Is Offshore Drilling the Next Gun Control?

The conventional punditry on McCain's call to end the ban on offshore oil exploration has focused on whether President Bush's suppport for the idea will hurt McCain in the fall. But that could change, and soon, if what's happened in just the past few days develops into a real trend:

  • Sen. Jim Webb announced he now supports exploration off the coast of Virginia.
  • Ex-Gov. Mark Warner also supports opening up the Virginia coastline to possible drilling.
  • Meanwhile, the latest Gallup survey shows Democrats are split on offshore drilling, with 39% in support while 59% still oppose.

Better yet, it's an issue where independents side with the GOP, although the margins are not so wide (80% in favor vs. 56%). Overall, Americans favor opening up U.S. coastal waters by a 57% to 41%.

Now, what does this issue remind you of? How about gun control in the late 1990s?

 

Arguably the anti-gun movement's greatest victory was the 1994 Scary-Looking Gun Act... er, Assault Weapons Ban. Through the 1990s, crime declined steadily, and it had nothing to do with assault weapons or the ban. State gun laws stayed the same or got better. Americans' support for gun freedom started to tick upward. The 2007 Virginia Tech massacre generated more questions from the left about their own priorities than any actual calls for greater restrictions.

Meanwhile Democrats, who had traditionally taken a dim view of the Second Amendment, started to change their minds. By 2000, many Democrats believed that Gore's opposition to guns cost him in rural areas. When Mark Warner ran successfully for governor in 2001, he gladly counted "Sportsmen for Warner" among his supporters. And after John Kerry lost in 2004, Chris Bowers actually wrote this at MyDD:

There are two liberal issues that I think we should drop ... The first is gun control. Even though I have never owned a gun, and never intend to own a gun, this is an issue that has never resonated with me. Have any of our gun control laws reduced gun-related violence? Are there any further laws we could pass that would be more effective than just enforcing the laws we have? Forgive me if I sound a little NRA, but are guns really a major part of the problem with our violent society?

Small coincidence then that MyDD site founder (and Warner consultant) Jerome Armstrong wrote this yesterday:

The politics have changed, and I don't see the principle that guides Democrats to be unequivocally against offshore drilling for oil at this point. We are stuck on oil for a long time. Congressional Dems should adopt the position, include some safeguards, and alongside billions in funding for finding alternative fuel solutions, make it part of a long-term solution.

So far, support for offshore exploration from Democrats is limited. Will Democrats continue to ignore a significant minority of their party who support it? If they don't, that's good news for John McCain. If they do, it might just be the next gun control.

P.S. To be sure, not all Republicans have joined McCain. Take for instance Gov. Schwarzenegger, who styles himself an environmentalist and, perhaps coincidentally, is also a supporter of gun cuntrol.

Note: Yesterday I covered the poor reception of Daily Kos' offshore drilling conspiracy theories on the social news site Digg, at Blog P.I.

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Dems, please keep harping

about how Americans just need to buck-up and learn to ride bicycles everywhere we go.  In fact you should make your support of higher fuel prices a front-page item for the Baracky campaign.

Looking at the oil problem backwards

 

Both Democrats and Republicans don’t get it!!! We need higher gas and oil prices to get us off our butts and do something before it turns into a real crisis—GAS AND OIL SHORTAGES--that would be a real disaster to our economy!    Had oil prices continued to go up modestly during the 80’s and 90’s we would not be in this problem now! The US is about 3% of the world population and yet we use about 25% of the world’s oil. The world population is growing and the ever-increasing demand for more and more energy by underdeveloped counties  will continue for the foreseeable future. 
 
If America wants more oil because it just wants cheap energy prices, it will be a fools errand. In the long run a sound energy policy that both Democrats and Republicans can live with is needed. This should have been done 35 years ago! With all the problems that we face in the  US, we are doomed unless we can work together!!!

 

Is it possible that gunthestops has a hidden energy agenda?

gunthestops

Maybe you could help the Obama campaign go nuclear, then we'd have plenty of energy for one and for all, throughout the whole wide world and beyond.  I mean, I dunno. Like the man says, I'm just pickin' up the pace, "Spanky" - no, wait - that would be "Sparky". 

Although if we're talkin' Obamunism, I prefer "Comrade Bunny-Bun". 

Comrade Bunny-Bun

Because we're sane?

"If America wants more oil because it just wants cheap energy prices"

What?

Um, hello? Yes? Even just stopping the meteoric rise would be a step. And there's a correct criticism that increasing energy supply isn't something that can affect the current supply immediately. (Which is then attached to the fallacy that that means it can't affect the prices of the energy we've got.)

