Friday, August 8, 2008

Gas Prices fall as Crude Oil Increases U.S.

Aug. 5 (Bloomberg) -- Crude oil fell to $118 a barrel on speculation Tropical Storm Edouard won't damage U.S. Gulf facilities and as slower U.S. economic growth limits the appeal of commodity investments.

Will Gas Come Down at the Pump?

The question you must ask is why did the price of crude oil drop? If you read the article above you will see that in the last four weeks crude oil supplies rose as if more oil was being pumped out of the ground but the article also said that fuel consumption was lower those four weeks. This proves if we increase the supply the price of oil will drop.

President Bush said in his radio address: "To reduce pressure on prices, we need to increase the supply of oil, especially oil produced here at home," It was the fourth time this week that he has called for Congress to end the drilling restrictions off the Atlantic and Pacific coasts and in the eastern Gulf of Mexico.

The Congressional Democrats don't want us to drill for more oil. They argue that the big oil companies already have large areas of federal land and offshore water where they can drill now. Now this is foolish.

Let's compare this to gold mining. If the gold miners want to look for more gold some where else and not keep on digging in the same hole, there is a reason. The gold is getting harder to get or they are slowly running out of gold. If there was gold, next to the mine on the same property, why would they want to go and mine some where else and maybe not find gold? The same with the oil companies they are in the business to produce oil.

Since our country's whole economic system is based on oil, it's almost imposable to replace it in 10 years or maybe even 50 years. You take the chance of killing our economy by reducing our oil and not first finding an abundant source of something else.

So the answer to the question: How do you get the gas prices, at the pump, to drop? Well it happened in the 1970's. Saudi Arabia, trying to gain back market share, increased production and caused downward pressure on prices, making high-cost oil production facilities less profitable or even unprofitable. The world price of oil, which had reached a peak in 1979 during the 1979 energy crisis, at more than $80 per barrel, decreased during the early 1980s to $38 per barrel.

So we must drill and we must drill now. Even though this oil will take time to reach the market, it will cause downward pressure on prices. So the price at the pump will drop.

Yes Democrats, we can drill ourselves out of this.

More on oil.
US Massive Oil Deposits Could be 10x Increase to Supply.
Five Nations Urge Oil Producers to Boost Output.

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