Drilling for oil in the US

[DaveE]

One big disadvantage to working from home is being able to have cable TV news as background noise. A few days ago Bush gave a speech and one of the issues of course was the price of gasoline in which he lambasted Congress for preventing drilling for oil in Alaska. This AM McCain gave a speech and commented on the fact that drilling is not allowed off the coast of Califirnia and Florida. My question is, if we allow drilling, how does that benefit the average American anyway? The world price of oil isn't going to be affected much, if at all, is it? Is Exxon, or whoever has the drilling rights, going to sell for less to Americans? I don't think so. It seems to me the only beneficiaries are the oil companies.

[onewhippedpuppy]

It could increase supply (lower the price) and would be cheaper to transport to the USA (lower the price). Whether or not the price to the CONSUMER is less, that is a different story. Current oil/gas prices are not the result of supply/demand, there's some manipulation involved as well.

An honest question, isn't the number of refineries/capacity of refineries the current limiting factor?

[Porsche_monkey]

The oil will be extracted eventually, why sell at $100 when you can sell at $200 in few years?

[Rot 911]

And why use up all of our oil when we can use up all of the middle east oil?

[DaveE]

Originally Posted by Kurt V

And why use up all of our oil when we can use up all of the middle east oil?

+1

I've thought that for a while also. It seems to me that Bush still works for the oil industry. It certainly seems it would be a national advantage to KEEP our reserves in the ground for now.

[Zeke]

Local oil is being extracted and wells are being revived that were once not worth operating. Local crude is not as light as Middle Eastern oil, so it's a wash by the time the lighter crude is transported.

Then there's the environmental aspect. We don't seem to want to take the chance of another spill.

I get my information from my deceased mother's 2nd hubby. He has been in the oil patch since being discharged from the service back in the WWII days. 10 years ago he had to sell off his antique gun collection to make ends meet. Now, he's got plenty of money at age 81. He just has a couple of leases in Central CA. I don't know how many wells, but they've deepened a few.

[The Gaijin]

It depends on the deal. Exploration costs and extraction costs can be huge. Offshore oil has been a boon to the Norwegion and British economies in the last 30 years.

Additional supply under our control also helps protect ourselves from some of those who like us least.

Mexican production has been going down due to poor management.

[Red Baron]

It creates competition in the market.

[Mule]

Once they see we are serious, they will drop the price to discourage our efforts, just like they've done in the past.

[Zeke]

As for the price of oil from the Middle East, has it really gone up or are they simply basing the price on another currency as the dollar goes away? A little of both, I suspect.

[DaveE]

Originally Posted by Mule

Once they see we are serious, they will drop the price to discourage our efforts, just like they've done in the past.

Who is they though? Who is setting the price now?

[carreraken]

Originally Posted by milt

As for the price of oil from the Middle East, has it really gone up or are they simply basing the price on another currency as the dollar goes away? A little of both, I suspect.

Along the same lines - if the cost of oil from the ME goes up due to currency fluctuations, does that mean our cost of oil from our continent also goes up just to match the market price? So their profit margin gets increased due to overseas oil cost??

[Mule]

Originally Posted by DaveE

Who is they though? Who is setting the price now?

Opec?

[daepp]

Explaining that we are going to drill drill drill would burst the oil speculation bubble.

And having lived in Cali for most of 5 decades, the experience and successes of the oil industry have been exemplary. It's the enviro wackos who freak out if a drop of oil hits the water, a bird or the shoreline that is a big part of the high cost of oil.

Even Prudhoe (sp?) Bay was a complete over reaction. IIRC, even the suit against Exxon has been overturned. The bay returned to normal as they always do eventually.

And all the surfers around here can tell you that oil NATURALLY has been leakin into the ocean and onto the shore forever!

[Seric]

Originally Posted by Kurt V

And why use up all of our oil when we can use up all of the middle east oil?

I've been saying this for years. As montioned in the thread, costs of getting the oil is huge and enviromentalists make it ever harder. Our refining capacity is small as well so I don't think we can feed our need as easily than having it shipped.

So while not using our oil is a good thing, we must also try and beef up the infrastructure for future extraction. Course with tree-huggin hippies runnin' the show, that will be damn near impossible. It's not all about fuel for our cars, we still need plastics, tires, lubricants etc....

[sammyg2]

If we increase supply and demand remains the same, the price goes down.
Eco 101.

[Porsche_monkey]

Originally Posted by sammyg2

If we increase supply and demand remains the same, the price goes down.
Eco 101.

In a perfect world yes. But supply creates it's own demand. Economic 102.

But finding, drilling, and producing take years. You will likely find that even with those new sources supply will have decreased when they come onstream. And demand is growing faster than supply can.

An increase in supply might only reduce the increases.

[daepp]

Half of the price of oil today is speculation. Make some real moves to start exploration, drilling and infrastructure improvements and watch the deflation.

[sammyg2]

Originally Posted by PBH

In a perfect world yes. But supply creates it's own demand. Economic 102.

But finding, drilling, and producing take years. You will likely find that even with those new sources supply will have decreased when they come onstream. And demand is growing faster than supply can.

An increase in supply might only reduce the increases.

And if ther bleeding-heart-liberal-tree-hugger-enviro-wackos and the democrat politicians they own hadn't squashed President Bush's energy plan years ago that included this drilling, we'd have that oil NOW and probably wouldn't be paying $122 per barrel for it.

I study the oil and refined products markets very closely.
They are not rational as of late, only reacting on fears and speculation. But ...... if there is an appearance of more oil coming, it will make some of these speculators think a bit differently.

BTW Mule, OPEC does not set the price.
They set the production levels from their countries. The amount they produce may affect the price, but it isn't the same thing.
A good example is, they produce slightly more now than they did a year ago, and demand is about stable, and the price has doubled. No, someone else is playing shenanigans.
This week an "expert analyst" (or should that be anal-ist?) from goldman sacks said that he sees oil going to $200 per bbl this year. There is absolutely no logical reason for it to go up a penny, but that's what their expert said. Guess what? It went up almost $10/bbl at one point.
I'd bet they were selling like it was going out of style. They bought when it was lower, put out a BS story that drove the price up, then sold to make hundreds of millions. They'll be buying again as soon as it dips, then thery'll drive it up again with their shills.
All the while the regular small investor is trying to ride their coattails and getting burned because they are always a day late and a dollar short.

[DaveE]

Originally Posted by sammyg2

If we increase supply and demand remains the same, the price goes down.
Eco 101.

Everything I'm hearing on the news and elsewhere says demand is actually going down. Price is still going up.
Eco 10??