Will lifting oil drilling bans in the U.S. lower the price of oil?

  • Context: News 
  • Thread starter Thread starter sketchtrack
  • Start date Start date
  • Tags Tags
    Lifting Oil
Click For Summary

Discussion Overview

The discussion revolves around the potential impact of lifting oil drilling bans in the U.S. on oil prices. Participants explore various arguments related to economic, political, and environmental implications of increased domestic oil production, as well as the broader context of global oil supply and demand.

Discussion Character

  • Debate/contested
  • Exploratory
  • Technical explanation
  • Conceptual clarification

Main Points Raised

  • Some participants argue that lifting drilling bans will not significantly lower oil prices, suggesting that any increase in domestic production would merely maintain current price levels rather than reduce them.
  • Others propose that market perception rather than actual supply changes may influence oil prices, with some believing that the announcement of drilling could lead to price drops due to speculative trading.
  • Concerns are raised about the limitations of refining capacity, indicating that even if more crude oil is produced, it may not lead to immediate price reductions at the pump.
  • Some participants highlight the role of the U.S. dollar's value in oil pricing, questioning why increased domestic production wouldn't impact prices given the dollar's international standing.
  • There are discussions about the long-term implications of lifting bans, with some suggesting it may only serve as a temporary solution to a larger issue of demand and reliance on imported oil.
  • Participants note that historical data shows the U.S. peaked in oil production in 1970, raising doubts about the effectiveness of new drilling in addressing current energy needs.
  • Some express skepticism about the oil companies' commitment to exploration, citing their flat spending on finding new fossil fuel deposits despite high profits.
  • There are calls for reputable studies to support claims about the long-term effects of lifting drilling bans and the transition to renewable energy sources.

Areas of Agreement / Disagreement

Participants do not reach a consensus on whether lifting drilling bans will lower oil prices. Multiple competing views are presented, with some asserting it will have little to no effect, while others suggest potential market reactions could influence prices.

Contextual Notes

Limitations include the lack of consensus on the role of speculation in oil pricing, the dependence on refining capacity for immediate price changes, and the unresolved nature of the long-term impacts of increased domestic drilling.

sketchtrack
My opinion is that it won't change much. I feel that the Bush administration and the oil companies are just pulling a fast one on us because Bush wants to lift these bans before he leaves office. The public are eating it all up.

There are two main arguments that they use to advocate lifting the bans.

1) Buying oil from foreign countries supports terrorism. This is kind of bogus. First of all, if we don't buy the oil, someone else will, and who might that be? China, Russia etc. By not buying foreign oil, we are giving more to our adversaries.

2) Drilling at home will lower the price. That is entirely dependent on the notion that oil companies will give us the oil cheaper out of pity. The reason this is, is because world wide production won't increase enough to make much of a difference in supply world wide.
 
Physics news on Phys.org
The quick answer on price is no. It will not lower the price of oil at all. The best we can do with aggressive drilling is to tread water where we are. Which my keep the price from rising even more than it would otherwise, but it will not lower it.

Lets look at the figures. If we open everything and give incentives to the oil companies to drill where it is very expensive, the estimate quantity of oil in the US (50% prop) is 140 billion barrels. That is about 20 years supply at the current consumption. But the physics of oil says that we can't get it all out over 20 years, it would probably take 60 years. That means we would be able to produce about 1/3 of our oil over that period. Hmmm, that is what we are producing right now.
 
Perhaps it has gone down already. I've been watching MSNBC, and since Bush came out and spoke about lifting the bans, the price of crude has dropped significantly. Congress would have to renew the drilling bans in late September, likely against the will of the American people.
 
I believe it will drop but it will be more from market perception than actual supply/demand. I believe the premise that we should drill because it will lower the price due increased availability is misleading. But it is, none-the-less, a good idea to drill for OUR OWN oil. For the sake of national security if nothing else.

It WILL bring more money and jobs. Something we can always use more of. If/when ANWR opens, I plan on getting into the petroleum industry myself. There will a lot of work to do for many years.
 
I know that a considerable portion of the reason why oil is priced so high is due to the value of the US dollar (internationally). If we were to increase the amount of oil produced (Here at home where the international value has less of an impact) why would it not have an impact at all?
 
not for a long time.
 
