While people want to argue whether drilling for oil in protected areas will help ease our long-term energy problems, maybe we should deal with a more immediate question: What can we do about the prices we are paying now?
The run-up of oil prices we have seen over the past year is due only in part to actual market pressures. Yes, there are tens of thousands of new cars hitting the streets of Asia each day, increasing the demand for oil. But that doesn't fully explain the wild fluctuations in oil prices.
Sen. John McCain admitted recently that his call to increase offshore drilling would have more of a "psychological impact" on oil prices than any real effect of producing actual crude. And in this statement, McCain hits upon the biggest reason for oil's recent rise: the perception that we are on the wrong track in terms of our energy usage. That leads speculators to bet big bucks that the price of oil is going to keep going up.
George W. Bush may be a lame duck, with approval ratings rivaling O.J. Simpson, but he's still president, and he has the power to change these perceptions and undermine the reasons for this speculation.
And here is how he can do it.
1. Stop the saber rattling with Iran. Bush and McCain seem intent on bombing their latest bogeyman of the Middle East. And the Iranians seem to like poking sticks at the U.S. And why shouldn't they? They have one heck of a scam going. They send out their nut-job president to make some provocative statements, the Bush administration responds by making threats, the price of oil goes up, and the Iranians are laughing all the way to the bank.
Speculators are wagering that any action against Iran will result in a serious disruption in the flow of oil out of the Persian Gulf. So even the threat of a military attack makes prices go up.
It's time to stop playing the Iranians' game. Ratchet down the rhetoric, and start talking peace with them. We might find talking a lot more profitable than bombing.
2. Start planning to withdraw from Iraq. Oil prices before the war in Iraq were under $30 a barrel. Now they are over $140. That's not a coincidence. The chaos this occupation has caused in the region gives rise to rampant speculation. And far from securing the oil supply, people are betting real money that the war will do just the opposite.
I know that Bush and McCain are totally wedded to the concept of staying in Iraq forever. But if Bush were to make actual plans to start pulling troops out, we would see an immediate impact on oil prices.
3. Get serious about conservation and alternative energy. When speculators see the president reacting to the current energy crisis by calling for more drilling, they couldn't be happier. Keeping the oil addiction going puts money in their pockets.
But if Bush were to use his remaining time pushing to move America off oil as a primary energy source, those speculators would start investing their dollars in alternative energy companies instead of oil.
4. Do something about the deficit. The dirty secret about high oil prices is that they have more to do with the weakness of the U.S. dollar than demand for oil. Compare the rise in oil prices in recent years with the fall in value of the dollar versus the Euro. Do you see the connection?
But why is the dollar falling? People speculate in currency as well as oil, and they look at our country's free-spending ways and believe the dollar is a bad bet. Instead of getting our budget under control, the U.S. is basically printing more money to spend. That drives the value of the dollar into the toilet.
The dollar will continue going down until the White House and Congress get serious about balancing the budget.
There is actually a fifth thing Bush could do to drop oil prices. He and Dick Cheney could resign. Of course, that's not going to happen. But neither are any of the other four.
We need to realize that oilmen like Bush and Cheney love it when the price of oil goes up. That was their goal all along. And don't be surprised when both of them leave office and go back to work for the industry they helped the most.
-Kirk Caraway writes for Swift Communications, Inc. He can be reached through his blog at http://kirkcaraway.com.