Think Before You Stick (that slogan on your car); oil-price edition
Bumper stickers were around long before Twitter but the idea is similar: encode a little pearl of wisdom in a very short statement. Like Tweets they can be entertaining, infuriating, and sometimes profound. And occasionally just abysmally stupid.
Yesterday I saw one (on an SUV of course) that said; “Drill Here! Drill Now! Pay Less!”
There are a few rather fantastic ideas wrapped up in that pithy statement. One is that foreigners are ripping us off. Another is that we’re sitting on a massive oil reserve that we could tap if only those stupid environmentalists would stop worrying about three-toed frogs. Another is that if we drilled more oil here, that the price at the pump would drop and stay down. And finally there’s the idea that we’re just paying too much for oil, period.
OK, one at a time.
Oil-selling foreigners – OPEC – do engage in something we would recognize as price-fixing if it were done to US consumers by a consortium of US companies. They’re not really competing; they’re colluding and that’s the grain of truth in the slogan. But their collusion isn’t completely solid; if they raise the price too high someone will break ranks.
As for how much oil we’re sitting on, estimates vary but the short answer is; no we probably couldn’t increase production much even if we turned the gulf into one giant oil slick and carbon-warmed the planet back to the Triassic era. So you can pretty much forget about drilling our way out of high prices at the pump. The oil companies know this and I don’t think it really bothers them much.
Here’s the real “What are you smoking?” point; that drilling more oil here would knock down the price and make it stay down. SRSLY?
Hey SUV- drivin’ person; do you honestly think that if US oil companies found a buttload of oil here in the US that they’d sell it to you for less than they could sell it to someone in China or Australia? Really? Better look up the meaning of the word; “fungible“.
We’d have to discover so much oil that it would glut the market, so OPEC would say; “Crap, we’re screwed. If we don’t lower our prices all those other countries will just buy cheap oil from the Americans.” And that ain’t gonna happen. Not only aren’t there any market-changing amounts of oil to be found in the Arctic, but US oil companies aren’t charities. We already subsidize them to the tune of $46bn, give or take. You pay for gas twice: once at the pump, and again in your taxes. Think about that the next time you hear someone arguing that green energy “needs subsidies to compete”.
Which leads to the last point: people who don’t drive are actually subsidizing those who do. That guy on the bike is helping you fill up your tank, so stop whining. You want to save money on gas? Next time buy a car that gets better mileage. Combine errands. Check your tires. And slow the frack down. Don’t think of it as being safer and greener; think of it as putting more money in your pocket, tax free! You’re beating the system, man.