OpenCongress Blog

Blog Feed Comments Feed More RSS Feeds

$300 Oil

July 22, 2008 - by Donny Shaw

Rather than promising $2 Gas, Texas oilman T. Boone Pickens went in front of the Senate Homeland Security Committee today and warned of $300-a-barrel oil.

>Oil prices will hit $300 a barrel in 10 years if the United States fails to reduce its dependence on foreign imports, billionaire oil investor T. Boone Pickens told U.S. lawmakers on Tuesday.
>
>The United States imports nearly 70 percent of its oil and Pickens said the world’s top petroleum-consuming nation would import 80 percent in a decade if it does not aggressively tap its own natural gas and renewable resources.
>
>Pickens has been touring the country pushing a plan under which domestic natural gas supplies would be used to power cars instead of electrical power plants. The federal government and private investors would build a massive wind farm system in the middle of the country from Mexico to Canada to provide electricity.
>
>Industry group the American Wind Energy Association (AWEA) has said the Pickens plan could work if the government renews the production tax credit for renewable energy, preferably for longer than a year or two.

Meanwhile, the debate in the Senate today over the bill to curb excessive speculation in oil futures markets has broken down over concern from Republicans who want to offer amendments to increase domestic drilling.

Like this post? Stay in touch by following us on Twitter, joining us on Facebook, or by Subscribing with RSS.
 

Comments

  • Dem02020 07/22/2008 1:16pm

    I’m trying to figure out just how it is that a wind-mill can make an automobile go.

    I’m under the impression that the burning of oil accounts for only 10% or less of electricity production in the U.S. (coal and nuclear making up the balance of 90% or so).

    So if wind-mills can only generate electricity (but not make a car go), and if electricity at present is produced for the most part not by oil, then I don’t see what oilman T. Boone Pickens’ distractionary nonsense about the wind, has to do with the present cost of oil.

    On the other hand, I can easily see what commodities futures speculation has to do with the cost of oil: as the price of oil you see routinely reported in the news, is the price of a commodities future contract, pure and simple.

    Today (as of three hours ago), futures contracts on the New York Mercantile Exchange settled at $127.95 for a barrel of oil.

    That’s what you’ll see reported today for the price of oil: $128/BBL

    That price was determined by speculators, who bought and sold contracts on that oil, to hold it as a middle-man of sorts; to agree to buy it on paper from the producer, and to sell it on paper to the consumer some time in the future (and in between time, never take actual possession of the commodity, or even see it): and if they can bid the price up and up and up while they hold the paper on that oil (while they hold the futures contract), then the higher price they’ll get when the contract comes due, will be their middle-man’s profit: and that profit will come from the higher price paid by the consumer, for the inflated price of the commodity.

    I know what that’s got to do with S.3268, but I don’t know what it’s got to do with wind… unless T. Boone Pickens is just trying to confuse and distract folks.

  • Comm_reply
    zane 07/24/2008 8:44am

    @Dem02020 Have you actually read Pickens’ plan? It doesn’t sound like it. Wind can be used to displace oil imports if we start shifting our fleet to 1) plug in hybrids that use mostly electricity, or 2) natural gas powered vehicles, which can use the natural gas that is displaced in our power mix by the wind. Pickens favors the latter.

    Re: speculators… even the fairly liberal economics columnist Paul Krugman at the NY Times doesn’t buy the whole “blame the speculators” nonsense. It’s just a good story Congress can tell, about a scapegoat nobody has any sympathy for, without addressing the problems behind the high oil prices: namely, that global demand has been skyrocketing, while global supply has been stagnant, and we have made huge infrastructural bets on oil being cheap and plentiful indefinitely.

  • Comm_reply
    donnyshaw 07/24/2008 11:46am

    In case anyone’s interested, here’s Picken’s website for his plan:

    http://www.pickensplan.com/theplan/

  • Cheri 07/22/2008 4:07pm

    All I hear is how we need to drill for more oil. No one ever seems to ask, "What about the oil wells that are being paid to keep closed? What about the ones that produce oil, but just in lower quantities than the big oil companies want, that are capped off? Seems a little oil out of a well that is already there is better than speculation on oil shale or the cost and time it will take for even more drilling.

    Back in the 70’s we were assured our oil problems could be solved if only the oil companies were allowed to drill in Alaska. Where does that oil go?
    How much stays in this country and how much is sold to the highest foreign bidder?

    The 70"s was supposed to be a wakeup call on dwindling oil supplies, so why were the auto manufacurers allowed to produce Hummers, SUVs, and super-cab trucks? Why are we using 1.6 billion gal. oil each year just in the production of plastic bags?

    Then when sensible alternatives are brought up they’re knocked down as not being feasible. One of those arguments is fuels made from grain. We’re told that if the farmers start growing grain for fuel production, that the price of food grains will skyrocket, but what they forget to mention is the thousands of acres of grain farmers are paid not to harvest. Acres and acres of grain crops are left untouched in the fields every year. Why can’t these fields be alotted as fuel production? I have been told (though I haven’t researched it) that anything that ferments can be made into fuel. If this is true think of all the grass clippings from miles of roadside, and tons that are dumped into landfills, along with tons of spoiled fruits and vegetables hat could be used.

