Mika: Offshore Drilling Wouldn't Lower Gas Prices for Ten Years

July 15th, 2008 7:11 AM
Mika Brzezinski might be an Obama backer, but she really should sit down with Hillary Clinton. The woman who turned $1,000 into $100,000 could clue her in to the workings of the commodities markets.  Be it cattle or crude oil, the concept's the same: these are "futures" markets in which prices are set on traders' expectations of what conditions will be some time down the road.

Mika's need for urgent remedial help on the matter became evident during the first minutes of today's Morning Joe.  Ostensibly fulfilling her news-reading function, Mika veered from the prepared text to inject her own editorializing to the effect that lifting the offshore drilling ban today wouldn't lower gas prices for ten years.
MIKA BRZEZINSKI: Time for a look at some of today's top stories.  President Bush is calling on congress to lift its ban on offshore oil drilling. On Monday the president ended a long-standing moratorium on the practice, saying new drilling would ease pressure on fuel prices [going off-script to inject her own views] -- in about ten years.  Critics argue the production of gas from the offshore --

View video here.

JOE SCARBOROUGH: Just read the news. Where are you going?  What are you --

BRZEZINSKI: OK, come on.

SCARBOROUGH: So what are you -- you know, nuclear power will take five, ten years.  Every solution will take five to ten years.

BRZEZINSKI: OK, but it's not a solution for today and let's not paint it as one, OK?

SCARBOROUGH: What is a solution for today, Mika?  

BRZEZINSKI [mocking McCain's idea]: How about a gas-tax holiday?

BRZEZINSKI: Invading Iran?
If Hillary were to sit down with Mika, she'd do well to read this passage from the Investors Business Daily editorial of July 3rd, "Energy Myths":
• "Even if drilling works, it'll take a decade or more for the oil to flow."

This is quite an argument coming from the Democratic Party, which has made keeping oil off the market a linchpin of its energy policy for decades.

If President Clinton hadn't vetoed the idea of drilling in ANWR back in 1995, we'd have that oil on the market today. Ditto if Congress had approved ANWR drilling in 2002, when President Bush requested it.

Even so, the larger point is false anyway. New oil will be flowing in some cases within three to four years, according to industry estimates. But the impact on prices will be immediate. Why? Because markets would suddenly have to discount future oil prices for the expected gain in oil supply. That would cause oil prices, especially in futures markets, to drop.

By the way, this isn't just conjecture. President Reagan, within a week of his inaugural in 1981, removed domestic controls on oil. Energy prices began tumbling almost immediately, with oil falling from $34 a barrel in early 1981 to just $11 by 1986.

It worked before, and it'll work again.
Of course Hillary wouldn't use the IBD editorial, since it criticizes Dems in general and her husband in particular.  But that doesn't mean Mika shouldn't read it. Pronto.