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

[Mental Gridlock]

Let the market set the price, not the government by restricting access.

I don't think the government is trying to set the price or restrict access. Looks like they are just trying to protect the environment. And rightfully so.

 

[wildman]

Good point. I own assault weapons so let me help you out. You don't have to "husband" natural resources. The market will determine when they are running out. As they wear thin, the price will go up. No need to hold them back. Let the market set the price, not the government by restricting access.

I disagree. Our dependence on foreign oil is a National Security issue. The problem is that every one except the Middle Eastern countries and Russia are at or past peak oil. The Arabs and Russia however are not. This means that if that these countries can manipulate the price to destroy our local alternatives (by flooding the market) and then suddenly cut supply to sky rocket the price (that may happen due to a war rather than a deliberate act). This would wreck our economy which needs a steady stream of energy at a predictable price.

Keep in mind, the word is predictable. If we depend only on one or two countries for our supply then it is anything but predictable. The reason the OCS has not been developed up to now has nothing to do with tree hugging or liberals. The Republicans controlled both the Congress and the President for years. They could have overturned the ban at any time. It is because the oil out in the OCS is so expensive that the oil companies didn't want to drill since there was no profit. This was due to the Saudis flooding the market with cheap oil. With no interest from the oil companies the Republicans didn't want to risk the political fallout so they did nothing. Even now they are afraid to invest their money because they are afraid the Saudis will flood the market again and lower prices.

We would be much better off to put a heavy tax foreign oil and create a local PREDICTABLE market for energy even if it cost us more in the short run.

 

[Astronuc]

This is interesting!

Can Offshore Drilling Really Make the U.S. Oil Independent?
Even if U.S. energy policy goes "drill baby drill," there will be no escape from the vicissitudes of the global oil market
By Emily Gertz
http://www.sciam.com/article.cfm?id=can-offshore-drilling-make-us-independent

. . . .

In fact, oil companies have yet to take advantage of the nearly 86 billion barrels of offshore oil in areas already available for leasing and development. So why are they chomping at the drill bit to open up the moratorium waters and survey them anew?

"Oil company stocks are valued in large part based on how much proved reserves they have," says Robert Kaufman, an expert on world oil markets and director of Boston University's Center for Energy and Environmental Studies. Translation: just having more promising leases in hand would be worth billions of dollars.

So it appears that the drive to drill oil is about artificially supporting the value of oil company stocks, and really has little or nothing to do about bringing the oil price down or ensuring oil supply or security of the US. Clearly, more efficient use of current energy supplies is necessary.

. . . .
"Do you think oil companies are going to sell [U.S. oil] to U.S. consumers for anything less than top price?," he asks. "The answer is no."

What if Congress mandated that the offshore oil could not be exported? "The question of how much of that product that comes out, where it goes, I don't think Congress can dictate," industry rep Penniman says. "It goes onto the market. It's a free market system…but it is up to Congress [to pass] the laws on what they will and won't open."

Such a move could in fact increase the nation's energy costs. "Any time you impose a constraint, like 'oil from Alaska cannot go to Japan,'" Kaufman notes, "you're saying, 'don't do the cheapest thing, do something more expensive.' So everybody pays a little more. Where the free market does work very efficiently is to minimize transportation costs" for oil—which are determined by many factors, including the location of the nearest refinery that can handle the particular characteristics of the crude oil being shipped.

Kaufman dismisses as "nonsense" any promises that offshore drilling could make the U.S. "oil independent." Even if it could somehow insulate itself from the ups and downs of the global oil market, he notes, the U.S. would have to make a huge leap in domestic oil production to replace what it buys from overseas.

"At its peak in production, which occurred in 1970s, the U.S. produced about 10 million [barrels of oil] a day," Kaufman says. "Now, after 30 years of fairly steady decline, we produce about five million barrels a day," whereas we consume 20 million barrels daily. "Whoever talks about oil independence has to tell a story about how we close a 15-million-barrel gap."

. . . .

 

[mheslep]

This is interesting!

Can Offshore Drilling Really Make the U.S. Oil Independent?
Even if U.S. energy policy goes "drill baby drill," there will be no escape from the vicissitudes of the global oil market
By Emily Gertz
http://www.sciam.com/article.cfm?id=can-offshore-drilling-make-us-independent
So it appears that the drive to drill oil is about artificially supporting the value of oil company stocks, and really has little or nothing to do about bringing the oil price down or ensuring oil supply or security of the US. Clearly, more efficient use of current energy supplies is necessary.

Note that the first quoted paragraph about leases was an unreferenced claim by the article author, with no connection to the statement by Kaufman the referenced expert.