Doesn’t matter…looks like we’ll be using E. coli poo to fuel our cars in the future…
-XT
I think you missed the point up thread where the country where the oil is drilled also benefits from the revenue generated from taxes/royalties, jobs, and not sending money overseas.
It’s all about the filthy profits from the evil, cigar smoking, peasant squashing Big Oil™ executives and their fat assed, lazy, shiftless profiteering shareholders! That and the massive environmental damage done by off shore drilling and exploitation of the oil fields in Alaska in the last decade.
-XT
So long as you are honest about the reasons for expanding offshore drilling (which is increasing profits, not reducing gas prices), I don’t care how you characterize the investor class.
Heck, it’s dropped $.40/gal here in the last month. It’s never going to be a ratio drop, because 100% of the cost of gas isn’t crude. Until refining and transportation are free, that is.
Fear Itself, thanks for your response. You say:
OK, back to basics. There’s this thing called supply and demand, which are the basic factors in setting any price. If we increase the oil production, ceteris paribus, the price will fall.
Now, you seem to be saying that somehow oil is alone among all commodities in being immune to what is commonly called the “law of supply and demand” … perhaps you’d like to expand on that new theory of yours, because it could be a very important insight.
Or not …
On a related topic, I keep hearing people say things like “but even if we opened up the offshore waters today, it would be as much as a decade before we see the results”, which is likely true. Then they go on to tout solar, or wind power, or nuclear, all of which have a time horizon comparable to offshore drilling …
Finally, the idea that the offshore reserves are a “drop in the bucket” is nonsense. The offshore reserves are estimated at about ~ 80 - 90 billion barrels. The US currently imports about two billion barrels per year from OPEC, so the offshore oil would buy us free of the Middle East mess for about forty years. If that’s a “drop in the bucket”, then you have a hell of a big bucket.
My advice? Do it all. Increase conservation. Invest in renewables. Increase auto gas mileage. Support basic energy R&D. Drill offshore. Restart nuclear.
Because no one of those actions will be sufficient … and all of them together might not be sufficient, but at least that way we have a chance.
w.
I swear that the liberal contingent here makes me drink more than I normally would. Smart people and crazy at the same time. Not good for me.
While I agree with much of what you said here, from memory I thought the estimated reserves were something like 20 billion barrels (though I’ve seen a lot of folks saying the US official estimates are low). But the other estimate I’ve seen is that (again from memory) with development of known reserves it would ‘only’ increase our production by something like a million barrels a day. Certainly nothing to shake a stick at, but not going to ween us off foreign oil.
Of course, I’m going on memory with these figures so I may be way off…admittedly. I do agree with you that there is no silver bullet solution and we should be doing a lot of different things (including at a minimum figuring out just what is out there, since exploration and test drilling is a first step regardless).
But you aren’t being honest if that is your assessment. It’s NOT just increasing profits and it WOULD reduce gas prices at some point (though it’s debatable as to how much). At a minimum it would add both jobs and capital to our economy, as well as give a buffer to world wide supply expansion. Again, from memory, only Saudi has the capability of ramping up (with their current infrastructure) to meet a short term supply problem…and only by a few million barrels a day. If the US could increase production by a million barrels it would give some slack to the system…AND this would change (somewhat) the speculation equation, since one of the things that is making speculators nervous is the lack of slack in the system in the event of a major (or even minor) disruption to the system.
-XT
So, tell me, what happened to the price of oil when the Saudis increased production by 200,000 barrels per day earlier this year?
Says who? The Department of Energy says there is only 18 billion barrels of technically recoverable oil in the Outer Continental Shelf.
Sorry, you have been misinformed. From the same cite:
So, it will take 20 years to reach peak production of 200,000 barrels per day (the same amount the Saudis increased production by earlier this year), which is indeed a very small drop in an increasingly large bucket.
We dropped 5 cents.
Aside from a possible shooting war between Iran and Israel (on again, off again) and (IIRC) production problems in Zimbabwe, I believe world wide demand was up earlier in the year.
I also would like to see where the 80-90 billion barrels figure comes from. However, I think most experts feel that the current official figures are understated, so part of that may be what intention is getting at.
That figure and time table is vastly under what I’ve read. I’ve read 5-10 years and up to a million barrels a day. If I can dig up the article I was reading earlier this week I’ll try and post it tomorrow…but I think your figures are way low and way more time than even the more conservative folks are talking.
-XT
But you must agree, just because he doesn’t like the DOE figures doesn’t give him the right to just make up figures to suit his argument.
