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Drill Baby Drill, or $2.50 a gallon gas
Mar. 22nd, 2012 10:16 amSo, various political types of the conservative / Republican persuasion are running around saying that if we just drill enough domestic oil, we can have $2.50 / gallon gasoline. Various libertarians, including The Usual Suspects, are in full ditto-head mode.
Not so fast, alligator-breath. First, US oil production has been falling since 1984, AKA, 'Reagan's second term'. It just recently trended up, a trend that started in 2009, AKA, 'Obama's first term.' Since Reagan and the Bushes weren't exactly anti-oil, and there were a number of Republican congresses in that period, anybody not wearing a dunce cap has to conclude that US production is being driven by factors other than politics.
One would be correct. In the Dakotas, the oil they are drilling is coming from the Bakken formation, which was discovered in 1951. When it was discovered, the technology to get the oil out didn't exist. Now, that technology (fracking) does exist, but it's not cheap. So, with rising oil prices, drilling the Bakken makes sense.
But why are oil prices rising if supply is increasing? Well, as this fellow points out, oil demand is increasing faster than supply. The money quote: "From 2005 through 2010, the growth in demand from China and India was double the demand lost in the U.S., and 1.14 times the combined demand loss of the U.S. and Europe."
We are in no danger of running out of oil, and crude oil may, in the short term, fall below $100 / barrel. But we've already run out of cheap oil.
Not so fast, alligator-breath. First, US oil production has been falling since 1984, AKA, 'Reagan's second term'. It just recently trended up, a trend that started in 2009, AKA, 'Obama's first term.' Since Reagan and the Bushes weren't exactly anti-oil, and there were a number of Republican congresses in that period, anybody not wearing a dunce cap has to conclude that US production is being driven by factors other than politics.
One would be correct. In the Dakotas, the oil they are drilling is coming from the Bakken formation, which was discovered in 1951. When it was discovered, the technology to get the oil out didn't exist. Now, that technology (fracking) does exist, but it's not cheap. So, with rising oil prices, drilling the Bakken makes sense.
But why are oil prices rising if supply is increasing? Well, as this fellow points out, oil demand is increasing faster than supply. The money quote: "From 2005 through 2010, the growth in demand from China and India was double the demand lost in the U.S., and 1.14 times the combined demand loss of the U.S. and Europe."
We are in no danger of running out of oil, and crude oil may, in the short term, fall below $100 / barrel. But we've already run out of cheap oil.
