Drill Here, Drill Now, Pay More

[Shaun @ Tru6]

EDIT: We're starting to make some real progress on page 6.



that's the McCain Plan for U.S. offshore oil drilling. I'm not sure why, but he wants to make sure that you will pay more for gas in your car.

I asked 2 questions yesterday;

1. Why does the price of oil go up only on threat of storms (with subquestions, who sets the price, etc.)

2. Would you build a home on a flood plain if higher national taxes covered costs associated with damage 1-3 times per year.


On the first question, as expected, Sammy nailed it, hard. Republican deregulation of the energy markets has allowed speculators access to a new market, one they can manipulate at will, as Sammy discussed. It is no longer necessary for an actual event that HAS damaged oil production to effect a price increase, it is now only the threat that will trigger higher prices. Speculators make money going up and down any given potential threat. You pay higher prices at the pump for a deregulated market.

On the second question, most here said they would not build on a flood plain, even though taxes will cover damage. Smart (no green).

And yet, that's exactly what putting additional new oil rigs in the Gulf and up the Southeastern seaboard is. An asset (house or rig) is placed in harm's way. You know that your house will be flooded 1-3 times per year and you know that hurricanes will threaten additional oil rigs every year.

the result for both? everyone pays higher taxes to rebuild your home, though at a static level. With rigs threatened by hurricanes, everyone pays higher prices for their gas with price spikes and a general year over year increase in the price of gas.

Here's where some math comes in. Oil is sold on the World market, though many Republicans here seem to think that oil pumped in U.S. territory is U.S. oil. It's not. Maybe you guys have a secret love affair with Hugo Chavez? heck, one Industry Man thinks oil companies set the price of oil, as well as Tabs and Matt. They do not.

Sammy commented on my 1% threat, 4% increase, that is even though only one lonely rig off the coast of FL that produces 1% of world supply may be threatened, you will see a 4% increase due to speculators gaming the market and idiots jumping on board.

So what happens when we double or triple the number of oil rigs off our shores? We linearly increase capacity in single digit percentages and we increase speculation and therefore price increases exponentially into double digits. Instead of 1 rig being, maybe, hit by a storm (remember, it doesn't actually have to be effected for the price to rise), 4 rigs have the potential to be effected. 1% ----> 4% quickly becomes 4% ----> 16%, but due to conditions that Sammy discussed, I think we'd see 4% ----> 20% increase in cost of crude.

Given the environment created over the last 8 years: deregulated energy markets gamed by speculators, drilling off the coast of the U.S. in hurricane zones is guaranteed to increase the price of gas at the pump.

not much happens in ANWR to threaten production, I think we would be much smarter to drill there.

[dad911]

The price of most construction materials also goes up with a storm, or threat of one. As long as we have a free-market system, this will happen. Hell, even 50 years ago, my mother ran to the store to buy milk, bread, and canned goods with every storm prediction.

Comparing a drilling rig platform to someones home. Standard Foundation? I think not. That's priceless. I nailed it yesterday, another social experiment....... waste of electrons......

[Shaun @ Tru6]

Originally Posted by dad911

The price of most construction materials also goes up with a storm, or threat of one. As long as we have a free-market system, this will happen. Hell, even 50 years ago, my mother ran to the store to buy milk, bread, and canned goods with every storm prediction.

Comparing a drilling rig platform to someones home. Standard Foundation? I think not. That's priceless. I nailed it yesterday, another social experiment....... waste of electrons......

Bush Hates Electrons.... there, I made it political thread.....

I think I'm out of OT until after the election.

Thank you for your wonderful contributions to date. Don't let the door hit you in the ass on your way out!

[sammyg2]

Originally Posted by Shaun 84 Targa

that's the McCain Plan for U.S. offshore oil drilling. I'm not sure why, but he wants to make sure that you will pay more for gas in your car.

I asked 2 questions yesterday;

1. Why does the price of oil go up only on threat of storms (with subquestions, who sets the price, etc.)

2. Would you build a home on a flood plain if higher national taxes covered costs associated with damage 1-3 times per year.


