Drill Baby Drill -- yeah, right

Discussion in 'Miscellaneous' started by HatterDon, Sep 11, 2008.

  1. HatterDon

    HatterDon Moderator

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    Well, it beats the heck out of EIGHT MORE YEARS! :shock:

    The latest catch-phrase to capture the overfed upper-middle class middle-aged whities would make sense if we were talking dentistry, but here are some observations -- and no, 'fog, I'm not posting any links from any blogs. It may be a weird concept to you, but I continue to make my own observations and express my own ideas:

    1. If we want to cut imports of foreign oil, we can do that immediately. We've always been able to do that. Why don't we? It's because foreign oil is cheaper than oil we produce domestically. Think of it like football players. English players are more expensive in England than are players from Asia, Africa, and the United States. [Marcus Bent 18million pounds/Brian McBride, 900,000 pounds]

    2. Oil companies buy oil as cheaply as they can and sell it -- post refinery -- for the highest rate the market will bear. This is called capitalism. Oil companies buy foreign oil because they know their competitors will, and they want to keep making a profit. After all, why stop selling gasoline for $3.85 a gallon using imports, when using domestic would make you sell it for, say, $4.15? Because the guy down the road might not, and consumers tend to go for the cheapest gas. Consumer demand is the single greatest reason for our use of foreign oil.

    3. There are two ways to bring down oil prices -- increase supply and decrease demand. Decreasing demand can begin immediately. In fact, it already has. People have stopped buying new gas guzzlers, have tried to sell the ones they already own, and have cut down on recreational driving. Things that make the aforementioned rich fat whities chuckle -- you know, like tuning your engine periodically and using properly inflated tires -- also can immediately reduce demand. This is good in terms of "reducing our dependence on foreign oit" but it doesn't do anything financially for American oil producers. So,

    4. Drill Baby Drill. The idea here is that we can reduce consumer cost by increasing supply. Okay, I'll buy that. So why didn't anyone in the administration react positively to the proposal to tap the strategic reserve? I mean, the strategic reserve is there for periods of emergency. Certainly people losing their homes and food prices going through the roof should be an emergency, right? Or is this just the "new reality" of Republican governance? But I digress. No, the answer is that increasing the flow of already mined oil would have had an IMMEDIATE effect on supply, but it would not have been a financial windfall for American oil producers.

    5. Increased off-shore exploration and drilling in ANWAR, on the other hand, provide new development contracts to American oil producers. These efforts will also increase the levels of tax breaks and incentives to oil producers. This is sometimes known, churlishly, as corporate welfare. It also accomplishes two things that directly benefit the Republican party -- and, I suppose, at least 2% of the people who regularly vote Republican: Your number one financial support base suddenly has even more money to donate to your elected officials -- AND -- in the name of National Security -- you've been able to dismantle two major environmental protections. And, since environmentalists tend to vote Democratic, it's all good.

    6. What's the drawback? Well, newly acquired oil carries with it the costs of exploration and infrastructure. Those first 100,000 barrels of oil include all the drilling, building, pipeline, refining costs for the entire oil field. What's the result? Well, for one thing, it makes oil from new sources MORE EXPENSIVE THAN OIL FROM OVERSEAS.

    7. Care for another drawback? It takes time to find the best place to drill and to mount a successful drilling operation. In other words, in exchange for huge tax giveaways to the oil companies [that most of us will have to make up for either in our own taxes or in even further reduced social services], we'll have to wait a significant period of time before we see even that more expensive oil. How long? Well, anywhere between 2.5 to 5 years WAS the given. When the always-efficient-never-to-be-doubted administration first suggested new off-shore drilling and overturning ANWAR protections, even Fox News said it would take a couple of years for the new oil to reach the marketplace. Then, obviously, the memo arrived and, in the course of 12 hours, Fox News revised those estimates downwards to "a matter of weeks."

    8. Is this an out and out lie? Of course it is. You can't make oil flow more quickly just because saying so supports Republicans. Now there WAS a logical reason behind all this once upon a time. In the relatively recent past, we've been able to reduce the price of oil just by THREATENING to drill in ANWAR or actually get serious about increasing the fuel efficiency of Detroit's products. NOT ANY MORE, however. When the rest of the world was already conserving, it was the US market that made prices go up and down. More American gas guzzlers=higher world prices; threat of increased American oil exploration=lower prices. But ...

