So the idea of drilling for more oil was floated last week with the idea that more oil (higher supply) in the market would lower the price of oil. Now from what I remember from economics class that seems to make since. But some in Congress seem to have forgotten the laws of supply and demand. For example Sen. Patty Murray (D-Wash.) said
“I also think we need to be honest with the American people,” Durbin said. “If we made the decision today to drill offshore, it would be eight to14 years before the production and the net impact on the price of a gallon of gasoline would be negligible.”
So let me get this strait If the idea of pumping more oil is going to take on the short end eight years to take effect in the market, then why does it take less than a day to jump up the price of oil on the mention of a possible cut in production
NEW YORK (AP) — Oil futures shot above $140 Thursday after OPEC’s president said crude prices could rise well above $150 a barrel this year and Libya said it may cut oil production. The advance raised the likelihood that gasoline prices would also extend their march higher, and that prices of goods and services throughout the economy would also keep rising.
Maybe I’m an idiot (and I probably am) but why is one true and the other not. It seems simple more supply = lower prices
less supply = higher prices
But what do I know.
This is an interesting subject. At Brad’s Kiwanis meeting on Wednesday their guest speaker was someone from the oil business and this very subject was brought up. It is true that the whole process to actually get the oil up, going and distributed will take about eight years. The thing is though, just because it will take that long, does that mean we should just forget it as an option? I don’t think so. Not to mention if they would have started it 20 years ago when it was first being proposed, we wouldn’t be quite in the situation we are now.
Damn tree-huggers. (Sorry, brief moment of the crazy conservative in me)