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Oil Price Shock and Blame

Steven Mufson writes this morning that soaring oil prices "are damaging the profits of oil-intensive industries, tearing holes in the pockets of American consumers, offsetting the stimulant effect of tax breaks, sapping more than $1.5 billion a day out of the U.S. economy for oil imports and diverting ever-bigger gushers of dollars to oil-producing countries such as Saudi Arabia, Russia, Iran and Venezuela." Not to mention that the price of gasoline is more than $4 a gallon and rising every day while the dollar continues to lose value.

Our readers provide a range of comments that cover most of the points usually raised in this issue -- foolish behavior by SUV-loving consumers, tree-hugging protectionists who block drilling for oil in sensitive areas, the growth of prosperity and consumerism in China and India, profiteering by big oil, the war in Iraq, unconscionable delay in developing alternatives, and a White House occupied by an oilman.

Not only that, but wise men have been warning for years that this was going to happen and we ignored them. Our transportation policy has been to build highways and discourage passenger trains and mass transit.

We'll start with egalitaire, who asked, "...doesn't anybody realize fuel prices are beyond our economic carrying capacity?...
STOP American Dollar devaluation.
STOP rising fuel prices.
STOP rising food prices."

To which billmosby replied, "...There are plenty of ways to do all three of these things. Pity they're just about all politically incorrect. So, we'll do the only thing we know how to do, as exemplified by the statements above: panic."

mjones1 said, "...The hard, cold, nasty fact is that the world has a lot less oil than it did before. What is left is expensive to drill, and often is in the hands of nations who have no reason to be nice to us. Look, use the execs as scapegoats if it makes you feel better. But it won't change diddly squat at the pump."

jrw1 agreed, writing, "...Geologists have been warning us this was going to happen since the 1960's, but no one would listen. Now it's too late."

sandram1 said, "for over a decade, Cheney and his ilk have been peddling the ridiculous notion that there is plenty of oil while responsible professionals have repeatedly warned about the decline of easily accessible oil reserves. Then add to that the "All war all the time" approach to key oil producing areas such as Iraq and Iran- plus "Conservation is only a personal virtue, not a policy" and what did we expect.?"

rmorris391 said, "...The value of the dollar is falling; huge federal deficit; cost of war without end; runaway bankrupcy; mortgage meltdown. All a prescription for inflation, the dollar is losing value."

samellison wrote, "Don't think for one minute that the energy executives meeting on Capitol Hill and the price spike weren't related. Big Oil likes to be self-policed."

bb211 said, "The oil execs told Congress that they only make 4 cents on the dollar. Isn't 4 percent profit actually very, very high? Couldn't they settle for less?"

gsross wrote that "...Oil prices are up - and will continue to climb - because the oilmen are concerned that when Democrats control the White House and Congress, they may not be as favored. Ergo, they are going to get all they can before the changing of the guard. Supply and demand has nothing to do with these prices."

bdstauffer suggested, "Something that I think would be good to do would be to develop plug-in flex fuel hybrids that have built-in solar cells... the concept is, you charge up your car at night. Drive it to work, park it in the parking lot, let the solar cells top off the battery, drive the car home, plug it in at night, and never burn a drop of fuel. It may be pie in the sky, but if it works it would be cool."

presGWBfanclub said, "... it's time to consider state run AND owned oil. gazprom style... the oil companies have not been fair to the american people in their most critical time.. so why should we cut them slack now? and by the way... while they have been RAPING the american people.. they have been getting tax breaks and federal subsidies..."

Thundershock wrote, "It doesn't make fundamental sense if you ask me. IF world demand only grows at say 4% a year, this would justify only a 4% increase in price."

TerrifiedCitizen said, "This is not complicated... Oil is up because it's good for business... After sucking the middle class dry, the administration has a new cash cow in big oil to help finance and perpetuate the oil wars expanding all over the globe... why would you doubt that greed is at the bottom of this latest challenge facing us?"

floyd4456 wrote, "We could be less dependent on foreign oil and have cheaper gasoline if it weren't for the liberal environmentalists restricting our ability to drill anwar. We also need to overturn the moratorium on building refineries (since we have not been able to build one in over 30 years)... I blame congress..."

birvin9999 agreed, saying, "...imbeciles like Obama and Hillary prattle about "alternative" fuels. What is needed NOW are more refineries, drilling offshore and in ANWR, and more emphasis on nuclear. Look what an "alternative" like ethanol got us."

