In 2008, Candidate Obama campaigned against Republican-era high gasoline prices. Now that pump prices are high with a presidential election looming, President Obama disclaims responsibility. “We cannot drill our way to lower gas prices,” he says.
Crude oil is a fungible commodity, the argument goes. So why should we Drill, Baby, Drill when any domestic supply we might add is a relative drop in the bucket? Nice argument, except that it could be used against having any new production. (And U.S. CO2 emissions at the margin are a drop in the bucket, right Mr. President? ) And as the economic revolution of the 1870s taught, economic value and thus prices are set at the margin.
Marginal Economics
The United States is the world’s #3 oil producer. Domestic policy decisions in the U.S. can impact the global supply/demand picture, which in reality is quite narrowly balanced.
Every barrel of domestic production clearly benefits energy security, but lately the debate has shifted to whether U.S. drilling can impact the globally set price.
But whether or not our incremental production can move the market, the U.S. is the world leader in petroleum technology. We have incubated and nurtured new and innovative drilling and production methods that are used worldwide. We are one big petroleum laboratory: new ideas often get their first test in our oil fields. Our technology advances unlock reserves worldwide.
The takeaway: Nothing is more fungible than a good idea.
What Nobama MEANS is: “My cheif fund-raiser, Zoroz, can’t make money on his overseas oil interests, if we drill for it here, in the USA.” He might also have added: “… so we’ll have to sacrifice all of our driving for fun until I’m re-elected, after which we can tighten our belts on the way to that $9.00/gal gas, and REALLY give Zoroz a “fun-time.” Great ideas DO have value, but the bureaus preventing their IMPLEMENTATION have to be “whacked, budget-wise”, so the Economy can rise up on the SEA of “Black-Gold” we have, just waiting for the Mafia-like(imo) EPA to get off of our backs and away from helping Nobama feed his Multi-billionaire-Baby, Zoroz!