Why are Oil Prices Falling?I couldn't help but notice that as soon as President Bush ended the presidential moratorium on drilling in the sacred, forbidden, offshore areas, oil prices went down. That was yesterday. They've gone down further today. I thought there could be a connection. The Detroit Free Press, wedded to a certain way of thinking, had other explanations for the fall of oil prices. But if there's one thing I've learned about the "progressive" mindset, it is that - for every true statement from the non-progressive side, they've got a barrel full of contrary explanations, very few of which can stand up to scrutiny, which is probably why they need so many arguments to convince us nonprogressives that we need to believe them over our own lying eyes.
Anyway, over at NRO Online, Larry Kudlow, who I assume knows a lot more about this than I do, says,
In a dramatic move yesterday President Bush removed the executive-branch moratorium on offshore drilling. Today, at a news conference, Bush repeated his new position, and slammed the Democratic Congress for not removing the congressional moratorium on the Outer Continental Shelf and elsewhere. Crude-oil futures for August delivery plunged $9.26, or 6.3 percent, almost immediately as Bush was speaking, bringing the barrel price down to $136.Democrats, though, will, according to Michelle Malkin, continue, along with environmentalists, to hold our economy hostage. How long will the American people allow this? I don't know, but I'm going to fire off another letter to my elected representatives. The other ones don't seem to have done much good, but if they turn out to be part of an avalanche of letters and phone calls, maybe we can see some change from these so-called servants of the people.
Now isn’t this interesting?
Democrats keep saying that it will take 10 years or longer to produce oil from the offshore areas. And they say that oil prices won’t decline for at least that long. And they, along with Obama and McCain, bash so-called oil speculators. And today we had a real-world example as to why they are wrong. All of them. Reid, Pelosi, Obama, McCain — all of them.
Traders took a look at a feisty and aggressive George Bush and started selling the market well before a single new drop of oil has been lifted. What does this tell us? Well, if Congress moves to seal the deal, oil prices will probably keep on falling. That’s the way traders work. They discount the future. Psychology and expectations can turn on a dime.
The congressional ban on offshore drilling expires September 30, so that becomes a key date. A new report from Wall Street research house Sanford C. Bernstein says that California actually could start producing new oil within one year if the moratorium were lifted. The California oil is under shallow water and already has been explored. Drilling platforms have been in place since before the moratorium. They’re talking about 10 billion barrels worth off the coast of California.
There’s also a “gang of 10” in the Senate, five Republicans and five Democrats, that is trying to work a compromise deal on lifting the moratorium. So it’s possible a lot of action on this front could occur much sooner than people seem to think.
So I repeat: Drill, drill, drill. Deregulate, decontrol, and unleash the American energy industry. Those hated traders will then keep selling oil as the laws of supply and demand and free markets keep working.
Bravo for Bush. Bravo for the traders.