We have countless democratic pundits on the air, in the media, claiming that increased oil drilling in the US won't bring down gasoline prices. They say it will take too long to bring new production on line, and there won't be enough of it, and oh dear oh dear we will just have to tough out $4 a gallon gasoline.
This is all malarkey. The oil market is a futures market. Users of oil (refiners mostly) sign deals to take delivery of oil from producers. The price they agree upon is based on what they think the price will be in the future. If they think prices are going up, they will pay a little more to get their needed crude. If they think prices might be going down, they will postpone signing a deal, hoping for a better price next week.
Should the market become convinced that the Americans are serious about bringing new oil to market, the price will fall. Obama made a speech the other day promising to increase production. Trouble is, nobody really believes him. The market figures Obama is just talking to make political points. They think Obama is too deep in hock to the greenies, who hate production of damn near anything, to actually do anything to increase oil production.
As for timely, the industry could get production from the "Alaska National Wildlife Refuge" (ANWR) flowing down the Alaska pipeline in less than 12 months. The much ballyhooed ANWR is just another piece of frozen tundra above the Arctic circle. There is a zillion square miles of tundra up there. We will never run out of frozen tundra.
No comments:
Post a Comment