    9. NOT ANY MORE. Ladies and gentlemen, let me draw your attention to India and China.

    10. So, if we want to reduce our use of foreign oil, either we pay significantly more for domestic oil, or we use less. On the other hand, if what we want to do is put more tax dollars in the hands of individuals and corporations who will, in turn, donate even more money to the RNC and Republican politicians, then ... DRILL BABY DRILL!

    Oh, and about all that money-saving off-shore oil, for the second time in a month, gasoline prices in my area are going up. Why? Because a major Gulf hurricane in bearing down on ... off-shore oil platforms.

    Never mind. a three-word chant [even if it only consists of two words] is usually enough to drown out logic and planning.
     
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  2. jmh

    jmh New Member

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    Using less is haaaaaaard, waaaaaaaah.

    When did we all become so petulant and selfish?
     
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  3. pettyfog

    pettyfog Well-Known Member

    Joined:
    Jan 4, 2005
    Don you have some weird ideas on how the oil market works.

    The spot market price on oil grades, plus transportation cost sets the price. If every barrel you pump costs you money, you dont pump it.

    The core question is how to reduce the dependence on foreign oil.

    The correct answer is: ALL THE ABOVE!

    STRATEGIC RESERVE means exactly what it says. This is NOT an emergency! PERIOD! To say it is is lunacy. An emergency is when you cant get the oil at any price.

    What Don's doing here is setting you all up for a possible bait and switch trick by the Dems. Which will end up reducing practical drilling options.

    We'll see how that comes out. I suspect the Dems will win if Don's argument makes sense to you. To me, it's pure bullshit.

    I hope the GOP says ... sure, no more tax breaks and incentives for proven field development. Only for alt fuel development.
     
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  4. HatterDon

    HatterDon Moderator

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    We already have more than 20 fields in the CONUS where reserves are known to exist, but drilling is considered not as profitable as using foreign oil. Why is the RNC only interested in off-shore and ANWAR?


    Oh yeah, that's me ... the DNC's secret point man to sway national opinion. I'm doing that by propagandizing on a site that is at the very center of all American men and women: Fulham Football Club.

    It is to larf.
     
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  5. Bradical

    Bradical Member

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    Your faith in the GOP to do the right thing is the type of gamble that most Americans aren't willing to risk. The current administration has spent a total of $4B in research for alternative fuels and alternative technologies, and McCain is being surrounding by the same Bush-oil crowd, all intent on keeping things the same.

    I have an idea, why don't we spend money on research so that we win the race to develop the next transportation technology (replacing oil altogether)? Wouldn't that solve all (most) of our problems, not to mention put the entire Middle East out of business? As much as I'm disliking Obama at the moment, he at least has the right mindset - provide a timeline and solve the problem. Much like how JFK handled the Moon Race - JFK stated, "Here's the problem (how to land on the moon), here's a timeline and resources, now go and solve it." The same prinicple should apply here -- and for those who think my logic is flawed, as far as the plausibility of a new technology, I ask: In 1960, how concievable was it to believe that we would land on the moon within 10 years? Probably less concievable than man inventing something that goes without the need for oil by 2018.
     
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  6. pettyfog

    pettyfog Well-Known Member

    Joined:
    Jan 4, 2005
    What was the production/break even price/bbl?

    Name your source, don.
    Let's examine those fields. Have they been blocked by the enviro-wackos?

    The answer to that would be to half the 'use it or lose it' terms, then wouldnt it?

    No drilling because it will take 'n' years to produce is the most freaking insane argument EVER! It's the SAME one used by Clinton when he vetoed in 1994.

    BRADICAL...
    what is it about 'DO ALL THE ABOVE' that you dont understand?

    If you read what I write in other TECH stuff, I'm all FOR replacing oil as fuel.

    But not with FOOD CROPS, as the BRILLIANT FUCKING DEMOCRAT HARKINS and the Agri-Biz pushed on us.

    BTW... just what do you think the Oil Company profits margins after taxes are? Just take a wild guess.

    I'm so sick of that crap, hell I even reflexively jumped all over Palin on her increasing the Alaska oil co tax before I realized THAT was producer royalties.
     
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  7. BarryP

    BarryP New Member

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    In an open market there is open competition and price is most certainly derived from a supply/demand equation. My personal opionion is the oil industry is not an open market with open competition. In a typical supply/demand, open competition market place prices will decline if either supply is increased or demand is decreased. If you hold to the assumption that the oil/gas market is an open market then increasing oil supplies by whatever means necessary would reduce both oil prices and through the chain of production gasoline prices would be reduced.

