Anyone who knows the story of the Standard Oil Trusts knows John D. Rockefeller made himself immensely wealthy by never allowing oil prices to go in the same direction too long. In the past when the West was threatened by rising oil prices US Presidents "pressured" and pleaded with the Saudi Arabia to increase oil production and the Saudis always complied. It's not recorded whether or not they always managed to keep a straight face when beset by pressure and pleas but they have laughed all the way to the bank for some sixty years. Each time as oil prices ebbed so did new oil exploration in the rest of the world. No one could afford to look for oil if the exploration and production costs exceeded the current world market price. There was some limited success. Occidental Petroleum, which had discovered oil in Libya, under the guidance of the legendary Armand Hammer made a huge discovery in Venezuela. The British, following the OPEC oil embargo of 1973 did bring in a awesome find in the North Sea and the United States under the imbecilic guidance of President James Earl Carter got the Department of Energy instead of oil. Said Department of Energy like its bastard step brother, the Department of Education, has been a clear hindrance to its purported goal. Instead of bold and new ideas we got tired and trite nostrums. Peak oil, the notion that all of the world's easily accessible oil had been discovered, the deliberate slander of the oil companies as bad actors of greed, and the magna opus of the green movement, Global Warming were all employed by the political class to disparage anyone who even thought that increasing domestic oil production was a good thing. "We can't drill our way out of this problem." intoned a somber President Obama as he paused, looking seriously into his teleprompter as his not-too-bright and partisan audience cooed and giggled in the delight they had elected the most forward looking individual since Nostradamus.
While looking forward, the ultra perceptible Obama missed an event going on right in the here and now. Actually he saw it but like most of us didn't grasp its significance. To paraphrase another great thinker in the Democratic party, Linda Ronstadt said "He couldn't see the forest for the trees." What happened in 2008 prior to the collapse of the housing market? The price of oil went to $148 per barrel. Why? Because Saudi Arabia lost control of the price of oil. It pumped as much oil as it possibly could and still it could not meet world demand. The result was "Drill, baby, Drill". The Obama administration has brought every hindrance at its disposal to bear on the oil and gas industry from the EPA, to the DOE, to the SEC but notwithstanding all this the United States has moved into third place in world oil production thanks to the newly discovered technology of horizontal drilling and hydraulic fracturing (fracking) and the Bakken Shale formation in North Dakota and Montana. To counter this success Obama has proposed a $40 billion tax on oil companies by excluding them from taking the same deductions all other manufacturing companies would continue to enjoy. With Jimmy Carter's windfall profit tax on big oil in the mid 70's the number of drilling rigs on productive wells declined from 4500 to 55 in almost a matter of months. Stopping this tax is one fight the Tea Party and the country must win.
This is another excellent piece, btw. I learned a great deal from it.
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