Category — Oil

As mentioned in a post yesterday, Cato just published a rather encylopedic Cato Handbook for Policymakers.  Text is due from contributing authors around August, and the tome is published in January to coincide with the arrival of a new Congress (or, when we’re on a four year cycle, at the beginning of the new presidential term).  It’s a nice set of policy discussions and a handy one-stop-shop for what we think Congress ought to do on a number of policy fronts.

My energy chapter, submitted in August, coincided with the peak of the hysteria about oil and gas prices, foreign oil dependence, offshore oil development (“Drill Baby Drill!”), and rampaging congressional search & destroy operations to root out the speculators theoretically at the root of the price spiral.  Hence, my essay was about why oil prices were going up and what Congress could do about it. 

Those issues today, of course, are well off the political radar screen.  But before we forget the events of the last several years, it is worth reviewing what happened and why. [Read more →]

Much attention was garnered last year by those, like T. Boone Pickens, who predicted oil prices rising to $200-300 per barrel with a year or two, but less attention has been paid to the recently revised forecast of the US Department of Energy, published in preview of its Annual Energy Outlook. The Outlook appeared in January, when prices had already plummeted, but was presumably written earlier, when prices were higher. It included the seemingly moderate forecast of prices rising to $70 by 2010 and $110 by 2015, as the figure shows. [Read more →]

Many people believe that national security would be advanced if we reduce our petroleum usage, because, goes this theory, we would be funneling less money to the Middle East which then would reduce, if not eliminate, funding for terrorists who wish to harm the U.S. (more on this in the future).  Ex-CIA Director, James Woolsey, for instance, is reported to have said that we need  “destroy the strategic power” of petroleum by making us not less dependent on foreign oil, but less dependent on oil, period. See, also, here.  [Read more →]

As a political economist of a certain age, I naturally had a certain amount of Marxist writing inflicted on me, and found one particular thought of great insight. In “The 18^th Brumaire of Louis Napoleon,” Marx commented that Hegel noted that history repeats itself, but neglected to mention that the first time was tragedy, and the second time farce. A decade ago, I published “The Farce this Time” about fears of peak oil, but since then, we have experienced another energy ‘crisis’ which has remarkably resembled a commodity price cycle but which, many pundits observe, is ‘different’ this time. [Read more →]

This summer, we had the entertaining spectacle of scions of the Rockefeller family joining with environmental activists such as Greenpeace to urge a change in ExxonMobil’s corporate governance, including redirecting their investment towards green technologies.  Part of their argument was that research ‘proved’ that the world would need these new techologies and that they would be economically viable soon.

[Read more →]

Apparently, an increase in offshore drilling is still on the policy table, which suggests Obama is taking a more rational approach to energy policy than many of his colleagues.  Without question, offshore drilling cannot provide ‘energy independence’ (a ludicrous concept, but that’s for another day), but there are numerous benefits and only a trivial downside. [Read more →]

Robert Bryce is one of the leading journalists on energy issues.  He is Managing Editor of Energy Tribune, and in a recent article gave a mea culpa on oil speculators:

Back in June, I wrote a piece for The American in which I argued that oil prices were being driven higher by the immutable law of supply and demand. Today, with prices plunging to near $40 instead of the $145 level seen in mid-July, it’s abundantly obvious that speculators were a key driver, probably the main driver, of the surge in oil prices that occurred between late 2007 and July.

So, to be clear, I was wrong. The leaders of OPEC were right. So, too, was my pal, Ed Wallace. In May, Wallace, a savvy journalist from Fort Worth who writes for the Fort Worth Star-Telegram and Business Week, published several articles [in] which he showed how the unregulated futures market was being used by speculators to push prices upward. [Read more →]