"We can't solve problems by using the same kind of thinking
we used when we created them." ~~Albert Einstein
we used when we created them." ~~Albert Einstein
As gas prices head toward five bucks a gallon, the republicans crank up the noise machine in support of drilling in ANWR to solve our energy woes (for about three months in ten years at a prohibitive cost to the environment - they conveniently forget that part). McCain is still stuck on his "gas tax holiday" nonsense, rather like an old, old man or a young, young toddler who has decided he wants pudding and isn't going to shut up about it until he gets it. Never mind that the odds seem pretty good that such an action would likely prove counterproductive by encouraging consumption.
Everyone has ideas that will offer some measure of relief eventually, not one of them has the political courage to advocate for any of the three steps that would offer immediate relief. Not bu$h, not McCain, not even Obama.
Perhaps the quickest action, the experts said, would be ordering curbs on financial speculation. Financial industry heavyweights have acknowledged in recent testimony before Congress that such speculation is driving oil prices higher.
Pension funds, endowments and other big institutional investors are pumping big money into index funds linked to commodities, including oil, driving up demand — and prices. The popular Goldman Sachs Commodities Index attracted $260 billion in investment last year, compared to $13 billion five years earlier.
Complicating any effort to harness that, about 30 percent of the trading in crude oil is done in "dark areas" — markets in London and Dubai — that aren't regulated by the U.S. Commodity Futures Trading Commission (CFTC).
President Bush could order the CFTC to regulate U.S. investments in those markets with a snap of his fingers, said Michael Greenberger, a law professor at the University of Maryland and a former director of trading for the CFTC.
"Essentially this could be ended this afternoon if the Bush administration had the stomach to do it," he said. "Those abdications of responsibility and allowing these exchanges to trade in 'dark' markets ... provides an environment for speculators to thrive."
The CFTC is investigating the link between speculation and oil prices but hasn't scheduled any action.
A second partial solution would be to boost the supply of oil available on the market by releasing as much as 1 million barrels a day of oil now held in the nation's Strategic Petroleum Reserve. That step is being pushed by, among others, the Center for American Progress, a Democratic think tank run by several former Clinton administration officials.
Do that for 90 days — through the summer driving season when consumer demand for gasoline is highest — and the reserve would lose less than 15 percent of the oil held in case of national emergency.
"Put that on the market, and the price of oil will fall," said Daniel J. Weiss, a senior fellow at the center.
It's not entirely clear that U.S. refineries could handle all that extra oil, but it would signal to traders of oil contracts that the U.S. market is adequately supplied.
Finally, the Federal Reserve could act to boost the weak dollar, which has led oil producers to demand higher prices for oil, because oil generally is traded in dollars. Oil producers want higher prices to offset the cost of converting dollars into euros and other currencies that have grown stronger against the dollar.
The best way to bolster a currency is to boost interest rates, but the Federal Reserve has been reluctant to do that with America teetering on the brink of recession. The central bank in Europe, where growth is more robust, is poised to raise rates, however. That could weaken the dollar further, and drive oil prices even higher.
Later today, the Senate will try to muster the 60 votes necessary to thwart republican obstructionists led by Mitch McCionnell to move forward legislation that would mandate CFTF regulators require investors to put up more of their own wealth if they want to speculate on oil markets.
Obama, speaking at a campaign rally in Raleigh, North Carolina yesterday repeated his calls for a windfall tax on oil companies. "I'll make oil companies like Exxon pay a tax on their windfall profits, and we'll use the money to help families pay for their skyrocketing energy costs and other bills," he said.
in the long term, however, Obama said the only answers were to increase the use of alternatives such as solar, wind, biodiesel, and even clean coal - coupled with tougher CAFE standards for vehicles and development of plug-in hybrid vehicles.
By contrast, McCain would just go after less accessible (off shore) and less desirable (sand-tar) oil deposits, and puts no emphasis on alternative energy production or technological developments.
And isn't that something of a puzzler, coming from the guy who insists that his willingness to deal with global warming sets him apart from der chimpenfurher?