    I view the oil/gasoline market to be closed market in which the open market supply/demand equation no longer applies. Why? There is no real competition in either the oil market or the refined petroleum market. In my opinion the equation for determing gas prices is very simple:

    (total gallons sold * price per gallon) - Fixed costs - variable costs = profit

    The fixed portions of the business equation are fixed costs and profit. What looks like the easy portion of the equation to fix is the variable cost (ie the reduction of oil prices) of producing refined gasoline from all economic reports I have read is actually the most difficult part of the equation to fix. Why? Don covered one of the reasons in that foreign sources of oil are simply cheaper to purchase than to produce domestically and if we can't produce it cheaper than we can buy it we will be driving the price up. Secondly the ecconomic reports I am familiar with indicate the best the US government could by tapping our domestic oil reserves is provide a short-term minor decrease to oil prices unless we are willing to make a major dent in current reserve projections which neither political party are inclined to support.

    This makes price per gallon the only easy portion of the equation to manipulate. The gloomy part of my thesis is that as we become more fuel efficient and the demand for gasoline decreases the price per gallon will increase to balance the equation.
     
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  8. pettyfog

    pettyfog Well-Known Member

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    Jan 4, 2005
    WHAT! That was when oil was selling for $20 - $45. I thought we were dealing with that as a 'KNOWN FACT. YES.. if the overhead/burden total cost to find drill and produce is $50 and it looks like oils hanging at $45, you sure think twice.

    Secondly, do you see where oil is right now? When it was at $145, the 'experts' told us that only 5-10% of that was spec, the rest was real projected value based on usage and shortfall against peak.
    Guess what!
    Hell look what happened just when the Dems announced they were going to allow a vote.

    WHy the hell do you think there are no drilling rigs available? Or did you know that? Because of Brazil's new findings, all the existing have been snapped up.
    Tell you one thing, they'll start building more rigs if the forbidden reserves are opened
    No one expects the price to ever again go below $60, at the lowest, at peak oil or not .
     
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  9. jmh

    jmh New Member

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    Location:
    Brooklyn, NY
    No.

    The question with regards to national security may be how to reduce the dependence on foreign oil.

    The question with regards to transportation policy, city and regional planning, technology research, etc., is how to reduce the dependence on oil.
     
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  10. BarryP

    BarryP New Member

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    Yes PF I am aware of the discoveries in Brazil. The discovery was reported late last year and estimates at that time were that it would take at least two years to drill the first well and the first well would produce in the low hundreds of thousands of barrells a day. It was also estimated that production levels could reach somewhere in the millions of barrels of oil a day sometime late in the next decade if not the one after that. Speculation was that initial drilling costs would be in the billions of dollars with each drilling rig alone costing nearly a billion dollars. It is probably not a question if that oil will bring down the cost per barrell but when it will happen. Until that day the oil market will be driven by the same players that have escalated costs to where they are today.

    The good news for the oil companies at the time was that oil was at near record high prices and that was going to help cover the initial investment costs of the drilling. That last part is not my opinion just the media speculation of the day so take it with a grain of salt.
     
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  11. FulhamAg

    FulhamAg New Member

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    So why exactly is it cheaper to produce foreign oil. Don had some points but left out the self inflicted aspect.

    No one has addressed the role of the weakened dollar in all of this. Using pre-2001 $ valuations, today's oil price is probably in the $75-90 range. And while the Dems vote may or may not have had an impact, you can't ignore the fact that OPEC and non-OPEC producers had increased production by 1.4MM bpod since the spring. Couple that with steadily decreasing demand in the US over the past year and the price/bbl seems more supply/demand driven than anything. Spec has gone down, but again, that has coincided more with supply/demand changes than anything else.

    Why is there a fear from the dem side of more drilling? If you believe the case Don has made, the oil co's won't utilize the opportunity anyway. And if you believe as Bradical does that we can get off of oil that quick, the majority of that production will never come to fruition. Worst case scenario, it's just another option instead of what we've done since the 70's...a whole lotta nothing. The only fear I can see is that we'd stop at that point and neither side is suggesting that.
     
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  12. HatterDon

    HatterDon Moderator

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    What Brazil needs, obviously, is their own Fox News.

    It's wonderful when your ideology can trump the natural laws of science ... . Of course, when your ideology routinely trumps all science, I suppose that's even easier.
     
