Jim Neal on How to Lower Oil Prices NOW

It’s critical to understand the reasons for our skyrocketing oil prices if we want to lead our country away from protracted conflicts in the Middle East and towards energy independence.

The United States is the world’s largest consumer of oil, using about 20 million barrels per day.  Petroleum is not traded in a free market.  If the oil market were truly free, it’s unlikely we’d be paying over $100 a barrel.  Oil prices are in fact highly manipulated by people who claim to be proponents of free market capitalism and cartels that are interested in anything but a free market.  But our government has the power to manipulate oil prices as well. It could bring down the price of oil, if it so chooses, by opening the Strategic Petroleum Reserve. Tapping this cache of over a half a billion barrels of oil would have a dramatic and immediate impact on oil prices.

Background after the jump.

OPEC Keeps Production Down

Although OPEC member states have about 75% of the world’s oil reserves, OPEC controls about 35% of oil production worldwide.  Their production quotas create an artificial scarcity by holding back supply.  The Saudis in particular hold a tight grip on the production lever, keeping the flow slow and profits high.  They pushed OPEC to reduce production in 1998, and it has never been restored to those levels.

Bush/Cheney Profiteering

Meanwhile, the Bush family has long standing private and governmental ties with the Saudi Royal family.  For years, the U.S. Navy and Marine Corps have been the protector of last resort in the Middle East.  
U.S. taxpayers pay $136 million a day to protect Saudi oil wells while the Saudis treat us like they own us.  
Oil was below $12 per barrel in June 1998 and was still as low as $20 per barrel in December 2001 (after 9/11).  
While the price of oil has increased over 500% since the Iraq war began, the production cost to the Saudis has remained about the same -  about $2 per barrel.

The Bush government has done absolutely nothing to reduce our consumption or help us make substantial changes towards alternative fuel sources.

Why would they? The Bush and Cheney families are laughing all the way to the bank!

The Strategic Petroleum Reserve

Meanwhile, Bush/Cheney policy is to replenish the Strategic Petroleum Reserve no matter what the price of oil is. When the price of oil was skyrocketing, Bush used his 2007 State of the Union address to propose that we expand the capacity of the Strategic Petroleum Reserve to twice its current level… creating an open invitation for OPEC to keep prices high as we continue to buy whatever they put on the market.

Why does the Strategic Petroleum Reserve matter so much?  It currently holds about 700 million barrels of oil (worth over $70 billion at current value).  This takes a huge amount of oil off the market, and if you ever took Economics 101 you know that reduced supply results in higher prices.  But the psychological message it sends to OPEC is just as important.  When we don’t use the SPR as our supply and demand leverage, it allows OPEC to control production and prices however they would like.

Bleeding us Dry

The oil industry and their lobby are enormously powerful players in the Bush/Cheney era.  While the administration has had to tap into taxpayers pockets for recent Wall Street bailouts, they have allowed the oil industry to suck its money straight out of our back pockets.

The United States needs an oil policy that leverages the power of our demand on the world market.  We can decrease the amount we’re paying for oil while simultaneously decreasing our military spending in the Middle East.  It’s time that we stop sending a financial pipeline to the Middle East.  It’s bleeding common people dry, fattening the Bush/Cheney oil elites, and destabilizing the entire region.

What I’ll Do in Office

Take action NOW.  People can’t afford to drive to work with gas prices at $4/gallon.  They need help today, which is why I support opening the Strategic Petroleum Reserve.  Feed the market and drive retail prices down.  And, it sends the right message to OPEC nations: business as usual is over.  The US should begin tightening the screws with our purchasing power-and what better time than now to remind them of the $136 million daily subsidy we are providing to serve as their de-facto Department of Defense.

President Clinton tapped the Strategic Petroleum Reserve in 2000.  It’s time to take the same bold action-NOW.

Jim Neal For Senate

•  Nice work, Jim.

  My only problem is that the SPR is a very short-term solution, and once used, it's gone.  A better solution would be to formulate US foreign policy so that it isn't designed to keep prices elevated.  Consider what happened during the Iran-Iraq war, in which both nations pumped all they could, driving oil down to $15 a barrel.  While no one pretends that that is likely again, a timely exit from Iraq might convince the Saudis that they need the cash (and our help) to secure their borders, and whomever ends up with the remains of Iraq is going to be pumping like mad.

  But it's something to think about.

  by SicPlurisPoenaPrestantia on Wed Apr 02, 2008 at 12:24:54 PM PDT

  •  It is a short-term solution....but

    people need help today. Working class and the poor in NC are literally going broke at the pump and paying for healthcare.  And, their question to me when I travel across the state isn't one about LT energy independence, but rather "what can Washington do now."

    This is an idea I've had in response. Comments / suggestions welcome (just plz send to my attention at www.JimNealforSenate.com).

    Just before we launched the Gulf War the price of crude oil jumped up to about $40/barrel; after we announced that we were considering tapping the SPR  prices fell dramatically. The USA actually only sold 7M  barrels during that time-- or 1% of the currrent SPR reserve.

    Markets are driven by emotion. The announcement of our intent to get tough and tap the SPR likely will have more of a psychological, signalling effect on the short-term price of crude oil.

    And, certainly, it doesn't address the bigger scheme of our moving aggressively toward development of alternative energy sources. That's a major policy initiative which is a separate issue.

    PS: Al Gore proposed doing the same thing when he was running for President in 2000-- and for the same reason.

    by Jim Neal on Wed Apr 02, 2008 at 02:16:15 PM PDT

    •  I agree. It's wonderful to talk about long term

      solutions, and it's beyond necessary, but for today folks need relief.

