Real-World Realities Belie Rhetoric On Energy Prices
Real-World Realities Belie Rhetoric On Energy Prices
To the Editor:
Messrs Duffy and Barzetti must live in a simple world. If they saw it on TV, it must be true. Unfortunately, the only thing they have proven is their ignorance to what is happening in the world around them.
Mr Barzetti would prefer we get rid of all regulations and let the coal, gas, and nuclear industries run wild. How did deregulation work for Wall Street? Or the California electricity market? And if we are to remove all regulation then what protects us from another Deepwater Horizon accident, Fukushima disaster, or Exxon Valdez?
As for the real issue, energy prices and their behavior as a commodity, in light of full disclosure let me state that I not only work as a commodity trader, but as part of my responsibilities I directly oversee the purchasing of $1 million/day in fuel for a fleet of ships, so I spend a fair amount of time analyzing energy markets. Mr Barzetti will also be (un)happy to know that I actually worked for President Reaganâs first chairman of the Council of Economic Advisors, so Iâm very familiar with what his policies did, and didnât do.
As for the facts totally butchered or ignored by Messrs Duffy [âThe Devil In The Details,â Letter Hive, 3/30/12} and Barzetti [âGet The Environmentalists Out Of The Energy Industryâs Way,â Letter Hive, 4/6/12]:
1) President Reagan didnât lower energy prices through deregulation. Energy prices dropped after Reagan came to office because of the calming of energy markets following the 1979 Iranian Revolution and its impact on energy prices.
2) The number of drilling rigs working for gas and oil in the USA is up 11.4 percent this year and now stands at a 20-year high.
3) Chinese oil imports have quadrupled in the last decade and are expected to grow at 7.5 percent per year until 2020, compared to 1 percent growth in the developed world.
4) Demand for gasoline is so poor, that three oil refineries in the USA have closed.
5) We have so much surplus energy in the USA that we not only export refined petroleum products now, but thermal coal exports are also at a 10-year peak.
6) The link between speculatorsâ positions in oil markets and the price direction of oil is irrefutable. Itâs not the only reason energy prices are high, but consider that during the Bush Administration investments in commodity futures markets jumped six-fold.
7) When President Bush took office in 2001 oil prices averaged $28/barrel. By the last year of his Presidency prices hit a record high of $145/barrel.
8) Coal power plants are closing not because of regulations, but because international coal prices are near record highs, while natural gas prices are at 10-year lows. Mr Barzetti has obviously never had the pleasure of breathing the air in China, where coal is king and environmental regulations nil. The air quality is not only terrible, but respiratory illnesses are growing at alarming rates.
I could go on ad-nauseum, but for the 500-word limit. But why let facts stand in the way of bogus political rhetoric?
Peter Sandler
4 Far Horizon Lane, Sandy Hook                                    April 8, 2012