<< Republicans will open Alaska and world prices will fall/ eco 101. This will kill OPEC's high prices >>
Yes, no doubt. At what cost remains to be seen, but one thing for sure, once they open up Alaska, that is irreplaceable. It will never come back, and considerable damage will be done. That has been the history of that drama up north. Alaska will certainly never be the same ever again, and will be far worse off.
The big payoff is that we get lower oil prices for several years, with a lot of luck maybe a decade or more. But who is the beneficiary of this big payoff?
Well, we can't export most of the oil because it is not economically feasible to do so. So we use it up internally. The stock markets probably do better, all other things being equal. If anything, there's even less incentive to become petroleum independent while were sucking up hard-won Alaskan oil that the big oil companies have invested billions in harvesting. With that kind of capital investment, is anybody seriously going to try to propose developing something that will pull the economic rug out from under them? Anybody who tries will be committing political suicide.
Little benefit trickles down to Joe Sixpack, because nobody is interested in building big expensive refineries just to lower prices for Joe. So instead, refining capacity stays about the same, and Joe gradually gets used to paying $2 - $3 per gallon of gas, and his initial grumbling is silenced by all the handwaving and backslapping because we are no longer at the "mercy" of foreign oil supplies. And Joe, doesn't it just warm your little heart that we've done a good deed in the name of National Security? Well, it oughta, unless your some kinda traitor or somethin'..... C'mon, Joe, keep a stiff upper lip, willya? Doncha remember them stirring words: "ask not what your oil conglomerate can do for you, ask what you can do for your oil conglomerate?" (or something like that, anyways)
Meanwhile back at the ranch... while economic benefits trickling down to Joe Sixpack are minimal, Big Benefits are gushing up to the usual suspects, and that's the major reason Alaska will be plundered in the first place--- Econ 101 for sure. It certainly isn't to benefit Joe Sixpack, and anybody who believes it is hasn't taken their antipsychotics in far too long or lives in a dream at the Neverland Ranch.
So what does OPEC do about all this? Well, since their mission is to maintain stable world oil prices, OPEC lowers output quotas. Everybody more or less complies (with the usual cheating), because that allows them to make maximal profits while using up their resources at a slower rate. There's not much we can do since we probably won't be exporting much oil, so we don't call the shots on the world markets, OPEC does. In fact, that's even better, because if OPEC props up world oil prices, then domestic prices have the perfect justification for remaining just as high, and Econ 101 predicts there will be zero incentive to lower them because there's little or no pricing pressure from competition because foreign oil is no longer a competitor. This was the story of the "crisis" with electrical power some years back, so the techniques of massive market manipulations and transferance of enormous wealth away from the middle class with the aid of smoke and mirrors are tried and true.
Eventually (20 years, 30 years tops?) our oil runs out. We are back at square one. And we STILL are petroleum-dependent, because nobody wanted to invest significant capital in anything except finding new and better ways to profit off the Alaskan oil bonanza.
The supreme irony would be if OPEC outlasts Alaska. Given the sizes of the oil reserves worldwide, that is a distinct possibility, particularly if OPEC curbs production to maintain stable prices. Then we may find ourselves in 20 or 30 years TOTALLY at the mercy of OPEC, but this time with no alternative at all and we've played the ace up our sleeve. Why? Because nobody has the balls to make the tough decisions that will require big capital expenditures at the outset to wean us off oil forever. But plenty of people were ready willing and able to make the decisons that would provide a stop-gap solution, probably all but destroy Alaska, and would line everybody's pockets to boot---everybody's pockets except, of course (you guessed it)---Joe Sixpack. But since when does Joe elect anybody to anything at all? So... since he who pays the piper calls the tune, and Joe ain't the piper, never was, and never will be (of course, don't anybody break that news to Joe), he'll just have to get used to the tune. Again.
Wish I could end this little story with "....and they lived happily every after." But the ending just doesn't fit.
So on with the show....
T |