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  13. pettyfog

    pettyfog Well-Known Member

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    Jan 4, 2005
    Don... how about we debate the science and engineering then.. instead of going off on your favorite political straw man.


    You guys still are not looking at the big picture.

    Note the Dem emphasis on funds for research, WHILE using the position that new drilling, because it takes years to get to production, doesnt do anything in the interim!

    The MAIN thing new drilling does is to hold down speculative prices and provide a backstop for the new technology.
    Research takes years. Taking proven research to production takes years and requires changes in infrastructure that also takes years. Supposedly that can be done in the same time frame.. in reality seldom does.

    You can right now, for example buy a kit to convert a Prius to a 'plug-in' hybrid greatly increasing the defacto mileage on that car. Yet the energy has to come from somewhere and it comes from the grid. And the Grid as well as the power plants are too near full capacity as it is.

    The answer there, of course is conservation but also new 'renewable sources' like the current touting of windpower.
    I hate to tell you but 'Wind Power', looked back on as history, will be the 'Polyester of Energy'.

    Solar on the other hand is promising as hell, still wont 'fix the problem but it works.
    'Build more nukes!'
    'Get more Natural Gas'
     
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  14. HatterDon

    HatterDon Moderator

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    Not exactly, Matt. My point is that the oil companies won't do the field studies, begin the drilling, and develop the infrastructure without handouts from the federal government. They have shown that they need incentives in order to do work that would make them a profit. Or, looking at it another way, they've learned that they can get billions of dollars in government incentives, so why should they make any moves without them.

    If everything they do in the development process is financed by the taxpayers, then it's worth it to them to develop even if the oil is too expensive to use.

    Nice work if you can get it.

    Well, I didn't because this is basically tangential to the question of "dependence on foreign oil." The fact that the dollar is in the toilet is the subject of another screed on how Republicans can spend six years creating this giant financial shithole, and then blame two Democrats in Congress for not stopping them from diving into it.

    Maybe later.
     
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  15. pettyfog

    pettyfog Well-Known Member

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    Because that is the set of playing rules they have been conditioned to. you might want to point us to a position paper that explains that Don.

    While you're at it...point us to a site that breaks out those excessive profits that the Dems keep howling about. Even with all this corporate welfare.

    The weakened dollar is indeed a factor. That was discussed in a previous version of this. What WAS a reasonable price of 40-45 is now 60 .. see above?!!!
    But yet, the Euro is not the oil currency.. STILL. Check it out as for why.

    Because the world economy still rotates around our economy. Wonder why! Maybe the same reason all those third world people are STILL trying to get into the US rather getting out?
     
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  16. FulhamAg

    FulhamAg New Member

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    Good point.

    My comments on the strength of the dollar were more in line with the supply & demand debate above.

    Exactly why I can't believe the Dems aren't running away with this election.
     
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  17. pettyfog

    pettyfog Well-Known Member

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    Because as I've pointed out ad nauseum, they are more interested in goring their favorite ox{es}, like OBSCENE PROFITS, than actually DOING ANYTHING to benefit us.

    Why dont you pay attention? Is there something I posted abve you dont understand? Or is it inconvenient to your world view.

    Financial SHITHOLE... Repubs? Want me to point out the political leanings of some of the people responsible for Fannie Mae, Freddie MAC.

    Let's start with a certain 'Johnson' .. irony intended.
     
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  18. HatterDon

    HatterDon Moderator

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    [quote="pettyfog] Why dont you pay attention? Is there something I posted abve you dont understand? Or is it inconvenient to your world view.

    [/quote]

    Have you ever considered the possibility that people who contribute to these threads occasionally are not responding directly to your posts, and might find something else pertinent to discuss? AND Have you ever considered the possiblity that some people might not accept that the debate is over simply because you've made your points?

    Just askin'
     
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  19. pettyfog

    pettyfog Well-Known Member

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    So when they suck up your party position memes, that's okay... and my lone voice {apparently} doesnt matter?

    I'm only looking for some truth over blather... you're giving them none. I'd like the discussion to be over reality in the science engineering and market place ... you give them the political speak..
     
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  20. pettyfog

    pettyfog Well-Known Member

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    Tell you waht... you are geographically smack in the middle of the T Boone program. why dont we JUST deal with T Boone's ideas and his agenda.

    THEN we could separate truth and reality from position politcs.
     
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