Jul

Oil Drops as Result of Bush’s Press Conference?

Interesting theory:

In a dramatic move yesterday President Bush removed the executive-branch moratorium on offshore drilling. Today, at a news conference, Bush repeated his new position, and slammed the Democratic Congress for not removing the congressional moratorium on the Outer Continental Shelf and elsewhere. Crude-oil futures for August delivery plunged $9.26, or 6.3 percent, almost immediately as Bush was speaking, bringing the barrel price down to $136.

Now isn’t this interesting?

Democrats keep saying that it will take 10 years or longer to produce oil from the offshore areas. And they say that oil prices won’t decline for at least that long. And they, along with Obama and McCain, bash so-called oil speculators. And today we had a real-world example as to why they are wrong. All of them. Reid, Pelosi, Obama, McCain — all of them.

Traders took a look at a feisty and aggressive George Bush and started selling the market well before a single new drop of oil has been lifted. What does this tell us? Well, if Congress moves to seal the deal, oil prices will probably keep on falling. That’s the way traders work. They discount the future. Psychology and expectations can turn on a dime.

The congressional ban on offshore drilling expires September 30, so that becomes a key date. A new report from Wall Street research house Sanford C. Bernstein says that California actually could start producing new oil within one year if the moratorium were lifted. The California oil is under shallow water and already has been explored. Drilling platforms have been in place since before the moratorium. They’re talking about 10 billion barrels worth off the coast of California.

There’s also a “gang of 10” in the Senate, five Republicans and five Democrats, that is trying to work a compromise deal on lifting the moratorium. So it’s possible a lot of action on this front could occur much sooner than people seem to think.

So I repeat: Drill, drill, drill. Deregulate, decontrol, and unleash the American energy industry. Those hated traders will then keep selling oil as the laws of supply and demand and free markets keep working.

Bravo for Bush. Bravo for the traders. Read more….

Economically speaking, this makes sense, but it escapes the Speaker of the House completely as she still thinks 5 weeks worth of oil from the SPR will solve EVERYTHING!

“The President said today that he would not support the release of the oil from the SPR because it’s there for other reasons. Well, we are having a crisis in our country, an emergency. Whether the President knows it or not, there is an emergency in our country. He resisted withholding oil from going into the SPR. A couple of months ago, we passed the bill unanimously in both Houses, veto-proof.

“The President said another thing this morning. He said that by drilling offshore, it would not have an impact on the price at the pump; I’m glad that he’s finally admitted that to the American people. Our message back to the President is, ‘It’s the economy, Mr. President.’

“It’s about jobs and people not having them, and it’s about their standard of living and purchasing power of their income going down because of the increase in the price of gasoline and groceries and health care and education, as others have mentioned. It’s about the fragility of our financial institutions, the downturn in our capital equity market, the downturn in the cost of the value of people’s main equity investments, their homes.

“This economy needs the President’s attention and he doesn’t need to have any diversionary tactics. It’s about drilling offshore, but drilling isn’t, by his own admission, going to have any effect for many years to come. What did he say the other day? ‘If we could only drill offshore, the economy would be better.’ That is a poor excuse from the President of the United States.” Link