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

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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 wont increase enough to make much of a difference in supply world wide.
 
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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

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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.
 
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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?
 
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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?
 
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no, there isnt 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

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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

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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 isnt 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.
 

mheslep

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

Gokul43201

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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.
 
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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 [Broken]
 
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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

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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

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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

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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

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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.
 
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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.
 

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