 

But the price of practically everything includes a line-item or two for energy costs in various forms, and there's a wide swath of essentials whose price is dominated by energy costs.

 

Only a complete moron - or perhaps someone with a conflict-of-interest - would want an increase in the price of energy. 

This Could Turn The Election Around

The biggest obstacle facing our economy right now is the price of oil.   The price of gas is a little barometer most Americans use in judging the economy.  Americans instinctively understand that more American oil, means lower prices for them at the pump.  Being on the side of greater American oil production benefits Republicans on so many different fronts, economic, nationaly security, trade (less foreign oil), etc.

When Americans are paying more for their gas than their car payment or even their mortgage, environmental nonsense quickly goes out the window.  If one politician has a real solution to bring down the price of gasoline, and one politician (Obama) tries to sell Americans on the premise that high gas prices are good for them,  that it will make them better conservers of energy, who do you think is going to win that argument?

McCain should constantly hammer Obama on this, and make it a major theme of his campaign.  This issue resonates universally with voters across all 50 states.  The Sierra Club crowd is never going to vote for McCain anyway,  he has nothing to lose, and everything to gain.

 

Lagomorph for Veep

Good catch.  Uhh, gunthestops, we use energy in a free-market just as we do any other commodity; you might as well decry that China is using 65% of the world's current concrete production, which it buys on that same global market.

I agree we need sound energy policy, but having the DFL tell us we need alternate fuel supplies and then standing in the way of every proposal is ludicrous.  We can't have nuclear, or coal, or wind where the wind is, or nat gas or oil, so what do you propose we do?   Oil is what runs the world now and if you want a strong and sound economy which would allow for the creation of the viable alternatives, raising oil prices would be the last thing you should do.

 

My good friend, Jeff Roberts

Sorry Jeff, I must be wrong, Democrats and Republicans really don’t need to work together to solve these small problems such as energy shortages, the war, the national debt, crisis in the banking and credit system, the dollar, 50 trillion of unfunded liabilities and all the other little problems we have. My background both as a career military person and in finance/economics as a portfolio manager does not compare to your giant intellect and ego. But please go on sparky, you seem to be so much smarter then the rest of us, how do you solve these problems that have gone from bad to worse over the last 7 years!!!!!!!!!!!

 

Just to level set

First of all, the problems regarding energy have been well known, well documented, and have gone from bad to worse for approximately 35 years.  This whole "Blame-Bush" thing is so last year, but I suppose you must continue to replay that record ad nauseum until your candidate is elected. Certainly you will continue to play it long after our candidate is elected, should that long shot play out. 

But back to my response to your response to Jeff's response - the first oil crisis occurred in 1973 during the Yom Kippur War, when OAPEC would no longer ship oil to nations that had supported Israel.  The second oil crisis occurred in 1979, when Ayatollah Khomeini gained control of Iran's oil fields during the glorious people's revolution of Islamic FUNdaMENTALists.  In 1990 there was a milder oil crisis as a result of the Gulf War after the Kuwaiti oil fields were set afire (not really very helpful to the environment either, btw), and we've experienced a similar rise in prices since the commencement of the Iraq War in 2003.  This occurred over both Republican and Democratic administrations, and all Americans are guilty of fiddling around and not investing substantially in alternative energy sources including solar, wind, tide, nuclear, hydrogen, and so forth.  So if you'd like to come together in glorious unity, then you should probably acknowledge that we all had our heads up our collective arses, including many environmental activists who lobbied and railed against nuclear power and offshore drilling, both of which have proven safety records in this millenium. 

I'm not sure that referring to everyone affectionately as "Sparky" is really helpful, either, for building fearless and glorious social, economic and international respect.  You might want to revisit that strategy.  Other than that, many of us agree that we need to align with our Democratic brethren.  I'm always willing to work with conservative Democrats.  I think they're warmly referred to as "Blue Dogs" whom the Left is hoping to purge from its glorious People's Party this year...  Next year we will probably be calling them newly registered "Independents" and "Republicans". 

Who Are You Responding To?

Gunthestops,

I'm not even sure what you're trying to argue with me about.  Nothing in your "response" has anything to do with my post, yet you're addressing it to me.

Here's my theory, Jeff

When gunthestops wrote:

My background both as a career military person and in finance/economics as a portfolio manager does not compare to your giant intellect...

Clearly he was providing an accurate assessment of the situation. 

 

fattymelt

Offshore drilling won't effect our economy for close to 30 years. This will not be an issue in this campaign. People want immediate, sustainable (not a "holiday") solutions to the gas/oil problems we are facing.