      While providing some relief, talk about long term solutions and commit to taking action.

      by nannyboz on Wed Apr 02, 2008 at 03:01:05 PM PDT

    •  First, thanks for replying.

      It's easy to get a pol to write a blog and duck.  It speaks well of you that you returned to defend your position.

      While I agree that even threatening to tap the SPR might have some short-term stabilizing impact, the effect would be insulated from the consumer.  A more direct way to provide instant relief is to reduce the $.30 or so in taxes we pay per gallon here in NC.  Only paying $3.00 rather than $3.34 would be a start . . . but it would only help temporarily.  Therefore long term solutions need to be seriously addressed.

      And thanks for joining the Dkos circus.  I'll have your hat and secret decoder ring sent to your office post haste.

      by SicPlurisPoenaPrestantia on Wed Apr 02, 2008 at 03:06:40 PM PDT

      •  I don't agree with that at all.

        NC Roads are already declining at a pace that is just unbelievable. To take away the funding for road repairs would be a horrible decision for the long-term health of North Carolina.

        We are already allows road repairs to wait until they can no longer be resurfaced but must be completely regraded and then resurfaced - which costs $$$$$ more than simple resurfacing. To put this program any further behind would be suicide for North Carolina.

        by chuckles1 on Wed Apr 02, 2008 at 03:25:15 PM PDT

•  OK

  Lets see

  You support oppening up the Strategic Oil Reserve.  That's 700M Bbls of oil.  Our country goes through 20M Bbls of oil a day.  So, that looks like a 35 day supply.  Yes, it would have in impact, but how much?

  Now, float the idea of opening the Alaskan wilderenss up to development (which had we done so when it was first introduced by Bush in 2001 would be at full capacity now) and has somewhere in the neighborhood of 6-20 Billion Barrels and one will get attacked.

  This country needs better mass transit, better fuel efficiency, and more exploration in order to get oil prices down.

  by headhunt23 on Wed Apr 02, 2008 at 12:25:44 PM PDT

  •  why not use less oil

    and preserve as much of our dwindling, despoiled wilderness as we can?

     depends on your priorities.

    Do you think humans have had an important role in causing global climate change, friend?

    by voila on Wed Apr 02, 2008 at 12:37:43 PM PDT

    •  Not really

      "Do you think humans have had an important role in causing global climate change, friend?"

      If we go back 20K years, we are exactly at the historical average.  The earth's temp is always changing.

      That doesn't mean we shouldn't be careful - you should have noticed that I spoke of mass transit and fuel efficiency as well.  But those things are not mutually exclusive from exploration.

      by headhunt23 on Wed Apr 02, 2008 at 01:02:55 PM PDT

      •  thought so eom

        by voila on Wed Apr 02, 2008 at 01:03:32 PM PDT

      •  Incipient Holocaust Denial is an Ugly Thing

        And that is exactly what denial of anthropogenic climate change amounts to, beyond the fundamental intellectual fraud that lies at its root.

        by greenskeeper on Wed Apr 02, 2008 at 01:29:22 PM PDT

        •  Are you denying that:

          1.  The Earth is at the exact 20,000 year average?

          2.  Polar Ice caps on Mars are melting?

          3.  The Artic ice shelf is back ABOVE its running average after this very cold winter?

          Look, I am not saying we shouldn't be considerate of what we are doing to the planet.  I am a big proponent of mass transit and fuel efficiency and recycling - those things just make good economic sense regardless of the conservation aspect. But, I am not going to get into a huge twist over something that in all actuality is probably natural, and has been occuring on this planet for billions of years.

          by headhunt23 on Thu Apr 03, 2008 at 05:58:51 AM PDT

    •  absolutely

      this IS NOT an energy independence measure; it's a temporary means of trying to get oil prices down at a time when our economy if floundering.

      by Jim Neal on Wed Apr 02, 2008 at 02:19:25 PM PDT

      •  As I stated above, I agree. n/t

        by nannyboz on Wed Apr 02, 2008 at 03:01:44 PM PDT

      •  How much of an impact would it actually have?

        I'd like to see some economic models on it.  Clinton released some in 2000 to help Gore, and I don't seem to recall anykind of an effect.

        I would bet, that if we released a large quantity from the SOR, the price of a gallon would drop maybe $.20.  Purely talking out of my ass, but that's what I would put the over/under at.

        by headhunt23 on Thu Apr 03, 2008 at 05:50:50 AM PDT

  •  Opening SPR would spook speculators

    This isn't the totality of Neal's energy policy.  He supports a crash program in renewables, mass transit etc - all the things you say.

    Opening (not draining) the SPR would serve to spook commodities speculators and relieve the upward pressure they exert on crude prices.

    by John Wesley Harding on Wed Apr 02, 2008 at 01:45:27 PM PDT

    •  well put.....

      couldn't have said it better.

      by Jim Neal on Wed Apr 02, 2008 at 02:20:35 PM PDT

  •  see above...

    I think I address your question.

    by Jim Neal on Wed Apr 02, 2008 at 02:16:56 PM PDT

•  Jim

  I hope you will be working to strip the oil industry of its billions in tax breaks.  That money should be spent on research into real alternatives.

  by ilex on Wed Apr 02, 2008 at 12:25:57 PM PDT

  •  absolutely

    Vigilantly. The tax breaks big oil reaps are a rip off and can be reinvested in an Apollo-like Project to develop alternatives to green house gases.

    That is an investment-- one of many "social investments" which I favor making with our country's wealth. We've got to re-prioritize how we spend money.

