"Oil and coal? Of course, it's a fungible commodity and they don't flag, you know, the molecules, where it's going and where it's not. But in the sense of the Congress today, they know that there are very, very hungry domestic markets that need that oil first," Palin said. "So, I believe that what Congress is going to do, also, is not to allow the export bans to such a degree that it's Americans that get stuck to holding the bag without the energy source that is produced here, pumped here. It's got to flow into our domestic markets first."
I love Blitzer's reaction:
"...alright, not exactly easy to understand what she was saying..."
But really, WTF is she talking about? Even if the US starts all kinds of new oil drilling projects, and puts in place a total ban on exports, it would do nothing to lower oil prices. Oil is an internationally traded commodity, and the prices are set on the world market. And it doesn't matter how much drilling they do, the majority of the US oil supply will still come from Canada, Mexico, and the Middle East:
New offshore drilling not a quick fix, analysts say
And in any case, increased American production from offshore drilling would not necessarily mean lower prices for American consumers because oil is a global commodity whose price is set by global supply and demand.
"Suppose the US produced all its oil domestically," said Robert Kaufmann, director of the Center for Energy and Environmental Studies at Boston University. "Do you think oil companies would sell oil to US consumers for one cent less than they could get from French consumers? No. Where oil comes from has no effect on price."
And there is not likely to be enough new American oil to make much of a difference, Kaufmann and others said. About 86 billion barrels of additional oil may lie offshore, according to the US government's Energy Information Administration. Of that amount, about 18 billion barrels are subject to the moratorium. Much of the rest lies in areas that are too expensive to exploit or that oil companies have not yet tapped for technical reasons, fueling the industry's desire for fresh territory.
"We're picking over bones," said Cathy Landry, a spokeswoman for the American Petroleum Institute. "If we had new acres, we could hypothetically make a big find. We need oil and natural gas in the future."
But in the best-case scenario, Kaufmann said, the United States could only produce an additional two to four million barrels of offshore oil a day - not enough to shift the global supply-demand balance in a world market that now consumes about 86 million barrels a day and is growing fast. About a quarter of that consumption now occurs in the United States.
Kaufmann said that by the time any additional offshore oil got to market, much of it would merely offset losses from the depletion of current oil fields. Meanwhile, oil producing nations can easily keep supply constant by limiting capacity if they know the United States is adding more.
"There's nothing on the supply side that we can really do to disrupt OPEC's ability to influence prices," he said.
More domestic production is not the way to lower the price of oil (or by extension, the price of gas). In fact, there really isn't any way to lower the price of oil over the long term. If we aren't at Peak Oil now, we will be soon, and there is nothing we can do to change that. Prices may fluctuate, as we are seeing now, but over the long term, the trend is clear. Cheap oil is a thing of the past.
Kind of strange how such an expert on energy policy doesn't know this basic fact, huh? The truth is, Palin's experience with the energy industry is limited to taxing oil companies and signing off on a plan for a new Alaskan pipeline that will be completed in a decade or so. She's not an "expert" on it in any sense of the word, unable to answer even a basic question about the oil market that even a second year economics major could handle with ease.
What a farce.