At What Price?
By Don G. Briggs, President – LOGA (Louisiana Oil & Gas Association)

At what price does a barrel of oil or a gallon of gasoline have to cost before our Congress develops an energy plan that will work? I must say that I am continually amazed at the “do nothing” energy policies coming out of Washington; both Republicans and Remocrats pointing their fingers blaming the other for high gasoline prices and neither party seemingly having a clue on what to do. Keep these facts in mind while reading the rest of this column; the U.S. has a population of 290 million people, which is 2.5% of the worlds total population, consumes 25% of the worlds daily oil production, has 2.5% of the worlds known oil reserves and has 85% of it’s natural resources off limits for exploration.

This past week oil prices again climbed to a record high of over $127 per barrel and the average price of a gallon of gasoline hovered near $4 dollars; what did the Senate Republicans and Democrats do?, voted to call a halt to the diversion of 70,000 barrels of oil per day into the SPR (Strategic Petroleum Reserve), their rationale being it makes little sense to be putting oil into the ground at these prices. The SPR was originally created to provide relief when oil and gasoline supply shortages caused economic hardships and a threat to national security.

“I am pleased the Senate has taken a common-sense step toward easing the burden Americans are feeling at the gas pump by making more oil available in the marketplace,” said Senator Feingold. “This move is not a cure-all but it should provide some relief without jeopardizing our oil reserves.”

In reality, zero relief will come from a token 70,000 barrels per day; the move was more of a political ploy than anything. In fact, shortly after the Senate made the announcement, Iran announced they were going to reduce production and the price of oil climbed above $127.

Also this week the Senate Democrats and a handful of Republicans defeated a Republican drilling proposal that would have allowed the governors of the nation’s 22 coastal states, including Alaska, to petition the federal government for permission to drill on the Outer Continental Shelf (OCS), which is the slope beyond the beach.

During the one hour debate, Senator Kay Bailey Hutchison, R-Texas, said the OCS contains 115 billion barrels of oil, “The best thing we could do for America is we can say we are going to drill in our own areas that we control.” Senator Richard Durbin, D-Ill argued, “We cannot drill our way out of this issue. We cannot drill our way to lower prices.”

Missing from the Republicans drilling proposal was lifting the drilling moratorium in the eastern Gulf of Mexico, which the Democrats argued, “The Gulf of Mexico is the first place we should be looking to for expanded production, not the one place we leave off the list.”

As the sun sets on this week, crude rose to a record $127.82 per barrel. The Senate voted to suspend putting oil into the SPR, the Senate defeated a proposal to open drilling on the east and west coast, and defeated a proposal to open drilling in Alaska. On Friday, President Bush, for the third time this year asked Saudi Arabia to put more oil into the market, only to be told, “Supply and demand are in balance”, said Saudi Oil Minister Ali al-Naimi.

I am back to my original question, at what price does a barrel of oil or a gallon of gasoline has to cost before our Congress develops an energy plan that will work?