Friday, September 15, 2006

Bad timing for a conspiracy on oil prices

Earlier this week, the folks at the National Association of Manufacturers (NAM) took a swing at CNN's Jack Cafferty for suggesting that the oil companies might be deflating gasoline prices to help position the Republicans for the November elections.

If Cafferty's theory is right, I applaud the oil and gas industry for its excellent advanced planning. They sure have learned a big lesson from just a year ago, when the media was bashing them for lousy pre-Katrina planning. Way to get in front of the ball, guys!

But, I'm inclined to agree with NAM that Cafferty's out to lunch on this one. In fact, a letter NAM released on September 15 helps prove the point.

NAM, along with the American Forest & Paper Association, the American Chemistry Council, and the American Gas Association, sent a letter to House and Senate conferees urging them to move legislation opening the Outer Continental Shelf to energy development. Both houses passed similar bills approving this over the summer, so the legislation needs to move out of conference and over to the White House before the end of this session.

But wait, if the oil and gas industry -- and its allies -- want this OCS legislation to move so badly, would they REALLY want gasoline prices to fall right now?

Jump into the way-back machine and return to February 21, 2006, when the Washington Post explained that the oil industry and its allies have two weapons in the fight to open the OCS: hurricanes and high energy prices. The hurricanes, namely Katrina and Rita, demonstrated that the industry can operate safely under extreme conditions -- and they showed how fragile our supply lines are. High energy prices underscore the need to increase resource supplies to meet growing demand -- and they soften the public's tolerance for new energy production facilities.

Here in the present, though, neither of those two arguments seems very timely. We're headed into fall without any severe hurricanes, so the specter of another Katrina doesn't have much clout. As for energy prices, they're falling. So much for the the legislative arsenal.

If Cafferty wants to find a conspiracy theory in all this, he might think about looking for plots involving companies inflating prices -- and maybe even seeding storm clouds. Oil at $100 a barrel and a category 5 storm would do a lot more to help the industry open the OCS -- and position itself for the future -- than a bid to help Republicans in November would.

(Note to API: I'm covering for you on this one, dudes, but if Cafferty finds out you've had Elvis locked up in the conference room all these years, you're on your own.)

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