From Newt's American Solutions.
Good news today from Virginia on offshore drilling. HB6006, a bill that would allow vital oil and natural gas exploration off the Virginia coastline, passed the House of Delegates by 56 to 39.The bill would also use the revenue from the offshore drilling to help pay for Virginia's transportation needs. With Congress refusing to take action to drill here and drill now, it's nice to see the states take some initiative.
Delegate Chris Saxman, the bill's author, said this in a press release:
Though federal officials will ultimately decide whether to lift the ban on offshore drilling, it is important for Virginia, possessing potentially significant offshore resources, to prepare for that possibility now. By passing House Bill 6006, the Virginia General Assembly can send a strong message to Congress that we are ready to act.
Thanks to all the Virginians who called their Delegate asking them to support the bill. Now, we need you to call your State Senator to encourage them to support offshore drilling as well.
A similar bill was killed last month in the Democrat controlled Senate on a party line vote. My friends, especially my fellow Virginians, those Senate Democrats are in the Kill Box. We have a tough U.S. Senate battle in November and Barry thinks he can color the state blue. Gas prices and drilling are the issues on which Republicans can win. If the Virginia Senate votes down the drilling bill again, not only are they not supporting lowering gas prices, they will be voting to raise taxes, as the oil revenues will be used to fund state transportation projects, which otherwise have to be paid for in additional taxes. If they kill this bill, they must be made to pay dearly in November for their folly.
Also find Bill Dupray at The Patriot Room
Political suicide
mbauer July 12th, 2008 at 9:48 a.m. (link)
I hope 1 more month of gas prices has made our senators realize that this vote could determine their reelection.
pilgrim recommends
pilgrim July 12th, 2008 at 10:10 a.m. (link)
Please, Virginians, continue to keep the rest of us informed on the actions and inactions in the Virginia Senate as well as the Virginia House.
Extreme taxation, excessive controls, oppressive government competition with business … frustrated minorities and forgotten Americans are not the products of free enterprise.Ronald Reagan
A stopped clock
Aeneus July 12th, 2008 at 12:07 p.m. (link)
Time to drill. No doubt about it.
Libs, like a stopped clock, are right every once in a while. One of the things they are right about (in intention, not in detail) is the environment. My friends and I, conservatives all, who enjoy the wilderness and support the 2d ammenment wish all conservatives would promote a logical coservation position instead of yieldin the moral high ground to the democrats.
Honestly
Fedaykin July 12th, 2008 at 9:32 p.m. (link)
I think the democrats are making this issue a larger negative for themselves than needed. All Reid and Pelosi need to do is convince their caucuses to support exploratory oil drilling- not giving out leases, not auctioning off teritorry claims, the democrats can just say they support an immediate directive to the USGS to survey deposits of recoverable crude in our waters. Then say you'll use that data, when it's been collected to move forward to do a cost-benefit analysis that considers environmental impact.
People voting over energy prices are happy with the democrats the government is moving toward domestic energy development.
People voting over the environment aren't voting Republican anyway.
This kind of survey could take years and will certainly go well beyond November 2008. The democrats could be the ruling party and then begin the massive marketing of alternative energy source development as a better and faster solution to energy prices.
Out with the Oak King.
Alternative energy is a scam.
nod90 July 13th, 2008 at 3:39 a.m. (link)
For transportation there are no good alternatives to oil based fuels.
1/ Wind and solar generate electricty which is currently useless for transportation.
2/ An affordable battery powered car would be about half the size of what Americans are used to driving and have a range of only 20 miles or so. The Tesla is not affordable.
3/ Plug in hybrids like the Chevy Volt are a nice idea but notice how the schedule for that car keeps slipping and how the price keeps going up.
3/Biofuels are a disaster which is going to drive up food prices for Americans and starve half the Third world. Somebody should remind the tree huggers that whale oil was a biofuel.
4/Natural gas would work if there were abundant supplies of it but there aren't.
5/Coal to liquids will work but it is a disaster for global warming and it will take 30 years to ramp it up. Offshore oil drilling is far more environmentally friendly than coal to liquids production.
You sound like a D.
ThreeNineNine July 13th, 2008 at 8:53 a.m. (link)
"Everything is a scam!"
