McCain: ending offshore drilling ban eased oil price

August 15, 2008

ASPEN, Colo. – Republican presidential contender Sen. John McCain said on Thursday the recent sharp fall in the price of oil had been helped by the end of the U.S. federal offshore drilling moratorium.

“I think several factors have contributed to the recent drop in the price of a barrel of oil. I think the practice of conservation and the reduction in our demand has probably been a major factor,” he told the Aspen Institute.

“I also don’t think it was entirely accidental that the day that the president announced lifting the federal moratorium on offshore drilling, the price of a barrel of oil dropped.”

Despite the decline in oil prices from record highs above $140 a barrel in July to around $115, gasoline prices remain a crucial issue in the election campaign, pinching Americans as they cope with falling house prices.

McCain’s call for offshore drilling to boost domestic oil supplies, which he says will provide a bridge to a time when new, greener, energy technology is in place, has been slammed by critics who say it would be a disaster for the environment and not make any difference to oil prices.

The Arizona senator rejects this view, and on Thursday he reiterated his position that it could help straight away.

“I met with a group of independent petroleum producers in Bakersfield, California. They said, using existing facilities, you could have an immediate impact on our supply of oil. With exploration of known areas … within a year or two, they could increase our oil supply,” McCain said.

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12 comments

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McCain has no idea what caused the oil price to go down.

I believe it rampant speculation and corruption in the oil markets, it had nothing to do with anything Bush did since congress still has to vote. President has no affect. We had a hurricane it Gaviston Texas dead on and the oil prices went down.

McCain believes in oil corruption just as he did under Reagan when he was censured for his Keating 5 savings and loan lobbiest days.

It is a FACT that speculation that has nothing to do with current supply and demand have artificially inflated the price of oil by 30% to 100%, no question.

Its all greed just like just before the great depression, the Bush sub-prime mortgage companies, the Reagan Savings and Load deregulation banking scandals, and the Enron-World com greed.

Posted by Pulsar | Report as abusive

It’s been 28 days since President Bush removed the ban on offshore drilling and the Democrat leaders, Pelosi and Reid, have done nothing to drop the Congressional ban. The Republicans are on the House floor this week debating the issue and the Democrats are on vacation. Poor folks spend upwards of 50% of their income on energy. A doubling of prices is devastating to their budgets and their ability to survive.Who really cares about poor and middle class folks? Not the Democrats who are off enjoying a vacation right now. What we need from Democrat leaders of Congress is an energy policy that includes alternatives like solar, wind, nuclear, geothermal, clean coal and coal to liquids, and also increased domestic oil production. Pelosi and Reid won’t even allow a vote. Throw the bums out in November.

What Mr McCain fails to tell us is that people are driving less there is more gas going unsold. Nobody diving SUV’s or less of them on the road. Let’s factor in the 4 day work week in some places . I agree with the earlier posting about the all greed bit. As we should note Sen. Mc Same or if Mc Bush or what ever one wishes to call him he has failed to give any plan to close the ENRON loophole… To truly solve this problem we need to be free of oil. We need electric motive power.. Generated by clean; wind / solar generating facilities….

Posted by Bill | Report as abusive

Its less demand and more supply. OPEC has increased their supply/production and even though prices are going down, they havent decided to cut down production. New rules to cut down hedge speculations. Also the dollar gains. All these have helped but it looks only like a temporary fix. If demand is less over here means, less spending in travel, buying goods etc and most of them are manufactured abroad. To increase retail company profit or not reach losses, its better to cut inventories. Sooo the cut reaches out globally and guess who else gets into economic slowdown-all global manufacturers. thats my theory- wonder how much is correct.

Posted by Simpleguy | Report as abusive

Oil is a Commoitiy it is sold at a price based mainly on supply and demand.

There are no economys that work in this world where energy by fossil fuels isn’t the foundation of the energy source.

To increase domestic production and local supply is the only way to satisfy fuel demand and grow a economy.

And we can walk and chew gum at the same time you don’t just stop the life blood of our economy to bring another energy source to the forefront.

You develop it if it works and an Infrastucter to support it develops the country overtime will migrate to the better source whichever that might be.

Therefore the only logical answer is to drill increase capacity drive the prices down. And work on better enregy sources at the same time.

This is what the rest of the world is doing and this is without a doubt what we need to do.

Posted by Mike | Report as abusive

It seems silly to vote to allow drilling in new places when we aren’t drilling in the places that we already can drill in. Maybe if we were already drilling everywhere we could, then it might make sense to open up new territory. But it’s like asking for seconds when you haven’t finished what’s on your plate.

Posted by sdv | Report as abusive

McCain has demonstrated once again that he really DOESN’T know anything about economics. Or the logistics of oil production either. If big oil companies started drilling offshore tomorrow, the first drop of oil would not make it onshore for at least two decades and that’s way too far out to affect oil or gasoline prices. Oil prices are being driven by wall street compulsive gamblers (otherwise known as ‘investors’) looking for the next fast buck. As it became clear that there would be increasing regulation of this rampant commodity speculation, these junkies dumped off and harvested their profits.

We’re seeing the end of cheap oil and cheap gasoline in the US, and offshore drilling won’t change that fact; it may forestall the inevitable for a few years, but when it’s gone, it’s gone and if we waste the next 30 years like we wasted the last 30 instead of developing a coherent energy policy and investing in alternative energy sources and technology, then we’ll be in a world of hurt before too long.

