Wednesday, 07 March 2012 17:47

Why Oil Prices Will Remain High

It's less about "energy independence" for a nation and more about private sector extraction, transportation and refining of crude oil - a commodity on the global market. 

"But even if we ramp up production significantly, will it really change the conditions here on the home front all that much? We previously looked at a conspiracy theory regarding evil oil companies shipping all of the Keystone XL oil overseas and not letting us use it at home. That’s nonsense, of course, but it does teach us another important lesson. Oil is traded in a global market without distinction as to the nationality of the person writing the checks. While the energy industry provides a huge boost to the United States in terms of GDP, jobs and investment profits, they are not in this game for the purpose of driving down prices at home by flooding the domestic market with product."

"Think of it this way: let’s say that our national consumption rate is “x” number of barrels of oil per year. If we (along with Canada) are producing X + one million barrels, you might think that all is well. Prices should be dropping and we can thumb our collective noses at the Saudis, right? Not really."

"Even we produce above and beyond our needs, China still produces very little and has a massive thirst for oil. (They’re hardly the only ones, either.) The more we make, the more will be sold around the globe." 

Source : -- Is the idea of “energy independence” an illusion?

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