That Free Market Thingy is a Son of a Gun
May 20th, 2008 at 07:51am Mark Noonan
This will be surprising to liberals:
The US is starting to break its “addiction” to foreign oil as high prices, more efficient cars, and the use of ethanol significantly cut the share of its oil imports for the first time since 1977.
The country’s foreign oil dependency is expected to fall from 60 per cent to 50 per cent in 2015, before rising again slightly to 54 per cent in 2030, according to the head of the Department of Energy’s statistical arm…
…The US decline in foreign oil dependency is already becoming more visible, with imports making up 57.9 per cent in the first three months of this year, down from 58.2 last year.
Guy Caruso, head of the US Energy Information Administration, said that that trend was set to continue as people adjusted to high oil prices and the impact of the Energy Independence and Security Act, which became law in December 2007, was felt.
“The 1970s is the last time we saw any significant decline in net import dependency in the US. It shows that markets do work, policy changes do work, technology does work,” Mr Caruso said.
And if prices do remain as high as they are, I expect our imports will fall even further and even faster - as I try to explain to our liberal friends who insist that bad news is always and without exception completely bad, there is frequently an upside to things, if you keep a positive attitude. I’ve been advocating for a crash program to get us away from oil, and it looks as though greedy (and rather stupid) speculators are giving a massive - even if unintended - boost to my desire.
At any rate, the market works - as prices rise, alternatives will be developed and current supplies more efficiently used. It should always be kept in mind that petroleum, itself, was developed in a response to the last crisis in oil supplies…namely, whale oil…the world started to run out, and so alternatives were developed. Now, we’re just going to do it again - government can help smooth things out, if properly done, but to try and decree an end to oil would be counter-productive. Just wait for it, and it will happen - if prices remain high. If they come down, then there’ll be a pause…until the next time they rise.
Entry Filed under: Economy
12 Comments Add your own
1. Cavalor Epthith, Esquire, D.S.V.J. | May 20th, 2008 at 9:41 am
“While there will always be those who profit in any commodity trading if there is little fundamental demand for the commodity in real currency then the speculation cannot drive the trade.”–Carlton Pryor.
What you failed to inform your readers of is this most important nugget and the actual cause of light sweet crude’s rise through 110 and 120 dollars per barrel to a point now where it trades at 3 dollars a gallon+ on the NYMEX. Unrefined crude at 3 dollars a gallon! “On Monday, oil prices hovered near record highs as China’s energy needs outweighed the reduced US demand, and Saudi Arabia output increases failed to ease supply concerns.”
The very next line that follows your quoted portion of the Financial Times article by Carola Hoyos reads thus: “This new trend is likely to have domestic and international policy implications, making it harder to prove the case for drilling in Alaska’s Arctic National Wildlife Refuge and to reverse the ambitious biofuels production targets regardless of their impact on global food prices.”
2. OhioOrrin | May 20th, 2008 at 10:01 am
we’re witness 2 the start of a significant societal improvement away from the automobile.
and a corresponding shift away from those things dependent on the personal auto such as: the suburbs, strip malls, & vacation destinations.
our national security, the environment, & our urban infrastructure, neighborhoods, & schools will all benefit.
sell ur suburban mcmansion & gas guzzler vehicles quickly when the market improves or risk equity loss due 2 a shrinking buyers pool.
3. Justin | May 20th, 2008 at 11:08 am
I still remember when you told people to sell oil when it was approaching $70 a barrel due to tankers building up along the coast. We were going to have an oil glut you said. That was on blogsforbush of course.
Just this past winter you said the same thing after oil topped $100.
Both posts referred to America’s consumption.
I still say that you should stick with what you know, politics, and not try to predict the commodities market.
4. middlefinger | May 20th, 2008 at 11:15 am
As I was reading your post, I started gushing.
A tear rolled from my eye as I sang out:
“The sun’ll come out
Tomorrow
Bet your bottom dollar
That tomorrow
There’ll be sun!
Just thinkin’ about
Tomorrow
Clears away the cobwebs,
And the sorrow
‘Til there’s none!
