Doug,
While there may be some merit to what Domenici said, there is at least one clearly inaccurate statement, which calls into question the whole thing. He said that the oil for the SPR was not coming from domestic sources. That's not true. The oil is being collected as payment in kind for royalties on Federal offshore leases in the Gulf. Also, anyone who makes a prediction of oil prices 10 years from now, appears foolish to people familiar with the industry.
It is true though, that Clinton doesn't owe anything to Texas, NM and Okla since their Congressional reps were leaders in the attempt to impeach him. There's an old saying I just made up. "If you're hunting a grizzly bear, don't miss." There will be payback, it's the nature of the game.
But Clinton doesn't have to work too hard to let the small producers in these states hang out to dry, because there is little support, outside the producer states, for any kind of Gov't bailout of high cost producers, and the large oil companies probably also are not behind it. It's not just Clinton who wants to keep inflation/oil prices low for the benefit, it's pretty much the rest of the country, Demo and Republican, who are enjoying the economic benefits. I think the representatives from those States can make all the accusations or whatever they want, not much is going to come of it. It will be up to the States themselves to come up with packages. The US government has protected its interests in the Federal waters of the Gulf, and has little motivation to do anything for the States, particularly States with the leading political enemies of clinton. The US has also helped the large producers in the Gulf by the SPR.
I have to admit, even I have doubts about the wisdom of shoring up businesses, here high cost producers, who cannot compete.
they took their chances for profits, and they guessed wrongly that oil would stay in the 20's. That's the type of risks all businesses take, why should the Government bail them out, at taxpayers' expense, when they can't hack it? That's the argument that will be used for any large scale bail out, and it's pretty convincing, I think. Don't forget that last Oct Congress itself refused to appropriate money for the SPR buy, even with the big National Security argument. JMO
Good luck
Mike |