I'm not suggesting the Dems or the GOP has the right answer. but don't get your hopes up that offshore drilling is going to divide the nation.

If I understand the theory correctly,

just the mere announcement of drilling offshore, investigating oil shale extraction and (hush now, it's just a rumor so far) drilling in ANWR would accomplish two immediate benefits to consumers:  (1) stem the rise of oil future purchases, and (2) prompt the Saudis to increase supply due to perceived competition. 

Larry Kudlow wrote the following in his National Review column on June 10:

Right now voter economic anxieties are all about oil, even more than the sub-prime housing credit problem.

...Then there’s the oil nobody is talking about. The Bakken fields beneath North Dakota, Montana, and Canada hold an estimated 400 billion barrels of oil. In comparison, Saudi Arabia’s biggest field, Gahawar, has an estimated 55 billion barrels, while ANWR has an estimated 10.4 billion barrels.

Hat tip to Mark Perry at the Carpe Diem blog site for these figures. Perry also is reporting a Bureau of Land Management study showing 279 million acres under federal management where oil and gas could potentially be extracted. But more than half of this is totally off limits. Off-shore, where another 86 billion barrels lie in wait, is also restricted. Then there’s liquefied natural gas, oil shale, and the various coal-to-liquid carbon-capture and sequestration technologies that would be priced out of the market by cap-and-trade.

He wrote this today in Kudlow's Money Politic$, also appearing on National Review:

Oil-market traders react rationally to new information. Instead of blaming them, senators McCain and Lieberman might want to visit with some traders on some of the big Wall Street trading floors to better understand the relationship between global news and price discovery.

There’s something more here. Democrats reading from their talking points are completely opposed to Bush and McCain proposals to open up new oil drilling offshore and onshore. The Democratic argument — which I heard again last night on my show from Robert Reich — is that it will take ten years to lift new oil, which will never help today’s price problem. Obama says exactly the same thing, as do Harry Reid, Nancy Pelosi, and all the rest. But they’re forgetting the role of oil traders.

Oil futures markets have contracts that run out five years and beyond. If these traders — or “speculators” — believe new oil supplies are on the way in the future, they will sell those out-year contracts. And before long market arbitragers will backward-ize those price drops toward the spot market, bringing prices down there as well.

In other words, trader/speculators can be very handy instruments of energy (and economic) policies. If demand exceeds supply they are buyers. But a prospective future supply increase makes them sellers. In a free market prices move both ways. And if Sen. McCain would take the time to learn this he could respond accordingly to Obama’s silly criticism that we shouldn’t drill because it will “take too long.”

This is all part of the key point that McCain can turn record energy prices to his political advantage, as polls now show 65 percent, or two-thirds, of the public favors drilling. But to do this the whole GOP must understand the role of oil traders and their speculations.

Or alternatively, we could just nationalize the oil industry for the mutual benefit of all collective peoples' glorious prosperity and leave oil prices to whatever our great and fearless leadership tells us it should be.  I believe that's now called Hincheyconomics

The Problem with the Democrats is their Coalition

 For example, one of the reasons we don't have high speed rail in this country has nothing to do with the fact that people wouldn't use it; they would. There are plenty of folks who are getting tired of airline cattle calls. We have nothing, and I do mean nothing, like the clean and super-efficient Kanban that run the length and breadth of the Japanese Home Islands.

To build something like that here, we would have to process and EIS, or Environmental Impact Statement, for each line. That takes about 10-15 years to do. These EIS processes have nothing to do with actually protecting the environment. They have more to do with avoiding litigation and providing make-work jobs for the plaintiff's bar.

And that's just the train system in this country. The environmentalist lobby and the Trials have a chokehold on that party as well as on most major Big Projects in this country. Avoiding litigation is the primary purpose to all this paperwork, and since the object of the exercise is to get a cut of the swag, why not sue?

If you want to know why we don't have new refineries in this country, there's your answer. And the last thing that Democrats are going to do is change a system that provides them with mountains of campaign money from the American Bar Association. 

Looks like Gingrich finally stopped listening to himself talk and hit on something that works. 

 

 

When Rahm Emmanuel said "use it or lose it"

last night on Fox, referring to the oil companies "not producing on land they currently own", Brit Hume countered with your excellent explanation as to exactly why the oil companies aren't producing - because it can take up to ten years for the Environmental Impact Studies to be approved, and even when they are, often the exploration occurs in an unproductive area and they must begin anew elsewhere. 

