I have learned alot of frome ALL of the comments!

“WE THE PEOPLE” (American Public!) need a quick education of the Evil Oil & Gas Business! No, The Policitians (Pelosi, Reid, ect. , et.al, ) really do!

Gusess What? The elected People (Congress) of “US” just took a week, or two weeks recess becaues? , I guess they were tired?

Go Figure!

We people down here in South Texas have a little storm (Dolly) “ROAR” through and I am just now getting 6 hours of per night. ( 2 nights)

THAT TIRED!

Meanwhile the two rigs are up and running again! ( that what counts in the Evil Oil & Gas Business) , keep “TURNING TO THE RIGHT!)
TWO 19,000′ (FOOT RATED DRILLING RIGS ) INVOICES PER DAY ARE RUNNING $126,342.00 PER DAY FOR THE LAST THREE DAYS!

THAT MY JOB!

WATCH THE COSTS OF EACH RIG! AND HOPE NOTHING BAD HAPPENS!

POOR , POOR, PITY CONGRESS WHO HAD TO A RECESS FOR ONE OR TWO WEEKS TO GET SOME REST!

ASSHOLES!!!!!!!!!!!!!!!!!!!!!!!!!!!

HAVE A NICE DAY!!!!!!!!!!!!!!!!!!!!!!

If the US starts to take advantage of our own oil, there is no extra refining capacity for the increase in production. I live in Western Pennsylvania, I know people who have their own oil wells. Some of them have tried to take advantage of the current situation, by increasing the output of their wells, only to run into a bottleneck because the local refiners can’t handle the extra capacity.

I agree with most of what you just wrote. Here’s a couple of points, though, you may want to consider:

1. Based on what I’ve read, I believe U.S. oil refiners have done a good job of expanding refining capacity. It’s unfortunate that most of our capacity is at risk due to tropical storms, but the infrastructure is already in place. Refinery outages due to those storms have so far been fairly brief. For the most part, lack of refinery capacity has not been the cause for gasoline price increases.

2. IMO, methods for conserving energy and alternative energy sources will develop in an orderly fashion in response to gasoline and crude prices. That is, as long as governments do not interfere with the functioning of the market.

How can I have it both ways? Military expenses to protect oilfields may be a subsidy, but they’re ineffectual because military predominance can’t persuade the Saudis to increase production, so these expenses aren’t really a good subsidy because lower production means higher prices. And the Iraq war was all about oil, but it’s not a subsidy because it prevented lower prices, the entire point of subsidies…

Perhaps a little more ‘splainin’ is necessary to unravel all of this.

For example, an un-subsidy like a gas or carbon tax would be as effective at raising the price at the pump as spending the money, blood and military might in Iraq. But what is the difference between this tax as an un-subsidy and the Iraqi invasion?

The primary difference, IMHO, is who gets the money. If the U.S. invades Iraq, all of the military-industrial complex and its allies are funded to the tune of trillions of dollars (now *there* is a subsidy!), and it only costs a few thousand kids in casualties.

On the other hand, if we taxed the gasoline to provide that increased price at the pump by exactly the same amount, then government would get the money and could use that money to build the alternative infrastructure for oil — something that invading Iraq effectively de-funds. In fact, even if all the tax money coming from the gas pump were refunded by, for example, lowering FICA taxes, a gas tax in and of itself would still encourage the public to explore alternatives to our current high energy use.

So invading Iraq is using public policy to ensure the continuance of oil’s predominance as an energy source, even if it makes the oil more expensive because it de-funds these other possibilities.

Meanwhile, I’m not sure equating military predominance with control of oilfields is necessarily a good connection. What if the Saudis don’t have the oil to pump? We can threaten them or ally ourselves with them until we’re blue in the face without any effect. There is evidence that the Saudi fields are peaking, so couldn’t pump more (see http://www.theoildrum.com/node/2325, for one example.)

And there are real threats to pipeline and oilfield security. Even the Alaska pipeline has been threatened — and that’s on U.S. soil! So I’d conclude that security expenses are necessary, and aren’t charged at the pump, at least now.

One example of the security problems: Oil-country-friendly former CIA man Jim Woolsey recently testified that there’s too much security risk for drilling in ANWR because of the single pipeline that would transport all this oil. If a terrorist attacked it, the pipeline turns into the world’s biggest chapstick. Is that a real risk. So far, historically, it’s been bombed twice, shot 50 times, and a disgruntled engineer was caught attempting to sabotage it.