Well, then you are going to have to show me figures that are more reliable than DOE. Until then, the DOE is the only objective source for debate on the impact of offshore drilling.
Don’t forget - there has been very little exploration in U.S. coastal waters other than the Gulf of Mexico for the last 20 years, and exploration methods are vastly better now than they were then. The bottom line is that you don’t really know what’s out there until you go look.
For example, just two years ago a huge new field was discovered in the Gulf of Mexico, which may hold as much as 15 billion barrels of oil and natural gas. That’s one field. Totally unknown until 2006. And that’s with the Gulf being open to exploration all that time.
Just this year, a monster oil field was discovered off Brazil, which may hold as much as 70-100 billion barrels of oil.
So what might you find elsewhere around the U.S.? Doesn’t it make sense to at least look?
I agree his figures seem high to me…but I’ve read enough on this subject to know that most experts highly dispute the DOE figures, which are really out of date. Most consider the DOE figures both on potential reserves and on the supply/distribution side to be low. That’s one of the reason a lot of people are pushing for exploration and test drilling…to get a better handle on just what’s out there. You may not know this, but a lot of the DOE figures are based on very limited test drilling (or none at all), and in the past they have underestimated reserves that were later proven to have much more than they thought was there.
I’ll see what I can dig up…but I wouldn’t bank on the DOE figures as being the be all and end all.
-XT
I’ll be waiting. Until then, the DOE is all we have. I have seen no reason to dismiss them.
Fear Itself, I appreciate your response.
First consider the term “ceteris paribus” and think about what it means in this case.
Then think about the fact that the Saudi increase changed total world oil production by about 0.2% … that’s two tenths of a percent … you were expecting fireworks?
Next, estimates of the amount of offshore oil vary by a factor of five or more. Why? Because much of it is unexplored. However, my point remains. Suppose there’s only ten years of freedom from OPEC out there as you say, that doesn’t change anything. I’d still like to buy ten years of freedom from OPEC.
But, let’s take your numbers, twenty billion barrels of offshore oil. We need energy from all possible sources, not just renewables, not just conservation, not just nuclear, but all sources. How do you plan to replace it if you’re not going to use it? With wind? With solar? With nuclear? With coal?
There’s about a hundred nuclear power plants in the US, and all hundred of them would have to run for 15 years to equal the energy in that 20 billion barrels of offshore oil … a hundred nuclear power plants running for 15 years, and you call that a “drop in the barrel”?!?
Me, I call it a hell of a lot of energy.
Or, we could look at it another way. The US has about 18,000 megawatts of installed windpower, more than any other single country except Germany. How long would those thousands and thousands of US windmills have to turn in order to replace the energy in the 20 billion barrels of offshore oil?
Oh, about 1,280 years or so … “drop in the bucket” my ass. Windmills are a drop in the bucket.
However, we could increase the number of windmills. The US currently generates about 0.4% of our power from windmills. By the time the offshore field comes online, we might (at an extremely high cost) be able to jack that up to say 10% … but they’d still have to run for fifty years to replace the oil …
Which is why I say “all of the above”, no one source is going to be able to supply the world’s energy needs in the near future.
w.
Funny you should say that. Read my DOE cite again. In 2030, at the peak of production, new offshore drilling will add 200,000 barrels per day to production without new offshore drilling. I don’t expect fireworks then either.
What’s your point here, that we should be giving the Saudis $7.3 billion/yr (assuming $100/bbl oil) instead of giving it to a company owned and operated within the US?
No matter how evil the US oil conglomerates are, at least their record profits equate to record tax payments. All the Saudis do is buy bigger and bigger yachts.
My point is, if increasing big oil’s profits is the justification for expanding offshore drilling, then proponents should knock off this truthiness about reducing gas prices.
Agreed, as long as the opponents quit acting like “big oil’s profits” is actually a bad thing that must be avoided at all costs. SOMEONE is going to be selling oil to us, it’s either Big Oil (US version) or Big Oil (another country’s version). One of those options creates jobs and wealth in the US, the other doesn’t.
Even if you don’t like the economic reason, how about I give you an environmental reason to approve the drilling?
If we assume that our drilling will not appreciably affect the price of oil or gas, then it will not appreciably affect our consumption. It will not reduce the desire to create alternative fuels. It will not increase our driving habits, or encourage the purchase of gas guzzlers. We will consume the same amount of oil with or without this drilling.
With that assumption, isn’t it then clear that the oil we use will have to come from some other country’s production? A country that may not have the environmental concern that we have? It makes one wonder if environmentalists care about preserving the Earth, or just care about preserving their backyard.