The Chevy Volt, which should hit markets in 2010, can get 40 miles before it starts to recharge. It's only a 4-seater, but it's priced around 30-40k.
We can't live off oil forever. We're heading in the direction of electricity (and other things such as hydrogen). Might as well start using renewables when we can, rather than when we have to. Look what happened when we waited too long to drill for oil.
A tank full of gasoline is hard to beat,
nod90 July 13th, 2008 at 5:05 p.m. (link)
...as an energy storage device. In terms of energy per unit mass, energy per unit volume or energy per $ it vastly outperforms batteries. I'm not convinced that we are headed for electricity. In the short run, what we are headed for is job losses and smaller cars.
It is possible to make liquid hydrocarbon fuels via a gasification / Fischer-Tropsch route from a wide range of feedstocks. Coal works well, biomass is a bit more expensive if you insist on sustainability. I think "sustainability" and "renewables" are religious obsessions of the enviro-nut crowd and should not be an political or economic goals.
As for hydrogen, that is a dreadful fuel. Explosion hazards, burns with an invisible flame and it is very low density and difficult to store. While a hydrogen / fuel cell system is very clean, the fuel cells are still very costly.
I didn't...
Fedaykin July 13th, 2008 at 9:13 p.m. (link)
type my post to advocate alternative energy. I was making the point that it's possible for democrats to belay the issue until after the election if they do things correctly.
I did want to reply to your first point, however. I do agree wind & solar are useless for powering cars, but they still would help oil prices. A lot of this country's electricity is generated from oil and natural gas; the juice in your wall socket, in part, is coming from the same source as does gasoline. If you can even create enough wind and solar-thermal plants cogeneration plants to account for 10% of this country's electricity, you've made more oil available for refining to gasoline. Not to mention you've created thousands of new jobs in construction, engineering, design, science, etc.
Out with the Oak King.
Our energy comes from:
ThreeNineNine July 15th, 2008 at 12:25 p.m. (link)
~50% coal ~20% nuclear ~20% gas ~10% hydro ~1% petroleum [Source]
Total cost, in cents, per kilowatt hour (2007): Coal - 2.47 Gas - 6.78 Nuclear - 1.76 Petroleum - 10.26 [Source]
"If you can even create enough wind and solar-thermal plants cogeneration plants to account for 10% of this country's electricity, you've made more oil available for refining to gasoline."
If you get 1.6% of our energy more from renewables, that could replace all of our oil->electricity.
Oil and Power
motigercali July 16th, 2008 at 6:44 p.m. (link)
According to your source and others its about 1% an it bounces between 1% and 2% of are power is generated from oil but here is some things you and others might not know. That 1-2% equals about 28% of are oil consumption that means about 28% of all oil we consume is just for electricity to power are PC,s and other gagets. Yes if we were able to get other sources of power we would free up a bunch of oil....
http://home.earthlink.net/~oilandyou/
http://www.pluginpartners.org/plugInHybrid/nationalSecurityBenefits.cfm
http://www.iags.org/index.html
Lip Service
civilengineer July 16th, 2008 at 9:59 p.m. (link)
The problem with your approach is that the oil shotage is real and the alternative solutions are years away. I don't want to junk my relatively new gas burner and I can't afford a new electric car. What do I do in the meantime?
Sorry but there is no quick fix.
motigercali July 17th, 2008 at 11:11 a.m. (link)
Even if they opened ANWAR and offshore for drilling, it would be anywhere between 2-5 years before we recover any substantial amount of oil. Then in grand scheme of things would only reduce gas prices by pennies on the dollar. The 2 things that we could do soon and have a bigger impact are 1) Stop using massive amount of oil for energy purposes approx 28% of oil consumed in the states is for power but worldwide its actually around 70%. 2) Use Shale Oil for other petrolem used needs such as plastics and etc. If we did this in just the USA we would free up approximately 30% of all oil we consume for more gas. Someone mentioned it earlier that we should start moving away from oil now, before we are forced to and that's true. The writing was on the wall in 1970's and its on the wall again are we still not going to do anything about it.
Really think so?
Dave_in_Fla July 17th, 2008 at 1:17 p.m. (link)
The sites off California have been mapped. I saw an estimate yesterday that oil can start pumping from off shore platforms in a little over a year once the ban is lifted.
