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

[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.

 

[wildman]

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.

 

[Mk]

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.

 

[drankin]

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.

 

[B. Elliott]

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?

 

[thomasxc]

not for a long time.

 

[WarPhalange]

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?

 

[thomasxc]

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(theres about amillion miles of red tape and codes/regulations to adhere to), a large surplus would bring prices down.

 

[mgb_phys]

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!

 

[WarPhalange]

Norwegians at least bring Metal (music) with them. What are the Scots good for?

 

[mheslep]

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.

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.

 

[drankin]

Norwegians at least bring Metal (music) with them. What are the Scots good for?

Beer

 

[mheslep]

Light crude dipped to $123 on Nymex today, a $24 drop from the peak a few days ago. Smells like correction time.

 

[mheslep]

Norwegians at least bring Metal (music) with them. What are the Scots good for?

Beer

I was going to say they always have a copy of 'Braveheart' in the pocket ready to go.

 

[Gokul43201]

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.

 

[WarPhalange]

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

 

[edward]

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

 

[Herodotus]

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.

 

[mheslep]

...considering 35% of our supply is imported. ...

If 'our'=US: 66% in 2007
http://www.eia.doe.gov/emeu/aer/pdf/pages/sec5_3.pdf

 

[mheslep]

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.

 

[Gokul43201]

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?

 

[mgb_phys]

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.

 

[Astronuc]

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

 

[sketchtrack]

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.

 

[wildman]

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.

 

[WheelsRCool]

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.

 

[Gokul43201]

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...

 

[WheelsRCool]

Which is why I said it may lower prices.

 

[sketchtrack]

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.

 

[Mental Gridlock]

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

 

[Mental Gridlock]

If/when ANWR opens, I plan on getting into the petroleum industry myself.

ANWR can't be opened for oil exploitation because it's a nature preserve.

http://arctic.fws.gov/

 

[mheslep]

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

Note that in the US at least, no deaths have ever been attributed to commercial nuclear accidents. Second, though waste is a complicated problem, source [2] does not support your claim of 'problem for mankind.. thousands of years'.

 

[mheslep]

ANWR can't be opened for oil exploitation because it's a nature preserve.

http://arctic.fws.gov/

So? As your link states, ANWR is 1.5 million acres. The proposed drilling requires only a few dozen acres.

 

[WarPhalange]

Your house probably uses something like 500sqft of land if you have a lawn. It's okay, I'm only going to use one or two to put an outhouse there.

What do you say?

 

[mheslep]

So? As your link states, ANWR is 1.5 million acres. The proposed drilling requires only a few dozen acres.

Your house probably uses something like 500sqft of land if you have a lawn. It's okay, I'm only going to use one or two to put an outhouse there.

What do you say?

How do you even remotely compare the two? If people actually lived there and had a stake in the land in question, and they objected, perhaps you'd have a point. There is nobody, you don't. You may also want to check your math in making those comparisons. 100/1.5 million vs 10:500. Or, go up there. Dropping yourself randomly into ANWR, you could easily spend a lifetime random walking and never even lay eyes on the proposed drilling rigs.

 

[wildman]

Once again. ANWR contains less than 15 bbls (50% prob), a lot less than the OCS. While it once again will not hurt, it is not going to affect the price of oil in any significant manner either. The big thing about ANWR is that it is relatively cheap oil so the profits are much higher than in the OCS (where for many wells, the profits are near zero for even $100 a barrel oil).

 

[Astronuc]

This probably has a bigger and certainly an immediate impact of the price of oil.

http://news.yahoo.com/story/nm/20080812/us_nm/usa_oil_demand_dc;_ylt=AmTZMZvUzYKlnfXQ.jgi1gNH2ocA

WASHINGTON (Reuters) – U.S. oil demand during the first half of 2008 fell by an average 800,000 barrels per day (bpd) compared with the same period a year ago, the biggest volume decline in 26 years, the Energy Information Administration said on Tuesday.

