As you know rising oil prices have created a ripple effect on the American economy that places a heavier burden on our most economically vulnerable citizens. OPEC has announced that they will not increase oil production any time soon, and will not meet again to discuss supply and demand policy until September 2008 (Mufson, 2008).
Blaming speculators and holding congressional hearings about the commodities market when market supply and demand is dictating price will not create any meaningful solutions (Economist 2008; Smith, 2008).
A recent congressional proposal called for withdrawal of 10% of the U.S. Strategic oil reserve which would result in 70 million barrels of oil hitting the market. This amount of oil is equal to about 3.5 days worth of oil that we consume (Nationmaster.com), and does not result in a steady stream of oil supply.
Many politicians are not fully informed about oil leases and how the process works in the oil and gas industry leading some to claim that oil and gas companies have leases and are not using them or let them sit idle, which is not accurate (Energy Tomorrow; Smith).
While it is notable that congress passed the Energy Independence and Security Act of 2007 (the Energy Bill) that introduced higher CAFÉ standards and increased use of renewable fuels in gasoline, however, the America people will not materially benefit from that legislation until 2016-2020.
The U.S. is the only oil and gas producing nation in the world with government restricted access to its domestic energy resources (Caveney, 2008).
Our political leaders should be more active in support of solutions that can increase domestic supplies of energy. Our current laws prohibit exploration and drilling in many promising areas. Leaders should actively promote and support fuel diversity, so that the market—not government regulations and taxpayer subsidies—determines energy winners and losers (Lieberman).
References
Caveney, R. (2008, July 16). Presentation by API President and CEO Red Cavaney to the USEA Energy Supply Forum. http://freerepublic.com/focus/f-news/2046863/posts
Energy Tomorrow. (2008). Facts about non-producing leases. http://www.energytomorrow.com/energy/Facts_about_Non_Producing_Leases.aspx
Lieberman, B. (2008). Energy and the environment. Heritage Foundation. http://www.myheritage.org/Issues/EnergyAndEnvironment.asp
Mufson, S. (2008, March 6) OPEC says members won't pump more oil. Washington Post. http://www.washingtonpost.com/wp-dyn/content/article/2008/03/05/AR2008030500500.html
Nationmaster.com. (n.d.). Energy Statistics: Oil consumption by country. http://www.nationmaster.com/graph/ene_oil_con-energy-oil-consumption
Smith, D. (2008, July 2). Whats really driving oil price? Motley Fool. http://www.fool.com/investing/general/2008/07/02/whats-really-driving-oil-prices.aspx
The Economist. (2008, July 3).The oil price: Don’t blame speculators. http://www.economist.com/opinion/displaystory.cfm?story_id=11670357&CFID=12328457&CFTOKEN=12385819
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