Can someone explain the upside to additional oil drilling in US territory?

[Xakk]

Originally Posted by rinthea

or you know, maybe they are actually economists

so you're an economists?

[whatsamattau]

If drilling is allowed to happen on US soil and the oil is sold to China or India instead of to the US the price WILL still go down here in the US because supply will increase.

You can't know that. Like you said yourself, oil prices are based on more than just supply. It also says absolutely nothing about relieving our dependance on middle eastern oil.

If they open drilling force them to sell it and refine it in the US and I'm for it.
...
Either way, no reason to not drill our own oil. You'd have to be fucking stupid to not see that.

I agree it's good if as long as your stipulation holds true. The problem is that that stipulation will never, EVER be made law.

They wont sell it elsewhere because they'd have to eat transport costs.

The CIA World Factbook says the US exported over 1 million barrels of oil a day in 2004. The same CIA factbook estimated the US produced 8.3 million barrels of oil a day in 2005. Assuming exports roughly maintained 2004 levels in 2005, 12.5% of the oil produced in the US in 2005 was exported.

You guys saying that private US oil companies wouldn't export the oil they drill from previously banned sites just plain don't know what you're talking about.

[rinthea]

Originally Posted by Xakk

so you're an economists?

several

[Havelock]

Originally Posted by whatsamattau

You can't know that. Like you said yourself, oil prices are based on more than just supply.

Just because other things also affect the price doesn't mean that increasing the supply won't drive the price down.

[Erumaron]

Biden and Graham are on Meet the Press right now and this issue comes up for a good portion of the show...can almost see the lobbyists on Graham's shoulders whispering talking points to him.

[Havelock]

Originally Posted by Erumaron

Biden and Graham are on Meet the Press right now and this issue comes up for a good portion of the show...can almost see the lobbyists on Graham's shoulders whispering talking points to him.

Right, because Biden is blameless and pure as the driven snow, and there aren't tens of millions of voters clamoring for lower gas prices.

[Drauk]

Originally Posted by Soriak

Oil drilled in the United States gets more expensive because of it, even though it has nothing to do with that particular supply. (Exxon Mobil is going to sell it where they get the most money for it - they're not going to keep it in the US out of some patriotic duty.)

There is an universal solution to this, called "export tax". But i guess oil lobbies in the US are too strong for something like this to even appear on radar.

I suppose one thing the US could do would be to use a uniform standard for gas. This is a map I found that shows the different gas requirements:

Could you please explain what all those different abbreviations means ?

[Soriak]

Originally Posted by rinthea

-Increasing consumption of oil is coming from subsidized nations (china asia, middle east, blah blah) where prices are held artificially low for domestic consumption.

http://www.nytimes.com/2008/06/20/wo...ss&oref=slogin

$3.83/gallon in China is hardly all that subsidized.

-Speculation, oil has become an asset class. I mean seriously, what the fuck. Oil does not produce earnings. There is also big fuck off dollars behind trend following speculation in oil (and other commodities).

It's a good way to hedge against inflation and the prospects are better than for gold: people actually need oil and it's not available in unlimited supply that can cheaply be recovered.

Futures contracts are very important for companies that depend on the price of oil. (airlines, refineries and such) They can protect themselves somewhat of higher prices, it introduces more stability. Of course once their cheap futures run out, they'll have to adjust prices upwards again, but for now they can keep them somewhat lower.

-Fucking retarded dumbshits actually believe peak oil.

So you think the daily oil production is going to continue to increase indefinitely? You do realize that some countries are past peak oil, they're producing less now than in the past. It's only a matter of time before this happens to the major oil producers and it's questionable whether their slack can be picked up by other sources.

[Burf]

Originally Posted by Drauk

Could you please explain what all those different abbreviations means ?

http://www.gao.gov/new.items/d05525sp.pdf

Q. How have government requirements for special blends of gasoline affected the price of gasoline?
A. Federal and state government requirements to use special gasoline blends, often as part of overall efforts to improve air quality, can increase the costs of producing gasoline, which may be passed on to consumers in the form of higher gasoline prices. Under the Clean Air Act, as amended, the federal government and some states now require the use of a variety of gasolines, generally in areas not in compliance with federal air quality standards. The number of such special gasoline blends has grown over time and, as of the summer of 2004, there were at least 11 different blends, in addition to the more commonly used conventional gasoline.
Seasonal and other factors, such as multiple octane grades, can raise this number to nearly 50 gasoline blends over the course of a year. To produce some of these gasoline blends, refiners have incurred extra costs, such as investing in additional refinery units. They also incur additional costs to produce or purchase the blending components used to make special gasoline blends. For example, the Environmental Protection Agency and the Department of Energy have estimated the cost of producing reformulated gasoline—a special-blend gasoline mandated by the federal government—to be approximately 4 to 8 cents per gallon greater than conventional gasoline. (See section 4 of this primer for further discussion of the use of special gasoline blends.) A detailed analysis of the effects of special blends of gasoline will be presented in a GAO study to be issued this year.

http://www.ucalgary.ca/iaprfiles/tec...r-tp-06014.pdf

In addition to federally mandated reductions in the allowable emissions from newer vehicles, which has led to changes in engine technology and the design of vehicles, the federal government has mandated the use of a particularly stringent blend of gasoline—known as federal reformulated gasoline or RFG—in areas that are in extreme non-attainment of the National Air Quality Standards. Due to the high cost of producing RFG, in many instances the states and localities, in collaboration with refiners, have adopted unique fuels— sometimes referred to as boutique fuels—not widely used in adjacent markets; these boutique fuels address pollution concerns in the local market while being less costly to product than federal RFG. In effect this has created differentiated markets for motor fuels and this, in turn, has increased the cost of supplying these fuels while at the same time reducing the capacity of the supply infrastructure.