On the first question, as expected, Sammy nailed it, hard. Republican deregulation of the energy markets has allowed speculators access to a new market, one they can manipulate at will, as Sammy discussed. It is no longer necessary for an actual event that HAS damaged oil production to effect a price increase, it is now only the threat that will trigger higher prices. Speculators make money going up and down any given potential threat. You pay higher prices at the pump for a deregulated market.


And yet, that's exactly what putting additional new oil rigs in the Gulf and up the Southeastern seaboard is. An asset (house or rig) is placed in harm's way. You know that your house will be flooded 1-3 times per year and you know that hurricanes will threaten additional oil rigs every year.

the result for both? everyone pays higher taxes to rebuild your home, though at a static level. With rigs threatened by hurricanes, everyone pays higher prices for their gas with price spikes and a general year over year increase in the price of gas.

Sammy commented on my 1% threat, 4% increase, that is even though only one lonely rig off the coast of FL that produces 1% of world supply may be threatened, you will see a 4% increase due to speculators gaming the market and idiots jumping on board.

So what happens when we double or triple the number of oil rigs off our shores? We linearly increase capacity in single digit percentages and we increase speculation and therefore price increases exponentially into double digits. Instead of 1 rig being, maybe, hit by a storm (remember, it doesn't actually have to be effected for the price to rise), 4 rigs have the potential to be effected. 1% ----> 4% quickly becomes 4% ----> 16%, but due to conditions that Sammy discussed, I think we'd see 4% ----> 20% increase in cost of crude.

Given the environment created over the last 8 years: deregulated energy markets gamed by speculators, drilling off the coast of the U.S. in hurricane zones is guaranteed to increase the price of gas at the pump.

not much happens in ANWR to threaten production, I think we would be much smarter to drill there.

You put words in my mouth.
The speculators getting control of the oil market has absolutely nothing with republican deregulation. don't know where you dreamed that up. The oil market is no more or less regulated than it ever has been since the break-up of standard oil.
There is and has been no republican deregulation in oil. Therei s no deregulated oil market. You simply made that up and the sad part is, there are others around who will buy into that untruth and it will spread like wildfire because it sounds like something they would like ot be true even if it isn't.
If you want to make any political ties to this issue at all, we might be able to associate the restrictions of offshore oil drilling by the democrats which has limited production and contributed to the problem we have today. For many years bush has been proposing opening up the offshore drilling not only in the gulf but also in the west coast where we don't have hurricanes. Every single time the democrats blocked that. If they hadn't we probably wouldn't have gotten into the situation we saw this summer.


BTW Putting more oil rigs in the gulf will do the exact opposite of what you suggest.
See, the reason the speculators can play the games they have been is because the supply is only a little bit bigger than the demand. there isn't as much fat in the system as there used to be. They have the leverage they have because it wouldn't take as much as it did previously to upset the apple cart and temporarily reduce supply to the point were it wouldn't be able to keep up[ with demand, and the price would skyrocket. They are playing on that fear to maniupulate the price. Putting more oil rigs out there and increasing potential production will provide a larger cushion, provide additional available inventory, and decrease the severity of fluctuations in price due to percieved threats like a hurricane, Iran, a little tiny pipiline in Nigeria, etc. So no, there is absolutely no basis in fact ot support your assertion that opening up the gulf to more drilling would make things worse.
It would help and make things better even if you don't like to hear that.

it almost looks to me like you played innocent for a while and asked some reasonable questions and we discussed the issues logically and maturely. Then you took that info and twisted it for your own personal political adgenda. Not cool. Not cool at all.
There's an old saying, "fool me once shame on you. Fool me twice, shame on me."
I'll be more reluctant to openly discuss matters with you in the future if you are only going to twist what I say and mis-quote me to support your hidden political motives. Not much trust left there.

[Moses]

How frequently do storms demolish offshore oil rigs?

