Free Markets, Free People

Michael Bromwich

Gas price BS

In many cases, there’s not much government can do to stem the rising price of gasoline.  But there’s also pure BS afoot when it claims the following:

Michael Bromwich, the chief regulator for US offshore drilling, on Monday waded into Washington’s growing debate about high oil prices, saying his agency’s pace of reviewing oil and gas exploration plans has no relation to the rising cost of gasoline.

"Even if we permitted the hell out of everything tomorrow — every pending permit, some permits that haven’t even been filed yet — it would not have a material effect on gas prices," Bromwich said. "That’s the simple, clear reality."

Bollocks.  Anyone remember what happened when the Bush administration announced that it was opening the Outer Continental Shelf along both the east and west coast to drilling?  High oil prices immediately began to drop.  That’s because those who speculate on oil were speculating on long-term scarcity – building demand with, at best, the same amount of oil produced.  Such an announcement makes that premise questionable.

And despite claims to the contrary, it doesn’t take 10 years to bring a well in.  Depending on where it is, that can be done in a matter of months or a couple years.  So it dampened the speculation by promising increased production of oil.  Econ 101.

So Bromwich’s claims are nonsense.  Perhaps if they “permitted the hell out of everything tomorrow” it might not have as deep an impact on oil prices as the Bush declaration did, but it would certainly have a positive downward effect on oil prices.

Oh, and if governments are truly concerned about gas prices and how they can keep a little more money in your pocket, a gas tax roll back is always something they can consider:

 

GASOLINE-TAX-MAP-JANUARY-2011

 

Yeah, that’s not going to happen – so Californians, Illini, New Yorkers?  Remember that over 60 cents of the cost of a gallon of gas in your neck of the woods is taxes.  And that’s something government has full control over.

~McQ

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