Bush Says Drill, Drill, Drill — And Oil Drops $9!

UNTflyer · July 16, 2008

In a dramatic move yesterday President Bush removed the executive-branch moratorium on offshore drilling. Today, at a news conference, Bush repeated his new position, and slammed the Democratic Congress for not removing the congressional moratorium on the Outer Continental Shelf and elsewhere. Crude-oil futures for August delivery plunged $9.26, or 6.3 percent, almost immediately as Bush was speaking, bringing the barrel price down to $136.

Now isn’t this interesting?

Democrats keep saying that it will take 10 years or longer to produce oil from the offshore areas. And they say that oil prices won’t decline for at least that long. And they, along with Obama and McCain, bash so-called oil speculators. And today we had a real-world example as to why they are wrong. All of them. Reid, Pelosi, Obama, McCain — all of them.

Traders took a look at a feisty and aggressive George Bush and started selling the market well before a single new drop of oil has been lifted. What does this tell us? Well, if Congress moves to seal the deal, oil prices will probably keep on falling. That’s the way traders work. They discount the future. Psychology and expectations can turn on a dime.

The congressional ban on offshore drilling expires September 30, so that becomes a key date. A new report from Wall Street research house Sanford C. Bernstein says that California actually could start producing new oil within one year if the moratorium were lifted. The California oil is under shallow water and already has been explored. Drilling platforms have been in place since before the moratorium. They’re talking about 10 billion barrels worth off the coast of California.

There’s also a “gang of 10” in the Senate, five Republicans and five Democrats, that is trying to work a compromise deal on lifting the moratorium. So it’s possible a lot of action on this front could occur much sooner than people seem to think.

So I repeat: Drill, drill, drill. Deregulate, decontrol, and unleash the American energy industry. Those hated traders will then keep selling oil as the laws of supply and demand and free markets keep working.

Eagle1855 · July 16, 2008

As an economics dork, I find this to be wildly entertaining.

just to keep it real, I also like boobs and beer and stuff.

GoMeanGreen1999 · July 16, 2008

It is going to have to drop for a week or so before I believe it. It dropped what - $10 over two days last week, and then it went back up. We should be drilling with as much oil as we have.

adman · July 16, 2008

by Larry Kudlow
In a dramatic move yesterday President Bush removed the executive-branch moratorium on offshore drilling. Today, at a news conference, Bush repeated his new position, and slammed the Democratic Congress for not removing the congressional moratorium on the Outer Continental Shelf and elsewhere. Crude-oil futures for August delivery plunged $9.26, or 6.3 percent, almost immediately as Bush was speaking, bringing the barrel price down to $136.
Now isn’t this interesting?
Democrats keep saying that it will take 10 years or longer to produce oil from the offshore areas. And they say that oil prices won’t decline for at least that long. And they, along with Obama and McCain, bash so-called oil speculators. And today we had a real-world example as to why they are wrong. All of them. Reid, Pelosi, Obama, McCain — all of them.
Traders took a look at a feisty and aggressive George Bush and started selling the market well before a single new drop of oil has been lifted. What does this tell us? Well, if Congress moves to seal the deal, oil prices will probably keep on falling. That’s the way traders work. They discount the future. Psychology and expectations can turn on a dime.
The congressional ban on offshore drilling expires September 30, so that becomes a key date. A new report from Wall Street research house Sanford C. Bernstein says that California actually could start producing new oil within one year if the moratorium were lifted. The California oil is under shallow water and already has been explored. Drilling platforms have been in place since before the moratorium. They’re talking about 10 billion barrels worth off the coast of California.
There’s also a “gang of 10” in the Senate, five Republicans and five Democrats, that is trying to work a compromise deal on lifting the moratorium. So it’s possible a lot of action on this front could occur much sooner than people seem to think.
So I repeat: Drill, drill, drill. Deregulate, decontrol, and unleash the American energy industry. Those hated traders will then keep selling oil as the laws of supply and demand and free markets keep working.

Oil prices dropping had about as much to do with Bush saying "drill the offshore" as our winning the "War On Terror" did with him landing on an aircraft carrier decorated with banners reading: "Mission Accomplished.". Oil dropped due to the fears of banks failing and the uncertainty of the market because of it, etc.

Even if Congress lifted the moratorium it would take years and years, 10 perhaps, before a drop would be produced. More drilling is not the answer. Not short term. Not long term. A comprehensive energy plan is the answer and that is something we have not had since before Nixon.

Edited July 16, 2008 by adman

UNTflyer · July 16, 2008

Even if Congress lifted the moratorium it would take years and years, 10 perhaps, before a drop would be produced. More drilling is not the answer. Not short term. Not long term. A comprehensive energy plan is the answer and that is something we have not had since before Nixon.

Did you even read the whole thing before you went kneejerk and starting bashing Bush on the war? Bush did more than say "drill offshore". He actually lifted the executive order banning offshore drilling, which is exactly what Democrats were screaming their heads off about just a couple weeks ago. Now the only stumbling block is Congress.

A research group says they can start pumping oil in California within a year.

