oil prices - ThisIsCommonSense.org

Tragedy has hit the environmental movement: The price of oil is going down.

And may go down further.

While environmentalists quiver, science writer Ronald Bailey chortles. “Resource depletionists” — the prophets of “peak oil” — should, he says, hide their heads in shame! They’ve been so very, very wrong in the prophecy biz.

As oil descends towards $20 per barrel, we should ask ourselves: where’s the tragedy? Well, it will postpone the switch to non-fossil fuels. The need is far from obvious, and the incentive is to use energy in its cheapest, most efficient forms.

But if increased CO₂ in the atmosphere is destabilizing the planet’s atmosphere and ecosystem, cheaper oil (and thus more burning of it) might lead to the much-ballyhooed tragedy for all.

Still, that’s a big “if” — the more we learn about the climate, the more doubtful the identified CO₂causation and attendant doom.

Besides, global warming catastrophism’s implicit message — the “need” for global political control over everybody and everything to “manage” climate changes — seems awfully convenient for those who just love intrusive government … on “principle.”

It echoes the Keynesian technocratic conceit in economics — that experts should manage the economy by fiscal methods (increasing debt) and monetary intervention (central bank interest rate manipulation and bad asset purchase). It’s pretty obvious that they shouldn’t, because they’ve demonstrated they can’t.

As prices for oil defy “peak oil” prophets’ predictions, it becomes obvious: the world works differently than dreamed up by the prophets of doom.

This is Common Sense. I’m Paul Jacob.

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Petroleum-based fuels are going up in price, so naturally people start looking for someone to blame. Call up the Usual Suspects:

Speculators. These futures market folks never get credit for lowering the prices of gas, but they can always be counted on to serve as easy “bad guy” targets when prices go up. Same this time. You’ve heard the rumors, the rancor. (It’s nuts.)
President Obama. You know, for not allowing drilling and pipelines and such. Go to a meeting of conservatives and you’ll hear someone yell out “Drill, baby, drill!” Now, I’m all for drilling, and it’s stupid to clamp down on future supplies of oil — indeed, investors in the futures market for oil see these political and bureaucratic restrictions on exploration and mining and refining, etc., and no doubt bid up the price of oil — but really, don’t blame just Obama, blame, also,
Romney and Santorum and Gingrich. All these presidential candidates have engaged in hysterical, belligerent rhetoric about Iran, threatening warfare in the Persian Gulf region. War is bad for supply lines. Compromising supply lines means compromised supplies. Which means less oil. Which means rising prices.

So of course futures traders will bid up those prices — they would lose money if they didn’t — and in so doing they make the likely future conditions palpable to contemporary decision makers.

That’s their economic function. Don’t blame the messenger.

So, if you think the U.S. should bomb Iran to prevent that country from bombing the U.S. in a few years (after which the U.S. could easily make the populous nation, full of innocents, a sea of irradiated glass), don’t gripe.

One consequence will be (must be) rising prices.

This is Common Sense. I’m Paul Jacob.