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

[whatsamattau]

I must have a serious misconception regarding how world markets work, because I cannot understand how allowing private oil companies to drill for oil in the United States in places it is currently banned from doing so will either help reduce US dependence on foreign oil or help lower the price of gas in the US by any significant margin.

Say, ExxonMobil, a global oil company based in the United States, is allowed to drill for oil in the U.S in places it is currently not allowed (ANWAR, gulf coast). And let's say they can do 2 things with that oil. They can sell it, or they can refine it themselves into gasoline.

Here is where I must have the misconception: what force is keeping that oil or the gasoline refined from it inside of the United States? If ExxonMobil can sell that oil or gasoline elsewhere for a single dime more than it could here, what is to stop them, and why wouldn't they?

In Brazil, their rise to oil independence came under *heavy* government regulations and oversight, something that I cannot see ever happening in the United States with regards to the oil industry.

So tell me, how would this get the US an inch closer to oil independence?

[Malakriss]

Because if the ploy is successful it will help McCain get elected. In which case we'll be in Iraq for the next 50 years and eventually conquer the oil fields for ourselves, thus achieving that independence.

[Soriak]

Originally Posted by whatsamattau

So tell me, how would this get the US an inch closer to oil independence?

It wouldn't, but that doesn't mean there aren't enough voters who think just because oil is drilled on US soil or by a US company, it somehow benefits them. They are the same people who freak out that a Belgian company might be buying out Anheuser-Busch. (Not likely they could tell even now what percentage of shares is currently owned by foreigners.)

Of course oil is traded on a global market and it doesn't matter one bit whether you buy yours from Iran, Saudi Arabia, Canada or get it off your own shores. If there's an incident, it affects the global oil price - so insecurity in Iran would drive up the price of Oil from the US.


This is just like the gas tax holiday. It resonates with voters and that's what matters - whether it really has an effect 20 years from now (when they can expect to hit peak production) is a problem for some other guy way down the road.

This is long before even considering how much (or rather how little) that peak production is going to be. ANWR is estimated to lower the price of crude oil by about 1%. For the price of a gallon of gas, this would currently translate to 1c to 4c, depending on how much oil there really was. (4c is the very optimistic prediction)

Assuming the price of gas doubles in 20 years that'd lower the price from $8/gallon to $7.92/gallon at most. Yeah, that's going to be a huge difference.


edit: one thing to keep in mind is that many companies still get a big part of their oil from old futures contracts. If they were smart, (and the airlines that didn't go out of business yet are) they bought part of their oil gradually up to 2 years from purchase. So neither the price of plane tickets nor the gas at the pump actually reflect a $135/barrel price. As those contracts run out, the price will go up even if the price of oil doesn't.

[chu]

As far as I know Exxon/chevron/shell doesn't drill on the Arabian peninsula (the biggest oil supply) so the large part of the world's oil supply is in complete hands of the Arabs. Opening up additional sources of oil (where companies like Exxon can drill) decreases the dependence on however the fuck Arabs feel on any given day.

[Soriak]

Originally Posted by chu

Opening up additional sources of oil [...] decreases the dependence on however the fuck Arabs feel on any given day.

If there's unrest in the middle east (more than usual, or fears of something immediate) then that drives up the price of oil globally. 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.)

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:



Gas has to be prepared differently for each colored region, that's just wasteful.

[Tea on tuesday]

I always wondered why gas in northern kentucky was more expensive.

Now I know.

[Cynno]

The only upside I can think of is local tax revenues.

I know Kern County in California gets quite a bit of tax revenues from the oil drillers in the Bakersfield area.

[chu]

Originally Posted by Soriak

If there's unrest in the middle east (more than usual, or fears of something immediate) then that drives up the price of oil globally. 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.)

I'm aware of that but opening up additional drill sites results in a higher global supply of oil which WILL drive prices down.

An example with arbitrary numbers:

1) Today, Saudis produce 80% of the world's oil.
2) Tomorrow, because Exxon is allowed to drill on the mainland and offshore Saudi's output would be reduced to ~60% of the worlds oil supply. The effect of Arab decisions would lessen..ie. foreign oil dependence decreases.

[whatsamattau]

See, that's what pisses me off and is one area where our media has completely let us down. The Republicans get to use this gimic and say it's being done in the interest of "reducing our dependence on foreign oil," but at least ONE fucking person in the audience has to know that when *insert giant oil company here* actually gets the oil out of the ground it does not belong to the United States.

I feel like I'm in motherfucking bizarro world. I was hoping someone could show me how this passes any obvious bullshit test.

[Soriak]

That's true. However, ANWR production is significantly lower than 20% of world production.

