Offshore Drilling Is Bogus » Forum Post by stevendedalus

Since when does increasing production mean higher prices? I guess we should just allow China to continue to drill offshore but not drill ourselves. Yep, that makes sense. NOT

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Since when does increasing production mean higher prices?

Without high prices there's no incentive for oil companies to explore and drill anywhere. The cost is prohibitive.

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What you say almost makes sense except that when the President removed the presidential ban on offshore drilling the price dropped 10 bucks in minutes. Just the hint of more oil coming into the market even 10 years from now had the price drop.

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Just the hint of more oil coming into the market even 10 years from now had the price drop.

Yes, it seems the Saudis are up to their old tricks to lull us, but they won't sustain the ploy as they have far too many other markets now. The speculators have priced September oil at $125, so you can imagine what it will be in the winter. But my main point is why play this game? We should get serious in weening off oil with alternatives--there's no denying the future.

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Just the hint of more oil coming into the market even 10 years from now had the price drop.

You could have achieved the same result, even more i think, if the oil companies announced that they will start drilling tomorrow in the areas where they have already ... more than 70 million acre ... why aren't they drilling there?????? they dont need permits, approvals, studies ...etc or anything else .. they can drill tomorrow, literally, if they really want to.

opening more land for them to hold makes sense? and drilling, actual drilling tomorrow does not??????

what a logic. then again since when there is any logic in the thinking of people who just want to drill.

didn't you hear that when you are in hole ... stop digging?!!!!

we are in a deep energy hole ... and you want more digging???

didnt you see T. Boone's Ad.... ???

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You could have achieved the same result, even more i think, if the oil companies announced that they will start drilling tomorrow in the areas where they have already ...

Dry wells do not increase supply. Drilling on the "hope" of finding will do nothing for the price. Drilling where you "know" there is oil will.

But to Steven's premise, while it is fashionable now, it is also wrong (probably right for some as they are like goldfish). The reason that the oil companies do not want oil at $140/barrell (but Opec is like goldfish and does) is that it makes alternatives cost effective.

What happened to VHS Tapes? Have you been in a Video store lately? VHS kept the price artifically high for a long time to milk the market. Along came DVD - a vasstly superior technology - at the same price - and VHS is now the same place that 8 tracks are. This cycle is repeated every day, and there are a multitude of examples of it. And it will happen with oil with the price as it is. You just dont see it until it is done (just as VHS did not disappear over night).

The smart companies (and to call Oil companies stupid is to underestimate them) see that as well. So they want to maximize profits, but not kill the golden goose. Unfortunately, they do not control the market (as we see with the prices today). OPEC has a great deal of influence, as does the Greens. Both OPEC and the Greens are being honest in their endeavors - if for different reasons. The greens want to kill oil - OPEC wants to milk the golden goose. But the ends are the same. And the losers will be the oil Companies.

Keep beating up the Oil companies. It is fun, if fruitless. I have no love for them, but I also am not going to be so myopic as to underestimate them.

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if the oil companies announced that they will start drilling tomorrow in the areas where they have already ... more than 70 million acre ... why aren't they drilling there??????

Because there is no oil there. At today’s prices don't you think they would be sucking it out of the ground before the leases expire? They are not allowed to verify the presence of oil before they purchase the lease. Do you think the oil companies are stupid and will repurchase the leases after they expire? Don't fall for the Democratic propaganda.

If the alternatives were ready now then you would have a case, they are not. So drilling is needed while development continues (hopefully at a faster pace). But even when they (alternative fuels) come online, it will still take years to get off oil. Your answer can be summed up in this analogy: We need money, so let’s quit our jobs, and rely on the lottery. Brilliant thinking. Why do some feel you have to destroy in order to create? The stop drilling crowd had made us dependent on foreign oil.

Funny you mention T. Boone, a multi-millionaire oil man that made his dough and now has a conscience (or needs a tax shelter after Obama gets through with his cash). He wants to put wind turbines in the mid-west to power the cities. Great idea except Mr. and Mrs. Billy Treehugger don’t want their kids living under the 10’s of thousands of miles of high-power wires the plan entails. Not to mention the vast amounts of farmland wasted. Until you get the alternative fuels people to agree with the not in my backyard people (many are members of the others group) it will take years for them to make up their minds (funny just like drilling) and nothing will be done.