The final toll for Katrina was:

* 47 platforms destroyed with 20 suffering extensive damage.
* 6 rigs broken from moorings and set adrift.
* 3 platform rigs destroyed and 1 jack-up capsized (Rowan New Orleans), with 2 jackups,
5 semi-subs and 2 platform rigs suffering extensive damage.
(Statistics from Minerals Management Service)

Cost of doing business, I suppose.

[Rearden]

Originally Posted by Shaun 84 Targa

Republican deregulation of the energy markets has allowed speculators access to a new market, one they can manipulate at will

Tell us more.

[Shaun @ Tru6]

Originally Posted by sammyg2

You put words in my mouth.
The speculators getting control of the oil market has absolutely nothing with republican deregulation. don't know where you dreamed that up. The oil market is no more or less regulated than it ever has been since the break-up of standard oil.
There is and has been no republican deregulation in oil. Therei s no deregulated oil market. You simply made that up and the sad part is, there are others around who will buy into that untruth and it will spread like wildfire because it sounds like something they would like ot be true even if it isn't.
If you want to make any political ties to this issue at all, we might be able to associate the restrictions of offshore oil drilling by the democrats which has limited production and contributed to the problem we have today. For many years bush has been proposing opening up the offshore drilling not only in the gulf but also in the west coast where we don't have hurricanes. Every single time the democrats blocked that. If they hadn't we probably wouldn't have gotten into the situation we saw this summer.


BTW Putting more oil rigs in the gulf will do the exact opposite of what you suggest.
See, the reason the speculators can play the games they have been is because the supply is only a little bit bigger than the demand. there isn't as much fat in the system as there used to be. They have the leverage they have because it wouldn't take as much as it did previously to upset the apple cart and temporarily reduce supply to the point were it wouldn't be able to keep up[ with demand, and the price would skyrocket. They are playing on that fear to maniupulate the price. Putting more oil rigs out there and increasing potential production will provide a larger cushion, provide additional available inventory, and decrease the severity of fluctuations in price due to percieved threats like a hurricane, Iran, a little tiny pipiline in Nigeria, etc. So no, there is absolutely no basis in fact ot support your assertion that opening up the gulf to more drilling would make things worse.
It would help and make things better even if you don't like to hear that.

it almost looks to me like you played innocent for a while and asked some reasonable questions and we discussed the issues logically and maturely. Then you took that info and twisted it for your own personal political adgenda. Not cool. Not cool at all.
There's an old saying, "fool me once shame on you. Fool me twice, shame on me."
I'll be more reluctant to openly discuss matters with you in the future if you are only going to twist what I say and mis-quote me to support your hidden political motives. Not much trust left there.

Sammy, are you aware that it was Phil Graham's Commodity Futures Modernization Act that gave us ENRON and created the environment for speculators to flourish? yes, it was Republican deregulation that gave us these two winners for the American Economy.

I respect your opinion on buffering with more rigs, BUT, I think we both agree that speculators DON'T employ standard economic principles. That's the entire rub here. They will do whatever they want to make more money.

Do you disagree with that?

it is regulation that ensures standard economic principles are applied to a market. Without it, and enough money is stood to be made, manipulation rules the day.

[Shaun @ Tru6]

Originally Posted by Moses

How frequently do storms demolish offshore oil rigs?

The final toll for Katrina was:

* 47 platforms destroyed with 20 suffering extensive damage.
* 6 rigs broken from moorings and set adrift.
* 3 platform rigs destroyed and 1 jack-up capsized (Rowan New Orleans), with 2 jackups,
5 semi-subs and 2 platform rigs suffering extensive damage.
(Statistics from Minerals Management Service)

Cost of doing business, I suppose.

yes, and you are paying for it.

[dtw]

Let's see what using your logic a little more thoroughly yields:

1. Current pump prices are largely the result of speculation; actual cost of extracting & shipping crude, plus a fair profit margin, is NOT $100/bbl
2. As the pricing is not determined by any 'normal' market forces, just the start of offshore drilling would cause a tumble in pricing.
3. Let's say for the sake of discussion the price settles to a more realistic $2/gallon at the pump
4. Tropical Storms Joey & Rex head toward the Gulf Coast, causing speculators to jump out of windows - price increases 10 or 20 percent.
5. Temporary increases from $2.20 to $2.40.