But garryh wrote, "...for those arguing that drilling on wildlife refuge lands will fix the problem it won't. Nor will modest conservation. We will use less but the price will still go up, so we will pay the same. It is childish to think the oil companies will charge less with the minimal amount of oil added to the world supply if we were to drill in Alaska..."

gala1 said, "...If anybody needed help on figuring out why oil prices are sky-rocketing, I could charge them a lot less than the experts and give it to them straight in about a minute flat. It's called profiteering in basic commodities during wartime..."

bullmountaininc said, "...It is not just a need to drastically conserve, there is an accompanying need to accelerate the changes in lifestyle and adoption of alternative energy sources that cannot wait for the "End of Oil" before being considered. Then it is far too late."

And burtonpaul wrote, "Not to mention, America is the only industrialized country in the world WITHOUT an effective system for public MASS TRANSIT."

jabreal00 said, "...It's plain and simple Americans need to buy more fuel efficient cars. The mentality of getting a 7 seat SUV... for a family of four has got to stop... Europe pays $7-8 a gallon. They have more fuel efficient cars. They walk more. They have better public transportation. It's time that the US follows Europe."

tryreason asked, "Could it be the infallible forces of the free markets don't always work and become just another path for money to leave the hands of the poor and end up in the pockets of the rich. Without democratic regulation capitalism is just another ism and when paracticed for the benefit of the wealthy it becomes just another scam."

Last word goes to halifar59, who said, "Since America is so short-sighted, we need a short-sighted, short-term answer. Open those capped wells and wildlife refuges, and suck those wells dry. This should bring gas prices down to 3.75 for a few years, and then bring us right back here where we started from: Slaves to Big Oil. On second thought, no thank you."

All comments on this article are here.

By Doug Feaver  |  May 22, 2008; 8:20 AM ET
Categories:  Oil  
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Comments

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Posted by: sylvia | May 28, 2008 7:28 AM | Report abuse

I was going to ask why you were employed, since you seem to provide little value, but then I realized the standard of comparison was Fred Hiatt, and you looked a lot better....

Posted by: tc125231 | May 28, 2008 1:25 AM | Report abuse

Phill Gramm introduced legislation to eliminate oversight which allowed ENONOMICs to contuniue unabated by Rich Speculators...

The same surviving Speculators that lost their jobs when ENRON died got a fresh satrt with companines like Goldman Sacks and others.

They are maintaining NEOCON SUPPLY SIDE ECONOMICS and updating Fascism/Corpratism to a new level... plus a major conflict that nobody understands.

ISSA

Posted by: Issa Gallego | May 27, 2008 10:49 AM | Report abuse

Our illustrious Senate held "hearings" recently--calling the major oil company CEO's to Washington ( with the appropriate t.v. coverage of course). Hearing went something like this: Senator: Mr. CEO, is your company gouging the American public with high gasoline prices? CEO: No, Mr. Senator, we are not. Senator: Mr. CEO, thank you for your timely and forthright response. Hearing adjourned. What was not asked is why the oil production facilities are currently running at 85% capacity ( admitted by one of the CEO')instead of 100%. No one questioned the article which appeared in the National Petrochemical and Refiners publication which stated clearly that for the years 2006 and 2007, production facilities operated at only 73% capacity. No one asked why. Why Not??

Posted by: Jarhead | May 27, 2008 5:16 AM | Report abuse

Dumb, Dumber. and Dumbest -- Government, the FED, and The Oil Speculators. Bail-outs and trying to recoup losses generated by the Housing Meltdown "Overnight" are dooming the Dollar and the U.S. .
The losers, The working class and eventually even the Rich.
How, you ask ? INFLATION !!! WELFARE ROLES !!! UNEMPLOYMENT !!! BANK FAILURES !!! HOMELESS !!! etc. etc. etc.
Stupid is as Stupid does. Even with all the nearly Free money provided by the FED which is being used to "pick the pockets" of taxpayers Inflation will have the "LAST LAUGH" when the Speculators profits are rendered worthless by the falling dollar long before profits are ever realized.