We don't need an energy plan, we just need to let the market produce the energy we need. Lift the offshore drilling ban and oil prices will take a severe drop.

You can't dispute basic economic principles. More supply of any product, be it corn or oil or widgets, will lower prices.

MCMLXXX · July 16, 2008

Oil prices dropping had about as much to do with Bush saying "drill the offshore" as our winning the "War On Terror" did with him landing on an aircraft carrier decorated with banners reading: "Mission Accomplished.".

Who ever claimed that the "Mission Accomplished" banner had anything to do with the "War on Terror"?

According to sources in the US NAVY " The mission in this case, was the mission of the USS ABRAHAM LINCOLN. The men and women aboard the nuclear-powered carrier accomplished their mission and stayed out for a record time -- 290 days. It was a very long cruise for them.

The banner specifically was designed to celebrate and memorialize the ship's successful deployment. "

Edited July 16, 2008 by MCMLXXX

MCMLXXX · July 16, 2008

More drilling is not the answer.

Answer to what? Drilling certainly provides an increase in supply. Who has ever claimed that drilling is the only answer to our energy needs over the long term?

DeepGreen · July 16, 2008

Even if Congress lifted the moratorium it would take years and years, 10 perhaps, before a drop would be produced. More drilling is not the answer. Not short term. Not long term. A comprehensive energy plan is the answer and that is something we have not had since before Nixon.

Bullsh!t. This country can have oil out of the ground within two years or sooner. Throw away all of your talking points you hear on TV. Drilling IS what this country needs to remove the stranglehold the Mid East countries have on the U.S.

I agree we need more than just oil. Wind, solar, nuclear, etc., must be developed at the same time. And while we're at it, reduce the number of gas-guzzling autos and trucks that are available to U.S. consumers.

FirefightnRick · July 16, 2008

Who ever claimed that the "Mission Accomplished" banner had anything to do with the "War on Terror"?
According to sources in the US NAVY " The mission in this case, was the mission of the USS ABRAHAM LINCOLN. The men and women aboard the nuclear-powered carrier accomplished their mission and stayed out for a record time -- 290 days. It was a very long cruise for them.
The banner specifically was designed to celebrate and memorialize the ship's successful deployment. "

Thank you! Beat me to it.

Rick

adman · July 16, 2008

Who ever claimed that the "Mission Accomplished" banner had anything to do with the "War on Terror"?
According to sources in the US NAVY " The mission in this case, was the mission of the USS ABRAHAM LINCOLN. The men and women aboard the nuclear-powered carrier accomplished their mission and stayed out for a record time -- 290 days. It was a very long cruise for them.
The banner specifically was designed to celebrate and memorialize the ship's successful deployment. "

Must have been pure coincidence. Funny how during the speech he gave in front of that banner he never once mentioned the carrier's historic cruise. He only declared that major operations in Iraq were over. It was only months after the speech that the Navy said the banner was their idea. And who made the banner? According to White House spokesman Scott McClellan the White House did. Hmmm...

Censored by Laurie · July 16, 2008

Who has ever claimed that drilling is the only answer to our energy needs over the long term?

Stewie...

UNTflyer · July 16, 2008

It was only months after the speech that the Navy said the banner was their idea. And who made the banner? According to White House spokesman Scott McClellan the White House did. Hmmm...

Go back to your first post... you tragically tried to imply that it is believed the banner had some sort of causal effect on combat victory. It was confusing and lame.

You also tried to imply that all Bush did was say "drill offshore" and therefore he could not possibly have an effect on oil prices. The fact is that he rescinded the executive order that banned offshore drilling. Had you read the entire post, instead of immediately going into BDR Bash mode, you would have understood the argument to be that there are psychological factors in the speculation market. If speculators believe there is a possibility that oil production will increase because of new offshore drilling, then naturally the price will come down because Supply and Demand still works.

adman · July 16, 2008

Did you even read the whole thing before you went kneejerk and starting bashing Bush on the war? Bush did more than say "drill offshore". He actually lifted the executive order banning offshore drilling, which is exactly what Democrats were screaming their heads off about just a couple weeks ago. Now the only stumbling block is Congress.
A research group says they can start pumping oil in California within a year.
We don't need an energy plan, we just need to let the market produce the energy we need. Lift the offshore drilling ban and oil prices will take a severe drop.
You can't dispute basic economic principles. More supply of any product, be it corn or oil or widgets, will lower prices.

Yes I read the entire article. I realize Bush lifted the executive order. My point, which perhaps was poorly made, is that him lifting it had nothing to do with prices dropping.

We don't need an energy plan? That is delusional. Why wouldn't a country, any country, have a comprehensive energy plan?

Let's drill everywhere in America that has oil. Let's bleed it dry. Let's have cheap, cheap, cheap oil and gas flowing from fountains. Fine. Do it. But what do we do when it runs out? And it will run out.

