What do you think of John McCain’s proposal to lift the American moratorium on offshore drilling? You might suppose that it’s a practical trade-off, sacrificing some of our wildlife, natural beauty and tourism revenue to the pressing need for more oil. I mean, what kind of tree-hugging liberal would stubbornly protect the sea and its creatures if it means paying more than $4 a gallon for gas?
That’s probably what McCain and his “economic brain,” Phil Gramm, want you to think. They would hate it if you dug a little deeper and came up with the real reason for high oil prices, because if you did you would find their fingerprints all over it.
It’s a long story and you can find exhaustive explanations on the Internet if you Google the topic, as I did. It’s also a complicated story, so bear with me while I do my best to sort out what I found.
First, I found there’s no shortage of available U.S. oil fields. The oil companies have leases on millions of acres in and around America that have yet to be explored. On the federally managed Outer Continental Shelf, 44 million acres of coastal waters have been leased for oil and gas production, and only 10.5 million acres are in production. On public lands, mostly in the West, 47.5 million acres have been leased, and only 13 million acres are in production.
And, just in case those areas aren’t vast enough, here’s an announcement (released today) that you might find reassuring.
“The U.S. Geological Survey just published its official results of a groundbreaking study. Its report confirmed a massive oil reserve in an area the locals have nicknamed the ‘Bakken,’ which stretches across North Dakota, Montana and southeastern Saskatchewan. The new USGS study estimates a whopping 3.65 billion barrels of oil in the Bakken… but here’s what they didn’t mention: The reported (estimate of) 3.65 billion barrels …. is for ‘undiscovered’ oil only, and doesn’t include known oil, such as reserves. In fact, the study reports a 25-fold increase in the amount of oil that can be recovered… compared to the agency’s estimate back in 1995.”
Second, the reason oil prices have skyrocketed has more to do with crooked speculators than with supply and demand. Michael Greenberger, who used to run the Trading division of the Commodity Futures Trading Commission, said in a recent radio interview that “about 30 percent of our crude oil energy futures are traded in what is called a dark market – that is a market that was deregulated in December of 2000 at the behest of Enron.”
He noted that “prior to that legislation being passed, all energy futures traded in the United States or affecting the United States in a significant fashion were regulated by United States regulators under a very careful regime that had been perfected over about 78 years, and many observers believe that because those markets are not being policed, malpractices are being committed and traders are able to boost the price virtually at their will.”
That’s a bureaucratic way of saying speculators are making billions by manipulating the oil futures market.
“Futures markets” let traders buy or sell contracts (for such commodities as corn, soybeans, pork bellies, and – yes – oil) at a price to be paid on a future date. Without regulation, unscrupulous traders can manipulate the market and make money. That’s what Enron did in California, causing artificial energy shortages and bilking consumers out of an estimated $45 billion.
Guess who got the “Enron loophole” passed. It was then-Senator Phil Gramm (R., Texas)
And guess who was chairing the CFTC at the time: Gramm’s wife, Wendy, who later joined the Enron board of directors and collected a nice, fat paycheck. Now, guess who has become McCain’s chief economic adviser? Why, it’s good ol’ Phil.
So it comes as no surprise that McCain opposed this year’s $307 billion farm bill, which included a provision to regulate energy futures trading. Of course, McCain claimed that’s not why he voted against the bill. He said it would dole out wasteful subsidies to farmers. I guess he thinks the people who produce our food are just living the high life and hardly doing any work. I’d like to see him plow a field or milk a cow.
Third, offshore drilling, even if it started this afternoon, would be unlikely to produce gas at the pump for at least a decade. How’s that for a “short-term solution” to the energy crisis?
Fourth, without a doubt, there would be oil spills off the coasts of Florida and California (susceptible as they are to events like hurricanes), fouling beaches, killing wildlife, and harming tourism. And those oil spills would be disastrous. The U.S. Coast Guard estimates that between 6 million and 7 million gallons of oil were spilled by Katrina. That’s about two-thirds of the amount spilled by the Exxon Valdez in Alaska’s Prince William Sound in 1989, and I’m sure you remember the havoc that caused.
Finally, if these new oil fields somehow succeeded in reducing the price of gas significantly, the increased burning of fossil fuels would raise global temperatures and contribute to rising sea levels and devastating weather. Besides, it would reverse economic incentives to improve energy efficiency and develop alternative energy technologies. When the new oil fields were exhausted, the cycle of rising prices would begin all over again.
But why would John McCain or Phil Gramm give a damn? By the time that happened, both of these greedy old men would have gone to their reward. But how will they explain to a Higher Authority why they resorted to such skulduggery during their brief time on His planet?