In an interview on August 15, 2005, Dr. Michael Perelman of California State University's School of Economics was explaining factors that influence oil prices. In response to my previous post below about paying for the speculation of war, I discovered his statements on this subject. He simply called it a "risk premium" for the threat of war in oil producing countries. That's a good explanation for it, it's just too bad that we're all being held over a barrel (pun intended) on these oil prices. Why must all the oil be gathered from such turbulent areas?
Here's a theory: many people believe the US has numerous oil reserves in the ground. We could drill here, as we have in the past. But we don't drill because our society is so elegant now that it cares more about the "Environment" than our natural resources. I'm not trying to say that being environmentally concious is a ludicrous concept. Just because some people, who have made fabulous success in earning wealth in their lives by using an excuse of what we would call "work", and have taken up these causes with fanatical fervor in order to balance their personal perception of their level of Karma, or because they feel environmentalism is an excellent excuse to promote their personal, political agendas, doesn't mean that EVERYONE who talks about environmental issues is a loopy, wing-nutty, robotic, script-spewing fanatic.
Back to oil producing nations. Where is oil drilled? Is it downtown of a city? Now, I've seen an active oil pump in the middle of a shopping center parking lot in the outskirts Oklahoma City, but which do you think was there first? Many drilling sites are under-developed for a variety of reasons; they have jungles, deserts, remote mountain ranges, people nearby may be living in rural squalor, and the vast majority in poverty. You think they're worried about the "Environment"? You think Nigeria, Saudi Arabia, or Venezuela doesn't have more important things to worry about than if this one, particular activity of drilling for petroleum will adversely affect the local wildlife and fauna?
What the heck happens with sprawling cities, whether they're made from skyscrapers and suburbs or from shacks? Why aren't we concerned about the "Environment" when we're building thousands of square miles of condos and houses to keep up with this real estate craze we've been experiencing? You have to knock down trees to clear room for a building!
My point is this, we don't drill within our borders because we are concerned about affecting the local "Environment", the local wildlife, the local citizens, and let's not forget that Washington has been in bed with the Middle East for 20 years already. But we're not supposed to know about that... I guess there's some other perfectly good reason why the oil drilling boon of the 1980's suddenly dried up (remember that show, Dallas?).
In short, it appears that America is just "too good" to drill its own oil. So we have to head across the tracks, and make our way to the crackhouse to get our fix from the gun-toting thugs that own that turf. They flip us the bird as soon as we turn our backs, but then quickly count their money. As long as we have cash, they'll keep smiling to our faces (yeah, you, Chavez!).