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Let's have a little lesson in how the oil industry is set up.

1) OPEC (primarily made up of middle eastern nations) produces roughly 70% of the world's oil, we import most of what we use on a day to day basis from OPEC nations.
2) Due to point one the American oil companies are NOT the ones really profiting from the expensive oil prices, OPEC is.
3) The reason why more oil isn't being drilled from the currently alloted areas for drilling is because there is very little oil there to drill which makes it less than profitable for the American oil companies to set up rigs to drill there. It's like sending someone out into the desert and asking them to provide water for the world's usage. There is some out there but that isn't exactly the best place to be looking.
4) If we were to open up some of the OCS and/or a small portion of ANWR, where we know there is plenty of oil to be had, this would prompt the oil companies to drill there because it would be profitable, especially at todays prices. This in turn would shift who is making money (from America) on oil to be more American companies.
5) Increased supply with no change in demand will drive the cost of oil DOWN, that is simply supply and demand.
6) The reason oil dropped in price when Bush announced the removal of the executive ban on offshore drilling was because speculators are part of the reason why oil prices are as high as they are. His announcement gave the perception that American might start producing more oil in the future which would drive prices for oil down. Again simple supply and demand.

None of the 6 points above should be used as a reason NOT to invest in alternative energies. We need to find alternatives to oil because there is a finite amount of oil on Earth and it will eventually run out. That should be reason enough to pursue alternatives, but that doesn't mean that we should stop seeking out ways to increase production of oil to lower costs today because alternative fuels are still an unknown as to when they will become widely available.

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I said it before and I'll say it again. When people start arguing on how businesses create situations where they can make more money, I always question if given the chance, would they not try to make as much money as possible if an opportunity arises? I always have to wonder who is more foolish, the vendor who sells the product at much higher prices or the buyer who pays for those high prices? And I'm sure some will say "they have no choice", well with all the hybrids hitting the market, there are choices. That they choose to keep driving SUVs and gas guzzling vehicles is their problem.

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Another point to make here is that a perfect, relatively clean (ie no carbon dioxide in the exhaust) to coal and oil based power plants in America is Nuclear. But why haven't we built a nuclear power plant in the past 30+ years? It's rather simply, no one wants one in their backyard. It's going to be the same for any wind or solar power plants, the only difference is that solar can be built in the sparsely populated desert areas in the southwest. Nuclear requires easy access to water which means populated areas. If people are unwilling to allow these proven alternatives to oil what makes you so sure they will allow others.

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I said it before and I'll say it again. When people start arguing on how businesses create situations where they can make more money, I always question if given the chance, would they not try to make as much money as possible if an opportunity arises? I always have to wonder who is more foolish, the vendor who sells the product at much higher prices or the buyer who pays for those high prices? And I'm sure some will say "they have no choice", well with all the hybrids hitting the market, there are choices. That they choose to keep driving SUVs and gas guzzling vehicles is their problem.

And with gas prices as high as they are people are trading in their SUVs and trucks for more fuel efficient models in droves. Look at the 2009 model year vehicles and you will find increased fuel efficency and more hybrids because that is where the demand has shifted.

Businesses are based on free market principles of supply and demand. When the people create a demand for a product then the businesses are forced to provide the products. In the case of oil, the oil companies and auto industry were all too happy when gas and oil prices started to rise until they hit that $4/gallon ($130/barrel) price. At that point people started to change their behaviors and demanded more fuel efficency.

Yes businesses want to make as much money as possible, but the price of a product is going to be set at what people are willing to pay for the product, it seems we have reached the ceiling for oil and gas.

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The reason that the oil companies do not want oil at $140/barrell (but Opec is like goldfish and does) is that it makes alternatives cost effective.

Amen.

Do you know that $140 a barrel oil starts to make solar really attractive.

Each American uses just about three gallons of oil per day. Young and old it's all the same. Most speculators have the world peak oil production set for 2010. The current world production is at 82,000,000 bbls/day. The US makes up 6,000,000 bbls/day of that 82 million. The same speculators that have peak production set for 2010 have world wide production set for some where around 90,000,000 bbls/day.