Does the fact that refineries are running near or at max capacity affect anything? It's nice having crude oil and all, but we can't even use it until it gets through refineries, so is there a point to having a big surplus of it?
 
no, there isn't really. but even if we started offshore drillin today, it would be years before we saw a drop of that at the pump. but if it wasnt so hard to build more refineries(there's about amillion miles of red tape and codes/regulations to adhere to), a large surplus would bring prices down.
 
Another problem is that most of the technology for this sort of drilling was developed in the North Sea - so you are going to either reinvent everythign or let a bunch of Scots and Norwegians in!
 
  • #10
Norwegians at least bring Metal (music) with them. What are the Scots good for?
 
  • #11
wildman said:
The quick answer on price is no. It will not lower the price of oil at all. The best we can do with aggressive drilling is to tread water where we are. Which my keep the price from rising even more than it would otherwise, but it will not lower it. ...
If that is true it is a very good argument for drilling, as absent drilling the implication is vastly higher oil prices than with.

thomasxc said:
no, there isn't really. but even if we started offshore drillin today, it would be years before we saw a drop of that at the pump. ...
Could you explain why you think the future expected supply of oil does not effect today's price? Anyone can go buy a futures contract for 2013 oil, on common markets, this instant. One can buy future oil further out than that through less accessible methods.
 
  • #12
WarPhalange said:
Norwegians at least bring Metal (music) with them. What are the Scots good for?

Beer
 
  • #13
Light crude dipped to $123 on Nymex today, a $24 drop from the peak a few days ago. Smells like correction time.
 
  • #14
WarPhalange said:
Norwegians at least bring Metal (music) with them. What are the Scots good for?

drankin said:
Beer
I was going to say they always have a copy of 'Braveheart' in the pocket ready to go.
 
  • #15
mheslep said:
If that is true it is a very good argument for drilling, as absent drilling the implication is vastly higher oil prices than with.

Could you explain why you think the future expected supply of oil does not effect today's price? Anyone can go buy a futures contract for 2013 oil, on common markets, this instant. One can buy future oil further out than that through less accessible methods.
And on the other hand, I have seen nothing concrete that says the announcement of drilling will help drop prices.

After all, the announcement of additional oil from Iraq last month (more than we'd get from ANWR, and much sooner too) did absolutely nothing to drop prices. What does seem to help though is declining demand from economic conditions.

So what do all the economic experts predict? Is there anyone out there with better credentials than Rep. Don Young that talks quantitatively about the effect on prices of drilling announcements? Last I checked, "they" didn't have a consensus on how big a role is played by speculation, and how much is driven purely by demand.
 
  • #16
drankin said:
Beer

Drinking it maybe.

In any case, you can personally thank Bill O'Reilly for the gas prices coming down.

http://www.newshounds.us/2005/11/30/bill_oreilly_takes_credit_for_lower_gas_prices.php
 
  • #17
In recent years the big oil companies despite making windfall profits have not shown much of an interest in oil exploration.

The percentage they spend to find new deposits of fossil fuels has remained flat for years, in the mid-single digits.

http://ap.google.com/article/ALeqM5jdMq36pfzhyHeyexEU51JX5sr1egD922FK000
 
Last edited by a moderator:
  • #18
Personally, lifting these bans is only a short term fix at best. The United States already peaked in oil production back in 1970, just as Hubbert predicted it would. Getting oil out of places we couldn't before like ANWR isn't going to do much for the U.S. addiction to it considering 35% of our supply is imported. Right now, demand is the problem and prices are the only thing that's repulsing it right now. Demand could totally strip supply and plus, anything we don't use will probably be mopped up by countries eager to develop.
 
  • #20
Herodotus said:
Personally, lifting these bans is only a short term fix at best. ...
A short term fix is just what is needed: a 10-40 year bridge over to better nuclear and renewable power.
 
  • #21
mheslep said:
A short term fix is just what is needed: a 10-40 year bridge over to better nuclear and renewable power.
But is it a short term fix? Will someone please show me a reputable study that concludes this?
 
