On Monday, July 14, 2008, President Bush lifted the executive order that prohibited offshore drilling. He also urged Congress to do the same thing while Congress continues to “pretend” to do things to actually help fuel costs and the economy. On July 16, 2008 oil prices, reportedly began their drop on news that U.S. crude oil supplies jumped by 3 million barrels in the prior week.
There has been constant indications from Democrats, led by Presidential candidate Barack Obama, that drilling offshore or even adding more domestic oil to our equation through newly found continental reserves using current technology such as the Bakken formation, would have no effect on the market and the costs of fuel. But the Democrats think that pulling from the Strategic Petroleum Reserves would have a positive effect, even though it would only be a very limited increase in supplies over a very short period of time. This does nothing to correct the market conditions.
On Monday, July 14, 2008 oil was at $145 per barrel and retail gasoline averaged $4.16 per gallon. It has only been two weeks since Bush’s announcement and pressure applied to Congress to allow offshore drilling and today, July 28, 2008, shows oil has dropped to $123 per barrel and the average cost for retail gasoline is below $4.00 per gallon at $3.99 per gallon. Decrease in demand is being attributed to the devaluation of the market, but with the US so heavily dependent upon foreign oil, and with foreign oil production controlled, the market would likely continue to remain bullish if there weren’t indications such as Bush’s announcement that the US will increase it’s own production and upset that controlled market.
Drill here, drill more, drill now.