Tuesday, August 5, 2008

My Brain Hurts

Nancy Pelosi appeared on ABC's "This Week" and George Stephanopoulos tried to get her to explain why she won't allow a simple up or down vote on offshore drilling for oil. He keeps repeating the question over and over and she keeps avoiding it. Her evasions make my brain hurt:

The oil reserve she wants to open up is the US Strategic Petroleum Reserve which was established after OPEC announced that it would no longer ship oil to nations that had supported Israel during the Yom Kippur War back in 1973. The oil embargo ended in '74 but it made it clear that we needed to have a reserve on hand just in case a similar situation were to arise in the future. I'm not sure $4 a gallon gas is a good enough reason to start dipping into the reserve. In any case it's a limited supply that would be rapidly depleted and would then need to be restocked.

Pelosi says she wants the oil companies to drill on the lands they already have leased. The oil companies would be happy to do this were it not for one little problem. They haven't found oil there in any place that's currently accessible. You can't just poke a hole anywhere in the Earth's surface and have crude oil come gushing out. You have to find the oil first and they haven't been able to find oil on their current lands. We know that there's oil under the outer continental shelf which is why they want to drill there.

Pelosi also keeps going on about offshore drilling being subsidies to Big Oil. So much so that I find myself reminded of The Princess Bride. In the immortal words of Inigo Montoya, "You keep using that word. I do not think it means what you think it means." Opening up the outer continental shelf would not be a subsidy. The land isn't given to the oil companies for free. They pay a lot of money for a lease that gives them the right to drill. They pay for the exploration and they pay for the drilling and if they don't find anything they're out the money and when the lease expires the land goes back to the government without the oil companies being reimbursed.

Nancy also keeps harping on the fact that drilling now won't provide immediate relief at the gas pump. That actually remains to be seen. Yes, if we open the OCS for drilling now it will still take time to find the oil, drill it, pump it, refine it, and get it out to the consumers though not the 10 years she claims. However, it could have an immediate effect at the pump because oil speculators will react immediately to an expected future increase in the oil supply. Foreign oil producers may also act to lower their prices on crude oil as a way of discouraging us from increasing our oil production, which would create added competition for them. In case you haven't been paying attention the last few days, the price of gas has dropped lately on just the suggestion that we may soon be opening the OCS up for drilling.

The real reason Nancy Pelosi opposes increasing domestic oil production is because she gets a lot of money from environmentalist special interest groups. These groups oppose fossil fuels and want high prices at the pump to discourage people from driving and to spur on development of alternative energy sources. Nancy needs their money to fuel her campaign so she abuses the power of her position to put their interests ahead of the interests of the general public.

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