    I use the example of Warren Buffet when talking about Washington investing in the rapid, ramp-up of alternative energy sources. An investment which won't pay off in a month, or a year.......but over the long term, tremendously. Buffet doesn't "trade" stocks; he invests. He's a pretty smart cookie and has made some money by so doing.

    An Apollo-like project is a win for the environment, our economy, our communities (creating jobs that can't be offshored) and the social fabric of our nation.

    by Jim Neal on Wed Apr 02, 2008 at 02:27:46 PM PDT

    •  IF (and it's a big if) you can convince, coerce,

      or co-opt the big auto manufacturers into going along with the program.  Hydro, electric, whichever, just pick a standard, commit to developing its technology and infrastructure, and push.  But the Petro transnationals have been keeping Big Auto from investing in this technology -- see what happened to the electric car in California?

      by SicPlurisPoenaPrestantia on Wed Apr 02, 2008 at 03:10:27 PM PDT

•  With All Due Respect

  This is at best delusional thinking and at worst cynical demagoguery.

  The proposal utterly fails to recognize the globalization of energy demand, the urgency of reducing all petrochemical production and consumption, and the need to radically retool our zoning and development patterns and regulations from the ground up.

  But hey, maybe mindless electoral pandering will work for a Democrat in NC as well as it worked for Jesse Helms.

  by greenskeeper on Wed Apr 02, 2008 at 12:27:04 PM PDT

  •  Smells like snake oil to me.

    This country needs to begin some serious re-structuring to turn the end of cheap oil into an opportunity rather than a catastrophe.  Your proposal seems to be the antithesis of that, peddling a fantasy that we can combine some sort of energy independence while continuing to squander oil with hideous inefficiencies.  I hope your (potential) constituents demand more leadership than what you are offering in this post.

    by ajbrown on Wed Apr 02, 2008 at 12:32:17 PM PDT

    •  One other thought . . .

      NC has the highest gas tax in the SE: something like $.30 a gallon.  We spend that on roads, sure, but it is a leading contributer to Mr. Neal's constituancy's problems.  

      I agree, though, that this would be at best a band-aid, and at worst a gross miscalculation.  My idea?  A swift transition to electric cars, and the utilization of all that nifty wind power off of North Carolina's coasts.  We could be the Texas of wind . . .

      by SicPlurisPoenaPrestantia on Wed Apr 02, 2008 at 12:36:53 PM PDT

      •  the exurban Interstate corridors

        that NC has been flourishing with are possibly the last, great, cheap-oil-driven mistake in settlement planning.  It'll be a tremendous challenge to re-tool that into something that can work with $5 a gallon gasoline.  But NC needs another model for its community-building.

        by ajbrown on Wed Apr 02, 2008 at 12:53:42 PM PDT

        •  Electric cars.

          They use the same roadways as gas cars, and we don't have to dramatically re-think our infrastructure.  The technology exists and with plug-in hybrids and the like we can cut our transport-related energy costs by close to 90%.

          by SicPlurisPoenaPrestantia on Wed Apr 02, 2008 at 12:58:04 PM PDT

          •  I'd hope for solutions that incl. climate change

            as well.  Unfortunately, keeping our car-based lifestyle and shifting to electric just means burning more coal (or going nuclear).  Wind farms could help us shift our current electrical needs, maybe, but they're not going to take up the burden of transport as well.  I think we have to get less transport-intensive.  In any case, it is exactly these kinds of debates and discussions that ought to be at the heart of our politics and our civic lives.  We're going to need ingenious solutions from every angle.

            by ajbrown on Wed Apr 02, 2008 at 01:09:09 PM PDT

      •  How Will The Electricity Be Generated?

        Like it or not, mass transit oriented development is the only game in town once gas goes over $4/gallon, and it is unquestionably headed that way.

        by greenskeeper on Wed Apr 02, 2008 at 12:58:37 PM PDT

        •  Solar, wind, hydrogen . . .

          There's plenty of alternative, decentralized, localized power generating technology out there.  Imagine every light pole in the state adorned with a solar panel, and a bank of windmills and wave generators sitting just over the horizon in the ocean, pumping free power into the grid.  

          It's time we looked at this seriously.  The Triad region has outstanding light-industrial capacity, and I could see several small scale plants built in that region for the purpose.

          by SicPlurisPoenaPrestantia on Wed Apr 02, 2008 at 01:01:54 PM PDT

      •  yeah....

        but not quickly enough-- see above.

        by Jim Neal on Wed Apr 02, 2008 at 02:28:52 PM PDT

    •  see above comments

      before you judge.

      I'm not selling snake oil-- just trying to come up with solutions to problems people face-- in the short-run as well as the challenges we as a nation face in the long-run.

      by Jim Neal on Wed Apr 02, 2008 at 02:31:17 PM PDT

  •  Can we ditch the attacking, please?

    I agree with Mr. Neal that something needs to be done.

    I agree with you that the stated proposal doesn't work very well, but can we please avoid unnecessary cynicism here, too?

    by Samer on Wed Apr 02, 2008 at 12:57:45 PM PDT

    •  Necessary Realism is not Unnecessary Cynicism

      Economically and ecologically ignorant electoral pandering is in no way progressive.

      That's not an attack. That's not cynical. That's a blunt assessment of an indefensible proposal that would be a bad idea even if it were remotely possible to deliver.

      by greenskeeper on Wed Apr 02, 2008 at 01:04:25 PM PDT

  •  Greenskeeper -

    If this were all Neal had to say on the subject, I'd be with you on the demaguogery rap.

    But Neal agrees with you on what must be done to reduce demand.

