Why is Crude Oil Priced So High?

That’s the trillion dollar question … literally.

I’ve expressed my opionion several times … and listening to the talking heads on the television … at least some of them agree with what I’ve said in the past. Congress is now trying to construct legislation to regulate the speculation going on in the commodities with oil.

The price of oil has doubled since last year, probably tripled from it’s low of last year around $45 a barrel. Has the demand for oil double d or tripled in the past year? Not just no, but hell no!!

So … what’s changed?

The market was riding high until the end of October. Then it got the jitters and started heading south fast with a few slight rebounds in late November and December. This was related to the sudden realization the the financial markets might be in trouble of the housing markets … which proved to be very true.

From the beginning of November through the middle of January literally trillions of dollars made an exodus out of the stockmarket and was “sitting on the sideline”. Speculators, hedge fund manangers and managers of other funds as well as individual investors had a lot of cash sitting around not making any money.

They looked at oil, gas, gasoline and other commodities … like corn … and decided that was a good place to put their money. Betting that the U. S. government, run by the Democrats and with two Democratic candidates firmly opposed to increasing the U. S. supply of oil, and with the odds favoring a Democratic victory in the fall, they felt they had found a sure thing. The money is being placed on the bet that the Democratic controlled Congress will do nothing to relieve the pressure on the price of crude oil, gasoline or corn. To the contrary, Congress has tried to pass a bill to continue subsidies for corn as well as continue the tariff on importing ethanol from Brazil … both actions contributing to the current $7.50 or so price of a bushel of corn now and the concurrent rise in food prices.

The results of the later “action” of Congress is that the price of corn has nearly doubled since last year. You have to keep in mind that two years ago, ethanol producers were virtually loosing money with ethanol selling around $1.60 a gallon.

We are all feeling the results of Congress’ “inaction” with the price of gasoline hovering around $4 a gallon now. I’ve previously stated that “news” has a profound effect on the price of crude oil and gasoline like the nearly $10 rise in the price of crude the day after Boone Pickens said it would go to $150 a barrel. The inaction on Congress’ part continues to feed the negative news with the resulting inverse rise in the price of crude oil.

While Congress decides how to regulate the speculators, they happiily continue with their profitable feeding frenzy knowing that Congress moves slower that pond water. Billions, if not trillions, can be made while Congress debates the issue … all at our expense.

What is the Democratic line. Drilling is harmful to the environment. It won’t make any difference for ten years or, more optimistically, until 2012. It’s okay to import so much oil from the Middle East. We need to levy windfall profit taxes on the oil companies. We’ll be better off with alternative sources of energy … wind and solar. The high prices are good for us. We will consume less gasoline and oil.

While they’re preaching the evils of oil, America is being stripped of tens of billions of dollars a week. And we are consuming less oil and gasoline … as well as less meat, eggs, cheese and everything else. Their approach is destroying the U. S. economy.

We need to use hybrid cars and electric cars. Well, hybrid cars run on a mixture of ethanol and gasoline. The price of corn has doubled. Guess what? My car runs on premium unleaded gasoline. What is premium unleaded gasoline? Well, it’s the old gasohol of the 1970’s. And guess what? It’s more expensive than regular gasoline.

Well, just buy an electric car. Well, how do they think that electricity is made? It’s made primarily from burning fossil fuels That’s right … natural gas and coal … with a little nuclear power (that they’re opposed to) thrown in on the side. Honda has a hydrogen car. buy one of them. Well, where does that hydrogen come from that those cars run on. Right now, it made from hydrocarbons. You guessed it …  crude oil and coal.

The Democrats don’t want to begin drilling more for oil and they’re opposed to building new nuclear reactors. Well, nuclear reactors don’t last forever. They have a life span of about 50 years and many of them have already eaten up about 30 of those years … so, without new reactors being built, we won’t have nuclear power in another 20 or so years.

