Led by John Dingell, Congress is proposing to limit the amount of speculation in the oil markets by reducing the incentive to do so. The Wall Street Journal reports that the House Energy and Commerce Committee said that investors of oil futures should be required to pay up to 50% in collateral in order to make a trade in the oil futures market. Some analysts report that this move could reduce oil prices up to $60/barrel. Better put: at the current trading price of roughly $138/barrel, the House believes that under their new bill (code for government intervention), oil would be sitting at just $78/barrel. The Democrats obviously believe that any price above $78/barrel is simply speculation.
Not according to the Energy Information Administration
In their short-term outlook, they forecast that the average price of crude oil in 2008 and 2009 will be $122/barrel and $126/barrel, respectively. And that is all accounted for by supply and demand – you know, too much demand (
Compared to the House, the EIA has vast data on oil fields and infrastructure regarding the ability of key economies, like members of OPEC, to supply sharply rising global demand coming from insatiable giants like the
It is so like the Democrats to try and intervene where they should not intervene.
But why not? A related article in the Wall Street Journal, Saudis Promise More Oil
To Curb World-Wide Fears, reviews some of the goings-on that occurred in
At this point, I see two problems:
- Curbing speculation is a short-term fix that doesn’t seem to be a viable fix at all.
- In the long term, it is supply that must rise if we are to see energy prices subside at all.
This brings me to my final point: why are the democrats against drilling offshore in the
One viable option may be allowing offshore drilling for natural gas and oil. Obama and Bush’s aids are right – offshore drilling will not affect energy prices in the near term, but what about 10 or 20 years from now? If we do not invest in the future of the fossil fuels supply, then we will most certainly pay through the nose in the decades to come.
Some Californians are against further offshore drilling. Have you ever been to
“It makes me nervous to think about those who are proposing to drain America’s offshore oil and gas reserves as quickly as possible in the hopes of driving down the price of gasoline,’’ said the panelist, Michael Feeney.
Sure, I don’t want to see a big oil spill off the coast of
We must bide our time and increase drilling for fossil fuels. It is a matter of survival – if supply does not keep up with demand, then a lot of people across the globe will be really cold in the middle of winter. For now, offshore drilling is a good option for setting in place new supply lines that we can draw on in 10 years or so.
At any rate, the Democrats should allow the offshore drilling simply to provide new frontier for government intervention!
I would like to hear your comments and feedback. Best, Nontruths