There is no need to drill for more oil, or go to war to get more oil, it will not help in lowering the prices of oil. Even if the entire USA is sitting on top of oil 5 billion cubic miles and the same oil companies were to drill for it, the price would still go up. Thanks to the law lobbied by Enron that protects the traders of futures from divulging whom they work for. With that law, the oil companies or OPEC cronies can set up traders in the futures market. If they don't like the price, they would simply tell their proxy to put a higher bid. If they won the bid, nothing is lost, the oil need not be shipped nor bought, it simply stayed with the oil company or country. This will jack up the price each round of bargaining. The bidding practice of a conniving party is banned from eBay, but it is protected by US laws in the futures market. So the price is always jacked up, and here is when the law of supply and demand is put to oblivion. The price increase will go on, regardless of supply. Right now, the US demand has actually gone down more than 2% and yet, the price increased.
Drilling for more oil will not be a lasting answer. Changing our laws doesn't work either, too late for that now, as most of the world trading are now done outside the US. Working to get rid of oil addiction is the best solution. There is a way, and it is now technologically possible, but can't be done overnight. At least we will get rid of about 50% of it, given 10 years of changing our daily commuting fleet. Alternatives will just have to scale up, and it would also take time. We can work together to make this change faster than that.
Since it would take time, I do support drilling for our own oil only during the interim stages when we are trying to get rid of oil. I don't want the US money to give to countries that hate us.
http://www.unlvrebelyell.com/print_article.php?ID=12125&PHPSESSID=8598a1c9d3943a837045891fd36ccf4d
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A very common misconception is that there is a shortage of oil in the real market. There is actually a surplus of oil in the real market. Oil is being stockpiled all over the world in countries like Iran, for example, because there is no market for it right now. Most refineries are only operating at 75 percent of capacity. So what is really going on?
There are actually two markets at play here. There is the real oil market, and there is the futures market. "Futures" refers to the practice of predicting what is likely to continue in the future, or in this case, how much oil will continue to be produced. And the futures market refers to contracts traded on a futures exchange to buy or sell a product in this case, oil at a certain date in the future at a specified price.
The problem is, the futures market is divorced from the real market. The futures market operates with contracts that promise to deliver oil at a future date; however, no oil is ever delivered. The contracts change hands and then expire with paper profits on the run-up.
So in all actuality, it is the artificial oil futures market that is now driving the higher prices and has now become the real market. Nobody really buys oil, just pieces of paper. Even representatives of the oil companies can quietly buy futures and drive the price up. And that ends up becoming the actual market price.
It is unclear how the futures price becomes the market price. It may be done by convention, but it's definitely done in the interest of the oil companies. Nobody knows the identity of people who are in the futures market due to a law that was put on the books at the suggestion of Enron in 2000. |
