I hope oil hits $400 per barrel. I say that without a drop of sarcasm. The only thing that can burrow through the myriad of government-erected barriers to high supply and low prices is the market.
Even now, the prices prove the efficacy of the invisible hand: Bush has okayed offshore drilling, McCain is showing signs of a flip-flop on the Arctic National Wildlife Refuge (ANWR) and Al Gore’s pack of rabid environmentalists are crawling back to bedlam where they should be shut away – perhaps waterboarded – for eternity.
There are several facts to consider about current prices. First, the future market is often blamed for high prices, and Barack “The Messiah” Obama wants to stick his clumsy hands into that sector via every liberal’s favorite surrogate—the government. This is wrong, of course.
The reason that future traders are betting prices will go crazy is because of external factors: Mahmoud Ahmadinejad’s lucid diplomacy with Israel, the Saudi oil cartel’s refusal to increase production without a tidal wave of diplomatic pressure (they even lowered production four years ago!) and the environmentalist cockroaches’ stubborn refusal to scatter so that we can pillage the earth of its ancient fruit, which all tend to sway the speculators. If I were throwing money around in that market, I would bet that oil supplies are only going to dwindle.
True, speculators profit from higher prices, but the short-sellers do too—these two factions regulate one another.
Secondly, oil companies set the prices based on expected outcomes. To do good business, the company has to assess all possible impacts on production, such as Ahmadinejad, Al Gore, Obama and terrorists. This affects oil drilling and price; first, drilling in shale—which is a fine-grained rock found on land—is more costly than lifting it from sea floors. Secondly, the future market predicts impending global crises, which raises the price in anticipation of reduced supply and higher demand.
There is certainly something broken in the business relationship between market traders, Organization of the Petroleum Exporting Countries and U.S. oil. It is, however, irreparable. No magnanimity or government initiative from Mr. Messiah, Mr. Maverick or even Mr. Cardigan Sweater will ever fix it.
Thirdly, there are domestic options. President Bush is already on the offshore drilling and it’s about time. However, it is costly. Still, at these prices, it is ultimately profitable.
Of course, ANWR is another option. Despite all the calls about how pristine the area is, all drilling would occur on a dark stretch of 2,000 acres, comparable in size to a newspaper on a tennis court that is principally populated by hordes of mosquitoes.
Nuclear power is an easy way—or at least the easiest way—to gain energy independence. Alas, it has been a point of contention for decades. Our glowing Hollywood stars and starlets throw their millions at George Soros to obstruct progress. Meanwhile, McCain and Russ Feingold pass campaign finance “reform” to facilitate this insanity. Considering nuclear energy is virtually infinite once harnessed, it seems inane to continue depending on the Saudis. Our refusal to tell the environmentalists off is our Achilles’ heel. If France and Sweden, of all places, can do it, we should be able to as well.
There’s certainly nothing black and white about this issue when our markets walk hand-in-hand with the Saudi’s filthy oil business. The solution is to get Gore out of the way (a task that grows more difficult by the pound) and get the stuff out of our own soil, as well as expand into nuclear and flex fuel. People deserve to feel the hurt for letting Gore’s sycophants run around and obstruct production. That’s all of you. Look in the mirror for once. You let this happen by even giving him (and them) a forum instead of laughing them off the stage. As the price rises, you will feel it even more, and as we’ve already seen just in the last two weeks, the market is responding. Don’t blame me and my ilk. We’ve always been on your side while we wailed into the ANWR tundra for the oil we knew we needed. It’s about time you listened.
Let’s do everyone a favor and keep the Carter administration a decades-bygone specter: Drill, drill, drill.
Patrick Ross is a fifth-year English major. He can be reached at pross@uci.edu.