From 2004... good old days: Study: ANWR oil would have little impact - Environment - MSNBC.com

With the 876,000 barrels the refuge could provide a day, the reliance on imports would drop to 66 percent of domestic consumption, the EIA analysis said. The study said it would likely have little impact on world oil prices — perhaps reducing the price by 30 to 50 cents a barrel if prices were in the $27-a-barrel range.

Best I could find on the global daily oil production is an article from 2005 estimating 80 million barrels per day. People's Daily Online -- World oil consumption hits record high in 2004: BP report

So ANWR would at its peak (sustainable for 3-4 years) add about 1% to the global production.

[spronk]

and today the saudis announced they can pump out an extra 2.5 million barrels a day if needed (extra capacity), and it costs under a $1 a barrel to pump oil out of saudi arabia, vs $20+ out of ANWAR.

it also sends a signal to the rest of the world that the saudis are in control of oil and don't you fucking forget it

[aychamo_aycono]

They also have the hottest women. So we should all move there.

[Vim]

Bottom line... In my opinion... We're told some things regarding the world oil, our oil, oil markets and so on and so forth, but I really think theres a lot of things we don't know about oil or the media knows about.

Plus theres a lot of misinformation out there and so on and so forth...

Regardless, I am pretty sure I can state with a lot of security that, if drilling around some parts of the US's territory was banned, unbanning it would do good just because it puts more oil in the market closer to where more oil is needed, thus quite possibly reducing prices.

Also, as we all know prices are all over inflated because of speculators or thats what the oil producing countries and oil producing companies quite possibly want us to think.

My 2 cents.

[EnigmaticParadigm]

Originally Posted by Cynno

The only upside I can think of is local tax revenues.

I know Kern County in California gets quite a bit of tax revenues from the oil drillers in the Bakersfield area.

Filled up my gas tank at the corner of White Ln and Gosford yesterday in Bakersfield. Regular unleaded was $4.83 a gallon; Supreme was $5.06.

On that note, I'm going to convert my traditional gas engine to run off the blood of homeless people and use the tears of newborns for engine lubrication.

I remember the ARCO station down the street from the Valley Plaza Mall in Bakersfield in 1998 had Regular unleaded for .89 per gallon. I could fill up for about $14.00. Now, it costs almost $80.00. What's worse is the fact that I have to fill up twice per week; for one vehicle . Fiance drives the other vehicle which takes Supreme and has a 16 gallon tank; which she also has to fill up twice per week (we both work at different jobs across the street from one another about 32 miles from where we live - and we work different shifts, so no carpooling). Between both vehicle payments, insurance, and gas, we spend around ~ $2,800.00 per month.

Buying a scooter or motorcycle would be cool and all, but Highway 99 is two lanes of suicide. Between the truckers that take up both lanes doing 40mph and the 50 vehicles behind them waiting to jump around them at 100mph+ while darting in and out of both lanes like ADHD Nascar, it's very, very dangerous for cyclists. The town our jobs are located in is a crime-ridden shit hole (only around 20,000 people or so, no shopping, all mom-and-pop shops, etc), so moving closer to work is out of the question.

Kind of a damned if you do, damned if you don't scenario. Obvious fix is to pay off the vehicles or trade them in for something more economical. We'll probably trade-in our RAV4 and get a Civic hybrid or something. It's stupid to keep the BMW, but amazingly it gets around 28-30mpg; not to mention it's very comfortable for long drives. The new Prius that is coming out will have a 3rd generation design and, from the concept shots (pre-production), they actually look pretty cool.

In a weird way though, since our gas bills are so much higher now, its helped us focus on paying off other debt in order to "break even" on monthly expenditures. So, ironically, higher gas has helped us pay off debt and improve our credit rating.

Still, I wish we had some sort of transit system here. Guess the cost of running a bus line from one small town to another small town just doesn't make financial sense .

[hauwk]

O.k.. I can solve all this shit.
1. Take the gloves off in the Middle East first, and I mean gloves off, give complete greenlight to the military to rape the shit out of Iraq, it's populace, and establish a no-shit border patrol along the divide between everyone else.
2. Deport all Iraqi's to Australia and Devil's Island
3. Move 3/4 of the population of Texas and West Virginia to Iraq and re-institute the Homestead act of 1862.

In 20 years, every middle easterner worth a shit will have tried every single tactic known to man to get across the border legally into "Ameriraq". We will get a steady flow of oil with some longevity and the ability to impact the market until Oil goes kaput.

Also: States populations will have to be on a rotational basis. So Texas+W.V goes for 5 years, then they come back to the states and Louisiana + California goes for the next 5 years. After we get a new source of energy and we aren't dependant on middle east stability, we just pull fuckin chocks and move our asses back to the USA leaving a massive hole for whoever the fuck wants to move in.