And if ANWR is opened up, then we can circle 2013 on our calendars as the year crude prices begin to fall, much like they did in 1986 when the North Sea platforms went online.
Much better than penciling in somewhere between 2015 and never for alternatives. Of course if Clinton hadn't vetoed ANWR, we would have been pumping from there for the last 5 years.
"If they were merely incompetent, then at least SOME of their actions would have been to the benefit of the country."
So you think it will have more of an impact huh?
motigercali July 17th, 2008 at 9:47 p.m. (link)
The U.S. Energy Information Administration (EIA) recently did a detailed study of the likely outcome of offshore drilling for their Annual Energy Outlook 2007, “Impacts of Increased Access to Oil and Natural Gas Resources in the Lower 48 Federal Outer Continental Shelf (OCS).”
http://www.eia.doe.gov/oiaf/aeo/otheranalysis/ongr.html
The conclusion: “The projections in the OCS access case indicate that access to the Pacific, Atlantic, and eastern Gulf regions would not have a significant impact on domestic crude oil and natural gas production or prices before 2030. Leasing would begin no sooner than 2012, and production would not be expected to start before 2017….Because oil prices are determined on the international market, however, any impact on average wellhead prices is expected to be insignificant.” According to the Energy Information Administration, lifting the bans might boost the nation's oil production by 1 or 2 million barrels a day by sometime next decade. Places like the Atlantic coast, thought to be rich in natural gas, lack drilling platforms, pipelines, terminals, storage facilities, and other energy infrastructure. “Although a significant volume of undiscovered, technically recoverable oil and natural gas resources is added in the OCS access case, conversion of those resources to production would require both time and money. In addition, the average field size in the Pacific and Atlantic regions tends to be smaller than the average in the Gulf of Mexico, implying that a significant portion of the additional resource would not be economically attractive to develop at the reference case prices.”
What about ANWR? (Arctic National Wildlife Refuge) How much oil is there?
95% Probability 5.7 billion bbls = .5 mbpd Mean (Expected)10.3 billion bbls = .9 mbpd 5% Probability 16.0 billion bbls = 1.9 mbpd
From first production to peak will take 3 to 4 years where the production rate peaks at .9 million barrels per day.
EIA estimates that if Alaska's Arctic National Wildlife Refuge were opened for drilling tomorrow, oil wouldn't flow at full tilt at .9 mbpd approx 2025.
By 2030, the US is projected to consume 22.8 mbpd. Today, we consume 21 mbpd. 22.8 mbpd divided by 24 hours = .95 mbph .9 mbpd is 95% of one daily hour US demand
Conclusion: ANWR would power the US for 57 minutes/day, the rest would have to be imported. EIA, best case scenario would reduce oil prices by $.30 to $.50 per barrel
Reduce oil imports from 70% to 66%. Today, we import 60% of our oil.
http://tonto.eia.doe.gov/ftproot/service/sroiaf(2004)04.pdf
Not to mention, 2 million barrels a day would need to be balanced against steep production declines expected in many non-OPEC areas like Russia, Mexico and the North Sea over the next several years.
US oil production has been in terminal decline since 1971 from a height of 9.6 mbpd to barely 5.14 mbpd in 2008. Even the discovery of oil in Alaska in the 1980’s was unable to reverse this decline.
We cannot drill our way out of this oil crisis. Since 2000, oil companies working in the U.S. have doubled the number of wells drilled per year.
Although increased drilling has added new oil to the nation's supply, it has not done so fast enough to offset the terminal decline of existing fields.
The IEA predicts that because of steadily rising demand, the world needs to add new oil production at a rate of 3.5 million barrels each year, on top of today's production level of 89.9 million barrels a day.
http://middleeast.about.com/od/oilenergy/a/me080701.htm
Conclusion if you add ANWR and All Offshore ANWR Reduce oil imports from 70% to 66%. Offshore 66% to 64% If you go by High Numbers we reduce from 70% to 62% Today, we import 60% of our oil. That’s means we would still import more oil after than we are importing today yes it will equal about pennies on a dollar.
http://www.theoildrum.com/node/4215
Before you label me as a crazy enviro my Uncle is an engineer at one of the Major oil companies he has repeatedly told me that we need to change are habits and do it now. Guess what he does not have one of those gas Guzzlers either has a Motor Cycle and a Hybrid.