    Recognizing demand reduction will take years, he is saying tap the SPR to send a signal to market manipulators (speculators and cartels) that the US Govt is not slave to a dogma of (mythic) inviolable free markets, but is willing to do what it can to manipulate prices - as certianly as the cartels and speculators are manipulating prices.

    by John Wesley Harding on Wed Apr 02, 2008 at 01:55:07 PM PDT

    •  Demand Reduction Has Already Begun

      As reported early last month.

      The best way to deal with market manipulators is to reduce the size of the market. The best way to reduce the market is to reduce highway funding, increase freight rail funding, condition federal transportation/housing/economic development funding on the adoption of smart-growth planning guidelines and the termination of exclusive residential zoning laws, mandate higher temperatures in public buildings in summertime, increase public transit funding, adopt strict energy usage guidelines for all new appliances, tax carbon, and mandate 50 mpg fleet averages by 2015.

      The focus on bad actors in energy markets is basically an exercise in scapegoating. The lion's share of energy costs have nothing to do with market manipulation, they have to do with unsustainable patterns of development.

      It's past time to be honest about that fact.

      by greenskeeper on Wed Apr 02, 2008 at 02:24:39 PM PDT

  •  whoa...

    Look, I am campaigning in a state where people are hurting. Badly. I don't think NC is unique.

    I appreciate your input but if you're going to label me mindless and pandering....then please throw the sink at Al Gore as well since he proposed the same step for the same reason in 2000.

    I just turned down a meeting with two energy company PACs who I imagine would be interested in contributing $5K each to my campaign. If I had accepted the meeting and the money, I'd be pandering for sure.

    Or worse yet, playing politics the same old way. Or worse yet, talking the talk and not walking the walk.

    by Jim Neal on Wed Apr 02, 2008 at 02:36:47 PM PDT

    •  Props (and a rec, our local currency) for honesty

      You'll discover that the debate here can get . . . hasty, sometimes.  It's why we like it.

      by SicPlurisPoenaPrestantia on Wed Apr 02, 2008 at 03:13:46 PM PDT

•  The strategic petroleum reserve

  is to be used for cases where supply is interrupted. Not for managing prices.

  by science first on Wed Apr 02, 2008 at 12:31:59 PM PDT

  •  and that's the same argument

    which The American Petroleum Institute makes. I obviously, in all due deference, don't agree.

    by Jim Neal on Wed Apr 02, 2008 at 02:41:12 PM PDT

    •  I have to say, I expected a better argument

      from a candidate for our party's nomination for Congress.

      Rather than addressing the argument -- "SPR is to address supply interupitons, not price increases" -- you have employed the technique of "guilt by association" and addressed an arguer, the API.

      Let's see where else we can apply this fallacious logic.

      Osama bin Laden also recently spoke of the dangers on global warming.  Shall we discredit the notion of anthropogenic warming because Osama bin Laden endorsed the idea?  Or should we look to the evidence supporting or disconfirming the hypothesis itself?

      by science first on Wed Apr 02, 2008 at 05:30:54 PM PDT

  •  I agree with Jim, it's a technical point.

    Obscenely high prices are, in effect, an "interrupted" supply.  

    by SicPlurisPoenaPrestantia on Wed Apr 02, 2008 at 03:14:47 PM PDT

•  How about systematically inflating the dollar?

  A Euro was $0.82 in 2001.  It's now $1.57.  

  That should count for about HALF of the price differential.  And we're LOWERING interest rates and printing BILLIONS of dollars to bail out Bear Stearns, et al.  Can't pay for Single Payer Healthcare, but we can bail out big business and destroy our economy in the process.

  We need to fix our economy, our infrastructure, our currency, our relationships with other countries, OUR GOVERNMENT, and our relationships with each other.

  And to do that we need a lot of things, but energy independence and trade agreements that are mutually beneficial (as opposed to the blatant one-sided ones we have now) are a start.

  by polecat on Wed Apr 02, 2008 at 12:35:24 PM PDT

•  You are wrong on OPEC Production

  Read some Kevin Drum over at Washington Monthly's blog. One of his things is Peak Oil and it's pretty likely that OPEC absent Iran selling to the US, can only increase production by tiny increments.

  For instance, from his excellent article "Crude Awakening" back in 2005:

  After 9/11, .... Saudi oil ministry began inviting oil analysts over for tours of its facilities....

  In retrospect, this effort may someday be viewed as one of the most disastrous PR campaigns in history. Far from reassuring everybody, a closer look at the Saudi oil industry caused some analysts to lose hope altogether.

  Of Saudi Arabia's 10 million bpd of oil, about 90 percent comes from a mere seven giant fields, all of them old. Ghawar, a uniquely gigantic field which all by itself accounts for more than half of Saudi Arabia's output, has been in production since 1951. A massive water injection program was begun in the early '60s, and today more than 7 million barrels of seawater are required daily to keep Ghawar going. Even at that, though, the best evidence indicates that Ghawar's production may have already begun declining.

  Look, I know you're trying to win here and I understand and support it, and hope to with money, but you need to actually know the real story.

  by MNPundit on Wed Apr 02, 2008 at 12:37:50 PM PDT

  •  Quite possible that

    OPEC is basically tapped out and challenged to have any increases in capacity.

    With all due respect, Mr Neal, this pandering on energy issues does not reflect the realities of the changes we face in the world, does not help prepare the nation/the citizens/your state for moving toward a more sensible energy situation, and is -- well -- simply Energy Dumb rather than Energy Smart.

    Fine, you want to stop seeking to put more oil into the SPR.

    But, don't try to pretend that a single Senator will be able to drive through a policy like this ... which would only worsen the situation, even it panders to uninformed voters.

    by A Siegel on Wed Apr 02, 2008 at 07:23:27 PM PDT

•  We need higher oil prices

  to get people to conserve and use alternative transportation.  Get used to it.  Oil prices are this high forever and we will never see the old low fuel ever again.  I thougt we should have started conserving oil in the 1970, but everybody ran out and bought a huge car, finally a truck, after that was over.