When I’m stuck a day
That’s gray,
And lonely,
I just stick out my chin
And Grin,
And Say,
Oh
The sun’ll come out
Tomorrow”
Get a grip Noonan.
5. Just Another Taxpayer | May 20th, 2008 at 1:44 pm
Oil is at $129 a barrel with no shortage of or shrunken inventories. That tricky son of a gun was as hard for that oilman Bush to anticipate, as was the WMD’s that we’re in North Korea but strangely absent from Iraq. Kim must’ve wanted those nukes pretty bad to starve 2 million of his countrymen to death in order to commit the resources necessary to develop his weapons.
T. Boone Pickens, a loyal Bush advocate, who still has some standing challenge to John Kerry arising out of the Swifboat debate, says oil will go to $150.
That free market sure is a tricky son of a gun.
Enjoy the ride!!
6. FmrMarine | May 20th, 2008 at 5:38 pm
JAT:
>>>>Oil is at $129 a barrel with no shortage of or shrunken inventories. That tricky son of a gun was as hard for that oilman Bush to anticipate,<<<
First a second grader understands oil is a commodity and traded on the open market….prices are NOT set by the President.
Second it is the RAT controlled CONGRESS that is blocking anwar drilling, gulf and offshore drilling.
They are blocking construction of refineries, and nuclear power.
Except you are a lib dumbed down democRAT and have BDS!
7. Just Another Taxpayer | May 20th, 2008 at 6:43 pm
FmrMarine
If your response is any example of your ability to listen you must have found it difficult to follow orders seeing as you have trouble with English. I didn’t say Bush CAUSED!!! oil prices to skyrocket. I’m saying he failed to anticipate it, and make preperations. Just as he failed in Iraq, where he feels he can’t request a single drop of oil in exchange for the sacrifices we have born, and North Korea where all he can do is negotiate with a dictator who brought 2 million people to starvation so he could keep his nuke program going.
Refinery capacity is running at about 86% right now. Inventories are near normal. We are, however, locked in a bidding war with Asia over the same oil, and they can afford to pay what we can’t, because they make more effecient use of it than we do.
In addition, our prime rate is 2%, and Europes is at 4%. Our money is becoming increasingly worthless relative to the commodities we need to keep the Bushs consumer paradise going.
Oil co’s, like the foreign countries we get our oil from, are out to make money from the commodity, not to keep the price where you find it accpetable. We could drill anywhere you wanted to, and the producers, whoever they were, would charge whatever the market would bear. If that leaves America out of the competition to obtain petroleum, that’s not the producers problem. It’s yours.
T Boone pickens says so. And he is, as I said, a Bush loyalist from the Swiftboat debate.
You can talk about nukes till your blue in the face, but the market for Uranium operates the same way as the market for petroleum. We don’t have much of a domestic supply, and, again, Asia and Europe are willing to pay more than we can afford. Then there’s the problem of what to do with the waste, another area where the scientists disagree.
I am not a lib. I am a fiscal conservative. I am a conservative. You are a social conservative, a socialist, and like your secular counterparts, you do not know how to restrain spending. And now, for your sin of arrogance, the market has turned against you.
It will continue to turn against all liberals till they accept the realities of the market, and act to diversify our energy sources so that the price of energy may be brought down. Neither nukes nor petroleum can, by themselves, in the absence of any competition in the market have their prices significantly reduced.
I repeat, FmrMarine, Bush caused none of this. But his failure to anticipate it once again leaves the country bereft of leadership when it needed most.
Don’t worry, though, whatever history does with Bush, the oil industry I’m sure will take as good care of him as he has taken of oil.
Doesn’t that make you feel good.
Have a nice day!
8. phnx | May 20th, 2008 at 11:13 pm
“This new trend is likely to have domestic and international policy implications, making it harder to prove the case for drilling in Alaska’s Arctic National Wildlife Refuge and to reverse the ambitious biofuels production targets regardless of their impact on global food prices.”
