Tuesday, April 10, 2012

Drill baby Drill. Simple Solutions never work!!!

Common Sense solution right???

The price of a barrel of crude is NOT the reason gasoline is so expensive. A barrel is 42gal if memory serves right. By time they cut and alter the crude you get 19gal of gas. Do the math... After the price of processing the oil (which costs more than the oil itself) the pumps can still sell it at a profit at about $4pg. $128 ÷ 19gal = $7 per gallon. The price per barrel is not why the price is so high. Even when the price per barrel goes down dramatically the price at the pump does not. The price at the pump is not dictated by a bunch of greedy Arabs huddled in a hole in the sad in the middle east but rather by a bunch of old greedy white men in a boardroom in America.

Oil is a global commodity and U.S. production has very little influence on supply. All oil drilled on Federal lands goes directly on the world market as per law. Only oil drilled on private property can be sold to whomever the owner chooses to sell to. Factors far beyond the control of any president or nation dictate the price of gas at the pump.

Statistics directly contradict Newt Gingrich's 2008 book "Drill Here, Drill Now, Pay Less". Since February 2009, U.S. oil production when seasonally adjusted has increased 15 percent. Prices in those three years went from $2.07 per gallon to $3.58. It is proof positive that drilling more does not mean lower prices and very likely will result in paying MUCH more.

There are so many outside factors that dictate to cost of oil it is mind boggling. Everything from Speculators, to the Stock Market, to inflation, to China needing more fuel because it is becoming more industrialized can spike the global cost of gas. How quickly the limited number of refineries can turn the crude into gasoline can even affect the price. Recently several refineries were intentionally shut down in order to not flood the market thereby keeping prices inflated. We could never drill our way out of this problem especially if there are companies willing to shut the spigot in order to create higher demand to fetch a higher profit. Recently there was even a glutton of oil on the market (too much oil) and prices still did not go down. So how will more U.S. drilling help?

Remember, if there is a highly complex problem and someone offers you a one line solution chances are they are selling you a pipe dream (not talking Alaskan or Canadian either LOL), especially if they are pointing fingers at guilty parties. This fact is almost always true. I don’t care if it is Tea Party, Democrat or Republican, Liberal, Libertarian or Conservative pointing the finger.  One and two sentence solutions are never the answer for problems that require a book to explain. They just make you feel good, and last I checked how good I felt didn’t change the price at the pump.


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