Will Obama's New Plans for Domestic Oil Drilling Lower Gas Prices?

[russ_watters]

Though still sketchy on details, it appears Obama is opening up to increasing domestic oil drilling:

With gas topping $4 a gallon, President Barack Obama on Saturday will announce new plans to speed up domestic drilling for oil.

In his weekly address to the nation, the president will outline his plans for what he calls "safe and responsible" oil production.

The Obama administration will speed up the leasing process for the Alaska National Petroleum Reserve, give oil companies better financial incentives to use their leases and extend all drilling leases in the Gulf of Mexico so oil companies have more time to implement safety measures after the devastating BP oil spill.

He will also fast-forward the testing of areas off the east coast of the United States to see what oil resources are there and if it would be safe and commercially viable to drill.

The announcements come as the Republican-controlled House of Representatives recently passed several bills to open up drilling off the coasts of the United States.

http://www.cnn.com/2011/POLITICS/05/14/obama.weekly.address/index.html?eref=rss_latest

Since I'm not an Obama fan, I tend to see his broken promises as positive things (though I will still chastize him for making the bad promises in the first place!) and this is an example of that. It won't immediately cause oil to flow, but it will over the next few years provide more domestic oil production, which will help ease the high oil prices. In the short term, though, perhaps it will help ease the current speculative oil price bubble we're in, where oil prices are rising despite no current lack of supply.

 

[Ivan Seeking]

Though still sketchy on details, it appears Obama is opening up to increasing domestic oil drilling: http://www.cnn.com/2011/POLITICS/05/14/obama.weekly.address/index.html?eref=rss_latest

Since I'm not an Obama fan, I tend to see his broken promises as positive things (though I will still chastize him for making the bad promises in the first place!) and this is an example of that. It won't immediately cause oil to flow, but it will over the next few years provide more domestic oil production, which will help ease the high oil prices. In the short term, though, perhaps it will help ease the current speculative oil price bubble we're in, where oil prices are rising despite no current lack of supply.

Obama says offshore drilling stance nothing new

Sen. Barack Obama responded Saturday to criticism that he has changed his position on opposing offshore oil drilling.

Obama said Friday that he would be willing to compromise on his position against offshore oil drilling if it were part of a more overarching strategy to lower energy costs.

"My interest is in making sure we've got the kind of comprehensive energy policy that can bring down gas prices," Obama told The Palm Beach Post early into a two-day swing through Florida...

http://articles.cnn.com/2008-08-02/politics/campaign.wrap_1_offshore-oil-drilling-obama-gas-prices?_s=PM:POLITICS

That was August of 2008; before he was ever elected. As usual, you misrepresent his position and then claim he has changed his story. His position has always been that we need a responsible energy policy and not one that just caters to the profits of oil companies.

 

[russ_watters]

That was August of 2008; before he was ever elected. As usual, you misrepresent his position and then claim he has changed his story. His position has always been that we need a responsible energy policy and not one that just caters to the profits of oil companies.

So...you're saying this announcement wasn't a change in his position? Then what was the point of the announcement?!?

In any case, 'if you twist my arm and force me to compromise I'll accept it' isn't exactly rousing support.

Yes, I sometimes get confused by the ping-pong match that is some of Obama's positions and yes, I suppose if he didn't have a clearly identifiable position upon election it can't be called a "broken promise", but rather just another in a series of flip-flops on an issue. I'm not clear on if this is the 3rd or 4th or if he ever even had a "real" position*. That article you linked doesn't provide clarity - the writer doesn't even seem to know what Obama's position was at the time of the writing, but makes it clear that he's at best hedging and appears to be flipping. Nevertheless, the announcement today is a flip from his position yesterday.

Here's December 2010 (and afaik, where we were yesterday):

Pointing to the BP blowout and risks of a new environmental disaster, the Obama administration reversed itself Wednesday and promised not to pursue offshore drilling in the eastern Gulf of Mexico or anywhere else along the nation's East Coast.

http://www.msnbc.msn.com/id/4045579...obama-no-offshore-drilling-east-coast-waters/

Note that that was a flip-flop at the time, so that particular flip only lasted 6.5 months.

*I do, however, believe his real position, if he has one, is that he doesn't like and doesn't support domestic oil drilling. AFAIK, that was his first identifiable position and he only flipped the first time (as your article indicates) because of a lack of popular support.

