You Can’t Have Supply and Demand Without Supply

By June 16, 2008Energy

Senator Byron Dorgan (D-ND) and Sen. Kay Bailey Hutchison (R-TX) were on Fox News Sunday this weekend, a lengthy interview on energy policy. (Transcript.) At one point, Senator Dorgan said, “This issue of production is a canard.”

With respect, no it’s not. It’s not a canard, a wild goose, a red herring or a bowl of knoephla soup. The lack of domestic production is a fundamental failure of U.S. energy policy.

We point the readers to a very good column by Noel Sheppard of Newsbusters on the policies that have contributed to high energy costs:

Despite 35 years of empty rhetoric from politicians bemoaning U.S. dependence on foreign oil, legislatively enacted environmental barriers have actually resulted in a 25-percent decline in domestic production since the first ’70s energy crisis — while our usage has increased 20 percent.

And to the argument that, “It won’t help now, it will take years to develop, no, no, no…”

Predictably, the liberal counter-argument is that such production is years out, and won’t solve today’s supply problems. Such thinking ignores the speculative component to energy prices, and how much today’s bullish consensus about oil is based on the expectation that American production will continue to decline as it has for going on four decades.

With that in mind, anything Congress did today that indicated a change in philosophy concerning U.S. oil production would send shockwaves throughout commodities exchanges across the globe.

Read the whole thing.

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