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Lamar Smith Hearts Hugo

A note I just sent to the morning show guys at KLBJ after I got to work late from the car dealer:

Ed and Mark,

I heard your conversation with Lamar Smith while coming late to work today from the car dealer. While his figure of 20% for ANWR's possible increase to US oil production is higher than anything I've ever seen anybody say, that's not the most relevant thing: the more important point is that oil is priced on the world market (it's 'fungible'), so it doesn't matter whether the US produces 1% or 99% as much oil as we consume; what matters is the world supply and demand (unless we were to nationalize our oil industry and force 'our' oil to be sold to us at a discount).

I wrote a short post on this a few weeks ago; finding it ironic that the party that has stood for supposed economic literacy and against nationalization is proposing a plan that can only work if you ignore one or both. Here's the link: http://mdahmus.monkeysystems.com/blog/archives/000515.html

Regards,
Mike Dahmus
mike@dahmus.org

This entry was posted in the following categories: Economics , PS: I am not a crackpot , Republicans Hate Poor People , Republicans Hate The Environment

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Comments

Off topic, but...

What are your thoughts on the delay of the commuter line opening? To me, the whole point of this line was to show that rail could be viable in CenTex and to show that Cap Metro could build and execute properly. Now, we have a plan that is over budget and late (wasn't it originally set to open Fall 2007). I know delays and cost overruns are typical, but I am very disappointed. The whole point of this was that it was going to be quick and easy to get up and running. If Cap Metro can't execute here, then we have some serious problems.

My hoaky internet research seems to turn up 1 to 2 million barrels per day that could be brought online by the additional drilling. Some of that would come quickly, and some would take years to come online.

With global oil demand in the high 80's million barrels per day, 1 to 2 million barrels additional supply -is- significant.

Commodities pricing (speculation aside, even) comes from the most expensive unit, and a 1 to 2% displacement should eliminate some of the most costly units.

That's not even getting into the regional factors. I think it is a bit misleading to label oil as globally fungible as you have, giving the impression that regional events really have no impact on oil pricing.

Pumping a half million barrels at offshore rigs off the coast of Florida is probably going to be quite a bit cheaper than getting an equivalent amount from places like Venezuela and Nigeria. That kind of shift would have a global impact.

We see that kind of thing frequently, after all. Every time storm clouds gather in the gulf, or Ahmadinejad rattles his saber, global prices go up. Why are you implying that these regional actors & events can affect global prices, but our 1 to 2% additional to global supply won't?

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