 

[AlephZero]

In the short term, though, perhaps it will help ease the current speculative oil price bubble we're in, where oil prices are rising despite no current lack of supply.

"No current lack of supply" is hard to nail down, but ignoring the US domestic position, there is

1. Libya (zero supply)
2. Fukushima (increased demand)
3. China has recently moved from being a net exporter of diesel to a net importer, due to increased domestic demand.

Russia is also limiting exports of refined oil products, but that may be partly financial opportunism.

Those are all physical oil flows, not speculation.

Of course most of the fuel price difference between the US ($4 a gallon) and Europe ($8) is caused by taxation policy, but that may be a different topic.

 

[russ_watters]

"No current lack of supply" is hard to nail down...

No, it really isn't:

OPEC has over 4 million barrels per day of surplus capacity, more than 2.5 million bpd even if Libyan production was lost entirely. Commercial inventories of both crude and refined products are ample, more than enough to cover a temporary loss of output.

http://in.reuters.com/article/2011/02/24/idINIndia-55129620110224

 

[Ryumast3r]

So...you're saying this announcement wasn't a change in his position? Then what was the point of the announcement?!?

In any case, 'if you twist my arm and force me to compromise I'll accept it' isn't exactly rousing support.

He wasn't saying that, he wasn't saying that if you twist his arm enough he'll accept it, he was saying that he is open to the idea of opening up further offshore drilling areas and leases, AS LONG AS it was part of a larger picture of lowering our dependency on things like foreign oil. Basically, he would agree to open up more areas (mind you, leases are not just oil wells, leases are areas of water/land that can be drilled on... there's a difference), as long as other alternative sources were also included to help reduce our overall need for oil in general.

Here's December 2010 (and afaik, where we were yesterday): http://www.msnbc.msn.com/id/4045579...obama-no-offshore-drilling-east-coast-waters/

Note that that was a flip-flop at the time, so that particular flip only lasted 6.5 months.

*I do, however, believe his real position, if he has one, is that he doesn't like and doesn't support domestic oil drilling. AFAIK, that was his first identifiable position and he only flipped the first time (as your article indicates) because of a lack of popular support.

Read on in the article, past the first paragraph.

"The new drilling focus would be on areas with leases that are currently active in the central and western Gulf of Mexico."

"'In the Gulf and the Atlantic we are adjusting our strategy,' Salazar said. 'We believe the most appropriate course of action is to focus development on areas with existing leases and not expand to new areas at this time.'"

"The new plan allows potential drilling in Alaska, but officials said they will move cautiously before approving any leases."

I think the rest of the article speaks for itself.

They were saying after the BP oil spill that they will restrict the amount of wells they'll open up, yes, but that's because you can't exactly let BP happen 2 or 3 or 10 more times... it would be disastrous. Heck, even only having the one was disastrous. Before the BP oil spill he was more open to the idea of drilling (and in fact, a bunch of permits went out between the time he was elected and the BP oil spill happened), but after, as would be reasonable for any person, he became less willing.

Frankly, if he "flipped" on the issue after the giant oil spill you wouldn't be able to really blame him... I would've too honestly. I would've said "ohhh wait a minute there... we can't exactly let that happen again, let's be extremely cautious for at least a couple years before we totally open it up again, and, until then, let's only let a few people drill and see how it works out."

Then, if after say about a half a year, all the companies came up to me (or someone representing me) and told me that they have a bunch of new fool-proof ways to make sure a spill like that doesn't happen again and they have been tested or whatever, I'd change my position again saying "ok, I might be more willing to let you drill now since you've shown me, with reasonable evidence to back it up, that this can be done without hurting our country further."

 

[OmCheeto]

... I tend to see his broken promises as positive things

hmm... I like it when politicians break their bad promises too.

(though I will still chastize him for making the bad promises in the first place!)

That's how they get elected, in the first place.
It's when they make a good promise, and do the flip flop to the bad side, now that really chaps my hide.

and this is an example of that. It won't immediately cause oil to flow, but it will over the next few years provide more domestic oil production, which will help ease the high oil prices. In the short term, though, perhaps it will help ease the current speculative oil price bubble we're in, where oil prices are rising despite no current lack of supply.