We can not drill out of this.
http://www.boston.com/news/nation/articles/2008/06/20/new_offshore_drilling_not_a_quick_fix_analysts_say/
Various Oil Reserves (aka We CAN Drill Out of This)
youthgrunt July 23rd, 2008 at 10:28 a.m. (link)
ANWR - 6.4 Billion Barrels Continental Shelf - 18 Billion Barrels (off limits today) Bakken Formation - 167 Billion Barrels For Shale Oil I have seen estimates of around 2 Trillion Barrels
If we open up Anwar oil prices will drop
bobojake July 26th, 2008 at 9:20 p.m. (link)
Oil prices wil drop btwetween $50-$75 per barrel if we open up drilling in Anwar and this greatest nation will get the first oil to market within 1 year of starting drilling. We would already have the oil if the democracks and billy clinton hadn't veto it. Please don't try to use the excuse we won't see it for 10 years because if thats your thought we just as well shut the colleges down and get rid of the liberal tenure professsssooorrs. no school no tenure
Your data is wrong.
nod90 July 17th, 2008 at 8:16 p.m. (link)
Only about 2-3% of our oil is used for electricity. (Data)
Quite a bit of that is in Florida which is not a good area for renewables.
Also, the majority of the oil burned for electricity does not come out of the gasoline/jet/diesel pool. Power plants usually use residual fuel oil, which is what is left over in the refinery when the gasoline, jet and diesel are taken out of the crude oil.
Residual fuel oil can be converted into gasoline, jet and diesel but doing so requires expensive units which take several years to build.
The bottom line is that everything in energy takes a while and planning ahead is a good idea.
World wide only 7% of the electricity comes from oil (2005) down from 25 % in 1973. (Data)
Converting electricity away from oil is a good idea but it will take even longer than it takes to drill ANWR.
Republicans fight for cheap gas....
nod90 July 13th, 2008 at 3:18 a.m. (link)
...while Democrats fight for Hollywood environmentalists who want middle class America to ride the bus to work.
Republicans fight for jobs and economic growth while Democrats fight for "conservation". You know what conservation means? It means Americans take fewer vactions and don't get to fly away to places like Orlando and Las Vegas. Did you see the article in a lefty east coast paper about how the airlines are cutting back on flights to Vegas and Orlando? That means job losses.
It is time somebody reminded Harry Reid's constituents of how utterly dependent their city's economy is on affordable oil.
We need to replace oil
jjoiner3 July 18th, 2008 at 10:09 a.m. (link)
Natural Gas for one has the lowest combustion temperature of all fossil fuels which makes it more efficient than oil based fuels. It also is much cleaner option. And the fuel comes from methane gas, which is a very abundant natural resource and it can also be produce from waste products as a from of bio-fuel. That means we can use our wastes for other reasons than trashing the planet we live. Volvo already makes a natural gas car used in Europe that works quite well.
Many other alternatives can be developed and are being developed. If we invested the time and money we could bring those alternatives to market much faster.
And why open up offshore drilling, which destroys coastlines, ruins tourism, and will not make a difference anytime soon, when the oil companies are sitting on unused land right now that they are not drilling. They have the ability to increase supply but they are not going to if it will lower prices.
Prices are high bc of supply and demand. Demand has sky rocketed and so prices will naturally do the same. Supply is not in a shortage or a surplus, so it will not change. If you want prices to go down don't drive so much.
But high gas prices are a necessity if we want to end our dependence on foreign fuel and reduce global warming. If gas was still $1 a gallon no research would be carried out to find alternative fuels. Instead we would be buying oil like staving dog tearing into a trash can, with no regard to the consequences. If we continue at this rate we will deteriorate the planet until it is unlivable or end up fighting a major war in the middle east bc we cant get enough of their oil.
If we want a real solution, then we need to fight for better public transportation, alternative fuels, and fewer cars on the highway.
So MANY mistakes here
Dave_in_Fla July 18th, 2008 at 10:26 a.m. (link)
I'm not sure where to begin...
1) Natural gas does have some benefits as an alternative, mostly that it is piped directly into my home, so I can refill there. The downside is that the storage difficulties make automobile range rather low, compared to gasoline.
2) Off shore drilling does not ruin coastlines. After Katrina, there were ZERO incidents of spilled oil.