  Once the oil prices are out of sight, will we be making medical devices that use petroleum, like tubing and stuff? Or will we do without.  Maybe the SPR needs to be kept for medical use instead of autos.

  by Silverbird on Wed Apr 02, 2008 at 12:37:52 PM PDT

  •  For the first time I hear auto ads mention fuel

    efficiency.  The auto parts stores are marketing their engine cleaners to improve MPG.  Truckers are slowing down.  True, we need to find some ways to mitigate the nastier effects on working families, but we need to find some that don't involve trying quixotically preserving our unsustainable status quo.

    by ajbrown on Wed Apr 02, 2008 at 01:24:00 PM PDT

    •  Have an auto for personal errands like grocery,

      use public transportation to go to work daily.  Public transportation is so important to this question!  We in the middle class will not be able to continue driving is we want to get out of Iraq and stop our wars.

      by Silverbird on Wed Apr 02, 2008 at 01:37:30 PM PDT

      •  That's fine, if the bus goes to where you work.

        That's not the case for about 90% of the people in the Triangle, and it is, by far, the most developed region of the state.  The Carolina Crescent, stretching from Raleigh to Charlotte, just isn't laid out for mass transit.

        by SicPlurisPoenaPrestantia on Wed Apr 02, 2008 at 03:16:05 PM PDT

•  and then what?

  So we dump the reserves into the market, and the prices fall.

  Then we use up the reserves and prices go back up.

  I hate that people are being hurt by high oil prices, but cheap oil got us in this mess in the first place.

  We will NEVER get off of oil or develop alternative energy if oil prices are low.

  Cheap oil v. alternative energy. Pick one.

  by thepdxbikerboy on Wed Apr 02, 2008 at 12:38:08 PM PDT

•  good politics, but policy concerns

   Taking OPEC to task is going to be popular, but I disagree on the assertions here regarding oil availability, but opening the SPR is probably a nonstarter and it's a transient "solution" at best.

   I work with a group of folks from http://theoildrum.com and there is a lot of brainpower there specifically focused on oil policy. We'd like to have a conversation with you if you've got time ...

     

  by Stranded Wind on Wed Apr 02, 2008 at 12:42:28 PM PDT

  •  left my # /w your staff

     I just left my name & number with your staff - 712 area code. A call from a staffer in this area would be just fine ...

    by Stranded Wind on Wed Apr 02, 2008 at 12:46:58 PM PDT

•  asdf

  I agree with you that the price of gas is affected at the margin by speculation.  I also agree that our current administration is disgustingly beholden to traditional energy interests and only pretends to care about alternative energy.  I can't agree, however, that high prices can be fixed.  Oil a finite resource that is depleting, and four years from now $4 per gallon will look like what it is--a bargain.  If an event was to occur that sharply reduced our imports for even a short period (and I'm hoping that this country wouldn't cause said event), we'd need that reserve.

  I also think OPEC is pumping as much as it can.  The idea that the cartel, and Saudi Arabia in particular, has productive capacity in reserve is something periodically floated to keep us ignorant.  I expect all hell to break loose once not even CERA can deny that Saudi production has peaked.

  by eightlivesleft on Wed Apr 02, 2008 at 12:43:34 PM PDT

•  Stop the speculators

  It used to be that if you bought or sold oil futures you had to have a means to receive delivery. Now anybody can buy then.

  Restrict oil futures to those that need the product, not speculators.

  by BehrHunter on Wed Apr 02, 2008 at 12:46:43 PM PDT

•  Bad idea

  Let's think about oil consumption in our own state.  Sure, there are halfway decent public transportation systems in Chapel Hill and Durham, but it's nearly non-existent in my hometown of Greensboro, where having an SUV almost seems socially obligatory.  Even if I wanted to take a bus to a shopping center, I'd have to walk almost a mile from my house, then wait at a stop on the edge of someone's yard with no shelter.  Not exactly convenient.

  There should be a federal program with matching funds to develop a real public transportation in places like Greensboro and actively promote taking public transport as a social value.  In Greensboro, taking a bus carries a stigma, which is why middle class folks won't use PT.

  by SneakySnu on Wed Apr 02, 2008 at 12:53:28 PM PDT

  •  And what about light rail?

    I can't tell you how many times I wished as an undergrad that there was a train between Chapel Hill and Greensboro so that I could go home on weekends without begging for rides or having my mom come fetch me.

    by SneakySnu on Wed Apr 02, 2008 at 12:55:14 PM PDT

    •  Consider the size of the project you're proposing

      It would be on par with Boston's Big Dig, but without the population density to justify it.  I like the idea, but there's no way to pay for it.

      by SicPlurisPoenaPrestantia on Wed Apr 02, 2008 at 12:56:51 PM PDT

      •  That's why there has to be federal funding

        I don't see why a good chunk of the transportation tax couldn't be spent on new infrastructure.  God, NC spends so much on repaving roads every year!  We barely even get a hard frost most winters--I've never run over a pothole in NC.  

        You've got to make it a necessity in the eyes of the public instead of just an enormous expense.

        by SneakySnu on Wed Apr 02, 2008 at 01:02:08 PM PDT

        •  And that, unfortunately, won't happen in NC.