Wind and solar power can provide as much as 30% of our energy requirements by 2030 … if there aren’t any obstructions to their development. But you have special interests that Democrats cater to … including their own self interests …ergo Senator Kennedy … that will obstruct their own professed salvation to our energy crisis.

Correct me if I’m wrong … but the last time I checked it’s another 22 years until 2030. What the hell are we going to do in the mean time? Hey … 22 years … that about the time all the current nuclear reactors will have to be deactivated. Oops!!

One day this week, I actually heard a Democratic pundit actually say it wasn’t the goal of the Democratic party to drive us all back to the Stone Age … living in caves. Well, I hope not. There aren’t that many caves for us all.

Another thing … the wind doesn’t always blow and the sun doesn’t always shine. What are we going to do to have continuous uninterrupted power? Nuclear …..????

Regardless … we’re going to need oil and gas. They speak of using “renewable” sources of fuel … ethanol and biodeisel. With these providing less than 3% of our current fuel requirements, look at what their use has done to the price of food. What’s going to happen to the price of food when that percentage increases? Are we going to have to choose between eating versus going to work to try to afford the cost of the food? How is that food going to be produced … with horses and mules? Or maybe we can all start a “victory” garden to celebrate our independence from oil … and so we won’t starve.

This is absolute insanity. I suppose one way to resolve the healthcare crisis is to simply starve people to death. Those with the most expensive health issues will be the first to go. It’s also a way to resolve the purported “obesity” problem in the U. S.

All this week, I’ve heard Democrats like Bill Richardson and others talk about how the oil companies aren’t doing what they need to … simply gouging the public. One said they already had leases on 68 million acres of land … 37 million of those in the west. What they don’t tell you is that in those 37 million acres, much of it doesn’t have projected reserves and what is known to be there amounts to about a 28 day of supply of crude oil at the current consumption rate.

One thing that has been forgotten about in all of the madness is the discovery last year of a massive reserve in deep water in the southwestern gulf. Unfortunately, practically all of the deep water rigs were moved to the Persian gulf and other places prior to Hurricane Katrina. No one is talking about this so the speculators are happy.

Further exploration needs to be done on both the east and west coasts as well as the eastern Gulf of Mexico and in the Florida Straits. Why? We need to be independent from imported oil … period. That doesn’t mean that we shouldn’t conserve and use alternative forms of energy where available and practical. If we can expand our known reserves, we can ensure that the U. S. will have a domestic source of oil for hundreds of years.

Also, if we start building new nuclear reactors now, we will just have some new ones coming on line just before the ones now in operation will have to be shut down.

Last night, I saw Tyson Slocumb on the O’Reilly Factor. For an answer to one of the questions, he smuggly stated he rode the subway to work and it ran on electricity. I wonder how he thinks that electricity is made? He’s one of these “don’t drill, no nuclear” type of people. Unfortunately, probably 280 out of our 300 million people don’t have access to and “electric” subway … or any kind of subway or reasonable form of mass transit at all.  The rest of us that don’t live in Washington, DC, New York, San Francisco, Boston, Los Angeles or Chicago can just walk or ride the bus. Right?

Unfortunately, that horse I bought back in college is probably dead now. Shouldn’t have sold it, though.

Simply put, the Democrats … in some perverse and insane way … and led by Barack Obama now … are savoring the current oil crisis. It is the means for them to achieve their goals of promoting biofuels, energy conservation and development of alternative power sources such as wind and solar. They feel that the American public doesn’t have the discipline or knowledge or intelligence to make coherent decisions about their future so they’re using the current crisis to win the White House and Congress to force their agenda. It’s really that simple. They preach all of these things as available solutions now. But are they? How many electric or hybrid cars are sitting at the car dealers lots? What’s happening to the corn crop with the current weather in the Midwest? Where are all those wind farms and solar farms? How long will it take for all of these promised solutions to become a practical reality?  Well … wind and solar … 2030 … 22 years. Have they priced what it costs to put solar panels on a house? Who can afford a hybrid or electric car? It sounds good until you start asking questions.

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