This comes from a source recommended for further info about why nuclear isn’t an option: Amory Lovins 7/16/08 on Democracy Now

Strangely enough, Lovins declares that the market has already decided to support renewables. Private capital has rejected nuclear, even with 100%+ subsidies — only central government bureaucrats consider it viable enough to fund.

Just so we’re clear: my point about the source of our imports wasn’t about the price of oil in the U.S. It was about who should be protecting the Middle East oil fields from terrorism. Clearly Europe and the Middle East should be paying to protect the oil fields which are so important to them. If the U.S. were ever threatened by a cutoff of crude, it could conquer Venezuela much more cheaply than what Iraq has cost us.

Saudi Arabia’s puny response to our president’s request for more production is clear evidence: military control of that region did nothing to ensure lower oil prices. Spending in Iraq ia no subsidy for oil, as you agreed.

While he’s correct in saying most of the actual imported petroleum — imports are 70% of the petroleum burned in the U.S. — comes primarily from Canada, Mexico and Venezuela, this fact is not that significant in determining the price. Oil is fungible, so worldwide supply and demand, not supplier proximity, determines price. The steep increase in oil prices in the mid-1970′s occurred because of shortfalls in U.S. domestic production, Arab and Nigerian oil, not anything that occurred in our most frequent importers. And we were importing only about 30% of domestic demand then.

Mr. Dewey adds that we didn’t need to overthrow Saddam to get his oil. He’s right. Saddam was threatening to sell more oil than his OPEC quotas — which would have made oil cheaper. So the invasion of Iraq was an “un-subsidy” — something that made oil more expensive. In “Armed Madhouse,” journalist Greg Palast suggests that the real motivation to invade Iraq was not to get the oil, it was to keep it in the ground. So, as Dewey says, control, not subsidy was the motivation.

But why the interest in control for Iraq, and not, for example, in Rwanda? Oil is the answer — it’s what’s worth controlling. While several U.S. government programs keep oil cheaper — everything from tax policy to our willingness to tailor most infrastructure to autos — ultimately, control trumps subsidy.

I should add, incidentally, that my oil business contacts tell me that none of the oil companies wanted the Iraqi invasion, even though it increased their profits. It was way too risky, by their sensible, and really conservative lights. Fortunately Blackwater and Halliburton weren’t deterred by such sissies.

So the historical record is confusing and ambiguous, kind of like reality… We subsidize oil (and other) consumption to encourage a demand-based economic system, but do some things, like invade Iraq, to un-subsidize the very same thing and boost its price by orders of magnitude. Could the latter be some way for clever corporations to take advantage of a society whose infrastructure is heavily committed to high energy demand? Hmmmm…. I wonder…

And could continuing to thwart development of alternatives to heavy conventional energy dependency possibly be part of this same agenda?….

I agree with your entire post.

The only thing I wish to reiterate is that the price we pay for natural gas has not much whatsoever to the goings on in the middle east. Gas is a regional commodity. While oil is correctly viewed as global market.

diz: “Our natural gas industry is primarily domestic and imports from Canada.”

Our petroleum industry is primarily domestic and imports from Canada, Mexico, and Venezuela. Very little comes from the Middle East.

Certainly the price we pay for oil is dependent on global production. But if the U.S. military were not in the Middle East, the oil would still be flowing onto world markets. Saudi Arabia has enough money to protect it’s oil fields. But why should they pay for protection if the U.S. is willing to pay? And why should the chief consumers of Middle East oil, Europe, feel compelled to protect their lifeblood?

We didn’t need to overthrow Saddam Hussein to ensure the flow of Iraqi oil. He wanted to sell more of it, but the U.S. and the U.N. prevented him from doing so.

As I see it, the U.S. military presence in the Middle East is not a subsidy for oil. It is a means of ensuring U.S. political power. The purposes are very different.

Well, perhaps you have not been following along but in most of my posts I have been comparing wind and natural gas fired generation.

Our natural gas industry is primarily domestic and imports from Canada.

So, while I think you are very much wrong that we need to fight wars in the middle east to buy oil, it’s essentially irrelevant in a debate about electric power.