          Make a compelling argument for me to use when I try to argue the point with my wife's best friend who lives in Burlington and commutes to RTP every day.

          by SicPlurisPoenaPrestantia on Wed Apr 02, 2008 at 01:10:34 PM PDT

          •  Tell her to imagine this scenario

            She leaves her car at a park and ride and boards a train that leaves every 30 minutes, 15 during peak hours.  She could sip coffee and get work done, or talk on her phone or check e-mail on her Blackberry while being escorted safely to RTP.  Her company provides a shuttle from the train stop.  

            All this while saving money on gas and car insurance, and in addition saving the stress of having to drive on I-40/85 and/or Hwy 54 (which is fine from Burlington to CH but is one stop light after another from CH to RTP).

            by SneakySnu on Wed Apr 02, 2008 at 01:29:12 PM PDT

            •  And dropping off her kid to school?

              Stopping at the grocery store?  Shelling out a few extra thou in taxes to pay for it all?  Finding a company willing to pay the expense of transporting its workers?  Dealing with a job that requires some travel?

              Mass transit works best for an industrialized, urban environment.  RTP is a post-industrial exurban environment.  Try again.

              by SicPlurisPoenaPrestantia on Wed Apr 02, 2008 at 03:18:05 PM PDT

  •  But the investment in MT is far, far too high

    for a state our size.  It's one thing when you have a fairly large urban center, but we're too spread out for that.  No, the better idea is to leave our expensive infrastructure intact and work on a more viable energy solution.  We ain't giving up our cars.  Period.  Proposing all those good ol' boys take the bus isn't going to fly.

    by SicPlurisPoenaPrestantia on Wed Apr 02, 2008 at 12:55:30 PM PDT

    •  Yeay! Status quo!

      That's a ridiculous argument.  Not everyone in NC is a good ol' boy.  And the spread is just going to get worse the way development is going.  We need to reverse the trend.

      by SneakySnu on Wed Apr 02, 2008 at 01:07:17 PM PDT

      •  Ain't gonna happen.

        Who is going to give up suburban living for high-density urban life in North Carolina?  Really?  Sprawl is here to stay -- we can manage it, but we can't stop it, and we can't reverse it.

        People move to NC to get AWAY from "big city" problems.  

        by SicPlurisPoenaPrestantia on Wed Apr 02, 2008 at 01:08:56 PM PDT

        •  when the gas is too expensive

          or the gas stations have "closed: no gas" signs hanging o the pumps, people will look at walking or riding their bikes a mile to the train station, and at living within blocks of said train station, and most of them will choose the denser neighborhood.

          not before, but those days are going to catch up with us pretty soon.

          by wu ming on Wed Apr 02, 2008 at 02:25:14 PM PDT

          •  They'll switch to hybrids and electric long

            before they get to that point.  It's better to invest in a $30,000 electric car than a $150,000 condo in a crappy urban neighborhood that's guaranteed to depreciated as the urban density picks up.  

            by SicPlurisPoenaPrestantia on Wed Apr 02, 2008 at 03:19:33 PM PDT

          •  A mile is not that far.

            What keeps me from biking more (and I am fortunate enough to walk to school) is the knowledge that someone will steal the bike no matter HOW I tie it to the rack. Lost 2 bikes that way.

            by MNPundit on Thu Apr 03, 2008 at 08:52:16 AM PDT

    •  Yes, You Are Giving Up Your Cars

      It's just that you will give them up due to high prices rather than direct government intervention, and then the politicians can blame it on the Arabs and vote for war on Iran and the sons of the jobless good ol' boys who can't afford to fill up their trucks' gas tanks and can't find any jobs because the textile mills and furniture factories are closed will sign up for the "all-volunteer army" and those of us who oppose the war will be told that we're a bunch of dirty hippies who don't support the troops because we opposed the war.

      Of course, it would have been cheaper and simpler to change zoning regulations and invest in mass transit, but that's just crazy dirty hippie talk because ain't nobody giving up his car.

      On to Tehran!

      by greenskeeper on Wed Apr 02, 2008 at 01:13:42 PM PDT

      •  Cars don't have to run on gas.

        Electric cars are well within our technological grasp.  Decentralized electric power is well within our technological grasp.  It is FAR easier to keep the cars and change the engines than to drastically re-engineer the entire American economy and social structure.  

        by SicPlurisPoenaPrestantia on Wed Apr 02, 2008 at 01:16:20 PM PDT

        •  Global Climate Change

          Demands the re-engineering of the entire American economy and social structure.

          There are two options: either we deliver the change in economy and social structure in a form we can handle, or the climate change delivers it in a form we can't.

          There are no other options.

          by greenskeeper on Wed Apr 02, 2008 at 01:24:31 PM PDT

          •  While I almost agree . . .

            I also recognize that climate change is not going to be a civilization-changing event but rather a small series of events that will sometimes be cataclysmic.  You cannot legislate the population into a new mode of working without their permission -- and without proving to them that it works.  This will be a gradual process moved as much by markets and technological advances as it will be moved by legislation and regulation.  

            Americans won't give up their cars.  They don't have to run on gas, but a Berkley-style pedestrian-oriented society just isn't going to happen in any place but Berkley and its cognates in other states.

            by SicPlurisPoenaPrestantia on Wed Apr 02, 2008 at 01:27:40 PM PDT

            •  well, they said Americans wouldn't give up horses

              either, but then with a gargantuan public expenditure on road funding and a national policy geared toward massive oil use- first domestic and then secured from abroad -- golly gee, we became a car culture, finally culminating in the suburbs of NC -- which are, you may be right, unthinkable and helpless without a pair of cars in every garage.  We don't have to legislate them out of existence.  50 cents per mile in transport cost will probably do the trick.  

              by ajbrown on Wed Apr 02, 2008 at 01:33:42 PM PDT

              •  Nah, they'll switch to electric, first. eom

                by SicPlurisPoenaPrestantia on Wed Apr 02, 2008 at 03:20:08 PM PDT

•  None of it will work, though.

