On Monday July 14th (three days ago), President Bush lifted the Executive ban on offshore oil drilling in the U.S.   (see article).  And by today, three days later the price of oil has plummeted from $145 a barrel to $130 a barrel.  That's a 10% drop in three days.  Democrats have spent most of the summer saying "we can't drill our way out of this mess."  They've said if we start drilling here now for oil that it won't affect energy prices for 10 years or more.

Conservatives have been saying that if we showed a resolute determination to drill for oil here that it would bring downward pressure on oil prices immediately.  That's because the price of oil is determined on the futures market.  The price of oil as reported each day is the futures price, usually the price for oil purchased a month out.   That price is influenced by what oil investors think the supply and demand will be at any point in time. 

When the American government takes an action that makes it even appear that we may begin drilling at some point in the future, it is enough to bring down the price of oil by 10% in three days. 

There are two bans on offshore oil drilling, a Presidential ban and a Congressional ban.  President Bush has now lifted the presidential ban but the Congressional ban remains in place.  Despite this, it was still enough to bring down the price of oil by 10% in three days.