3) Off shore drilling does not ruin tourism. See, the earth really isn't flat. Oil platforms are over the horizon and can't be seen from shore. But if you need further proof, spend a spring break in Galvaston and see what their tourism looks like.
4) Off shore drilling will make a difference soon. The California fields are already mapped and can begin producing oil in about 18 months. There are 18 billion barrels of recoverable oil already identified, which will increase off shore capacity by 41%.
5) Oil companies are not sitting on unused land. While the necessary geological surveys are underway, those lands are listed as unused. The oil compnaies will either develop the leases, or determine there is no oil available.
6) Demand is not high because we are driving too much. It is high because China and India (and other countries) are subsidizing fuel and using oil for electrical production.
7) What global warming? You mean the global warming that has resulted in lower tempatures since 2000 and a dramatic increase in the Anarctic ice pack?
8) Why am I even arguing with a bunch of fully debunked Democrat talking points? I just wish one day that all you moonbats would just admit that you don't give a damn about the citizens of this country and just want political power.
Yeah, when pigs fly.
"If they were merely incompetent, then at least SOME of their actions would have been to the benefit of the country."
Hey Dave
motigercali July 19th, 2008 at 12:23 p.m. (link)
You keep claiming that it will make a difference quickly. Where is the Link?? I have one here.
The U.S. Energy Information Administration (EIA) recently did a detailed study of the likely outcome of offshore drilling for their Annual Energy Outlook 2007, “Impacts of Increased Access to Oil and Natural Gas Resources in the Lower 48 Federal Outer Continental Shelf (OCS).” http://www.eia.doe.gov/oiaf/aeo/otheranalysis/ongr.html
The conclusion: “The projections in the OCS access case indicate that access to the Pacific, Atlantic, and eastern Gulf regions would not have a significant impact on domestic crude oil and natural gas production or prices before 2030. Leasing would begin no sooner than 2012, and production would not be expected to start before 2017….Because oil prices are determined on the international market, however, any impact on average wellhead prices is expected to be insignificant.” According to the Energy Information Administration, lifting the bans might boost the nation's oil production by 1 or 2 million barrels a day by sometime next decade. Places like the Atlantic coast, thought to be rich in natural gas, lack drilling platforms, pipelines, terminals, storage facilities, and other energy infrastructure. “Although a significant volume of undiscovered, technically recoverable oil and natural gas resources is added in the OCS access case, conversion of those resources to production would require both time and money. In addition, the average field size in the Pacific and Atlantic regions tends to be smaller than the average in the Gulf of Mexico, implying that a significant portion of the additional resource would not be economically attractive to develop at the reference case prices.” 86 billion barrels of oil may lie offshore, according to the US government's Energy Information Administration. Of that amount, about 18 billion barrels are subject to the moratorium. Much of the rest lies in areas that are too expensive to exploit, areas that are already leased, or that oil companies have not yet tapped for technical reasons, fueling the industry's desire for fresh territory.
Yes while California has been mapped it's because 10 billion sits of its coast. Most analysts even say that to count on California could be a little misleading, because more obstacles are faced there than anywhere else. 1)Will not lift drill ban. 2)California Legislature Has looked into allowing no infrastructure to be built in the state to receive oil from offshore drilling off California coast or help drill for oil of Coast. 3)California Senators have looked into the possibility of allowing drilling in OCS but the States to be able to opt out. 4)Offshore drilling faces more legal and environmental hoops to pass, so California could fight drilling in OCS of California for a very long time. So it could be even longer if ever the oil of California is tapped. There were several articles about Hurdles Drilling faces of California in LA Times, Washington Post, and many others.
My last reply to the trolls on this topic
Dave_in_Fla July 19th, 2008 at 1:37 p.m. (link)
The Minerals Management Service said that of the estimated 18 billion barrels of oil in off-limits coastal areas, almost 10 billion are off the coast of California.
"California could actually start producing new oil within a year if the moratorium were lifted," the Sanford C. Bernstein report said, because the oil is under shallow water, has been explored and drilling platforms have been there since before the moratoria. )
WSJ Link
MMS Link
From the Minerals Management Service report above:
Note that this is significantly higher than the estimate you quote from the EIA report. I suspect that given the discepencies between the EIA and MMS reports, the EIA report accounted for, and eliminated, the California recoverable oil from their estimates.
