Tuesday, August 5, 2008

Oil Oil Everywhere But Not a Drop to Pump

Congressman Chris Carney was called out this week over oil investments. The NRCC issued a press release that was critical of Carney for attacking the oil industry while profiting from that same industry. According to the NRCC, Carney owns between $30,000 and $100,000 in mutual funds whose top holdings are in oil companies.

The NRCC is likely driving this in conjunction with the current ruckus going on in the capital. The Democrats bailed without passing meaningful energy reform and that has the Republicans (and probably anyone still paying close to $4 a gallon) pretty mad. Refusing to leave the Capitol even after the Democrats ordered the cameras turned off and the press escorted away, the Republicans are still trying to hammer out a solution to our energy crisis.

The Republican plan includes alternate sources of energy, increased nuclear power, more domestic drilling, and authorizing that drilling now. The talking heads on both sides of the issue have been kicking this around for weeks. Those against it (mostly Democrats) say it will not have any real tangible influence on the price of oil for years to come. Those for domestic drilling (mostly Republicans) point out that when President Bush lifted the executive order banning offshore drilling, the price of oil reacted and went down. They also point out that had former President Clinton not banned drilling in ANWR, we would now be draining that oil and reaping that benefit some ten or so years later.

Another benefit, though not mentioned as often, could be on the oil futures. Those that speculate on the oil market basically drive the price of oil up by trading in oil commodities betting that they will be more expensive as time goes on. When it looks like it might be less expensive, the price per barrel retreats. If more domestic drilling were authorized, the market would react due to the increase in future supply and ultimately lower the price of oil.

The Democratic powers that be have been blocking discharge petitions to allow this type of legislation to come to a vote. Both sides of the argument should propose their own solutions, have the political courage of their convictions and allow the debate to continue and a vote to commence. A vacation should not be part of this equation. My guess is that they fear election year ads saying that they voted against drilling. Recent polls have indicated that the majority of the American people favor more drilling. It would be powerful ammunition to use against them and they know it. But, with single digit approval ratings, can it really get much worse?

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