Robert Murphy

Pelosi’s next point is straightforward enough: “Three, stop the speculation.”  The only problem here is that the Commodity Futures Trading Commission’s July report (pdf) showed that there is no evidence that speculators are responsible for record oil prices.  If they were, there would be telltale signs such as rising inventory levels, and changes in investor positions preceding changes in futures prices.  But the data don’t show any of those patterns.

But Pelosi’s fourth talking point is my favorite: “Four, renew—invest in renewable energy resources, which will bring a faster return than drilling offshore, which will take 10 years and produce two cents reduction in 10 years off the price at the pump.”

Now this point is false—the price reduction would be much more than two cents at the pump—but at least excusable, as there have been (in my opinion) wildly pessimistic analyses put out by the EIA on the impact of ANWR drilling.  However, if Pelosi wants to believe the EIA when it says that tapping into a 10 billion barrel deposit, which may ultimately produce an extra million barrels per day, will have such a small impact, then how can she claim that drawing down the SPR will bring relief at the pump?

Nancy Pelosi has backed herself into a corner with her energy analysis.  Anxious to show realistic leadership, she has called on tapping into the Strategic Petroleum Reserve, which holds 700 million barrels.  Yet she continues to claim that tapping into the hundreds of billions in natural reserves would have little effect on prices, even in the future when that oil is hitting the market.  The contradiction speaks for itself.

Robert Murphy

Robert Murphy has a Ph.D. in economics and is the author of The Politically Incorrect Guide to Capitalism (Regnery 2007).

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