Oil’s Well That Ends Well?

Just when I think the Republican Congress can’t get any dumber, they do something like this – demanding that the President investigate (nonexistent) “price gouging” by oil companies. It appears as though the Republicans, who should know better, don’t have a clue about the basics of the oil industry.

Oil is at nearly $75/barrel. Our capacity to refine that oil into usable gasoline hasn’t expanded in years, and different states require different formulations of gasoline that further tightens an already iffy supply. This should be basic Economics 101 stuff – the smaller the supply of something, the higher the price. Add to that the rampant speculation going on into oil futures, and you’re going to see gasoline heading northwards of $3/gallon for a lot of people.

Artificially lowering the price of gasoline means that people use more – which leads to shortages and even worse problems than people who feel the need to overcompensate for something with their massive gas-guzzling land whale having to take it in the rear at the pump. Such an effort would lead to the kind of gas lines that we saw in the 1970s. The second Congresscritters think they can control the market is the second that the problem gets infinitely worse. High prices are a signal that supplies are low, and trying to lower prices only reduces supply that much faster – which can soon lead to critical shortages.

This investigation is economically idiotic, but it’s politically stupid as well. There is little to nothing Congress can do about oil prices. The only thing Congress can do in this case is preen in front of the cameras and create a nice kangaroo court for some hapless oil executive. That sort of televised circle jerk will be forgotten soon after, and when the prices continue to go up people will see right through Congress’ cheap pandering.

If Congress wants to really reduce gas prices they could mandate a single formulation of gasoline, expand our refining capacity, and start pushing for increased exploration of domestic oil. All of those things would have the environmental lobby screaming bloody murder, which is why no one in Congress has the guts to do it. Apparently for Congress, it’s much easier to pander to a problem than to solve it.

3 thoughts on “Oil’s Well That Ends Well?

  1. There is no way to drill or refine our way out of this problem. It’s not a matter of the do-nothing Congress pandering to the environmental lobby. It’s a matter of a pathetic lack of innovative ideas and a pathetic lack of motivation to address a serious problem. The people we have representing us in DC are not bold enough to tackle serious long-term problems like energy. They’re weak.

  2. Brazil could be positioning itself for a seismic economic boom through its efforts to ween itself completely off of oil in a few years. While America panders to corn farmers with the wildly inefficient ethanol, Brazil is shifting almost exclusively to sugar-based ethyl. I’m sure ethyl has disadvantages of its own, but they can scarcely be worse than the predicament us oil slaves of the world will face after peak oil clubs us over the head. That’s where the real accountability failure has occurred in our government, which has been bought and paid for by the oil barons, but now pretends like they’re gonna “investigate” the very price fixing schemes they helped orchestrate.

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