I find this flip flop to be simply a pragmatic reaction to a dynamic set of problems.

1. We are being bled dry. Drill for oil.
2. We have a disastrous oil spill. Stop drilling.
3. The oil spill has stopped. See step one.

 

[Proton Soup]

No, it really isn't: http://in.reuters.com/article/2011/02/24/idINIndia-55129620110224

but capacity isn't supply. OPEC has to actually decide to supply it.


this really seems to be about gasoline hitting $4/gal. psychologically, it's a tipping point, and any further increase would certainly hurt his chances for re-election. and all that for a war in libya that was really about EU national interests, not US interests.

 

[drankin]

If he keeps flipping on his not-so-clear positions like this, I might just vote for him next time around! LOL

 

[russ_watters]

but capacity isn't supply.

You didn't read the full quote:

Commercial inventories of both crude and refined products are ample, more than enough to cover a temporary loss of output.

"Inventory" is oil that has already been supplied and is now sitting in storage.

 

[WhoWee]

http://articles.cnn.com/2008-08-02/politics/campaign.wrap_1_offshore-oil-drilling-obama-gas-prices?_s=PM:POLITICS

That was August of 2008; before he was ever elected. As usual, you misrepresent his position and then claim he has changed his story. His position has always been that we need a responsible energy policy and not one that just caters to the profits of oil companies.

Ivan's correct Russ - to be fair on the "flip-flop" assessment you have to look at EVERYTHING the President has said about energy including oil, coal, natural gas, and nuclear, plus all of the subsidized programs like ethanol, wind, and solar.

Then you have to compare what he says about US policy as compared to global policy. For instance, he thinks it's a great idea to drill off the coast of Brazil. I still can't figure out though why he doesn't try to broker a deal to Iran on wind and solar - so they won't need to develop nuclear for their peaceful energy needs?:uhh:

 

[Proton Soup]

You didn't read the full quote: "Inventory" is oil that has already been supplied and is now sitting in storage.

quantify "temporary".

 

[Char. Limit]

quantify "temporary".

I don't know how they're using it, but I tend to use "temporary" as meaning "less than six months", if that helps.

 

[Proton Soup]

I don't know how they're using it, but I tend to use "temporary" as meaning "less than six months", if that helps.

assuming that, temporary could run out before the 2012 election.

 

[Char. Limit]

assuming that, temporary could run out before the 2012 election.

This is indeed true.

 

[russ_watters]

quantify "temporary".

No. You're missing the point here. The point is that inventory is higher than normal, which makes the prices higher than is warranted by supply and demand.

 

[CAC1001]

His position has always been that we need a responsible energy policy and not one that just caters to the profits of oil companies.

Yup, instead one that caters to the profits of the solar panel makers and the windmill makers (like GE). The problem is all of that is pie-in-the-sky right now. Coal, oil, natural gas, etc...are the only ways we can power our cities and economy at the moment.

 

[gravenewworld]

Probably won't do much. Rather than drilling for more oil, our government should really be addressing the issues at the root of the cause of the drastic rise in the prices of commodities, , like speculation on Wall Street. As long as a few super wealthy i-bankers at places like JP Morgan and Goldman Sachs get rich off of making the world's poor starve and make all of middle class Americans pay more for oil, they'll continue to have enough money to to pay all of the politicians in our government to look away. Ever since they let the banks rewrite the rules a few years ago, everything has gone to absolute hell.

 

[CAC1001]

I don't think speculation is that simple. There are many people who bid up the price of commodities, and I would imagine outside of the United States too.

 

[WhoWee]

Probably won't do much. Rather than drilling for more oil, our government should really be addressing the issues at the root of the cause of the drastic rise in the prices of commodities, , like speculation on Wall Street. As long as a few super wealthy i-bankers at places like JP Morgan and Goldman Sachs get rich off of making the world's poor starve and make all of middle class Americans pay more for oil, they'll continue to have enough money to to pay all of the politicians in our government to look away. Ever since they let the banks rewrite the rules a few years ago, everything has gone to absolute hell.

While I agree they are comfy with the Obama Administration - somehow I don't think "a few super wealthy i-bankers at places like JP Morgan and Goldman Sachs" control the price of oil globally. Also, how does this relate to "making the world's poor starve"?