  • #22
mheslep said:
A short term fix is just what is needed: a 10-40 year bridge over to better nuclear and renewable power.
It's a pity we didn't think of this 10years ago - then it would have been solved by now.
 
  • #23
I split of the discussion of nuclear energy, recycling Pu, proliferation and consequences, since it was way off-topic with respect to lifting bans on drilling in ANWR and off-shore in US.

New thread on nuclear energy and proliferation is
Feasibility of Nuclear Energy with Recycling (Pu) as Energy Solution in US
https://www.physicsforums.com/showthread.php?t=247478
 
  • #24
mgb_phys said:
It's a pity we didn't think of this 10years ago - then it would have been solved by now.

Yeah, if we had done it 10 years ago we would only have twenty years to wait for our 2 cent break at the pump.
 
  • #25
mheslep said:
If that is true it is a very good argument for drilling, as absent drilling the implication is vastly higher oil prices than with.

Could you explain why you think the future expected supply of oil does not effect today's price? Anyone can go buy a futures contract for 2013 oil, on common markets, this instant. One can buy future oil further out than that through less accessible methods.

The future expected supply does affect the price. It is that is isn't enough to make any difference. It may keep it from going up more than it would have though.
 
  • #26
I think we need a combination of both increased drilling, which may immediately lower prices because of future expected supply, and alternative energy research. Even if drilling doesn't immediately lower prices now, it eventually should. And that, combined with improving fuel efficiency with newer technology, creating viable alternative energy, and so forth, I think most definitely would. We need to come at the problem from all ends, IMO.
 
  • #27
WheelsRCool said:
I think we need a combination of both increased drilling, which may immediately lower prices because of future expected supply...
Multiple claims of this "immediately lower prices" - not a single reputable source cited to support this unjustified claim. Still waiting...
 
  • #28
Which is why I said it may lower prices.
 
  • #29
WheelsRCool said:
Which is why I said it may lower prices.

The only reason why it might lower prices is because oil companies are jacking the prices up more than they should be right now in an attempt to get us to let them drill. The price drop at peak production of the reserves would only be about 3% anyways though. The idea that knowing that we have that oil for later is going to immediately help lower prices could only mean one of two things, either the oil companies will drop the price back to normal (not overly inflated), or they drop the price by a fraction of a cent according to supply and demand.
 
  • #30
mheslep said:
A short term fix is just what is needed: a 10-40 year bridge over to better nuclear and renewable power.

Nuclear power has some major bad consequences because of the potential for disaster.[1], and especially all the nuclear waste generated which creates a problem for mankind for thousands of years.[2]

1 www.cnn.com/interactive/asianow/9910/history.nuclear.disaster/dates.exclude.html[/URL]

2 [PLAIN]http://gdi.ce.cmu.edu/gd/education/edradiocase.html
 
Last edited by a moderator:

Similar threads

News Will Obama's New Plans for Domestic Oil Drilling Lower Gas Prices?
  • · Replies 19 ·
Replies
19
Views
4K
News Does Offshore Drilling Impact Gas Prices as Claimed by McCain?
  • · Replies 54 ·
2
Replies
54
Views
7K
News How Did Chavez Outmaneuver the White House on U.S. Heating Oil?
  • · Replies 47 ·
2
Replies
47
Views
6K
News Would You Prioritize Sex or Oil in Political Leadership?
  • · Replies 29 ·
Replies
29
Views
5K
News Gusher of Lies: The Dangerous Delusions of Energy Independence
  • · Replies 133 ·
5
Replies
133
Views
28K
News Are We Funding Our Enemies Through Oil Purchases?
  • · Replies 3 ·
Replies
3
Views
3K
News U.S. Outsourcing and Oil Dealings Begin to Hit Home
  • · Replies 6 ·
Replies
6
Views
2K
News Was George W. Bush's Response to 9/11 Justified?
  • · Replies 88 ·
3
Replies
88
Views
14K
News How Can We Improve Mass Transit to Reduce Dependence on Cars?
  • · Replies 26 ·
Replies
26
Views
5K
News Halliburton pulled from Iraqi oil contract
  • · Replies 29 ·
Replies
29
Views
5K