Thursday, December 19, 2013

Menendez Says 'No Way' to US Oil Exports: Shows His Ass

I could have named this blog entry "A Man Has Got To Know His Limitations"

We live in a time when ignorant (and arrogant) people are making rules where they have no knowledge and/or understanding--i.e., our politicians are dumb asses.   Not only do these people not know what they are doing, but they are not smart enough to get out of the way of people who do know best. 

Take Robert Menendez 's D-NJ comments:  "Lifting the ban on crude-oil exports would benefit major oil companies and hurt Americans."  Robert Menendez doesn't know what he's talking about and he should have the wisdom to step aside.  Menendez is on the Senate Foreign Relations Committee and he should stick to what he knows.

In Washington: Arrogant Big Government Officials Are the Problem.

I don't know much about the ban, but it was started in the 1970s when we were facing oil shortages.  Now we have a time of abundance in oil production and it's happening rapidly under the nose of Malthusian politicians who said that it couldn't happen (hint, O-blah-blah).  The US is already exporting 3 million barrels per day of gasoline and other refined products right now.  This is because US gasoline demand is down and we have excess refinery capacity.   So, we import about 9 million barrels of crude, process and re-export 3 million barrels of gasoline.  That's how free markets work.

Another example is Alaskan Prudhoe bay production.  It has probably always been more economic to ship that crude oil to Japanese or Korean refineries.  They could in turn, ship gasoline to the USA. (There was always a refinery capacity constraint on the US West Coast.)   Companies would chose this option only if it's a lower cost option.  Lower costs are passed onto the consumer.  This is how free markets work.

Another example, it's entirely possible that it's more economic for companies to send crude from Pennsylvania to European refineries.  Let the company's involved decide!  They will do the most cost-effective thing, keeping costs as low as possible.  This is the way free markets work.  It's too bad more people don't know that. 

The simple truth is that there is one very large, world-wide, crude oil market.  All crude oil production is priced the same (but price-adjusted for quality and impurities) all over the world.  The same is true for gasoline.  There is no local markets that need protection.  Prices for these commodities are basically the same all over the world.   So Menendez's comments are ignorant.  And he needs to recognize his own limitations.  Let the markets work!  Geeez!  He is a Democrat, so that should be instructive.  They are nearly all economic idiots! 

Another other problem out of Washington is that programs, rules or laws, whose purpose is long forgotten, continue without end, without review and without oversight.  End the export ban if oil companies advise that it's best to do so.

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