OBAMA ADMINISTRATION POLICIES SOUGHT TO DISCOURAGE ‘OVERPRODUCTION’ OF OIL

http://www.redstate.com/vladimir/2012/03/18/flashback-to-2009-administration-policies-sought-to-discourage-%e2%80%98overproduction%e2%80%99-of-oil/

RedState – Steve Maley – 3/18/2012

So, to recap:

Encouraging more investment (drilling) is a bad thing, because

More drilling leads to too much production (!), which is

… detrimental to the nation’s long-term energy security (!!)

Cheaper hydrocarbon fuel would work against the Administration’s goal of reducing carbon emissions.

Carbon-based fuels were destined cost more (via taxation) under a cap-and-trade system anyway.

We can raise the taxes on industry by taking away the deductions (not “credits”) which have historically, and successfully, encouraged drilling, and

Redirect that money, and then some, to our political friends who are invested in “green” technologies (read: Solyndra, Fisker, et al).

As was pointed out in my blog at the time, we have a Treasury Secretary who doesn’t know the difference between a tax deduction and a tax credit. Given his difficulties with TurboTax, perhaps this should not be surprising.

Nowadays, instead of worrying about “overproduction”, the Adminstration crows about success in the oil patch. Success that owes little to government initiatives.

In the real world, a call for higher taxes is a call for less drilling. Even discounting the impact on price, more domestic drilling would mean more American jobs. More domestic drilling also means more domestic supply, which will enhance the nation’s energy security.

READER COMMENT:  is dropping as well: two refineries in Pennsylvania, one in the Virgin Islands have closed this winter and another in Philadelphia is scheduled to close in late June. That cuts 360,000 bpd of gasoline supply to the East Coast. That will push prices up, especially if the Colonial pipeline from Houston is not able to cover a substantial part of the loss. The estimated gap at the moment is on the order of 160,000 bpd. Where will that come from? Well, if the price looks good, probably from Europe. Why are the refineries shutting down? Because the price of oil doe not improve their profit margin. It is the cost of their basic feed stock, and their profit is based on the difference between that price and the price of the various finished products produced from the crude. While the price of gasoline may be rising more or less in sync with the rise in crude prices, the prices of other products made by the refinery are not, so profit margins are squeezed. Add the cost of maintaining relatively old facilities and add the price of meeting additional EPA rules, most of which are designed to raise the price of all carbon fuels and not to protect the environment, and you have an obvious recepie for economic disaster, at least with respect to the refining business. With the loss of these three refineries on the East Coast, gas in the Washington, D.C., area could easily top $5/gallon before Labor Day. At that point, for purely political reasons, don’t be surprised if 0 opens the SPR and approves Keystone XL.

READER COMMENT:  …from fossil fuels overnight even if we wanted to. WTH do Obama and his fellow travelers expect us to do? Of all the vehicles that are on the road and in the air 99% run on petroleum products and no amount of alternatives will change the fact that these vehicles are designed for a single fuel. I can’t simply start using biofuels or anything else in my car. And as long as the fuels we use combust, they produce that boogeygas, CO2, so exactly why do they demand an end to the use of fossil fuels?

How about we demand a real long term, achievable, sustainable plan from them before allowing them to continue destroying the economy and disparaging an industry that employs over a million Americns.

The environmentalists have power way out of proportion to their numbers and it is the poor and middle classes, those the Dems claim to represent, that are most harmed by their hostile policies.

“In questions of power, let no more be heard of confidence in man, but bind him down from mischief by the chains of the Constitution.” – Thomas Jefferson

“I cannot undertake to lay my finger on that article of the Constitution which granted a right to Congress of expending, on objects of benevolence, the money of their constituents.” – James Madison

READER COMMENT:  If we look at prices across the board, there is no ‘common’ trend or equivalent rise among commodities prices…

Some things go up, some down, the trends for gold and oil (less so for oil) are both way, way out of line with the rest of the economy.

The problem with the price of oil isn’t a dollar-value issue. If it was, then you’d see equivalent-rate price-rises economy wide.

It’s a supply-shortage issue – an artificial supply-shortage created by the idiotic policies of US & European governments, beholden to the radical environmental movement.

People crowed about ‘inflation’ being to blame for the 07-08 gas spike, however the Crash of 08 proved them ALL WRONG – gas prices fell 50% in a few weeks, the price of oil went from $150/bbl to 60/bbl, but [b]there was no corresponding-percentage increase in USD value[/b].

It’s not inflation. It wasn’t last time, it isn’t this time, and it won’t be next time…

It’s an increase in consumption due to people perceiving ‘recovery’ in the industrialized world, combined with anti-oil government policies. 100% supply & demand, with a little bit of pessimism in the futures markets…

Get a pro-drilling president in, leave the monetary policy as it is (where it needs to be – eg, inflationary), and watch everything turn around, with no change in the dollar…

WHENEVER THE LEGISLATORS ENDEAVOR TO TAKE AWAY AND DESTROY THE PROPERTY OF THE PEOPLE, OR TO REDUCE THEM TO SLAVERY UNDER ARBITRARY POWER, THEY PUT THEMSELVES INTO A STATE OF WAR WITH THE PEOPLE, WHO ARE THEREUPON ABSOLVED FROM ANY FURTHER OBEDIENCE.” — JOHN LOCKE, 1690

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