Friday, February 25, 2011
In today's news, we see two responses to rising oil prices. The first is at least coherent, even if incomplete:
Interior Secretary Ken Salazar plans to meet with oil industry executives in Houston Friday to assess the industry's readiness to handle a major offshore oil spill, amid growing pressure from congressional Republicans and a federal judge to resume deep-water drilling in the Gulf of Mexico...
The recent jump in world oil prices and U.S. gasoline prices following unrest in Libya has spurred renewed calls from many Republicans and Gulf Coast Democrats in Congress to allow more domestic production. One House committee is scheduled to hold hearings on drilling policy next month.
The second one makes no sense at all:
Separately, three Democratic lawmakers called on the administration to consider releasing oil from the government's strategic petroleum reserves to tamp down gasoline prices.
Oh, that will work. Because, you know, the oil market won't instantly figure out that when the reserve is down or depleted the United States will have no defense against a genuine oil shock, as opposed to next to no defense.
The "solutions" of politicians are becoming ever more temporary and fantastical. They seem to assume that Americans cannot see consequences beyond their next meal, much less the next year or decade. Sadly, in many respects we have conditioned our politicians to think that way. If I could change one thing about our national political culture it would not be to return to "civility," but to persuade our leaders that many of us -- obviously not all of us -- think about and even work and plan for the future.
The problem isn't what they think WE think - the problem is that's how THEY think. They have shown no capability at all to see/plan more than two inches down the road.
We need more recall capability, to fire them - for cause - when they behave so stupidly. Then, perhaps, the lesson might be learned.
And to think everyone laughed and thought this day would never come! I've been blogging warnings (since 2007), but nobody cares --- not until gas hits $4, I guess!
A few years ago -- when we had our last spike in gas prices -- the NYT did a detailed analysis of the effects that >$4.00 gas was having on the "not so rich" folks who lived in rural America and who had to drive a lot, including to get to work. They found that in a great many counties of the USA people were spending on average more than 15% of their total income on gas BEFORE prices spiked. Many of these people got really squeezed when prices went over $4.00.
Cynical me says that the NYT was enjoying some schadenfreude: These dumb Red State crackers didn't have the sense to live on the Upper West Side ... serves them right for having put Bush back in office, instead of the enlightened John Kerry.
But I was mildly impressed with the detail in the study. Someone had to correlate data at the county level, which sounds like actual work. Not like Maureen Dowd blowing somebody at a Georgetown dinner party to get a lede.
"The Prize" by Daniel Yergin is a surprisingly great history of the oil industry. It doubles as a surprisingly insightful history of the 20th Century. Oil continues to be a big driver in the 21st, even if our government no longer includes it in official inflation figures.
Can you say double dip? It's not a question of if, just when and how bad.
Stagflation? WTF! Back to the 1970s. Just hope it's not the 1930s.
Not to mention that oil inventories are near record high levels...the current price increases are not due to short supply but due to future supply risks. In other words, oil futures and spot prices are going up because the POTENTIAL of shortages.
Adding to current inventories by tapping the national strategic reserves won't change that. Those Democrat lawmakers might as well brand "I'm stupid" on their foreheads.