Actually, I'm calling BS on that EIA report. It conflicts in significant ways with the MMS survey.
"If they were merely incompetent, then at least SOME of their actions would have been to the benefit of the country."
Read the Study
motigercali July 20th, 2008 at 6:46 p.m. (link)
Really before you call someone a troll and call BS on a study 1) Thoroughly read your study. 2) Make sure they don’t use the EIA 2005 study which is almost a carbon copy of EIA 2007 study as reverences in your study. 3) Make sure your study is not very close to mine.
These exact quotes are from your study.
“The OCS production currently contributes about 1.5 million barrels of oil per day (MMbopd) and 11 billion cubic feet of natural gas per day (Bcfgpd) for U.S. consumption (2004 data), accounting for about 30 percent of domestic oil production and 21 percent of domestic natural gas production. Within the next five years, offshore production will likely account for more than 40 percent of oil and 26 percent of U.S. natural gas production, owing primarily to deepwater discoveries in the GOM.”
“The MMS estimates that the resources in OCS areas currently off limits to leasing and development total 18.9 Bbo and 85.8 Tcfg (mean estimates).” EIA Estimates in 2007 studies 18 Bbo currently off limits and 86 Tcfg
Wow those numbers are very close.
Next you said they already have wells off California coast well I would hope they did Offshore California, since production continues from 43 active OCS leases there that have reserves of 315 Mbo or about 17 days worth of US consumption.
“Producing more of the Nation’s energy domestically will protect economic and national security and help close the growing gap between the amount of energy used and produced. Despite expected increases in OCS oil and natural gas production over the next ten years, the Nation likely will not be able to mitigate the growing long-term expected shortfall between projected domestic supply of and demand for oil and natural gas without continued and timely access to high potential areas on Federal lands, including the OCS.” What I got from that was just like EIA study US oil production is in a terminal decline and we will not be able to get where we are without further development including the OCS so that means we will still be importing about 60% of are oil even if we drill on federal lands and in OCS.
MMS stats “There are long lead times needed for exploration and development of OCS oil and gas resources, especially in frontier areas where risks and costs are especially high. Preparing to offer oil and gas leases entails years of planning and consultation under sections 18 and 19 of the OCSLA. Once a lease sale is held, it could take five to ten years for drilling to commence. Production could take another five years or more after a discovery. OCS oil and gas activity must comply with a variety of Federal and state statutes, regulations, and administrative orders under various laws like NEPA, CZMA, ESA, MMPA, CAA, and CWA, which are designed to provide for safe and responsible resource development with appropriate environmental protection.”
I read parts of Section 18 and 19 and I just stopped before finishing getting a big headache coming on but from the numbers It said 36 months pursuant to some weird things so even if it ran very smooth no lease sale would start for at least 3 years be my guest and read further if you like but it has to go by EPA, USGS has too do in depth study on fair market and other stuff has to be done. So Now we have some sort of a timeline from MMS and Say it passed Congress today. We have 1) 3 Years for OCSLA Study 2) Once a lease sale is held, it could take five to ten years for drilling to commence according to MMS so fairness ill say 7 years. 3) As Stated by MMS Production could take another five years or more after a discovery. So that’s 5 Years.
2008 +3 2011 2011 +7 2018 2018 +5 2023. So even according to your study the MMS it will be 2023 before we receive the effects of drilling in the OCS. MMS never gave a figure on money I imagine it will be close to the .30 - .50 a Barrel of Oil we are talking time lines here that will not save the consumer any more than pennies on a tank of Gas.
Don’t get me wrong I think we should drill there I also believe that we should start construction on 40 or more Nuclear power plants and even go solar, wind, and biomass (not from food but from waste raw resources, trash, and seaweed) where it is possible. We Can not Drill are way out of this mess we need other sources of Power and we need to start that now but like I said there is no easy solution or quick fix.
McCain's proposals regarding Continental Shelf and Offshore drilling will lower gasoline prices now
mccainsupporter July 26th, 2008 at 12:04 a.m. (link)
Many Democrats and Senator Obama's criticism of John McCain's energy proposals sound the theme that any increased production will not come on line for at least 5 to 10 years and therefore will not have any immediate effect on energy prices. That contention is entirely wrong. With increased offshore drilling, there will be weekly announcements of dramatic large discoveries in the Gulf of Mexico and discoveries off the US continental shelves. Those continuous weekly announcements will serve to drive the price of oil down even before production actually comes on line.
