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Political motivation behind energy crisis
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17:11, July 22, 2008

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· Surge in Oil Prices
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The soaring international oil price has sparked a dispute within the United States about whether the country should increase oil production. More and more ads and commercials have appeared in metro and media channels, appealing for increasing domestic oil production. Of course, there are also many voices of opposition. At least, within the United States, it is very difficult to reach a consensus on this issue in the short term. In this context, President Bush recently announced to lift the administrative ban on offshore oil drilling; and urged U.S. Congress to repeal the relevant law. This, no doubt, indicates a change in US government policy, and revealed the complexity of US energy politics, which can be seen in three ways:

The first is the conflict between different interest groups. It would be a joke to say the US is short of oil. In fact, the United States is the world's largest importer of oil and relies heavily on foreign energy resources. The underlying reason is for environmental considerations. Over the years, despite the voices demanding the lifting of the ban, U.S. Congress has consistently been able to pass the extension. Clearly, the voices calling for environmental protection have overwhelmed those calling for oil production expansion advocates and the easing of foreign energy dependence, and represented the mainstream public opinion. Those in favor of developing renewable energy and opposed to growth in energy resource exploitation believe that an increase in exploitation requires a huge investment. It is in the long-term interests of the United States to invest that amount of money into renewable energy development instead of expanding energy exploitation.

The second is the consensus between Republican and Democratic voters. A poll showed that soaring oil prices are quietly changing public opinion. A survey in late June shows that in the last six months, 46% of Democratic Party voters gave priority to the enhancement of energy production as primary energy-related topics. At the beginning of the year, only 30% of voters indicated this as priority. The case for Republican voters is quite the same. Among independent voters, half of respondents indicated that priority should be given to an increase in oil exploitation. For ordinary American voters, the rapidly rolling chart in gas stations seems to be more convincing than the rational figures. Although environmentalists have attributed this to the short-sighted mentality of consumers, both parties have to overcome this challenge this election year. Some crucial members of the Democratic Party, under the pressure of constituencies, have agreed to increase offshore oil exploitation. This might lead to a division within the Democratic Party.

The third is the influence of speculation and the weak dollar. Bush said that even if approved by Congress, increasing offshore oil exploitation will not have an immediate effect on curbing oil prices but will change people's psychological expectations for oil prices and challenge speculation in oil transactions. There is some truth to this. Speculation occurs when commodity prices continue to rise, let alone the price of non-renewable oil. But the key point is that if speculation is the biggest cause of rising oil prices, we would simply stop oil futures. In effect, giving speculation as an explanation is simply avoiding the bigger issues by dwelling on the trivial. In fact, many countries outside the United States believe that that the weak dollar is more responsible for skyrocketing oil prices. However reluctantly, Federal Reserve Chairman Ben Bernanke admitted in his testimony before the Congress that the dollar was at least one of the reasons pushing up the oil prices. At any rate, given the current domestic economy, the US government is not likely to increase the value of the US dollar for the time being.

By People's Daily Online



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