Politicians Silent on Oil Industry’s Windfall Losses – WSJ

by Marilou Long on November 6, 2015

in Energy,politics,Recommended Reading

 

The Wall Street Journal has an editorial today about the silence in Washington after the price of oil has fallen by over 50%.  From the linked article:

A funny thing happened in Washington as oil prices have fallen by more than half since the summer of 2014: Nothing. No calls to hang speculators. No pleas to stop layoffs or help drillers in danger of bankruptcy. No Rose Garden speeches, like the one in April 2012 in which President Obama said he had unleashed his law enforcers “to make sure that acts of manipulation, fraud or other illegal activity are not behind increases in the price that consumers pay at the pump.”

This year the White House has been silent on prices. And as far as we can tell, in the nearly 17 months when the price of U.S. crude oil has slid from $107 per barrel to a recent $45, Mr. Obama hasn’t advanced a single conspiracy theory to explain this decline.

This is political progress of a kind, since businesses are paying for their missed bets with their own money. But it’s worth noting the financial carnage sweeping the oil industry, as well as the contrasting political reaction when prices abruptly fall compared to when they rise.

When oil companies plan their capital expenditure budgets, the timeline is very long and takes into account a range of oil prices.  There is a reason the phrase “oil boom” came in to favor.  A boom is usually followed by a bust.

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