    There are power plants that are powered by garbage, yet every day in the United States, there are billions of tons of waste, polluting landfills. How many more tons are hauled out to open water to pollute there?

  • Comm_reply
    Dem02020 07/22/2008 5:14pm

    True, the present great number of acres of Federal Lands that oil companies hold leases on, are not being drilled for the oil that is known to be there, because those operations would not be “high margin” enough (would not produce windfall profits), and so they go un-drilled, in favor of simply calling for more and more leases, in some cases on lands that might provide “higher margin” operations. This reminds me of being like someone in the trades, a plumbing or electrical contractor, who is so greedy and so lazy, they refuse to bid on “low margin” (less profitable) jobs, and just sit around waiting for the real plums, the “high margin” jobs and contracts, and then and only then will they work.

    Back in the 70’s, the cause in the great rise in oil and gas prices, was because there was a shortage (an embargo actually): there were long lines at the gas pumps (demand), and those pumps were often dry and out of gas (a supply problem: “Out Of Gas” were what the signs said, on the pumps and in front of the station): people actually waited in their cars, in line at the station, if the attendant told them that the tanker was on the way, and would be there soon, to fill the station’s underground tanks; and then the signs came off the pumps, and the bells and the cash registers started ringing again…

    This of course is all true, and actually happened: and that’s called a “Gas Shortage”, which is a supply problem that causes prices to go up.

    Is there a “Gas Shortage” today? Are the pumps dry at the gas station, with “Out Of Gas” signs on them? Are people waiting in their cars for the tanker to show up?

    No, no, and no.

    And so if there is no “Gas Shortage”, and therefore no supply problem causing these high prices, then why would anybody think that increasing supplies, and drilling off-shore or in ANWR, would have any impact at all on those high prices?

    Today’s high oil prices are not a supply problem, they’re not caused by any “shortage”, so therefore no increase in supplies is going to have any affect on them.

    It’s worth noting here, that in the media and even in Congress, they know very well these current high oil prices have nothing to do with supply, and are not the result of any “shortage”: but still, they wish to put you in mind of the 70’s, and what happened back then (when there was an actual shortage), and so they choose their words carefully and cleverly, and call today’s high oil prices a “crisis”, and then of course they suggest increased drilling to address this “crisis”, despite it not being caused or having anything at all to do with, any supply shortage.

    Also worth noting, is that as a result of that true and real shortage in the 70’s, there was a quick and dramatic shift in automobile production, that resulted in many new models of fuel-efficient compact cars: the Pinto and the Vega and the Maverick and the Bobcat, and also the Comet, were all born fuel-efficient, as a result of higher gas prices: even Toyota and Datsun (Nissan) sales went up greatly.

    Where is the call today, for more fuel-efficient cars in response to the “crisis”?

    No one in the media, and few in Congress, are calling for any such thing: the entire televised media (owned by a narrow few private corporations) and many in Congress (mostly Republicans), are taking advantage of today‚Äôs high oil prices which are caused by speculation (and manipulation) of futures contracts trading on the commodities exchanges, to call for more drilling: as if those commodities traders will stop their speculating (and manipulating) in those futures markets, simply because more leases were being giving to people who aren’t even drilling on the lands they already presently hold leases for.

  • Cheri 07/22/2008 4:10pm

    All I hear is how we need to drill for more oil. No one ever seems to ask, "What about the oil wells that are being paid to keep closed? What about the ones that produce oil, but just in lower quantities than the big oil companies want, that are capped off? Seems a little oil out of a well that is already there is better than speculation on oil shale or the cost and time it will take for even more drilling.

    Back in the 70’s we were assured our oil problems could be solved if only the oil companies were allowed to drill in Alaska. Where does that oil go?
    How much stays in this country and how much is sold to the highest foreign bidder?

    The 70"s was supposed to be a wakeup call on dwindling oil supplies, so why were the auto manufacurers allowed to produce Hummers, SUVs, and super-cab trucks? Why are we using 1.6 billion gal. oil each year just in the production of plastic bags?

    When sensible alternatives are brought up they’re knocked down as not being feasible. One of those arguments is fuels made from grain. We’re told that if the farmers start growing grain for fuel production, that the price of food grains will skyrocket, but what they forget to mention is the thousands of acres of grain farmers are paid not to harvest. Acres and acres of grain crops are left untouched in the fields every year. Why can’t these fields be alotted as fuel production? I have been told (though I haven’t researched it) that anything that ferments can be made into fuel. If this is true think of all the grass clippings from miles of roadside, and tons that are dumped into landfills, along with tons of spoiled fruits and vegetables hat could be used.

    There are power plants that are powered by garbage, yet every day in the United States, there are billions of tons of waste, polluting landfills. How many more tons are hauled out to open water to pollute there?

Due to the archiving of this blog, comment posting has been disabled.