Posted by windrider | Report as abusive

windrider…

I hate to force economic principle back in your face after you so eloquently proclaimed to understand it, but isn’t it interesting that as driver’s cut back, as Bush announced their may be more oil coming on line in the future, and as the middle east boosted supply, that the free market responded and that these same gamblers who apparently inflated the price also brought it back down. Speculation? Driving the price down? How absurd….

Liberals seem to lack a fundemental understanding of economics…
I had to explain this before about ag amrkets in the US and it goes right along with oil speculation. article attached.
This is some pretty interesting commentary on the how the Ag markets are working in this new age from one of our brokers in Minneapolis. His basic point is that by taking the human element out of the market we are detoriating its value.

Its pretty funny that the talk of limiting speculation has decreased since the price of oil has fallen. I firmly believe that with out the specs we would have oil at unbelieve numbers, because no one is there to take the other side. If they want to guaruntee $100 oil its simple they need to increase supply or decrease the demand. The market will ration demand and increase supply to move the price into equilibrium. We have seen the rationing take place, but is it enough?

There is a new problem here that noone seems to want to admit to in the rush to electronic trading. The problem is the electronic marketplace isn’t working so well for US ags. A set of markets like US ags simply do not have the constant micro-equilibrium volumes that the worlds financial markets do. The old pits relied on a good measure of information flow that could be garnered by the professional market maker by standing there and observing the mechanics of the order flow. All of that is absent in the electronic marketplace, leaving market makers in every US ag commodity except possibly corn to the conclusion that the only way to trade on the screen is to abandon marketmaking and “go with the days trend” instead. In other words, while the government guys and the newspapers discuss and legislate ad nausea on the “overspeculation” problem, the real problem is the vacuum caused in the micro (under 2 minute) world of commodities due to the exodus of the professional marketmaker from the industry. All moves are overdone, because they have to be since there is noone there to take the other side. The short term volatility is much, much higher than it was with pit trading, and probably will stay that way forever. This is not due to “overspeculation”, its due to the lack of information flow that the new world of screen trading has caused.
Further, we have the new world of for-profit exchanges in the US keeping fees high. Remember back about 2000 when everyone told you ag exchange fees would be about a quarter a round turn if only everything traded on the screen? What a laugher. The exchanges simply took the floor broker fee for themselves, leaving everyone wondering where the cheaper rates went. There are cheaper rates, but only for members executing their own trades. So the trading companies and ag firms that wanted the cheaper rates have decided to pony up for the memberships or trading rights to save costs and execute themselves. The only problem there is those customers have never executed for themselves and are finding out that the task is not as easy as it appeared when they called their orders in. Massive resting stops, big spread orders placed all at once getting leaned on, and so on and so on are rampant on the screens as these new players learn the hard way what not to do when executing their orders in the micro sense. It turns out that it’s hard work getting volume moved in the ags. Who would have guessed. I fear the financial fund guys will never get it when it comes to placing orders for size in the world of ag commods. Again, all of this is causing more and more short term volatility.
The point of all this rambling is that the marketplace as we knew it for US ags is something altogether new. Every run, whether for a day, a week, a month, or a season, is going to be faster and farther than ever before due to screen trading. Get used to it, there simply is no going back now and we are forever stuck with this new world. Immediate fills are nice, unfortunately they appear to come at the small cost of massive slippage. The corn market will be okay for mid-size front month trading, but soybeans are suspect even in the front month, and wheat, my friends is a small market disaster that just happened before everyones eyes. Don’t even get me started on oats or the soy products markets. Good luck and be careful out there because it turns out the world is full of dogs and we’re all wearing milk-bone underwear.

Posted by karlthomas | Report as abusive

Lets put this together, what of the issues for prices has been speculation. The day after Bush signed the exec order to allow drilling prices started dropping. There is NO DOUBT this has everything to do with the drop. People are asking our leaders to go drill, this starts the debate.

Posted by scot | Report as abusive

WOW Pulsar your post truly shows your ignorance and lack of knowledge on the facts.

Bush’s “sub Prime mortgage crisis”???

You do realize that it was a bill put forth and signed by Bill Clinton in the late 90′s that required lenders to give money to risky borrowers.You do know this right? As you would say “This is a fact and public record”.Sub prime mortgages and the availability of them had and has NOTHING to do with Bush.

As for oil,of course the threat of new drilling will bring prices down.What the hell do you think the speculators are all about? Threaten to drill for new oil will bring greater supply to the market,IN THE FUTRE! DUH,the speculators are going to get nervous and sell.Your a pretty smart guy arent you!

Saying that that some oil from ANWR or offshore may be exported or it wont lower gas prices is a very stupid reason for not drilling there! Take an class in economics. If we export a million barrels from ANWR and import a million barrels from somewhere else, it costs us nothing. If we import a million barrels and export none it costs us 140 million dollars! Research and development of alternative energy sources is great and we should do that, but as long as we are useing more oil than we are producing we need to drill as much as possible. If we end up with more oil than we need we can sell it to China to pay for all our imported lead painted toys!
Democrats sy drilling would not help because we wont get the oil for 10 years, a great argument they have been making for a decade – jay Leno

Posted by Charles | Report as abusive

Sarah Palin letter to Harry Reid on Energy Policy.
Is she a “Energy Expert”?
http://strategicthought-charles77.blogsp ot.com/2008/09/sarah-palin-letter-to-har ry-reid-on.html

Any comments??