Will drilling off-shore and in ANWR have tangible impact on price of gasoline? Depends what traders "feel" more than actual impact on supply/demand...

I agree that it is only in the best interests of everyone to have this bill pass before the end of the summer session, though without the support of the Speaker I find it hard to believe it will pass Conference in time to be signed by President Bush. As with all bills that determine government spending, the Energy Bill must originate in the House, though it is doubtful that the Senate would pass an identical version of the bill, which would send it to Conference Committee, in which it is expected that a hand-picked cadre of veteran lawmakers will expedite a compromise founded on the principles outlined in the original drafts passed by the House and Senate independent of each other.

Unfortunately, the member tasked with making appointments to serve on Conference Committee is the Speaker of the House, and she is under no obligation to appoint any particular lawmakers, and in fact could intentionally appoint the most anti-drilling members of her conference that she can find, who will purposely debate the fine print of the Bill to death and prevent it from ever returning to the floor before the end of the 110th Congress. This would not be the first time ANWR drilling was killed in Conference, but it certainly would be the first time it died under $120/barrell oil and such an overwhelming majority of voters supporting the measure. We will have to wait and see what Pelosi does, but sadly she still holds all of the cards.

I disagree with the assertions that passing the ANWR and Offshore drilling measures will not have an impact on the price of gasoline in the next year, as I think it is very likely that it will in fact have such an impact and the reasoning behind this thought is very simple....

Oil is not a true supply/demand market, it never has been and never will be. The reaction of traders this Friday to the invasion of Georgia by the Russian military was met in the pits with a $4 decrease in the cost of oil, which is the opposite of what conventional wisdom would have led us to believe. In fact, I believe that Goldman Sachs even forecasts the price of oil to settle between $70-$80 dollars over the next 12-18 months, which makes sense if the market is able to digest the increasingly complex global distribution chain and identify the true drivers of demand on global markets. If oil settles and stablizes at $70/barrell by the end of next summer, it is certainly not unreasonable to expect gasoline prices to drop across the US as a result. Perhaps we are talking in terms of dimes or maybe a quarter/gallon, but anything is better than nothing and ANWR/Off-Shore drilling may just be the key to easing the anxiety of futures traders whose whims are the only real drivers of the cost/barrel of oil.

Does anyone think that oil is truly a supply/demand driven market? If so, how do you account for the radical spike in the price without any major hinderence to the global supply chain or sudden/unexpected surge in demand that was not accounted for in the pre-exuberant pricing of contracts? I think that what we are experiencing is a bunch of rich dudes behind computers shorting the welfare and standard of living of the middle class for the benefit of recovering their firm's massive losses in other highly speculative markets (i.e. sub-prime mortgages). The market, though imperfect and only losely worthy of the label "market", is going to level out once the traders have solidified their long positions and the speculative cycle starts all over again. Perhaps this logis is flawed, I do not claim to be an expert on any of these things, but I enjoy financial news and this is how I interpret the experts. What does everyone think?

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