While that still isn't an ideal scenario, it is a hell of a lot better than what we've got now.

[Mule]

Guys, you are attempting to use logic in a discussion with Shaun of the Dead. ??????????????

[dtw]

Originally Posted by sammyg2

it almost looks to me like you played innocent for a while and asked some reasonable questions and we discussed the issues logically and maturely. Then you took that info and twisted it for your own personal political adgenda. Not cool. Not cool at all.

Yeah, Shaun! That's a classic Soup move. Serious dick move, albeit predictable and played-out on this board.

[The Gaijin]

Originally Posted by Shaun 84 Targa

And yet, that's exactly what putting additional new oil rigs in the Gulf and up the Southeastern seaboard is. An asset (house or rig) is placed in harm's way. You know that your house will be flooded 1-3 times per year and you know that hurricanes will threaten additional oil rigs every year.

Nobody needs to build in a flood zone "AE" or on a beach.

But the gulf and SE coastal waters is where the oil is.

We would rather drill in Texas and Wyoming - but much of that has already been extracted..

[Shaun @ Tru6]

Originally Posted by sammyg2

You put words in my mouth.

Yes, it was more lazy typing than malice Sammy in attributing Republican deregulation of the energy markets to you. I apologize.

[Shaun @ Tru6]

Originally Posted by dtw

Yeah, Shaun! That's a classic Soup move. Serious dick move, albeit predictable and played-out on this board.

Puhllllleeeease.

I built a case yesterday by asking good questions. When was the last time you saw someone build an actual case rather than just spewing cartoons or cut and pastes.

don't like my treatise? refute it directly with data collected here or abroad. but don't try to shame me for building a good case for my argument.

Don't be lazy and make the argument about me, it's not. take the debate head on.

[Shaun @ Tru6]

Originally Posted by dtw

Let's see what using your logic a little more thoroughly yields:

1. Current pump prices are largely the result of speculation; actual cost of extracting & shipping crude, plus a fair profit margin, is NOT $100/bbl
2. As the pricing is not determined by any 'normal' market forces, just the start of offshore drilling would cause a tumble in pricing.
3. Let's say for the sake of discussion the price settles to a more realistic $2/gallon at the pump
4. Tropical Storms Joey & Rex head toward the Gulf Coast, causing speculators to jump out of windows - price increases 10 or 20 percent.
5. Temporary increases from $2.20 to $2.40.

While that still isn't an ideal scenario, it is a hell of a lot better than what we've got now.

Please defend #2, and #3.

[dtw]

Originally Posted by Shaun 84 Targa

Please defend #2, and #3.

YOU defend #2, it is the premise of your thread.

#3 was arbitrary. Do you disagree that a material effort at tapping more capacity will result in a significant decrease in bbl price?

[Rearden]

Originally Posted by Shaun 84 Targa

Sammy, are you aware that it was Phil Graham's Commodity Futures Modernization Act that gave us ENRON and created the environment for speculators to flourish? yes, it was Republican deregulation that gave us these two winners for the American Economy.

Please explain how this bill, that Clinton signed into law, "allowed speculators access to a new market". It did allow American exchanges to participate in the single stock futures market, but speculators previously simply traded in London. What do you mean?

[Mule]

The title of the thread says that he thinks more production will result in higher prices. Nuff said?

[dtw]

Originally Posted by Mule

The title of the thread says that he thinks more production will result in higher prices. Nuff said?

Think back to Econ 101, and how many people were asleep...

[Shaun @ Tru6]

Originally Posted by dtw

YOU defend #2, it is the premise of your thread.

#3 was arbitrary. Do you disagree that a material effort at tapping more capacity will result in a significant decrease in bbl price?

Originally Posted by dtw

Think back to Econ 101, and how many people were asleep...

That's a major part of my premise. Deregulated Speculation does not follow standard economic principles. that is THE crux of the situation. it is regulation that ensures standard economic principles are applied to a market. Without it, and enough money is stood to be made, manipulation rules the day