Posted on 08/25/2008 6:11:15 PM PDT by Kaslin
One of the most contentious issues of late has been the question of whether increased drilling for oil would reduce the price of oil today.Certainly increased drilling will not bring an immediate increase in the supply of oil. But many people, even so-called experts, believe that the effect on the pump price would not be felt until the oil is actually at the pump, possibly years later.
In fact, the price will fall well before the first hole is drilled. Even the possibility of increased drilling will bring down the price of oil. It already has.
Almost everyone knows that supply and demand determine price in a market. But that knowledge seldom goes beyond understanding how supply and demand themselves are determined.
The belief that the current quantities demanded and supplied are the sole determinants of price misses an important point. Both current and expected future demand and supply interact to determine the quantity demanded and supplied in the current marketplace.
That is true because oil, and indeed almost everything else, is storable.
When a quantity is storable, the amount a producer will supply and a consumer will demand is not independent of future expectations.
Take the case of Robinson Crusoe, an example used in some economic texts. Crusoe is a simple case because he is both the supplier and the demander.
(Excerpt) Read more at ibdeditorials.com ...
What we need also is a “DRILL” message that will bring down the House. (and the Senate)
Pelosi could lower gas prices tommorrow if she decided to cut back Congress's vacation and get serious about increasing domestic oil production. But, she won't because she doesn't care about the practical effects this has on the average person. This is about political power and if she thinks the average person stands between her and more power, the little guy will always lose.
When ever I hear or read someone mentioning “expert” I stop listening or reading
When ever I hear or read someone mentioning “expert” I stop listening or reading
There has been no plausible threat. Prices are again on the rise over the last 10 days. Granted oil prices do not move in a straight line, but they are not falling anymore.
Here's my guess:
"None are so blind as those who refuse to see."
The pipeline in Georgia, now shut down, means the Russians control more oil than they did a short time back. If Europe decides not to purchase supplies from the Russians, then the supply chain will shift, despite fungibility, and we will see higher prices.
Keep in mind the Russians and Chinese have been expanding their control--direct and otherwise--over oil supplies through actions like the one in Georgia, and influence like that in Venezuela and Iran.
Production is also declining in Mexico, one of our major suppliers.
All in all, with Russian saber rattling and military action, the situation has changed, and could change more to our detriment.
This will cause some tension in the oil markets, based on geopolitical concerns.
Just to keep everyone up to date, it has been restarted.
Baku-Tbilisi-Ceyhan oil pipeline back to normal operations, BP says
http://www.freerepublic.com/focus/f-news/2067439/posts
asdf
Thanks!
Every single Republican running for the House and Senate should mention oil independence in every speech. Folks are sick of high gasoline prices, and understand the connection between the high price of oil and the climbing prices of consumer goods. It's also time to start educating people about nuclear power to pre-empt the eco-freaks who will try to stop it's use.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.