My Congressman and Me

About a month ago, my congressman, David Price - North Carolina (D), was on a local radio show. The host is new the the all talk station and it was the first opportunity for this morning drive host to speak with one of the local representatives to Washington. Gas prices were a hot topic of discussion because we were paying close to $4 per gallon of gasoline.

The host asked about drilling off shore. Being a Democrat, naturally Rep. Price gave the party line of environment and using the leases that have already been granted. Now I can understand the environmental issue. Here in North Carolina it is a big issue because of our beaches. Any drilling will have to satisfy the need to maintain the beaches which are a summertime draw for tourists from neighboring and inland states. But with any drilling coming miles off of our coast I have doubts that there will be a major spill which has an impact on our beaches.

Callers made similar comments and naturally the congressman took refuge behind the lease issue. Many people could not get him off of this because they are not sure why oil companies refuse to drill on these leased areas. Well, there is an answer and it is one that requires an understanding of economics to comprehend. So, that means that democrats will not get it because they choose to ignore economic realities. So, here's the answer.

People wrongly assume that all oil extracted from the ground is the same. This is not true. At one time oil on the market here in the US was known as 'West Texas Intermediate'. The name was later changed to 'Light Sweet Crude'. Why? Because it better reflects the type of oil that it is and represents the type of oil that refiners want in order to make gasoline. So, there is light oil which is low in sulfur, considered an impurity and removed from crude in the refining process. There is also sour oil which has more than 1% of it's content in the form of sulfur.

As I stated earlier, sulfur is considered an impurity in oil that needs to be removed in order to make gasoline. The more sulfur in the crude the more the crude must be refined raising the cost of oil. So, if oil companies get a lease and find that the oil is high in sulfur they will find that the refiner will not buy it favoring crude lower in sulfur giving the oil company less of a market to sell their product. The investment in exploration, building a rig and extracting the oil will not be paid off unless the only alternative is sour oil. If the were able to sell and refine the sour crude the cost at the pump is going to be higher.

So what should be done? Open up the coastline for exploration and extraction. Make it far enough off the cost so that the rigs cannot be seen and so any spill will not impact the beach, wildlife. Once the pockets of light sweet crude are found then Drill, Drill, Drill! In the meantime, refiners are going to have to find better ways to refine sour crude. Make sure that some of the proceeds are reinvested into these processes. If necessary, make it a DARPA (Defense Advanced Research Projects Agency) which has a better track record of technical advances than grants and other government programs. It is, after all, vital to national security.

So, what happened with my congressman? I wrote him a letter letting him know that he let me down. I requested a response and asked for no Democratic talking points. His response contained the talking points about the leases. So, I essentially took him to task again giving him the explanation I gave above but being even more critical than in my 1st letter. In the time between letters (4 weeks - thanks for the prompt response BTW, congressman) the Democrats in congress tried to tap the Strategic Petroleum Reserve to lower prices. But their move did not end there. They wanted to replace the Light Sweet Crude with Heavy Sour Crude meaning that the oil in the reserve would be useless when it was needed most - a really good short term measure and really bad long term decision and one that's typically Washington. So, knowing that he was part of this debate I took him to task for knowing the truth but communicating disinformation. But what do you expect from an incumbent.