While we are using 3 gallons of oil per day/per person with our 4.6% of the world population, each person in China and India is using less than 20 oz. As their society and quality of life standards improve, they will use more and more oil per person. They only need to move up 10% to consume more than two quarts per day. With 36.9% of the world population between them we don't have any other choice but to look for another way. Production could never meet demand in the next 10 years even if we drill offshore and in Anwar.

What we can do is drill in those areas and reduce our demand on foreign oil even by a couple of percent and have an impact on OPEC's prices. We can build a new more efficient refinery and increase US production. We can keep the car in the driveway and stop using so much oil. We can keep plugging along trying to find a viable alternate to fossil fuels. We can do a lot of things. There is no single path that is going to work.

We have to explore every avenue possible.

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hat should be reason enough to pursue alternatives, but that doesn't mean that we should stop seeking out ways to increase production of oil to lower costs today because alternative fuels are still an unknown as to when they will become widely available.

And this is the part that boggles the mind when people like Steven try make the "new alternative energy" argument. Yes, we should be trying to get off oil and into new alternative energy. No one is arguing to the contrary, stop crying as if we are. But you can't, honestly, logically and obviously expect us to go from gas cars (that many are still paying for and will not get their value if they try to sell them or get rid of them) to electric or other alternative cars (that people will have to purchase at very high prices since they are new technology with too many flaws currently) over night.

Come on Steven, I usually consider you a very smart, educated debater that deserves to have your opinions considered before one expresses one's own opinion. But this here is out right ridiculous. Current alternative energy vehicles and machines are not efficient enough, are plagued with flaws and are too expensive. Not to mention what will happen with the current cars and machines that run on gas? Do you think people will make money selling them? To who? And have you thought about the cost to recycle or convert these vehicles and machines? I always notice some have the tendency of seeing the plus side of things while ignoring all the possible negative side effects of their solutions.

"This pill will make you lose weight by stopping you from getting hungry. Possible side effect, you never get hungry so you die of hunger due to lack of food in your body".

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1) OPEC (primarily made up of middle eastern nations) produces roughly 70% of the world's oil, we import most of what we use on a day to day basis from OPEC nations.

This is flat out wrong. Since the oil embargo of the 70’s America has been divesting itself from buying from OPEC nations. Our largest supplier of oil outside the US is Canada followed by Mexico followed by Venezuela, 23% of our foreign oil comes from OPEC nations. Yes, we used to get 80% of our oil from OPEC but the information you are using is 30 years old and out of date.

2) Due to point one the American oil companies are NOT the ones really profiting from the expensive oil prices, OPEC is.

This is true to a point but not just OPEC. The speculators in the futures market make the oil producing countries rich, the oil companies are just the middle men.

The rest of your points make sense and I find little fault with them.

didn't you hear that when you are in hole ... stop digging?!!!!
we are in a deep energy hole ... and you want more digging???
didnt you see T. Boone's Ad.... ???

Yup, saw the ad and laughed. Wind power is a waste of money at this point in time. Wind is not reliable, because of this you have to have diesel electric generators running 24/7 to provide the power which means you are still burning oil even when the wind turbines are turning. All they can do is sell the added energy from wind to the grid not replace a single generator, if fact you have to build more diesel generators. Where is the logic in that?

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Wind power is a waste of money at this point in time. Wind is not reliable, because of this you have to have diesel electric generators running 24/7 to provide the power which means you are still burning oil even when the wind turbines are turning. All they can do is sell the added energy from wind to the grid not replace a single generator, if fact you have to build more diesel generators. Where is the logic in that?

Gonna have to disagree here. Currently most major windfarms are only going up in spots that are pretty much guaranteed to be almost constantly wind-swept. And the "backup diesel" generators that you speak of are largely a boogeyman myth. Hydro-Quebec is in the process of building windfarms that will generate over 2,000 MegaWatts of power to come online between 2011 and 2015.

http://www.hydroquebec.com/en/index.html

The only places where backup diesel generators need to be located is in the case of an isolated or remote community that only has one source of power. The city that I live in is powered entirely by a hydro-electric plant about 45 miles away. We do have a backup diesel plant, but this sits idle more than 99 % of the year. Every now and then if there is a problem with the transmission lines they fire the diesel up until they fix the problem. For non-isolated communities the beauty of large-scale electrical grids is that there is a large amount of power available to be distributed, it just depends on demand in specific areas. Contrary to your scare-tactic statement, every windfarm built does not have corresponding diesel electric generators.

