Monday, July 14, 2008

Another wire service editorial

Reuters: Bush lifts offshore drilling ban in symbolic move

WASHINGTON (Reuters) - President George W. Bush on Monday lifted a White House ban on offshore drilling to try to drive down soaring energy prices, a largely symbolic bid unlikely to have any short-term impact on high gasoline costs.


Congress too has a ban on offshore drilling and while it expires on September 30, it could be renewed. Plus, federal officials say it would take years for any oil to be produced in those areas, together making Bush's move largely symbolic. [emphasis added]

Now if they simply made the statement that it was symbolic just because of the legislative ban, then that’s fine. But the writer is clearly implying that the move is also symbolic because it would not produce oil any time in the near future. This is patently ridiculous. First of all, even if it didn’t have any effect on prices in the near-term, that it would eventually have an effect means that is not symbolic. By their same logic, quitting smoking at the age of 25 would be a symbolic move, because the serious health effects of smoking likely won’t manifest in the near term. And never mind that part of it, because the idea that gas prices aren’t at all affected by a future expectation of the market is just plain ignorant. And I wonder how many who would make such a claim are the same who have been on a rage demonizing speculators for driving up the price of oil?

(essentially cross-posted here)

Actually, come to think of it, even the fact that half of the barrier is down could have an effect on market anticipation. Prices should still be affected, if only slightly.

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