If we succumb to the political pandering and drill our way to China, don’t be surprised if the price of gasoline increases and the oil companies get richer at our expense.
So you missed Woodstock in 1969?
Well, here’s your chance to pack that pipe with another sweet dream — cheap and plentiful oil.
Just love it when I hear that old political mantra — “Drill, Baby, Drill!” — from the Paris Hilton of politics, sister Sara Palin.
Let’s take a quick look at the list of countries with proven oil reserves.
In the top four, we find Venezuela, Saudi Arabia, Canada, and Iran. Somewhere down the list (about 15th) you will find the United States. With just a quick calculation on my iPhone, it looks as if the U.S. has around 2% of the proven oil reserves of the top four countries combined. Yeah, you heard correctly, about 2%.
Now, you don’t have to be a Rhodes Scholar with an advanced degree in economics to understand that if you only have about 2% of the proven oil reserves in the world, your chances of successfully controlling the world market price of oil are not that great. If you truly believe that the U.S. can significantly control the price of oil by drilling, it is time for you to sit back, light up your pipe, join the Tea Party, and vote for Newt Gingrich. Sweet dreams my friend, you’re not living in a bubble, you’re living in an alternate universe. Is the Twilight Zone still on t.v.?
Even, if the United States were capable of doubling it’s production of crude oil (which is not practical, never mind possible), all it would take to neutralize that gain, is for just one of the top four countries to cut back production by 10%. The result would again be higher prices and shortages. Should that occur, we would begin consuming our oil reserves at a greater rate than ever before, while the top four oil producers would end up conserving their reserves for future price manipulation. Does that really sound like a winning strategy?
We also have a group of Presidential candidates running around believing they are gasoline fairies, claiming they can give us $2.50-a-gallon gasoline. Unfortunately, we consume about 20% of the world’s oil production, while only possessing about 2% of the proven world reserves. C’mon, do the math and tell me how Mitt Romney, Newt Gingrich, or Barack Obama for that matter, are going to solve the problem by drilling. Every once in a while, one of the babbling bobble-heads on t.v. does get it right. As Bill O’Reilly said in 2008, “So the next time you hear a politician say he or she will bring down oil prices, understand its complete BS. Americans want lower gas prices? Then cut back.” Of course that statement was made back when George W. Bush was president. How times have changed.
The drilling myth is running on empty. In reality, we are drilling more than we did under the last administration. Drilling production in 2011 was at its highest peak since 2003. Now get this — just venture a guess as to what the number one foreign export of the U.S. was in 2011. According to the Wall Street Journal, for the first time in 20 years, the U.S. will export more gasoline, diesel, and jet fuel than any other single export. You heard correctly: oil products have become our number one foreign export, which reduces the supply here in the US, causing the price we pay at the pump to rise.
Is it just possible that the real reason for the upswing in gas prices is due to global demand, unrest in the Middle East, Wall Street speculation, and worldwide monetary problems?
But wait; lets get to the overriding economic factor: oil profits soar when the price rises. The top five oil companies made record profits in 2011. ‘Big Oil’ made a record $137 billion in profits, a 75% increase from the year before. Did your net income increase 75% over the last year?
So, if we succumb to the political pandering and drill our way to China, don’t be surprised if the price of gasoline increases and the oil companies get richer at our expense.