Cavalor quotes Carola Hoyos, the Chief Enegry Correspondent of the Financial Times, an obvious ‘expert’ whose pronouncements must be regarded as truth. Ms. Hoyos, is a journalist, with no formal training in ecomonmics or the petroleum industry. Prior to her present asignment she was the Financial Times correspondent to the UN.
You also fail to mention that Ms. Hoyos marvels at the resliance and strength of the US economy in the face of 9/11 and the rise in oil pricess.
Hhe is not without some insight. In another piece she wrote in February of this year, she rightly attributes the rise in oil prices to market instability. Instability in Venezuela, Nigeria, and the middle east, as well as declining output from the Russia, are all driving speculation and resulting in increased oil prices.
The long term solution for the US is energy self sufficiency, which include the exploitation of ALL of our resources, nuclear, wind, solar, coal and also including oil off shore and the Alaskan wilderness.
9. Just Another Taxpayer | May 21st, 2008 at 10:46 am
Phnx,
Thanks for agreeing with me, and parting ways with the socialist social conservatives who see all mankind as obligated to pay for the errors of the Bush elite, as the secular socialists want us to pay for the errors of the poor.
Have a nice day.
10. Ed | July 9th, 2008 at 4:22 pm
“At any rate, the market works - as prices rise, alternatives will be developed and current supplies more efficiently used.”
Quite a Polyanna-ish statement indeed. This is making the problem worse when people assume that “they” will “come up with something” so we don’t have to worry about it, go back to sleep. What are the “alternatives”? The only ones that have any chance at being a viable replacement for motor fuels are ethanol made from woodchips, switchgrass or something else inedible… and vegetable oil or “biodiesel” as some call it. Getting the infrastructure in place for either of them will take many years. This is a process that should have been started immediately as soon as it was realized that U.S. oil production had peaked (in 1970) and would never reach 1970 levels of production again. After a couple years for it to be understood that yes it had in fact peaked in ‘70 we should have been beginning the transition. Now it is far too late to make it relatively painless and every month we wait to begin to transition to something else is making the problem worse.
There is no quick fix though. If the federal government tomorrow mandated that crude oil is being phased out this year and (borrowed more billions from China to) provide huge grants for entrepreneurs to start building ethanol distilleries there would still be an enormous amount of economic pain because we have waited for so long. One thing is clear though: the world has reached the end of the era of cheap, easily-recoverable crude oil. Everything from here on out is going to cost more and more to extract for smaller and smaller amounts and in more and more inaccessable areas. Like ultra-deepwater Gulf of Mexico where they have to go through a mile of water and several miles of seabed to get to the oil.
And if anyone says “but we have enough oil here in the U.S. to be energy independent if the tree-hugging Dems would just let us drill more” then they can take a long walk off a short pier. The U.S. is not going to drill its way to energy independence, not even close. Get used to paying more than $4 a gallon for gas. Gas isn’t going to get any cheaper, ever. Look on the bright side: A few years from now people will be saying “Remember when gas was as CHEAP as ONLY $4 a gallon?”
11. Ed | July 9th, 2008 at 4:34 pm
P.S.– If anyone wants intelligent, HONEST discussion about the oil situation and how bad it really is then go to The Oil Drum http://www.theoildrum.com/
If you however DON’T want the truth and want to continue fantasizing about pie-in-the-sky “ideas” like “drilling and more drilling” and the oil shale barbecue then don’t go there because it will disabuse you of your fantasies. The people there know what they’re talking about and they don’t pull any punches. But if you want to actually learn something about the reasons why the oil situation is the way it is then that’s the place to go.
12. Ricorun | July 9th, 2008 at 5:08 pm
I agree Ed. The Oil Drum http://www.theoildrum.com/ is an excellent resource. If you can only visit one site, yet want to know about energy issues (particularly oil), in depth and from as many sides as possible, The Oil Drum is a great resource. I know of none better. The posts are thoughtful, and the commenters challenge everything. I’ve learned a lot from that site. It’s not for the squeamish, tho — it does require you to think… hard. So plan on putting an extra log on your intellectual fire.
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