In its latest monthly energy forecast, the EIA said the huge drop in demand was due to slower U.S. economic growth and the impact of high petroleum prices.

The drop in U.S. oil demand helped offset a 1.3-million bpd increase in petroleum consumption in nonindustrial countries during the first half of the year.

Meanwhile -

http://news.yahoo.com/story/nm/20080812/us_nm/volt_list_dc;_ylt=AlKzR3jOCp3Ncd36lVERJUpH2ocA

DETROIT (Reuters) – In a bid to show the demand for the upcoming all-electric Chevrolet Volt, a proponent of the car has released details of an unofficial waiting list for the vehicle with over 33,000 prospective buyers.

Lyle Dennis, a New York neurologist who has emerged as a prominent enthusiast for the battery-powered car from General Motors Corp, has been assembling a list of prospective Volt buyers for over a year through his Web site GM-Volt.com.

On Tuesday, Dennis released details gleaned from the list showing that 33,411 people had signed up to show their intent to buy a Volt when the rechargeable car is released in 2010.

The list shows the highest number of potential Volt buyers in California, Texas, Florida and Michigan. It also includes potential buyers from 46 countries outside the United States.

The average price buyers were willing to pay for the car was $31,261 -- . . . .

. . . .

 

[chemisttree]

It's really tough to say if drilling anywhere will have an effect. If OPEC lowers their collective production quota by an equivalent amount of new oil on the market as a result of US production nothing will change. If a lot of new oil hits the market from a number of sources and OPEC maintains or increases their production quota and demand remains flat or falls then the price will go down. But how likely is all that?

 

[edward]

As far as drilling the Outer Continental shelf goes, it won't happen anytime soon.

There is a shortage of the huge drilling ships that are used in deep water drilling.

http://www.nytimes.com/2008/06/19/business/19drillship.html?hp

Most of the existing ships are headed for Brazil. This includes the "West Polaris" which has been leased by Exxon.

http://www.bloomberg.com/apps/news?pid=20601087&sid=a8V5CHwdycrk&refer=home

 

[mheslep]

It's really tough to say if drilling anywhere will have an effect. If OPEC lowers their collective production quota by an equivalent amount of new oil on the market as a result of US production nothing will change. ...

Well OPEC's oil income will change, substantially lower, if they do that.

 

[rootX]

God lowered the prices

http://news.bbc.co.uk/2/hi/business/7566566.stm

 

[Gokul43201]

God lowered the prices

http://news.bbc.co.uk/2/hi/business/7566566.stm

Oh God!

 

[WarPhalange]

So is he also to blame for causing them to go so high in the first place? Sort of like taking $10 from someone and then giving them back $5 after a lot of begging and having them thank you for it?

 

[Mental Gridlock]

Note that in the US at least, no deaths have ever been attributed to commercial nuclear accidents. Second, though waste is a complicated problem, source [2] does not support your claim of 'problem for mankind.. thousands of years'.

Nuclear waste remains radioctive for thousands of years, thus it's a problem for thousands of years.

It's not like your biodegradable trash you throw out every week.

 

[Mental Gridlock]

So? As your link states, ANWR is 1.5 million acres. The proposed drilling requires only a few dozen acres.

So? So the point is it's a nature PRESERVE.

Do you know what the R stands for in ANWR? It means it's land put aside for the wildlife and habitat meant to be protected from human exploitation.

I don't care about how little you think the footprint will be. I don't care if you only need one micrometer of the land. You can't have ANY of it, or else it defeats the whole purpose of having a wilderness preserve in the first place. Once you drill there it opens the floodgates for a slippery slope. Drill for oil there today and tomorrow watch Yellowstone converted into a giant shopping mall. It's not about protecting a dozen acres. It's about protecting the sanctity of a wildlife refuge.

 

[mheslep]

Nuclear waste remains radioctive for thousands of years, thus it's a problem for thousands of years...

