From AP, July 23:
Republican John McCain on Wednesday credited the recent $10-a-barrel drop in the price of oil to President Bush’s lifting of a presidential ban on offshore drilling, an action he has been advocating in his presidential campaign.
The cost of oil and gasoline is “on everybody’s mind in this room,” McCain told a town-hall meeting.
He criticized Democratic rival Barack Obama for opposing drilling on the Outer Continental Shelf.
Bush recently lifted the executive order banning offshore drilling that his father put in place in 1990. He also asked Congress to lift its own moratorium on oil exploration on the outer continental shelf which includes coastal waters as close as three miles from shore.
“The price of oil dropped $10 a barrel,” said McCain, who argued that the psychology of lifting the ban has affected world markets.
There are 42 gallons in each barrel.
A barrel of light, sweet crude fell $1.86 to $126.56 on the New York Mercantile Exchange. That’s down from more than $140 a barrel earlier in the summer.
Not a likely explanation. As we’ve pointed out, Bush’s action does nothing to open up the offshore resources until Congress acts, and the Democrats are largely against it. The drop in price has also coincided with the first signs of a diplomatic opening in the Iran showdown—meaning there is less likelihood of a new war in the Persian Gulf, with oil fields going up in flames and the potential for them to fall into radical hands. Why is nobody pointing to this as a factor? As we’ve always argued:
With the invasion of Iraq—which sits on nearly half the Persian Gulf reserves—it was correctly perceived that the struggle for the planet’s most critical reserves was truly underway, and the third oil shock arrived. The price has escalated along with the level of insurgent violence ever since. The Great Fear driving the prices ever higher is that the US could lose control of Iraq, the conflagration could generally engulf the Middle East, and that Iran or jihadist elements far more intransigent than Saddam Hussein could emerge as new masters of the Gulf reserves.
As we’ve also pointed out:
There have been price shocks before, and they have all been in response to political crises in the Middle East: 1956 (Suez), 1973 (Yom Kippur War), 1979 (Iranian revolution), 1991 (Desert Storm). It is absurd to assume that the current spike is unrelated to the war in Iraq.
Why is everybody so blind to the obvious this time around? Increasing demand, “peak oil” fears and speculation are all doubtless contributing to the spike. But it was sparked, and is fundamentally driven, by the war in Iraq. And the same folks who brought you the Iraq war are now leveraging the resultant spike in order to get their hands on ANWR and the Outer Continental Shelf.
If the US falls for this, it is stupid enough to deserve John McCain.
See our last post on the global struggle for control of oil.