High Oil Prices - Paranoia Reigns Supreme

A Washington Post article reports how once again oil industry executives have been called in front of Congress to answer questions about the why oil prices are so high. But the fact is that there's no single answer to that question. Even the experts aren't sure why.

As interesting as the article and its conclusions are, it is the comments to that article I find far more interesting. They ran the gamut from “It's market forces and speculation!” to “It's all the Bush Administrations fault because they're all in the pocket of the oil companies!” and everywhere in between. Some folks commenting obviously had no clue about how a market economy works (“We should nationalize the oil companies!”), nor about the laws pertaining to such things as commodities markets (“Speculators should be tried by the Justice Department and imprisoned.”).

The paranoia exhibited by many those commenting seemed to grow with each new point and counterpoint. Some of it was a little scary. A lot of it was outright bizarre. Some commenters showed they had a pretty good grasp of the problem, using logic and reasoned thought, whether they agreed with what I think about it or not. A few examples:

“...it seems that many, if not most, Americans don't know or even care about the difference between fact and fantasy anymore. Their beliefs seem to be dictated by feeling, irrespective of referenced fact or evidence. From denial of evolution and climate change to magical thinking about vast untapped oil reserves and the quick and easy availability of energy-producing technologies, the combination of confidence and ignorance is breath-taking.”

“The decisions are made by a few obscenely rich and power-horny lunatics who want to be even richer.
Probably even the Bush administration is confused by the lack of self-control and foresight shown by this scum, but the high oil prices are no accident.”

First we have someone pointing out too many people are being emotional about this subject and ignoring facts which are readily verifiable. Then the paranoid conspiracy theorist adds his 2¢ worth.

Some more examples:

“Blaming the eco conscious is EXACTLY the tactic BIG OIL wants. If we allowed drilling tomorrow in ANWR no oil would hit the market for a decade, and at that point the most generous estimates are that it would provide a minuscule dribble of oil on the world market. TOP estimates are that it would in total provide about 3 months worth of current consumption. There simply is no way to "drill" our way out of our energy crisis. you can't invent a resource that does not exist just because you wish it were true. That is typical conservative/bush administration thinking. "Just because I want the world to be this way that means it is".

The REAL culprit are all those conservatives and oil/coal lobbyists who have squashed electric cars, squashed alternative and sustainable energy projects, who fought for decades against building more fuel efficient vehicles, who fight public transportation infrastructure. THOSE folks are the ones responsible for the current state of affairs. What is the point in doing irreparable damage to earth if all it buys is a few more months of driving your Yukon or Expedition?”

Really? And all this time I thought many of those blocking progress were the liberals in Congress and the state legislatures. When Ted Kennedy, a supposed supporter of alternative energy sources, pulled every string he could in an effort to kill a wind farm off the coast of Nantucket in Massachusetts, was he working for the Bush Administration, or was he showing the typical NIMBY mentality I've seen in far too many of the “eco conscious”?

It wasn't the oil and coal lobbyists that killed the electric car, but the lack of a sufficient battery technology. GM's EV1 was a great car except for two things: it was too damn expensive for the average motorist to buy (it was heavily subsidized by GM, which is why they only leased them); and the battery pack didn't have the storage capacity needed, nor the longevity to make it viable in the long term. There is no secret 'super battery' killed off by the oil companies, no 100 mpg carburetors stashed away in a dusty warehouse (Those carburetors worked...but they burned out the engines after a couple of hundred or a thousand miles. Not exactly a trade off that's economical.)

And a lot of the so-called eco-conscious liberals drive those big damn SUVs, or worse, use private jets that use far more fuel in a single day than I will ever use in a year or more. This commenter also mentioned public transportation, something I'm all for...but in areas where it makes sense. Where I live, rural New Hampshire, public transportation would cost far more to implement than would be saved in either cost or fuel.

More examples:

“The current price spikes; however, are not so much driven by changing supply and demand as they are by speculation. Players in today's commodity market for oil are willing to pay ever increasing prices betting that prices will go even higher. They're chasing quick profits—speculating.”

“This isn't rocket science. The media has reported the reasons many times over....4. Inability of the major oil producers to pump significantly more crude oil per day. 5. Unwillingness on the part of refinery operators to expand refining capacity. We must greatly expand the use of alternative fuels. Why are there so few biodiesel or compressed natural gas pumps, when there are plenty of cars that could be modified to accept either fuel? Answer: oil companies own the gas pumps and no one is doing anything to make them offer other fuels. We could also outlaw commodities speculation. Unless you can physically store the oil and gasoline you're trading, you should have no right to trade it. Gasoline speculation is endangering our national security and it should be stopped.”

The first example is closer to the truth than most folks will admit, but it isn't the only reason, nor the major one.

In the second example I cut out the points that I agreed with, mainly dealing with the growth of speculation/commodities trading, and the growing demand in the developing world. But then the commenter went off course, blaming the oil companies for not pumping more crude and for not building more refineries. First, if the oil companies in the US could pump more crude, they would. But in many cases they aren't allowed to because in order to pump more oil they have to explore for and drill for more oil. Congress has pretty much prevented that by making offshore drilling off the East and West coasts off limits. Second, it isn't the oil companies unwillingness to build new refineries that's the problem. They'd love to do just that. But they don't want to spend millions, if not hundreds of millions of dollars on projects that will inevitably be blocked by Congress or by state legislatures. We all want more of the products the refineries make, but we won't let any more refineries be built. It's a lose-lose situation for the oil companies, so why would they waste the time and money on a futile endeavor? I know I wouldn't.

I could go on ad nauseum as there are well over 400 comments to the WaPo article. Better that you read them for yourselves and come to your own conclusions.

UPDATE 5/24/2008: It didn't take long for the Congresscritters to show their true stripes. Maxine Waters (D - CA) stated outright in the open hearing with the oil company executives that the Dems goal is to nationalize the oil companies. Never mind what it will do to the stockholders, most of which are pension funds.

As the post linked above asks: "Can we call them Marxists yet?" I think we can because they are.

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