  I hate for Mr. Neal's inaugeral diary to be this way, but the clear fact is that no amount of tinkering with the bookeeping is going to make the oil problem go away.  There is a finite amount of oil, and the sooner we make a commitment to leave it all behind in favor of a new source, the better for all of us.

  Consider the massive amount of R&D resources available in RTP, among other places in NC.  This is not an insurmountable problem -- just a painful one.  The right combination of technologies could transform the state and national economy.  And in the mean time, "high" gas prices are just one of the many issues eating away at our economy.

  Jim, I like you, but a progressive blog is no place to push non-progressive policies.

  by SicPlurisPoenaPrestantia on Wed Apr 02, 2008 at 12:53:37 PM PDT

•  This is Why DKos is great

  Jim,

  I wish more politicians would post policy ideas on this website and get feedback like you are doing now.

  Like many, I am in disagreement with you over this plan. But, if you want to make a political point off of gas prices, talk more about how fruits and vegetable prices are sky-rocketing because of our dependence on oil. Talk about the small business pain because of high gas prices. Talk about the possible hit to the NC tourism industry.

  For possible solutions to the oil problems: I'm sure the more educated than myself members of this website will be willing to help. Maybe use tomorrow's diary as an open forum asking for their ideas?

  by tonydimarzio on Wed Apr 02, 2008 at 12:54:24 PM PDT

•  $100/barrel is actually good.

  It's not so much that supply is dwindling (it is) but that demand is going through the roof. There is an insane amount of demand from China and India for oil as their countries start to completely embrace the gasoline powered auto.

  If the price of gas is high and remains that way, it creates an incentive to create alternatives. The best way to reduce the impact oil has on the average Joe's income is to not use it. Walk, bike, carpool, take public transit, make fewer trips.

  Think of it this way. If I don't start smoking, I won't have to go through the trouble of quitting.

  by reciprocity on Wed Apr 02, 2008 at 01:00:35 PM PDT

•  The transforming answer, literally.

  Fuel prices at $3.49 a gallon for 87 octane IN OUR AREA ARE HERE TO STAY.  The local politicians are clutching at straws, such as rescinding a 5 cent a gallon, and a % of price excise tax to "lessen the burden" on drivers.  Of course the shortfall to local government and the lack of funds for road maintenance, schools,etc isn't spoken of in this posturing.

  Draining an emergency 35 day supply, assuming it is all recoverable is a one shot, even if it gets taken out at no more than 5% of actual daily needs.

  If it were diverted to diesel (and home heating oil) that would go the furthest and possibly drop the truckers costs and utimately a little bit to the consumer. But it doesn't change the fundamental difficulty of importing 60 to 70% of our fossil fuels which has been encouraged and demanded by Exxon Mobil,Chevron, Shell and their lobbyists in Washington successfully.

  In 1959, there was a LEGAL restriction, a cap on importing fuel into America  to no more than 13% of daily requirements. The major oil companies objected bitterly to this becazuse the cheapest oil for them to produce in an era of 2 dollar and 2 1/2 dollar barrels was the self pumping (virtually) close to the surface MidEastern SA, Iran and Iraq.  The law was changed and Texas declined because the profit margin was better in faraway places.

   Now the difficulties of mass transit outside the urban corridor of the Northeast NE, and Southern California, means a transition is needed. We need to stop burning so much fossil fuel, reduce it greatly.

  If the next generation of personal autos and long range trucks are hi performance electrics and those elctrics are powered from an increasing mix of non polluting sources such as wind, photo voltaics, tidal, geothermal as the Europeans are doing with great successs, we have a chance.

   It was the Senators and Congressmen in the pockets of the fossil fuel lobbyists that defeated the amendment to scrap the subsidies to an industry that had more than 100 BILLION in profits this past year. And defeated modest subsidies to launch desperately needed alternative energy projects to make them competitive with fossil fuels.

  We have a market that is unfair, skewed grossly towards fossil fuels,and their paid (bribed) politicians in Congress. Unfortunately, a significant amount of them are Democrats sucking on the oil lobbys teat, when they are not, ummmm amusing themselves in other ways.

  Short term, as the economy craters, the prices will drop because demand (and jobs, and the need to drive) will drop.  The problem of fossil fuel monopoly and addiction to an oil and military paradigm will stay. How will Jim Neal address THAT?

  The existing electricity grid is "idle" overnight, with enough capacity to possibly recharge the national auto fleet.  That is one possible solution. But the price has to be brought down. Not as in "the market will take care of it", because that hasn't happened in the USA in the past 41 years.

  by Pete Rock on Wed Apr 02, 2008 at 01:21:19 PM PDT

•  Hello, Mr. Neal.