SHOCK -- Everyone loses!

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Posted by: hereistheporn | May 26, 2008 2:12 AM | Report abuse

Honestly this conversation gives me a headache. About six months ago I asked my sister why speed limits hadn't been rolled back to 55 mph, given the rising price of oil, and she said that wouldn't be fair as it would take longer to get somewhere. To this day, the US is refusing to take the most basic conservation measures. People are acting like the smallest conservation is a terrible infringement on their right to do whatever they want.

Posted by: headache | May 24, 2008 3:11 PM | Report abuse

In India there was rioting in the streets because of the price of rice. What would it take for fat and happy Americans to riot in the streets because of the price for oil? Greenspan revealed that the Iraq invasion was about oil -- to keep oil scarce, pushing prices up. Look at the escalation since Bush invaded Iraq! Oil will continue to go up until we remove this destructive administration from office.

Posted by: fdef | May 24, 2008 10:16 AM | Report abuse

The real question is, why is everyone pretending they didn't see this coming? Smart but yet so very stupid.

Posted by: Inplanesight | May 23, 2008 12:32 PM | Report abuse

I'm becoming addicted to dot.comments.

Here's something I'd like to see, as a policy shift: I want fewer roads to be built, and less money budgeted for roads. I want more, much more, light rail built. I want train service between cities modernized and expanded. I want zoning laws that increase density and block sprawl. And I want a mandatory federal fleet average fuel mileage of 50 mpg by 2020.

I want SUV's and pickup trucks included in the average mileage requirements -- no exceptions. I want fuel standards for semi trailer trucks.

One more thing. I believe that state's rights are no longer desirable. I want to eliminate state sovereignty completely, and make all state law subordinate to federal law. I'd really like to eliminate state government, and make states federal administrative districts.

And, yes -- I'd like to eliminate the U.S. Senate. We can simply add 100 seats to the House of Representatives and begin to benefit from a single legislative body. We'd finally have some accountability.

Mostly, I'm tired of the lobbyists and the unfettered power of incumbency. Thanks for listening!

Posted by: Ned | May 23, 2008 3:02 AM | Report abuse

I'm becoming addicted to dot.comments.

Here's something I'd like to see, as a policy shift: I want fewer roads to be built, and less money budgeted for roads. I want more, much more, light rail built. I want train service between cities modernized and expanded. I want zoning laws that increase density and block sprawl. And I want a mandatory federal fleet average fuel mileage of 50 mpg by 2020.

I want SUV's and pickup trucks included in the average mileage requirements -- no exceptions. I want fuel standards for semi trailer trucks.

One more thing. I believe that state's rights are no longer desirable. I want to eliminate state sovereignty completely, and make all state law subordinate to federal law. I'd really like to eliminate state government, and make states federal administrative districts.

And, yes -- I'd like to eliminate the U.S. Senate. We can simply add 100 seats to the House of Representatives and begin to benefit from a single legislative body. We'd finally have some accountability.

Mostly, I'm tired of the lobbyists and the unfettered power of incumbency. Thanks for listening!

Posted by: Ned | May 23, 2008 2:57 AM | Report abuse

Time out on the calls for mutiny, anarchy, and civil unrest. The world's reserve is dwindling, and a revolution is not going to change that any more than it will change the law of gravity. We just have to adapt. There's no other choice.

Posted by: dcp | May 22, 2008 9:40 PM | Report abuse

I for one love high gas prices. A bicycle is my main form of transportation and I chuckle every time I go past a gas station. Another thing that makes me laugh is when people complain about how much their hour long daily commute in their SUV costs. I'm even thinking about buying a few shares of ExxonMobil, just to so I laugh a little more at their expense.

Posted by: Wolfcastle | May 22, 2008 5:19 PM | Report abuse

The "Greatest Generation" and their children have already squandered most of the worlds cheap oil. If we go and drain AWAR then what the heck will our kids have? What right do we have to take the last known large oil preserve in America so we can avoid $125 per barrel oil and continue to party like its 1999? Anyone want to guess what oil will cost by the time my kids get to my age?

It is wrong to take from your children.