However, even if you assume that Senator Barack Obama's argument is true and production will not come online for five years, his argument about no effect on gas prices does not hold water. Energy prices are also about future expectations. It is simple economics. If you own an oil well in Saudi Arabia, UAR or Kuwait or out in West Texas and you expect the price of oil is going to triple or go up in price five-fold over the next five years you may not be so eager to pump the oil out of your well today at a maximum rate knowing that your asset will be worth five or ten times as much in five years. You may just want to leave your well capped and leave the oil in the ground instead of pumping it out at today’s prices. However, with increased US offshore exploration and development and expanded US nuclear energy production, foreign producers will know that there will be increased future supplies coming online and they will have an incentive to pump their oil out of the ground at today’s prices instead of leaving it in the ground expecting the prices to rise in the future. Oil producers have a choice of selling their oil at today’s prices and put the money in the bank, stocks, US treasuries or real estate or leave the oil in the ground. Real estate has not been yielding high returns so some producers may have an incentive to just leave the oil in the ground if they believe that prices will be higher in five years. If oil producers leave their oil in the ground, prices will stay high or even go higher due reduced supply.
Some Democrats and Barack Obama do not understand simple economics. Most American voters understand that you don’t sell something if you think it will go up dramatically in value. Senator John McCain wants to change expectations that the price of oil is going to increase dramatically. With dramatic new discoveries off both US continental shelves and the Gulf of Mexico, the expectation of future large price increases will be quashed and prices will remain relatively stable.
time preference
duckhawk July 26th, 2008 at 12:41 a.m. (link)
Nice post. I think your reasoning is mostly correct, and I wish I had seen someone bring this up earlier. But you didn't say much about discounting future expected returns.
The left's argument (and the position held by every professional study I've seen) puts production in ANWR and the OCS ten to fifteen years away, not five. And fifteen years is a long time to compound capital gains, making for a pretty big discount factor.
That is, oil producers don't compare the real price now to the real price in the future; they have to compare the real price now to the real price in the future plus ten percent annual gains for more than a decade, plus whatever other opportunity costs they might incur.
So even if you think the price will change significantly when the oil flows fifteen years from now, the present value of this change is still tiny. That makes short-term benefits of drilling look uncertain at best and very temporary, even when benefits over the long term seem pretty meager.
Good news
YouthlyConservative July 13th, 2008 at 11:39 a.m. (link)
Gainesville is a despicable transportation cesspool. This bill better pass the senate because without it, this community is going to condemned to a slow death with clogged roads and inadequate public transportation.
Here's my blog if anyone wants to look at it.
http://thespyofcyberpunk-hydropower.blogspot.com/
The World of a Non-Liberal Teen
http://thespyofcyberpunk-hydropower.blogspot.com/
Neil, I'm replying to another one
pilgrim July 18th, 2008 at 10:20 a.m. (link)
that I did not post. I don't know anything about Gainesville or the link in that post. Perhaps they are clues for who to attribute the post to.
Extreme taxation, excessive controls, oppressive government competition with business … frustrated minorities and forgotten Americans are not the products of free enterprise.Ronald Reagan
I can just use the ip address
Neil Stevens July 26th, 2008 at 12:45 a.m. (link)
By the way it's only by chance that I saw this, good thing, heh.
HTML Help for Red Staters
Nobody can claim a "free speech" right to suck the fun out of our lives. Certainly not on a private board. – Steve Jackson
I take it that some Dems crossed
gamecock July 14th, 2008 at 6:53 p.m. (link)
over in the house and that the gop controls the senate and was always for this?
Thanks for reporting this fella.
reccomended
Mike DeVine’s Charlotte Observer columns The Minority Report and The HinzSight Report "The way to stop discrimination on the basis of race is to stop discriminating on the basis of race." - The Chief Justice Race 4 2008 "One man with courage makes a majority." - Andrew Jackson
Senate defeated
dittohead July 14th, 2008 at 8:24 p.m. (link)
I believe it was already defeated by the Senate.
Maybe Gilmore can get some traction on this issue.
