Energizer Elephant

Every day I drive past the Chevron station at which I regularly fill up. Since I drive a small car and have an insignificant commute (speaking as somebody who used to drive forty-six miles each way daily for over seven years, trust me, I'm referring to the distance, not my appreciation of it), I only get gas once a month or so. This has the effect of giving me more representative anecdotal benchmarks for the price of gasoline at the pump.

The time before last regular unleaded was $3.17 a gallon, the most I've ever paid for gasoline. The last time it was down to $3.09. Today when I drove past it was down to $2.92. By my mathematician skills, that's a quarter-a-gallon drop, or about 8%, in just under two months.

Hence, today's Larry Kudlow column heralding the cratering of energy prices in the near future did not come as any great surprise:

The Energy Department just announced that crude oil supplies rose 1.4 million barrels to 347.1 million for the week ended June 16. Analysts had been expecting a drawdown, so this news caught them by surprise. More, crude oil supplies in the U.S. are now at their highest levels since May 1998, when oil was trading around $15 a barrel. Add in the fact that Canadian oil inventories are fully stocked, and the more imminent reality is of a sizable oil-price decrease — not a huge increase.

Recently I interviewed four oil-tanker executives who control a combined 85% of the oil coming into the United States. They confirmed market rumors that the amount of oil being stored on large carriers on the high seas is abnormally high. One of the CEOs even predicted the possibility of $40 to $50 oil in the next six to twelve months. In another interview, Chevron CEO David O’Reilly suggested that gasoline and energy demands have flattened in the U.S., and may be showing signs of decline.

[W]e may instead be looking at a downward correction that will have oil prices dropping more than anyone imagines possible. Supplies are at their highest levels in eight years, while demand appears to be falling, or at least leveling off. Should a significant price correction be in the offing, stock markets and the economy will cheer.

And just in time for the 2006 mid-term elections, too. Karma is taking a bigger and bigger bite out of al Donka's collective caboose, it appears.

And the chomps just keep coming:

The House Resources Committee, chaired by California Republican Richard Pombo, has just delivered the Deep Ocean Energy Resources Act, which will give coastal states the authority to drill 100 miles or more offshore. This will allow for exploration and production in the deep seas and on the Outer Continental Shelf (OCS), where kajillions in oil-and-gas reserves are waiting to be siphoned. It also will provide the coastal states with significant oil and gas royalties. Democratic House Minority Leader Nancy Pelosi opposes this, but the bill has strong bipartisan support.

Finally, the Nuclear Regulatory Commission has issued its first license for a major commercial nuclear facility in thirty years. Construction of the $1.5 billion National Enrichment Facility in New Mexico could begin in August, and according to Louisiana Energy Services CEO Jim Ferland, it could be ready to sell enriched uranium (for
electricity) by early 2009. Senate Energy chair Pete Domenici calls this a “renaissance of nuclear energy in this country.”

And guess who is promising to filibuster DOERA when it arrives in the Senate:

Florida U.S. Senator Bill Nelson says he would start a filibuster in the Senate to block a measure on offshore drilling if it passes the House, which is expected to vote on the bill this week....Nelson and all seven of Florida's House Democrats oppose the measure.

C'mon, Jeb, jump into the race while there's still time. Nelson is the epitome of low-hanging fruit. And you might then be able to talk some sense into your Floridian colleague in a Senate even more Republican, as the rest of us merrily fire up the free market dynamo once more.