Some radio isotopes have long half lives, some do not. Radioactive materials are not a 'problem' just because they are radioactive. That's begging the question.

 

[mheslep]

So? So the point is it's a nature PRESERVE.

Do you know what the R stands for in ANWR? It means it's land put aside for the wildlife and habitat meant to be protected from human exploitation.

I don't care about how little you think the footprint will be. I don't care if you only need one micrometer of the land. You can't have ANY of it, or else it defeats the whole purpose of having a wilderness preserve in the first place.

You are begging the question again: "It's a Reserve because its a Reserve". The 'R' is an artificial title assigned by people, and it can just as easily be undone. There was no Reserve sign put at the entrance to ANWR at its creation. BTW, I "don't care" what you think I can or can not have.

Once you drill there it opens the floodgates for a slippery slope. Drill for oil there today and tomorrow watch Yellowstone converted into a giant shopping mall. It's not about protecting a dozen acres. It's about protecting the sanctity of a wildlife refuge.

Slippery slope arguments, esp. without evidence (and they never have any) are unpersuasive.

 

[mgb_phys]

As far as drilling the Outer Continental shelf goes, it won't happen anytime soon.

There is a shortage of the huge drilling ships that are used in deep water drilling.

And what's worse is that the Jones act says you can't use them.
All ships working between US ports must be built/maintained in US owned yards. So apart from suddenly catching up on 30years of Scottish/Norwegian rig technology you are going to have to find some 300m deep fjords around Galverston to build them in.

 

[Mental Gridlock]

You are begging the question again: "It's a Reserve because its a Reserve".

It's a reserve because it's the LAW. It's not just an arbitrary title. The land is protected by law so by going there and drilling it is in violation of the law.

BTW, I "don't care" what you think I can or can not have.

But your government cares.

Slippery slope arguments, esp. without evidence (and they never have any) are unpersuasive.

You said it yourself. The reserve status can easily be undone, so they can easily undo the protected status of all of your national parks. If they can easily take the ANWR protection away, then they can do the same for yellowstone and level it to make a giant shopping mall. They argue drilling in ANWR will have economic benefits, create jobs etc. so they will say the same thing to exploit other protected lands and build whatever they want on them. Once you set the precedent, it opens the floodgates. That's why it's important to stand to your principles and not let ANY encroachment happen, even one mm of protected land exploitation isn't tolerable for this reason.

And there is plenty of historical proof of the slippery slope in action. Like after 9/11 the government decided they needed to take away a certain right of the people to combat terrorism and keep the people safe. Some smart people opposed saying NO RIGHTS AT ALL should be taken. But they did anyway. Before you know it, rights have been vanishing left and right and are still vanishing and people just got used to it.

People's property is ONLY to be seized for public use, per the constitution. Yet once upon a time, somebody said it should be okay to take a certain property for a commercial use, to create jobs, economic revitalization or what have you. They allowed it. Then even the supreme court ruled it was okay. Now the US has a widespread epidemic of people's homes being taken to make way for corporations and people are having their houses taken left and right. All because at one point they thought it was acceptable. And if the government has no qualms about taking property from its people, they certainly won't care about taking it from animals.

Give them an inch and they take a mile. That's how your government works.

 

[Mental Gridlock]

Some radio isotopes have long half lives, some do not. Radioactive materials are not a 'problem' just because they are radioactive. That's begging the question.

They aren't a problem just because they are radioctive? Radioctive means they emit harmful radiation that poisons people and the environment; it's a problem by definition.

They are a "problem" because they contaminate the soil and water, and are a danger to people and animals.

Also it's not just like you can dump it somewhere and forget about it. Disposal sites must be monitered and protected and secured. Yet the waste can stay active for tens of thousands of years.. Even if you can protect the waste now, who is going to look after it 500 years from now? Or 5000? It's quite an unfair burden to place on our decendents, making them take care of the waste produced for our own use. And that's provided there even is a government in place in the future that can look after it.