Thank the Lord!
rbmshow July 15th, 2008 at 3:46 p.m. (link)
It is about time that we have started to move for in this national emergency. Yes we can not live off oil forever but we must wait until our economy is entirely destroyed either. It still amazes me that we are even having this discussion. How apparent is it that we MUST drill our own oil while AT THE SAME TIME making cars better and different. We need to heat and cool our homes better. We need to approach this at EVERY level. Go Virginia! Florida its our turn!
check me out at www.blogtalkradio.com/rational-black-man
For The People
OldSarge July 17th, 2008 at 1:50 a.m. (link)
The United States Congress has forgotten the cherished words, "By the people and for the people." Virginia has taken the first step in reminding the rest of the wonderful Country, in crisis, that we the people have a hand in resolving the energy crisis. The answer is clear, drill, drill now. So much debt can be retires, maybe not in this week, or nest, but releasing the ties imposed by Congress, oil experts, not Congress, say we can produce oil in two to three years.
In a letter to me from Sen Reid, he claims it would take some 10 plus before we could see results!. Do we believe Congress or someone in the know?
Actually, some sources say that the Congressional Ban on Oil Drilling will Expire on September 30, 2008
Rod_Patrick July 17th, 2008 at 10:22 a.m. (link)
I think this is the reason by Pres. Bush lifted the corresponding Executive Ban. In such case, the President's appeal is really just a gesture. He's winning another issue here, without even asking for a fight.
If the expiration is true, it is better for the Congress not to do anything and continue its lameduck status.
Otherwise, we need to be vigilant on the details of the new energy bills being developed by the Democrats...don't be fooled by the titles.
Remember:
Don't let the facts get in the way of Politics
Eye_Want_2_Know July 28th, 2008 at 11:43 a.m. (link)
With over 60,000 acres already approved for drilling why aren't the oil companies drilling their first?
Of course we must drill anywhere we think there might be oil, Great Lakes, Everglades, Yosemite and anywhere else someone thinks there might be oil.
Who cares that it will take 10 years to start producing and the oil will be sold on the open market at the going ptice.
The "Drill in ANWAR" croud are nothing but political oportunists depending on a non thinking public that doesn't have a clue about what is involved in producing and getting gas to the pumps. Just look at the rise in food costs and increased air and water polution because of the political decision to mandate Ethanol.
Apparently, the Democrats.
Moe Lane July 28th, 2008 at 12:06 p.m. (link)
Look, it's not our fault that the Democratic Party is more interested in keeping the Greens sweet than they are in helping the American people; we're just the ones who are going to make use of that particular inconvenient truth. So yell at the people causing your agitation; not the people taking advantage of it.
Pretty please, with sugar on top.
The Fuzzy Puppy of the VRWC.I've been usurped!Only 23 more to go
Matt S. July 28th, 2008 at 3:37 p.m. (link)
Now that Virginia's taken care of we only have 23 more states to go.
Matt S.
Only 23 more to go
Matt S. July 28th, 2008 at 3:37 p.m. (link)
Now that Virginia's taken care of we only have 23 more states to go.
Matt S.
Only 23 more to go
Matt S. July 28th, 2008 at 3:37 p.m. (link)
Now that Virginia's taken care of we only have 23 more states to go.
Matt S.
Only 23 more to go
Matt S. July 28th, 2008 at 3:38 p.m. (link)
Now that Virginia's taken care of we only have 23 more states to go.
Matt S.
Only 23 more to go
Matt S. July 28th, 2008 at 3:40 p.m. (link)
That's great now we only have 23 more states to go.
Matt S.
Only 23 more to go
Matt S. July 28th, 2008 at 3:42 p.m. (link)
That's great now we only have 23 more states to go
Matt S.
Only 23 more to go
Matt S. July 28th, 2008 at 3:42 p.m. (link)
That's great now we only have 23 more states to go
Matt S.
Only 23 more to go
Matt S. July 28th, 2008 at 3:43 p.m. (link)
That's great now we only have 23 more states to go
Matt S.
Only 23 more to go
Matt S. July 28th, 2008 at 3:43 p.m. (link)
That's great now we only have 23 more states to go
Matt S.
Only 23 more to go
Matt S. July 28th, 2008 at 3:43 p.m. (link)
That's great now we only have 23 more states to go
Matt S.