H/T to Coral Davenport at Congressional Quarterly:

After being pummeled by Republicans for opposing efforts to open more areas to offshore drilling, Democrats have shifted gears and are blaming energy companies for not fully exploiting the domestic oil and gas reserves they already control.

House and Senate Democrats are complaining that U.S. oil companies are not drilling on 68 million acres of leased federal land and waters.

“At a time when our constituents are paying $4 per gallon at the pump, the answer is to make sure that oil companies are producing on the land they currently own,” four leading House Democrats wrote in a letter to colleagues. “They need to either use it or lose it.”

The four House Democrats —
Edward J. Markey of Massachusetts, chairman of the Select Energy Independence and Global Warming Committee; Natural Resources Chairman
Nick J. Rahall II of West Virginia; Democratic Caucus Chairman
Rahm Emanuel of Illinois; and
Maurice D. Hinchey of New York — said they will introduce a bill that would raise lease fees for oil companies not drilling on leases they hold.

The Republicans need to hold legislation critical to the Democrats hostage in return for expediting permits for nuclear power plants and energy exploration (coal, oil, natural gas).  The time is right and the will of the people are behind it.  And Newt is one of the few Party leaders providing actual leadership at this time.  Except for Chuck Norris, of course.  

cnorrishead

The Democrats want America to be a BANANA republic

http://en.wikipedia.org/wiki/BANANA

BANANA is an acronym for Build Absolutely Nothing Anywhere Near Anything (or Anyone). The term is most often used to criticize the ongoing opposition of certain interest groups to land development.

Increasing supply may not lower gas prices.

Now hear me out on this. It's late and I don't want to go into this in great detail now...later. But, we are all assuming gas prices are going up because demand from principally third-world countries are consuming more. As demand increases, and supply is controlled, prices go up. It's simple supply and demand economic -- maybe too simple.

But what if the demand hasn't actually gone up dramatically as has the prices of gas in just a few short months? Sure, demand is raising, but at fairly steady levels, resulting in a slow, steady raise in gas process. And, sure, speculators may influence the matrix a little bit. But what if the real culprit isn't raising demand, but the falling value of the U.S. dollar?

Well, as I say; I'll get into this theory a little later, but for now, assuming it's true...it would take a fairly long time to address the issue, say around thirty years. Oil companies would be in no great rush to produce new wells, or refineries....but most importantly, when the Saudis increase oil output (even thought publicly they said they wouldn't) first 200 million barreles per day, and then 500, and now 800 million barrels per day, and prices still went up -- or failed to go down  -- you have to wonder, if the real culprit of raising gas prices is the falling value of the dollar and the government doesn't want you to know..

ex animo

davidfarrar   

Falling dollar

You're correct that the falling dollar and the shift of the oil market towards Euro-based is affecting our price at the pump. But that isn't why the price at the pump is skyrocketing in, say, Great Britain. You see posts all over the place to the effect "Stop whining, why in my country gas is OMG huge." (Notably not including anywhere where the government is paying for the gasoline.)

 

But that doesn't affect the Supply and Demand argument. With both a steep supply curve and a steep demand curve the law of S&D states that small shifts in demand will have sharp effects on the price - in any monetary unit. As will small shifts in supply.

 

We can reasonably predict a steady rise in demand unless there's major famines or an actual depression. So prices are going to go up. Sharply. Unless there's a concerted effort to grease the supply side of the problem. And not _just_ any one thing. But if you throw everything including the kitchen sink at the supply side you're certainly going to improve the odds.

Regarding the pound

Commodity Futures Charts

The pound is also falling against the Euro. And the hit on European gas tanks and pocket books because of the fall fo the dollar versus the euro. This chart should help.

The upshot is that dollar denomination is saving our butts, by keeping demand for the dollar up, but makes us really vulnerable if something goes really wrong.

 

More drilling=stronger dollar

More domestic supply=less imported oil

Less imported oil=fewer offshore petrodollars

Less supply of offshore dollars= higher value of currency

I hope you are right.

But if I was a private oil company bringing a million barrels of oil online for the first time, I would want to sell my oil on the "open" market, which adjusts itself to the devaluation of the dollar on the world market; wouldn't I?

ex animo

davidfarrar

Open market

 Domestic production helps regardless of whether the oil is kept inside the US or not.

 

The "strength" of the dollar is influenced by the ratio of imports-to-exports. So drilling here means either more exports - or less imports.

Additionally, increased energy supplies affect the price regardless of currency. So the US price gets a double-whammy. 

what Milton Friedman said

"inflation is always a monetary phenomenum"