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A point to remember
Posted by: McQ on Wednesday, July 09, 2008

Michael Gerson, in an article about why we should never expect to see cheap oil prices again, makes a point that is often overlooked in an orgy of gloom and doom:
Rising energy prices are mainly the result of unprecedented global prosperity — a rising billion in China and India determined to own automobiles and air conditioners. This increased demand for oil, natural gas and coal has almost nothing to do with the policies of America or the designs of OPEC.
While we have to work out the details on how this is going to effect everyone and probably make some adjustments to our lifestyles, in the long run unprecedented global prosperity is a good thing. Prosperous countries are usually able to take care of their own. Prosperous countries are less likely to go to war. Prosperous countries are more likely to be free(er) than unprosperous countries.

The down-side is they also demand more of scarce commodities thereby driving the prices of those commodities up to stay (or at least until there's a surge in supply - if possible - to finally meet the demand).

China, India, and to a lesser extent, other countries, are now demanding to live the way we've lived for years. They want cars, more meat, electronic conveniences and access to a more comfortable way of life. If we were talking about a country such as Turkey, we'd absorb this increase in demand with a very slight increase in prices. However, we're talking about the two most populous nations on earth. Supply, on many commodities, isn't going to satisfy demand for quite a long time.

So, while these prices are putting a strain on us and we're unlikely to see them come down anytime soon, the bottom line is they're a result of increasing prosperity and that, frankly, is good.
 
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Senator Harry Reid of Nevada, the majority leader, has made a refrain in recent weeks of saying, “We cannot drill our way out of this problem.” But he opened his news conference on Tuesday with a different approach: “Let’s begin the discussion here by saying, Democrats support domestic production.”
He probably mumbled under his breath .. "at current levels."

So far using the "Three days of the Condor" yardstick, we’re up to...
Higgins: It’s simple economics. Today it’s oil, right? In ten or fifteen years, food. Plutonium. Maybe even sooner. Now, what do you think the people are gonna want us to do then?
Joe Turner: Ask them?
... you can wait till it gets cold in the fall and they have to fill the oil tanks and turn on their natural gas heat, just before the November elections, but with that 9 percent approval rating, I’d suggest "any and all means" short of war, because from here it only gets worse Gentlemen.

Next stop War for Oil ...
Higgins: Not now - then! Ask ’em when they’re running out. Ask ’em when there’s no heat in their homes and they’re cold. Ask ’em when their engines stop. Ask ’em when people who have never known hunger start going hungry. You wanna know something? They won’t want us to ask ’em. They’ll just want us to get it for ’em!
 
Written By: Neo
URL: http://
I’ll make Julian Simon’s bet again, McQ...let’s name a bundle of commodities and check their inflation-adjusted prices in 20 years..."never see cheap oil again."-Right, you’re old enough to know better, you went thru this once before, as did I...break out some old Time or NYT articles from 1979...get back to me.
 
Written By: Joe
URL: http://
I don’t expect crude oil or gasoline prices to drop, either. Well, at least not significantly.

However, if we allow the genius of ordinary Americans to blossom, and we curb government’s tendency to regulate markets, American productivity and American incomes will rise faster than the price of gasoline, thus producing an "effective" reduction in gasoline’s cost.

Despite this effective reduction in gasoline’s cost relative to other goods, I won’t predict that Americans will stop complaining. In fact, I think it’s more likely that the effective reduction in the cost of gasoline will go unreported, and the oil industry will remain a villain in the eyes of the political class.

—-John Johnson

 
Written By: John Johnson
URL: http://
So, we have Pelosi calling on Bush to drain the SPR to get prices under control. She sent the letter yesterday.

And yes, this is tied to the topic. Think about the weight involved with that statement of Pelosi’s.... she’s saying increasing supply even by the relativly small amount in the SPR.. (And in truth, she’s calling for only a fraction of that to be released)... will bring pump prices down in dramatic fashion. Wasn’t it just last week I was told here that such a small increase in supply wouldn’t save anyone any appriciable amount at the pump? Funny, how this works.

So, on it’s face, first of all, Gerson’s wrong; Prices can be affected, and dropped.

But secondly, why wouldn’t Pelosi be calling for us to increase domestic drilling, which by definition will bring even more supply online, and lower prices even further, while not affecting the Emergency reserve they thought of such import when gas prices spiked in response to Clinton’s veto of ANWR?



 
Written By: Bithead
URL: http://bitsblog.florack.us
why wouldn’t Pelosi be calling for us to increase domestic drilling, which by definition will bring even more supply online, and lower prices even further
Because it won’t come on line for 10 years. So there’s no point in even trying. Pelosi and acolytes want an immediate fix or nothing.
 
Written By: CR
URL: http://
Well, here’s one; we have oil rigs in the gulf now, still crippled following Katrina, which are still offline because of a long and complex permit process, overseen by (you guessed it) congress. We could have these back up and running in weeks... days in some cases, were this roadblock removed. Congress won’t do it. And just as a reminder...who runs Congress again?

 
Written By: Bithead
URL: http://bitsblog.florack.us
we have oil rigs in the gulf now, still crippled following Katrina, which are still offline because of a long and complex permit process, overseen by (you guessed it) congress. We could have these back up and running in weeks... days in some cases
Okay, I hereby modify my assertion to "Pelosi and acolytes an immediate fix that fulfills all our energy needs in one go. No long-lead-time, piecemeal, partial approaches accepted; only silver bullets." There, I think that just about covers it.
 
Written By: CR
URL: http://
Pelosi and acolytes want an immediate fix or nothing.
No, they only want a short-term fix that they can take credit for, because that keeps them in power.
 
Written By: Keith_Indy
URL: http://asecondhandconjecture.com
well, look, I’ve been sayingf ro years, now, that an actual solution to a problem is the worst thing that could possibly happen to Democrats, when it’s far more profitable in terms of their political power, to demagogue the issue, often for deacdes.


 
Written By: Bithead
URL: http://bitsblog.florack.us
Because it won’t come on line for 10 years. So there’s no point in even trying. Pelosi and acolytes want an immediate fix or nothing
So by that logic....why bother trying to do anything about climate change now?
 
Written By: shark
URL: http://
Exactly the excuse Clinton used for his ANWR veto, as I recall it.
 
Written By: Bithead
URL: http://bitsblog.florack.us
Its important to keep in mind that as China and India get prosperous it will benefit all of mankind. Think about how many more cancer researchers will be working. Think about how many more cool products will be invented. Its going to be an exciting world.
 
Written By: Harun
URL: http://
Heh, as a short term Gloom and Doomer, I say yes, this is a result of unprecedented global prosperity.

I also think the "energy crisis" will be solved a la Julian Simon, but I don’t think we will see cheap oil. In fact, energy will become a more and more scarce resource for quite a while, and it will restrict growth. Prosperity however will still go marching on over time despite that. Energy isn’t the only factor in prosperity, and we’ll find more and more ways to increase our standard of living in ways that are less energy intensive.
 
Written By: Lance
URL: http://riskandreturn.net

 
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