Oil and Nationalism

[Gogar]

So,

I'm a simple guy and I'm happy to admit when I don't understand something.

So, I don't understand something.

There's a lot of you guys, even Mule had it in his signature, who are on the "Drill here, Drill Now, Pay Less" bandwagon. Okay, fine.

But explain to me why you think that ANY company (even an American company) who drills and finds oil domestically, be it in ANWAR, or off the coast of Florida, or in oil shale deposits . . . whatever . . . .

Just explain to me.

Why, if the global price of oil is, let's say, $140/bbl, WHY do you think that if the oil comes from some domestic source that the price will go down? Will the American Oil companies be compelled sell the oil domestically or refine it and distribute it at a lower price to Americans for some reason?

Given the current trends in high-level American business, I see no reason why any oil company would do ANYTHING but sell it to China at the going rate. Can the US government keep them from doing so?

Thanks in advance for helping me out. I'm going to try to tie my shoes now

[Pazuzu]

You're 100% correct. They will sell at the market value.

The hope of these groups is that massive sudden domestic supply increases will convince the speculators to drive the prices down.


You know, those same speculators that are getting rich off of oil futures now. Yeah, they'll shoot themselves in their collective feet financially to help push oil back down to $90. Wouldn't you?

[legion]

Basic economics says that more supply at the same demand = lower price.

More importantly, in today's speculative market, the perception of more supply is likely to trigger panic selling of oil futures.

[Pazuzu]

Oh, and as an addendum...

A new pumping rig has recently gone online in the Gulf. It's MASSIVE. When it hit full capacity (a few months) it will produce 250,000 barrels of oil and a similar amount of gas a day.

That's several PERCENT of our domestic consumption...from one rig. ANWR is not really the better choice, vs getting some of the ultra-rigs online. It's only been since oil has been this high (over $60, $70) that it's financially viable to drill some of these deposits, but we know they're there, and we know that a couple of them could significantly change our domestic production.

[Pazuzu]

Originally Posted by legion

Basic economics says that more supply at the same demand = lower price.

More importantly, in today's speculative market, the perception of more supply is likely to trigger panic selling of oil futures.

I cannot see how panic selling would drop it by 50%, which is where it should be.

[lendaddy]

A serious push toward domestic discovery and production would likely lead to OPEC increasing supply in an attempt to curb our new found initiative.

[Rick Lee]

We've been through this before in other threads. I also said no one would sell for below market value. Other said taxes and incentives would make it work. Sure, more supply would be good, but it would just make OPEC cut back, which would keep the price high. The only benefit I see is that we could save a little since the cost of bringing domestically drilled oil to market would be less. Then there's the emotional bonus of not sending our money to countries that hate us.

[Gogar]

That's helping.

It's interesting how some of you think more domestic supply would cause OPEC to pump more, and some of you think it would cause them to pump less.

Personally, I think they will pump as much as they can sell, unless they feel they will be able to sell at a higher price later. That's my junior high economics for ya.

[Pazuzu]

My view, being in the field, is that oil should sell for what it currently takes to pump your average barrel, across all of the various rigs. When the $40 oil is used up, and it will take $50 to pump the next harder level of oil, then the price should jump to $50, and so on. Right now, we're looking at something like $60, maybe $70 oil. As far as I'm concerned, it shouldn't be any higher than that, and every dollar above that is someone stealing from you.

[dd74]

Prices aren't the problem, at least to whom I have spoken; they just figure out a way to afford fuel. No, the real problem is the perceived supply. No one is really sure what might happen if Iran shuts down its supply and/or the Straight of Hormuz.

This is why I'm in favor of increased drilling and refining in this country. Increased drilling and refining will bring America peace of mind while leveling off dependence on a Middle East that's destined to blow itself up.

Sure, I'm aware of global warming and what-not. But is now really the time to debate that while our infrastructure is at a psychological risk because Iran feels threatened? No.

Drill in Alaska, off Florida - hell, in front of Brad and Angelina's house in Malibu. Dress the rigs up to look pleasurable and be done with it (they look pretty cool already, IMO). But please, put our minds at ease. I'll gladly pay the price for that.

[island911]

Originally Posted by Rick Lee

... Then there's the emotional bonus of not sending our money to countries that hate us.

That, to me, is the biggie. It is also where we have additional cost. We pay them for the oil, and then pay to keep them in line. --sucks.

[dd74]

+1

[Rick Lee]

Unless our new (that which does not yet exist) oil exploration and production is totally nationalized and run by the gubmint, I don't see how producing it here will make gas any cheaper. In times of crisis, like if Iran actually can and does block the Straits of Hormuz, the world price will skyrocket. Does anyone think that means we'll be unaffected in our little cocoon of oil independence? No way! Even if the gubmint ran it all, they'd still have to charge something resembling world market prices. Otherwise, our own oil companies would be run out of the country, unable to compete with government-subsidized gas here.

I can't see any way it can be done without becoming a huge clusterf&ck. And then people would just be even angrier than they are today because they're already so dumbed down and, if we were oil independent, folks would have a sense of entitlement to cheap gas far worse than we already have. Some folks just will never accept the laws of supply and demand or that oil is a world commodity.

[dd74]

Like I said, I'm unconcerned with price. Supply is my worry.

Luckily, the largest supply so far is just a few clicks north.

http://money.cnn.com/2008/07/10/news/international/velshi_oil_sands_boomtown/index.htm

Problem is, they haven't the faintest idea of how to get it out of the ground...

[dd74]

...also, before the rest of the Mid East allows Iran to start acting foolish, the cartel over there should get a strong dose of reality that no one will be able to afford the purported $250 a barrel price if Iran closes The Straight or stops its 30% of the world's oil supply.

If no one can afford it, no one buys. The Mid East rots.

[island911]

Regardless of the world (or local) price we need energy resources. If Texas gets rich, or even the Canadians-eh, I'm fine with it. Those people put the money to good use ...building, creating . . drinking beer, eh?

..and, yeah, I know, Dubai has some cool stuff going on, bla bla.... but what happens to those sand-boxes when they run out of oil? They then offer nothing to the world but problems.

[Rick Lee]

Canada is already our largest foreign oil supplier.

[dd74]

With what's underground in Alberta, Canada can be our only supplier of foreign oil. No more mullahs, no more ayatollahs, no more fundamentalists, and potentially, no more worries about terrorism because we won't have ***** to do with anything in the region.

Because after all, it's all about oil. What else could it be about? Israel?

[RWebb]

"That's several PERCENT of our domestic consumption..."

- But the problem is that it (and all of the super rigs) can only produce a tiny amt. of WORLD consumption. You need a big change in World supply/demand to really change prices -- to the extent there is no speculation in the price. There is, it seems, so prices will likely fall -- for a while.

[Chuck Moreland]

Originally Posted by Rick Lee

Then there's the emotional bonus of not sending our money to countries that hate us.

Forget the emotional bonus. Consider the financial bonus.

$700 Billion dollars this year sent to foreign countries in exchange for oil, and climbing. That money is now building indoor ski resorts in Dubai:



If instead all that oil came from domestic supplies, that's an extra $700 Billion injected into and stimulating our domestic economy and creating jobs both directly and indirectly. Much of that money then gets spent back into the domestic economy and domestic investments, further stimulating the economy.

The stimulus effect on the domestic economy would be huge.