Dems and the shifting political winds

Politico claims that “Dems [are] Searching Their Souls on Drilling“.


They’re searching the polls, not their souls, and they aren’t happy with what they find juxtaposed with their present position on the matter. So, as is typical of the breed, they’re easing toward the more popular position.

Senate Minority Whip Jon Kyl (R-Ariz.) said Wednesday that Democratic and Republican leaders are negotiating a compromise on energy legislation. Kyl declined to say who’s doing the negotiating or what results, if any, their discussions have yielded.

But Sen. John Warner (R-Va.), a longtime proponent of increased offshore drilling, said he was seeing “a big shift, a big shift in my direction,” and it was hard to find Democrats who disagreed.

We’re then treated to the most preposterous quote of the day:

“I’m not knee-jerk opposed to anything,” said Senate Majority Leader Harry Reid (D-Nev.). “We’re willing to work. We haven’t shut our minds to anything.”

Or so claims Mr. Harry “oil and gas make us sick” Reid. Instead what it means is Democrats are finally waking up to the political landmine this issue could be come Novemeber and are sliding, or slithering if you prefer, into the politically popular side of the debate.

The way you do that and still claim to be principled is to make demands while claiming it is these demands which have kept you from taking that side initially and it is all your political opponents fault for being intransigent on them. For instance:

Although Senate Democrats are slowly easing away from opposition to offshore drilling, it’s clear that the majority party is not giving it away for nothing.

One idea floated by Reid would require that whatever oil is drilled in newly opened areas would need to be sold in the United States.

Democrats also want any compromise plan to include investments in clean and renewable energies, a crackdown on oil speculators and proof that the oil and gas companies are fully utilizing land that is already leased for exploration.

“If they were showing in good faith that they were drilling on some of the 68 million acres they have now, it might change some of our attitudes,” said Sen. Claire McCaskill (D-Mo.).

The usual raft of nonsense about the “68 million acres”. Joseph Petrowski answer that in today’s WSJ:

The claim that the oil companies are sitting on leases and not drilling defies all logic. With oil at $135 per barrel and drilling rigs renting at $300,000 per day, there are no idle rigs anywhere.

He makes a couple of other salient points as well:

Your claim that any oil we drill for now will not come on line for five years or longer – and will thus have no effect on prices today – is incorrect. Unlike past oil crises, where the spot price of oil (that is, today’s price) rose more than forward prices, the oil price for delivery in 2012 is trading at $138 per barrel. The market is sending a clear price signal that our problem is in the future – because we do not have the will to curb demand or increase supply.

How many houses would someone invest in if there were a future guarantee that the price would not decline? It is anticipation of ever-increasing prices that fuels the mania.

The oil market, however, has more than anticipation; it has a well-defined forward price signal. This is a key component of the added $25-$40 per barrel in current oil prices. Congressional hearings and “make it go away” legislation will not stop that. Demonstrate the national will to address the supply and demand issues now and it will.

As forward prices decline, watch how quickly the spot price comes down.


And furthermore, in remarks addressed to Republicans, Petrowski says:

Finally, can we stop with the nonsensical talk of “energy independence,” the end of petroleum, and postured, ineffectual boycotts of Exxon Mobil? We cannot, should not and will not be independent in a global economy, and petroleum is not going to disappear.

A more accurate metaphor is the global energy market as a giant bath tub where more withdrawals (Chinese and Indian) are being made every day. The only consistent new supply to that tub is coming from periodically unstable and unfriendly places (Nigeria, Russia, Iran, Venezuela).

Our national interest is to add more energy, use it more efficiently, and diversify its source and type. This will serve to lessen the power of any one choke point (geography, nation or source).

Using market mechanisms and the private sector (admit it, Democrats) alongside an engaged, effective and focused government (admit it, Republicans), true leaders can solve this crisis decisively.

Of course no one will listen to Mr. Petrowski’s common sense and econ 101 points. Petrowski, you see, is the president of Gulf Oil and we all know “big oil” is simply evil on toast and it’s their greed which has gotten us in this shape in the first place. [/sarcasm]

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