  I am voting for you in the primary in Brunswick County.
  I wish you the very best of luck in your campaign to win the Democratic nomination nomination and then unseat Liddy Dole.

  by oibme on Wed Apr 02, 2008 at 02:13:08 PM PDT

•  we are being gouged

  but the commodity price of oil isn't where it's happening. if anything, oil looks cheaper than its costs actually are. where people are getting gouged is in all the hidden externalized costs that go into securing that oil, namely in the pentagon budget and the trillions thrown down the well in iraq.

  as for the oil production levels, i highly suggest spending a little bit of time over at The Oil Drum, a group blog populated by a lot of oil geologists who are tracking production levels of oil globally. fact of the matter is that oil production has plateaued since '05, is not going to match our demand, much less global demand, and will probably start its decline in the next decade.

  while oil corporations are bastards, the bigger issue that we have to face is that oil is not limitless, and we need to get ready to transition from our cheap oil infrastructure to a much more efficient one, as a way of buying time to get off it entirely for most transportation uses. you're a smart guy, jim, and while going after oil corporations might be smart politics (and i cheer you on in doing so), it is critical that you realize that they're not the one driving prices up at the moment. if they could pump more right now, they would, but they're throwing as many new oil wells and derricks at their fields as they can, and they've flatlined.

  going to be some very hard days ahead, if we don't get a handle on what's coming down the pike.

  by wu ming on Wed Apr 02, 2008 at 02:20:30 PM PDT

  •  perhaps another way of looking at this

    is to compare it to what the fed's doing by dropping interest rates to disrupt the long term stock market decline that's going on. sure, it gives you a lot of little bumps up, but in the end the trend is still down, only you've wasted that money slowing the inevitable instead of making a decent cushion for the collapse.

    the SAR ought to be for making sure that we don't starve to death when the saudi government falls to al qaeda, or bush starts a war with iran, or a hurricane knocks out houston's refineries. not for pissing into the wind.

    again, i see what you're trying to say, i just thing that oil and energy ought to be directed towards something that helps cushion us from high oil prices, rather than trying to game the oil market in the short run.

    by wu ming on Wed Apr 02, 2008 at 02:29:08 PM PDT

    •  I disagree.

      The Fed simply prints money.

      You cannot just conjure up more oil when the supply gets tight.

      Soon, oil depletion will be driving depression, instead of some greedy bankers, and then we'll really be in a pickle.

      by XOVER on Wed Apr 02, 2008 at 02:33:34 PM PDT

      •  not an absolute parallel, i admit

        but the impotence of trying to turn back reality rather than cushioning the blows of a trend seems a fair enough analogy to me.

        by wu ming on Wed Apr 02, 2008 at 02:38:12 PM PDT

•  The problem is resource depletion.

  It's really that simple.  Oil is finite.  The world has used up the easily available oil.  It's gone.  Forever.  

  What's is becoming increasingly left is "difficult" oil.  Tar sands oil.  Orinoco oil.

  Constricting supply + increasing demand = increasing cost.

  And the Middle East "reserves?"  You mean those reserves the ME nation just made up out of thin air in the 1980s?  They just made them up and everyone just runs around thinking their numbers are "correct."

  It would be very simple to prove ME oil reserves.  They simply need to show the world their books.  But they won't.  Because the "reserves" are made up -- lied about -- for financial reasons.  

  Look Jim, the world has been discovering far less oil per year than it uses since about 1982.  Far less.  Far, far less now.

  If I spend $100.00 per month and I earn $20.00 per month and I have a bank account with $500.00 in it, do I have a problem or not?  That's oil.

  Now extrapolate your US consumption numbers (more like 22 mbpd) to world consumption numbers -- 86 mbpd.  And for oil and condensates the most oil ever produced in a month in the history of the world occurred in May 2005 at 74.35 mpbd.

  So how is the world using 86 mbpd when it produces less than 74 mbpd?  Simple.  Tar sands.  Heavy oil.  Very expensive oil.  Hard to process oil.

  Oil is a problem of geology.  A problem of cooked books.  A problem of supply.

  Failure to understand these fundamentals is only going to get you in trouble politically.

  The days of cheap oil are gone.  Along with all that that implies.

  by XOVER on Wed Apr 02, 2008 at 02:29:57 PM PDT

•  I applaud what you're trying to do, Jim, but

  I'm not certain this is the answer.  I think this is a very complex issue that requires more than simply trying to temporarily lower the price of gas.

  I feel we've got to get the 10-15 mpg autos off the road...we need to make a radical and quick switch to renewable energy sources...and we need to start thinking about all the factors in a post-oil society.  
  Read this:  ARTICLE PLEASE !!!  

  You've got my vote...and I'm glad you posted your thoughts...but you might want to think about many of the comments here before banking on this as a winning policy platform.

  by Persiflage on Wed Apr 02, 2008 at 03:11:46 PM PDT

  •  In Jim's defense,

    he does make it clear in his comments that this is a short-term solution to the problem, aimed squarely at the middle class and working class in NC, not a long term solution.  A question of tactics more than strategy.

    by SicPlurisPoenaPrestantia on Wed Apr 02, 2008 at 03:23:41 PM PDT

    •  I appreciate your thought

      and understand it's a "short term" fix.  OTH, it's a placebo rather than a real prescription for success in dealing with the problem.

      If gas prices get high enough more people will buy hybrid autos and start screeching about renewable energy...and bitching at and to Congress.  

      In my neighborhood of 65 homes, two of us own hybrids...most don't even know what a hybrid car does, how it works, or what the mileage is.   Why give these folks more time to waste being dumb?  

      by Persiflage on Wed Apr 02, 2008 at 05:39:15 PM PDT

•  Jim Neal is Progressive on Environment and Energy

  I've met Jim Neal personally, and while it seems there is some disagreement on his idea to tap the Strategic Petroleum Reserves, overall I think Jim is very pro environment and very progressive when it comes to energy policy.  Jim even drives a hybrid car... I'm pretty green, and I don't even do that yet!  I really do think Jim Neal is most progressive US Senate Candidate here in NC, and he seems to be quite the fighter.  Keep up the good work Jim!!!!  Take down Dole!!!

  by spnj889 on Wed Apr 02, 2008 at 03:28:08 PM PDT

•  Why not take a look at

  and think about Vote Energy Smart, NOT Energy Dumb!

  by A Siegel on Thu Apr 03, 2008 at 07:26:57 AM PDT