Posted by: Grant | May 22, 2008 4:03 PM | Report abuse

In my opinion:
OIL PRICES STUMP EXPERTS

Simple, the experts are not really experts. Try to follow me on this:

• War in Iraq - Over-the-top consumption by US troops and their affiliates to continue the conflict unabated, spiking oil prices to higher levels
• Auto Makers - Increase size of gas tanks on SUVs and other models larger than 'compact' to accommodate the customers request for larger automobiles. Since the foreign autos are a rather large part of the USA economic picture, it makes sense that of course, the price to keep these toys on the road will escalate, until there is an alternative to using fossil fuel!
• Bush's Blind Trust - is just that! Blind! Do some due diligence here to see where this trust dollar levels are today
• STOP importing foreign oil to USA immediately!
• Decrease national speed limit to 55 mph
• Encourage the public to use alternative methods for transportation, walking, car-pooling, biking, etc. There needs to be a concerted effort to scale back and/or upgrade our efforts to find fuel oil alternatives that will benefit our citizens and our economy. For the sake of trying to do business as usual, must come to an end. The American people deserve much better than they are getting at present.

Furthermore, the callous disregard to the citizens of this country should not be surprising. Remember, the election that put this current resident in office, was greatly flawed, abused and misused. The people were lead down the road by an inept and academically challenged person, who is now residing at 1600 PA Avenue. The only hope we have is that this term will be his last, and if the American people really want their voice to be heard, make sure they steer clear of the republican party and their cohorts. The very idea that John McCain may succeed Bush in this upcoming election is frightening and fraught with apprehension and outright fear of again, having to do on-the-job training for someone who should know what the requirements are for this office.

The problem with the price spike can be leveled directly at the Bush administration. Common sense dictates that because of the conflict, oil producing countries who have taken up the residuals formerly belonging to Iraq, are now charging the USA for that conflict. It does not make sense. However, the USA should demand immediately, that the oil prices be rolled back to the price at the time of the invasion. No exceptions! Our national security is at stake, and it seems no one is interested in protecting our great country! Why?

The Bush administration should lead be example, and not follow poor judgment so far displayed by foreign and outside interests. This administration has made selling off America, bit by bit, a priority. To question why these prices have sky-rocketed, go and ask that person residing at 1600 Pennsylvania Avenue, and I do not mean the spouses of these numbsuchs.

Senator John McCain, is not the answer! If you thought oil prices are high, wait until McCain tries to render a decision on these oil prices, while having another 'senior' moment. This country has paid the ultimate price to doing business with these foreign entities. All foreigners doing business with our country are/should be capable of enhancing the quality of life here in America, as opposed to forcing an additional strangle hold on the good citizens. We have to intervene on our own behalf, since there is no assistance now, or ever, from this administration.

Problems are not that difficult to understand. What the problem is; is lack of comprehension and forethought to the needs of the citizens of the united states of America. The next resident should be very careful not to continue the abuse and misuse of the public's sacred trust!

Posted by: carmelita chico | May 22, 2008 2:43 PM | Report abuse

Old paranoid conventional wisdom: Bush went to war in Iraq to steal cheap oil for his buddies.

New paranoid conventional wisdom: Bush went to war in Iraq to drive up the price of oil to enrich his buddies.

Everything is always Bush's fault. And the Freemasons are poisoning the wells. Tinfoil hats on!

Posted by: Adam | May 22, 2008 12:12 PM | Report abuse

This country, and the American people, are completely owned by the oil companies. If this were really a government of the people, we would have legislation to prevent this sort of thing. So either shut up and accept your slave status, or get off your fat butts and do something about it. You might start by firing EVERY senator and congressman in Washington D.C.
In the early 1900's the Russian people knew what to do. Just ask the tsar! In 1776 the American people knew what to do. Just ask the British!

Posted by: Anonymous | May 22, 2008 10:54 AM | Report abuse

What's there to not understand....one barrel of oil cost $25 before Bushies started their foolish Iraq war. Five years later we still have the war and oil is $135 a barrel. Anyone who thinks the Iraq war has nothing to do with oil prices is a sap, a bushie or an oil executive.

Posted by: Playa | May 22, 2008 10:20 AM | Report abuse

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