Wednesday, July 16, 2008

Alternative energy research offers immediate gasoline price relief that drilling potential does not?

A few days ago in Jacksonville, Obama responded to McCain's lauding of the lifted executive order on offshore drilling:

It would have long-term consequences for our coastlines, but no short-term benefits, since it would take at least 10 years to get any oil," he said.

And that's not soon enough, he added: "Offshore drilling would not lower gas prices today."

How about turning that around by saying it would have a long-term benefit in increasing oil production levels but no short-term cost, since it would take 10 years to get any oil?

Opposition to increasing the federal government's ability to 'lease' ocean beds to energy companies by harping on how it wouldn't bring immediate relief sounds silly if this is the offered alternative:
The Illinois Democrat said he would put a higher tax on companies that pollute and use the money to invest in wind, solar, geothermal and other alternatives to oil. He said he wouldn't rule out nuclear energy as a future source of power, if problems of waste storage and safety can be resolved.
And that will offer immediate price relief how? Reducing the federal rate of $.184 a gallon (or reducing the varying amounts of state takes) or removing the tariff on foreign (Brazilian) ethanol are among the few ways to put immediate downward pressure on prices. Everything else has a longer-term orientation.

I'd much rather Obama honestly assert that petroleum energy sources are not clean enough or renewable enough, and anything that will work to lower their prices (or the growth rate of their prices) will make it more difficult for other alternative sources to become economically viable.


John S. Bolton said...

Unless, that is,prices are up on a specualtive interest which would be disgorged, if a shift towards greater production seemed to be getting underway. If political advantage is wanted, why wouldn't they release or sell futures from the strategic reserve? Pushing prices down would also capture the current high price for the government, later to be replaced with lower cost supplies, or the futures just allowed to expire. that they don't do this, is another indication that the chances of war with Iran are thought to be high and imminent. if they know that war is not coming, the popularity and profit would be hard to pass up.

Fat Knowledge said...

I'm with you on this one AE.

I can't see alternative forms of clean energy being competitive with fossil fuels for at least 10 years. If we want energy independence and clean energy we are going to have to pay for it.

Trying to be simultaneously for lower energy prices and cleaner energy just isn't going to work. It might get Obama elected, but he will have to choose once in office. My guess is that he will want to go with more clean and higher prices, although higher energy prices is not a good way to win reelection.

And put me in the minority of environmentalists who think we should be drilling. I would rather have the US do the drilling with strict environmental standards rather than have it go to some 3rd world country with who knows what regulations.

Audacious Epigone said...


Interesting take on much higher prices seen on the horizon b/c of war with Iran.

I'd removed a couple sentences about the energy derviatives market on futures and swaps so as not to sound condescending, and because I'm not confident an immediate downward pressure would result. But it might.


Good point. Nationalized energy industries in places like Venezuela tend to have poor records of maintenance and little environmentally-conscious oversight.

al fin said...

Good points. Large scale renewables are at least a decade away (and I'm a big promoter of bioenergy). We need oil, coal, gas, nuclear now.

Obama, Boxer, Pelosi are all thoroughly immersed in the carbon hysteria. Although evidence is piling up that the CO2 climate hypothesis is badly flawed, academics, the media and politicians (and trial lawyers) are usually the last ones to submit to real world evidence.

Audacious Epigone said...


You're the one who helps keep me up to speed. Thanks.