Yes, for a large wind power project there will tend to be some kind of alternative backup, but it usually works on a 1:n redundancy- this means for so many windfarms you have one backup plant, and it only needs to run once in a blue moon.

Another great application of wind power is for individual homes. I know a fellow here in my community that has cut his home power bill by more than 30-40 %. How? All it took was a couple hundred bucks at the local hardware store and an old treadmill he was looking to throw out.

He built a lightweight windmill from commonly available materials, hooked it up to the motor from the treadmill, which he then connected to some inverters and a battery plant. Every two days (depending) his little windmill charges up his battery plant for approximately 24 hours of electricity. This means a couple days a week he runs off his own battery plant AND if there ever is a failure of commercial AC he doesn't have to sweat it too much.

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Sorry also forgot to mention that on top of his little windmill he's looking into getting some solar panels on his roof. They're gonna cost him a couple grand after the installation is done, but it's going to cut his electricity bill by almost 70%. If he expands his battery plant, he'll only need to run off commercial power 1 or 2 days a week

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Yes, it seems the Saudis are up to their old tricks to lull us, but they won't sustain the ploy as they have far too many other markets now.

Steven - Stuff like this just makes you sound like the folks on the Ron Paul conspiracy sites.

The mere mention of new oil sources has always dropped prices.

Yes current high prices make more oil exploration more attractive, welcome to the basics of economic theory. You say this as though it was somehow unusual. It isn't.

Oil companies made money pumping oil at $30 a barrel. the current break even price is now up to somewhere between $55-70/barrel depending on the life cycle of the source and mechanism.

Which is better : No drilling and oil @ $125+/barrel or drilling and oil @ $90/barrel?

The "Don't ever drilll anymore because it won't solve every problem instantly!" mentality is pretty infantile.

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Daiwa

Join Date 07/2001

+351

I think wind-generated power technology has tremendous potential to reduce fossil-fuel consumption, but only when that technology becomes scaled down, highly efficient & affordable enough to be like the satellite dish on your roof. Big 'wind farms' are highly inefficient, adding piddling amounts of power to the grid, and currently only exist thanks to subsidies. Powering individual homes with a combination of solar & wind (with backup from the 'grid') is another thing altogether & very much worth pursuing.

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I think wind-generated power technology has tremendous potential to reduce fossil-fuel consumption, but only when that technology becomes scaled down, highly efficient & affordable enough to be like the satellite dish on your roof. Big 'wind farms' are highly inefficient, adding piddling amounts of power to the grid, and currently only exist thanks to subsidies. Powering individual homes with a combination of solar & wind (with backup from the 'grid') is another thing altogether & very much worth pursuing.

Yes it is. If you are interested cruise on over to myspace and look up a guy by the username "Over Unity". He has done just that, he built a new home in PA somewhere and has installed three solar panels and a small wind turbine. The combined power output will allow him to live off the power grid completely. You may have to go back a month or two but he has a couple of blogs detailing the process.

If I ever get the cash together I will be looking into building an e-nertia house (www.enertia.com). These houses are built in such a way that they need little to no heating or air conditioning year round. You can also get the home outfitted with solar panels and a well so that you can live completely off the grid.

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Thats my dream house right there. Solar panels on the roof and water from the ground and rain. A windmill may not be too bad either.

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All the hoopla over ANWR, Arctic Ocean rights and offshore drilling is nothing but a ruse to delude the public into believing so-called energy independence will bring down the cost of gasoline and energy in general. Undisclosed is the oil industry’s motive that with the price of oil at an all-time high, profits will continue to grow like never before. There is no intention to ultimately reduce the price because there would be no incentive for the oil titans to explore for oil if they thought it would drop below $100 a barrel other than perhaps more easily accessible gas for domestic use.
Even as a ploy to threaten OPEC to increase supply therefore driving down the price of oil will not work as it did in the ’70s when Nixon and Carter called for energy conservation, brownouts and smaller cars inasmuch as China and India will more than offset US move to tap our continental shelf.
This noisy cry for offshore drilling is but a deterrent for getting back to basics of developing alternative energy.