[rinthea]

Originally Posted by Soriak

http://www.nytimes.com/2008/06/20/wo...ss&oref=slogin

$3.83/gallon in China is hardly all that subsidized.
It's a good way to hedge against inflation and the prospects are better than for gold: people actually need oil and it's not available in unlimited supply that can cheaply be recovered.

Yes, china raised prices 17%. However after subsidies they're still sitting around USD$90/barrel. That's what I'd call heavily subsidized. Oil is a terrible inflation hedge because its a very complicated market. Nothings available in unlimited supply.

Futures contracts are very important for companies that depend on the price of oil. (airlines, refineries and such) They can protect themselves somewhat of higher prices, it introduces more stability.

I understand futures, I've traded them for years. Options however, hurt my brain.
I'm not being critical of using the market to hedge, or even as a form of speculation. Both are beneficial to all. I'm critical of those using commodities (oil) as an asset class. These days, you, or your typical dumbarse institutional fund manager can go to a financial adviser who will sell you some stocks & bonds. Great, you say. However, now, they'll also sell you exposure to commodities. This is a gigantic part of overall market demand. Commodities dont provide earnings like bonds or equities. This was not available 10 years ago and as people realize commodities dont provide earnings, this service along with its funds will evaporate at some stage too.

The speculation I'm critical of, is diversified long term trend following, upping your bet as the trend continues. Whilst its an ok way to make money if you can handle the drawdowns (check out richard dennis, his bet & the turtles if your interested and unknown to this type of speculation) it can get very silly in an individual market. When a market trends like oil has done now, there is a significant amount of leveraged coin betting on it to continue. When the trend stops, these positions gets liquidated without prejudice.

So you think the daily oil production is going to continue to increase indefinitely? You do realize that some countries are past peak oil, they're producing less now than in the past. It's only a matter of time before this happens to the major oil producers and it's questionable whether their slack can be picked up by other sources.

The suns going to run out too at some stage. Not for a while though. I agree there is an increasing cost with discovering and developing new reserves and that the depletion of existing oil fields as they age is increasing. This is not peak oil however, because as technology advances, so fall the costs in discovering and reaping new and alternative reserves. I outlined reasons above regarding why the increased price is taking its time increasing supply. Further, industry studies show known reserves to be literally trillions of barrels greater than figures offered by peak oil nutters. 100 million barrels a day for 100 years. Running out of reserves is a complete and utter non-issue. The issue around this mark is, can we produce enough barrels at a rate that meets demand?

There are some hilarious quotes form the 1800's about already hitting peak oil. Its a meme as old as the hills. The stone age didnt run out of stone. The oil age wont run out of oil. Better alternatives will become available.

[Burf]

Investment question: I know that if I want to make money off Apple, I buy AAPL. I know that Exxon is XOM, and I'd have gotten into that a few years ago, I'd have made a good chunk of change.

But, when people talk about the "oil speculators," is there a stock symbol that they're getting in on, or is that one of those things that you can't get into unless you're already in it as one of the priviledged few?

[rinthea]

Originally Posted by Burf

Investment question: I know that if I want to make money off Apple, I buy AAPL. I know that Exxon is XOM, and I'd have gotten into that a few years ago, I'd have made a good chunk of change.

But, when people talk about the "oil speculators," is there a stock symbol that they're getting in on, or is that one of those things that you can't get into unless you're already in it as one of the priviledged few?

They're trading oil as oil. Buying paper with a claim on physical barrels of oil. It can be done by individuals through futures contracts or exchange traded oil indexes. Similar to a share, however the index tracks the oil price.

[Cybsled]

Honestly I'd prefer that oil keeps getting more expensive, purely because the human race seems to do JACKSHIT until their asshole is on fire most times.

The only thing that will break our massive oil dependence is viable alternative energy sources or more economical use of oil. As always, the prime motivating factor to developing these depends on the level of demand for them.

Case and point: Car companies. At this point they're pretty much going "fuck you, big oil!" because their cashcows, trucks/suvs, can't be given away right now. There is a surging demand for cheaper to operative transport. Obviously the first car company to develop technology that removes the yoke, so to speak, will be showered with lavish praise and cash

[Burf]

McCain Offers $300 Million Prize for New Auto Battery - America’s Election HQ

PHOENIX — John McCain hopes to solve the country’s energy crisis with cold hard cash.

The Republican presidential nominee-in-waiting is proposing a $300 million government prize to whomever can develop an automobile battery that far surpasses existing technology.

McCain said such a device should deliver power at 30 percent of current costs and have “the size, capacity, cost and power to leapfrog the commercially available plug-in hybrids or electric cars.”

Interesting if it would actually happen.

[Soriak]

Originally Posted by Cybsled

Honestly I'd prefer that oil keeps getting more expensive, purely because the human race seems to do JACKSHIT until their asshole is on fire most times.

This. High prices are the best motivator to get something else up and running. Where's the faith in the market? Not that it's all that surprising, I've recently seen a lot of free-market guys propose all sorts of government subsidies - whether it's for more drilling, nuclear power or pretty much anything else. The US gets $2-$3 per acre that oil companies lease... yeah, that's closely related to the trillions of dollars of oil reserves below it. Would a private party lease their land at that rate? No way. So why should the government not charge market rate?

The usual answer is that the government just HAS to help them, or there will be shortages! Of course in a free market, there are no shortages - shit just gets more expensive until supply and demand are in equilibrium again. As long as there's no Carter or Nixon (yes, he did it, too) to institute price controls, it'll be just fine.

But when it comes to getting your hands on some government handouts, nobody cares about market forces anymore.