Maria Cantwell has a super boffo idea for bringing down the cost of a gallon of gasoline and it’s so surefire, it’s a wonder no one has ever thought of trying it before! Yes! It’s as simple as reining in the evil speculators who dabble in oil. Note to Maria…while we’re reining them in, maybe we should just go ahead and tar and feather them for some good, price-busting fun!
For those of you who are as confused by the commodities market as I am, let me explain the basics in simple terms. Simple because that’s the only way I understand it myself.
The laws of supply and demand dictate that when a commodity – in this case, oil – is plentiful, prices will be low and when it’s scarce, prices will be high. Speculators capitalize on this by buying when prices are low and holding it in anticipation of future high prices. It is true that by removing oil from the market, the cost of oil is forced upward, but what Senator Cantwell fails to take into account, among other thing which we’ll get to shortly, is that when speculators sell, i.e., release oil into the market, supply is increased, easing the upward pressure on prices and moderating the market.
I’d hate to think that Senator Cantwell knows even less about the commodities market than I do, but it appears as though that may be the case…and she’s in a position to do something stupid out of her ignorance. Or make a fool of herself in public by talking about it.
Now if Senator Cantwell really wanted a quick fix, one that didn’t meddle in the market, she could propose a gas tax holiday. The federal tax alone on gasoline is 18.4 cents per gallon. It’s not a lot, but it dwarfs the profits the oil companies are earning on a gallon of gas. From Exxon Mobil’s Perspectives blog:
“For every gallon of gasoline, diesel or finished products we manufactured and sold in the United States in the last three months of 2010, we earned a little more than 2 cents per gallon. That’s not a typo. Two cents.”
In fairness to Senator Cantwell, it does appear that she wants to throw oil speculators under the bus only as a short term solution, which would lead one to believe that she has a long-term plan. If she does, it doesn’t involve tapping into our own, hefty oil reserves; she voted “No” today on S.953, “The Offshore Production and Safety Act of 2011.” Key word being “production.” As in drilling for our own oil. Let’s note that the failure to drill for our own oil “removes” many time more barrels of oil from the current supply than speculators do.
So Senator Cantwell can sit in front of the camera and yammer on about gasoline prices from now until the cows come home and it won’t convince me that she really cares at all about gasoline prices, but for her own good, she’d better not sit there until the Democrats agree to drill here, drill now…she’ll be dust before that happens.