friends they find in our Federal Courts. That's the game!

Penny Wise and Oil Foolish

WOW! The Democrats must have finally taken a course in Economics 101. There, they must have "learned" all about the Law of Supply and Demand. Otherwise, they wouldn't be trying to increase the supply of oil in this country by suspending additions to the Strategic Petroleum Reserve (SPR). Nancy Pelosi says that a savings of 5 cents or more per gallon of gasoline could be achieved by suspending those additions; a total of 70,000 barrels a day (See Full Story).

Sadly, an average gallon of gasoline went up by more than 8 cents in just the last week. So, Pelosi's idea of saving 5 cents a gallon might buy us about 3 or 4 days worth of actual savings this summer; assuming that gasoline is rising at a rate of nearly a penny a day. At the same time, we won't be adding to the SPR. This could make us vulnerable in the case of any future disaster that would disrupt energy supplies to the United States. Of course, who's to say that OPEC (the Organization for the Petroleum Exporting Countries) just won't cut their production output by 76,000 barrels a day. Then, there would be no savings to Americans at the pump.

As I had mentioned before, I think the most "amazing" thing out of this story is that there has been a quiet admission by Democrats (like Pelosi) that supply will lower prices. Certainly, their conservation and "green" energy bill of 2007 did nothing to do that. Since passing that bill, oil has risen from $87 a barrel to today's $127 a barrel; a 45+ percent increase in less than 6 months. The sextupling of ethanol in that energy bill has "just" caused food shortages and food prices to skyrocket while prices of the pump have risen; unabated.

If only they would take that "supply" realization to heart and begin exploring/drilling off the coasts of Florida and California and begin drilling in the Arctic National Wildlife Refuge. There is an estimated 60+ years of "domestic" oil supplies sitting in those "protected" areas of this country. Unfortunately, even if they did give the drilling-go-ahead as of today, it would take another 5 to 7 years of exploration, drilling, and production deliveries before oil prices "could" be affected. In the meantime, gasoline prices will probably double or triple from todays prices.

Since 2002, oil prices have risen from $20 a barrel to today's $127; a six and a half fold increase. Exploration has been blocked and no new technologies have been developed to offset the rising demand for energy in this country and in the world. It isn't the oil companies who are at fault. It is our own Congress who is beholding to all those special interest groups like Greenpeace, the World Wildlife Federation, and the Sierra Club.

Conservation and new technologies like solar, wind, and hydrogen will have to be developed in a "parallel path" with increase and new supplies of oil; otherwise millions will suffer. We have 243 million vehicles on the road, along with thousands of airplanes that won't ever benefit from wind, solar, or hydrogen. At the most, those gasoline-designed cars will only burn a maximum of 15 percent ethanol without suffering from the corrosive effects of that fuel. E85 automobiles (ones that burn more than 15 percent ethanol) are specially designed.

Our own energy needs will grow by 45 percent by the year 2030. At the same time, our old and exhausted oil wells are drying up at a rate of more than 2 percent a year. We barely have enough refinery capacity in this country to handle the current demand for gasoline, jet fuels, diesel oil, plastics, fertilizers, etc.; let alone any future demands. We currently only have 132 refineries in America that are capable of producing 16.8 million gallons of gasoline per day, and they are at 99 percent capacity. Since 1981, we as a country have shutdown nearly 200 refineries due to environmental issues. No new refineries have been built thanks to legal maneuvering by environmental groups. India and China are growing and demanding increases in oil at a phenomenal rate. By 2030, it is estimated that those two countries along with the United States will use 1/2 of all the oil production in the world. The Middle East is constantly teetering on widespread war and oil disruption. Nigerian rebels are attacking the oil fields and oil production facilities in that, the 10th largest oil producing country in the world.

If all these factors aren't a formula for a U.S. and worldwide disaster, then, nothing is. Certainly, a measure to save 5 cents on a gallon of gasoline could be easily considered penny wise but, overall, oil foolish.