Which research group says they can start pumping oil within a year? And why is a research company drilling?

adman · July 16, 2008

Go back to your first post... you tragically tried to imply that it is believed the banner had some sort of causal effect on combat victory. It was confusing and lame.
You also tried to imply that all Bush did was say "drill offshore" and therefore he could not possibly have an effect on oil prices. The fact is that he rescinded the executive order that banned offshore drilling. Had you read the entire post, instead of immediately going into BDR Bash mode, you would have understood the argument to be that there are psychological factors in the speculation market. If speculators believe there is a possibility that oil production will increase because of new offshore drilling, then naturally the price will come down because Supply and Demand still works.

The articles I've read the past couple of days are saying the failing banks and worrisome American financial outlook are what are driving down oil futures. Not the President rescinding the offshore drilling ban.

UNTflyer · July 16, 2008

Must have been pure coincidence. Funny how during the speech he gave in front of that banner he never once mentioned the carrier's historic cruise.

Right, and I'm sure you read the whole speech. If you did, you would know that Bush said: "After service in the Afghan and Iraqi theaters of war, after 100,000 miles on the longest carrier deployment in recent history, you are homeward bound. "

I fail to see how you come to the conclusion that Bush was saying that the war (in Iraq or on Terror) was over. Again and again throughout the speech he said that the work both in Iraq and against al-Qaeda was not over. In fact, near the end of the speech he said: "Our mission continues." Less than a minute later he said: "The war on terror is not over."

I admit it was an image gaffe, and those who opposed the war have taken it and turned it into a joke that will live forever in our culture, but it is flawed in its genesis. However, it's really difficult to argue the facts when people come from such an illogical and false premise.

UNTflyer · July 16, 2008

The articles I've read the past couple of days are saying the failing banks and worrisome American financial outlook are what are driving down oil futures. Not the President rescinding the offshore drilling ban.

And here is an article from the WSJ, one of the top financial news sources, saying the opposite. Yeah, I read the same news blurbs about the cause of the biggest one day oil price drop in 17 years, and it makes absolutely no sense. I wouldn't be going to CNN or the AP for explanations on financial news.

It is remarkable that oil prices fell in SPITE of worries about financial markets. A weak dollar means people should be buying up oil futures, not selling. Falling oil prices in the wake of failing banks is counterintuitive.

UNTflyer · July 16, 2008

Yes I read the entire article. I realize Bush lifted the executive order. My point, which perhaps was poorly made, is that him lifting it had nothing to do with prices dropping.

Nothing, huh? And what do you base that conclusion on? I'm really interested.

We don't need an energy plan? That is delusional. Why wouldn't a country, any country, have a comprehensive energy plan?

We need a comprehensive milk plan. Everyone needs milk, so why don't we have a plan???

Because we're not a communist country where the State plans all production. The free market provides milk without a comprehensive government plan, and they can do the same with oil.

Let's drill everywhere in America that has oil. Let's bleed it dry. Let's have cheap, cheap, cheap oil and gas flowing from fountains. Fine. Do it. But what do we do when it runs out? And it will run out.

There is enough proven oil reserves in America to last 300 years. And when it runs out, the free market will once again come up with a economic solution.

Which research group says they can start pumping oil within a year? And why is a research company drilling?

I thought you said you read the article.

Censored by Laurie · July 16, 2008

meangreenacct · July 16, 2008

If it was Bush saying drill was the cause, I think oil would have dropped when he said he was going to lift the ban. I think the drop has more to do with the forecasts that American oil demand is dropping due to issues within our economy.

adman · July 16, 2008

Nothing, huh? And what do you base that conclusion on? I'm really interested.
We need a comprehensive milk plan. Everyone needs milk, so why don't we have a plan???
Because we're not a communist country where the State plans all production. The free market provides milk without a comprehensive government plan, and they can do the same with oil.
There is enough proven oil reserves in America to last 300 years. And when it runs out, the free market will once again come up with a economic solution.
I thought you said you read the article.

How is an energy plan communist Mr. McCarthy? Seems to me a plan would be rather strategic. How is a plan limiting to free market?

Quoner · July 16, 2008

Airline industry capacity reductions? Anyone?

BeanCounterGrad'03 · July 16, 2008

I've got alot of gas this morning. If I hold a press conference to announce this, could it lower prices?

Hope none of my coworkers walk by my cubicle right now and catch a wiff.

SUMG · July 16, 2008

Price of oil down about $4.50 a barrell today (as of 10:45 on Wednesday). Not sure how it will end up...but so far, it's down substantially again today.

meangreenacct · July 16, 2008

Price of oil down about $4.50 a barrell today (as of 10:45 on Wednesday). Not sure how it will end up...but so far, it's down substantially again today.

I think it will hold some of that loss. I think the market is realizing that there is definitely a point where the increase in price is shifting demand downward. I think what Quoner highlighted is definitely playing a factor, and OPEC has decreased it's demand forecast as well.

UNTflyer · July 16, 2008

How is an energy plan communist Mr. McCarthy? Seems to me a plan would be rather strategic. How is a plan limiting to free market?

I didn't say an energy plan was communist, I said the government doesn't need a plan because we are a free market economy, not a commmunist economy that does central planning and production.