Copyright © 2008 Richard R. Kennedy All rights reserved. Revised: July 31, 2008.
http://stevendedalus.joeuser.com
http://www.lulu.com/rrkfinn

Let me get this straight...oil companies want higher oil prices so they can have their higher profits, and so the evil oil companies want to drill for more oil so they can reduce the price?

Am I the only one who notices this fallacy in logic? Either the oil companies want higher prices, or lower prices. Frankly, the reason oil companies want more domestic drilling is so they don't have to pay Canada or Venezuela for their oil, and thus reducing costs, and hence increasing profit margins. It is a boon for us that the increase in drilling will decrease prices overall, as well.

If oil companies start drilling, both oil companies and US consumers win, while Canada, Venezuela, and OPEC loses. The choice seems obvious to me...

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Let me get this straight...oil companies want higher oil prices so they can have their higher profits, and so the evil oil companies want to drill for more oil so they can reduce the price?

Am I the only one who notices this fallacy in logic? Either the oil companies want higher prices, or lower prices. Frankly, the reason oil companies want more domestic drilling is so they don't have to pay Canada or Venezuela for their oil, and thus reducing costs, and hence increasing profit margins. It is a boon for us that the increase in drilling will decrease prices overall, as well.

If oil companies start drilling, both oil companies and US consumers win, while Canada, Venezuela, and OPEC loses. The choice seems obvious to me...

Do you really think this offshore drilling will have an effect on oil prices? No.

The US consumes about 23,000,000 barrels per day (domestic 9200000 b/d 40% and imports 13800000 b/d 60%). Now, let’s say, within the next 15 to 20 years, the US double its production of oil. Would this reduce the price of oil? No, because according to the Energy Information Agency of the U.S. government, world demand for oil is expected to increase by 54 percent in the first 25 years of the 21st century.

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Gonna have to disagree here. Currently most major windfarms are only going up in spots that are pretty much guaranteed to be almost constantly wind-swept. And the "backup diesel" generators that you speak of are largely a boogeyman myth. Hydro-Quebec is in the process of building windfarms that will generate over 2,000 MegaWatts of power to come online between 2011 and 2015.

You are correct they won’t need to use diesel generators because they will be using hydro-electric generators as the main source of power and the power generated by the wind turbines will be put on the grid. There are only a few places on the planet where the wind blows at a constant rate 24/7 none of them are near Quebec. You can’t turn on and off power generation like a light bulb you have to have time to get it up and running. If the wind dies down power stops and the hour and a half it takes to get a diesel up and running will mean that people will be without power for that time. Using the hydro-electric power as your source and supplement it with wind power just means they get to sell the power on the grid. Don’t get me wrong wind power is okay in my book it is just not the cure or even a band-aid to the real problem.

If oil companies start drilling, both oil companies and US consumers win, while Canada, Venezuela, and OPEC loses. The choice seems obvious to me...

That is because you are not smoking green stuff. If you smoke the green stuff and drink the cool aid you would see things a lot differently.

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Steven, Steven, Steven, More and more you are starting to sound like a walking breathing Democratic talking point parrot. For once I am ashamed of you.

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Do you really think this offshore drilling will have an effect on oil prices? No.The US consumes about 23,000,000 barrels per day (domestic 9200000 b/d 40% and imports 13800000 b/d 60%). Now, let’s say, within the next 15 to 20 years, the US double its production of oil. Would this reduce the price of oil? No, because according to the Energy Information Agency of the U.S. government, world demand for oil is expected to increase by 54 percent in the first 25 years of the 21st century.

It will have a marginal effect, in that it will slow the increase in price as we get closer and closer to peak oil production, yes. Your argument is like saying "You know, we're all going to die anyways, so why bother going to the doctor? He's just delaying the inevitable."

While we're leading the world's movement to non-fossil-fuel energy sources, does it make sense to make the transition as painless as possible to the US citizen? It's the poorest of the country that hurt the most from high fuel prices, after all.

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