CHESSNOID

I was reading a Time article entitled “Will More Drilling Mean Cheaper Gas?”. To give you the cliff notes version: No, it will not.

The long version is:

even if tomorrow we opened up every square mile of the outer continental shelf to offshore rigs, even if we drilled the entire state of Alaska and pulled new refineries out of thin air, the impact on gas prices would be minimal and delayed at best. A 2004 study by the government’s Energy Information Administration (EIA) found that drilling in ANWR would trim the price of gas by 3.5 cents a gallon by 2027. (If oil prices continue to skyrocket, the savings would be greater, but not by much.) Opening up offshore areas to oil exploration — currently all coastal areas save a section of the Gulf of Mexico are off-limits, thanks to a congressional ban enacted in 1982 and supplemented by an executive order from the first President Bush — might cut the price of gas by 3 to 4 cents a gallon at most, according to the Natural Resources Defense Council. And the relief at the pump, such as it is, wouldn’t be immediate — it would take several years, at least, for the oil to begin to flow, which is time enough for increased demand from China, India and the rest of the world to outpace those relatively meager savings. “Right now the price of oil is set on the global market,” says Kevin Lindemer, executive managing director of the energy markets group for the research firm Global Insight. President Bush’s move “would not have an impact.”

It is always irritating that many economic issues we are experiencing at home are not really dealt with in a way that will help solve the problem. We actually created this problem here because Bernanke was trying to stop the housing bust that he earlier claimed didn’t exist because there was no housing bubble. He was unsuccessful in doing so and lies through his teeth when he refuses to admit the problems we are having here. When he did the dramatic panic 7 interest rate drops in the short 7 month period, this weakened the dollar compared to foreign currencies and forced investors to put their money into crude oil and other commodities. According to a CNN.Money article “Did the Fed cut too much?”:

The problem, according to some economists, is that the Fed didn’t cut rates enough last year in response to the subprime mortgage meltdown and subsequently was forced to cut rates by a large amount this year.

The Fed lowered its fed funds rate by a half-point in September and followed that up with just quarter-point cuts in October and December.

“If policymakers had been more aggressive back in the fourth quarter, the financial system and the economy would not have gotten to this point, and the Fed would not have had to respond in such an aggressive way,” said Mark Zandi, chief economist of Moody’s Economy.com.

The Fed slashed rates by three-quarters of a percentage point in an emergency meeting on January 21 and lowered them by another half-point at its regularly scheduled meeting nine days later.

That was followed by another three-quarters of a percentage point reduction in March and a quarter-point cut in April.

Lakshman Achuthan, managing director of the Economic Cycle Research Institute, said these big cuts opened the door to the inflationary pressures we’ve seen in the past few months. He also thinks that the Fed wouldn’t have needed to go as far as it did if it had not “dragged its feet” on rate cuts last year.

“You can not make up for being late by doing extra. The tonic of lower rates turned toxic,” Achuthan said.

Right now we need real solutions to our economic problems, and not political pandering to the voters just so Bush and other oil interests advance their own agendas. So far, neither OBAMA or MCCAIN have any real solutions to get us out of this 2nd recession BUSH has achieved in his 2nd term. The first one was in his first term. I believe the only US president to have a separate recession in each term. Of course, the recession we are in now is “unofficially just a slow down”. HA HA