Why drilling won't help with the oil crisis

sorry...keep being interrupted, so I submit instead of losing all my typing.

Peel . response to your last post: I don't think that the threat of drilling is affecting the price. It's too long term, even for the futures markets.
 
jimpeel said:
The threat of drilling, combined with the current slippage in demand, has caused the price to slump below $100/bbl.
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There's no evidence that the threat of drilling is having any effect Jimbo.

"Oil prices swung higher Tuesday, snapping a four-day plunge as investors temporarily halted their frantic selling to see whether the government's sweeping economic bailout can stem a widening global downturn."
 
Oil down below $87/bbl

Supply and demand at work. Note how the experts are, once again, surprised.

http://biz.yahoo.com/ap/081008/oil_prices.html

Oil down after surprise jump in US crude supplies
Wednesday October 8, 12:03 pm ET
By Stevenson Jacobs, AP Business Writer

Oil prices down below $87 after government reports unexpected jump in US crude supplies

NEW YORK (AP) -- Oil prices tumbled to their lowest level this year, accelerating their declines Wednesday after the government offered further evidence that a souring economy is forcing Americans to drive less.

Light, sweet crude for November delivery fell $3.30 to $86.76 in midday trading on the New York Mercantile Exchange, after earlier dipping to $86.05, the lowest level since Dec. 6, 2007.

Crude has now fallen 41 percent since surging to a all-time record $147.27 a barrel on July 11.

Falling oil prices have given consumers some relief at the gas pump. A gallon of regular fell about 3 cents overnight to a new national average of $3.447 a gallon Wednesday, but remain well above the year-ago average of $2.765 a gallon, according to auto club AAA, the Oil Price Information Service and Wright Express.

Crude's latest losses came after the government reported a surprise jump in U.S. crude inventories and a bigger-than-expected increase in gasoline supplies.

<more>
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Note it's not "the experts" but "the government" in that article.

Wondering what your point is though.
 
Gato_Solo said:
Those are the same arguments used after the 'oil crisis' during the 1980's. Fact is...it doesn't matter. If you notice...the price of oil dropped below 100 USD per barrel, and is looking to fall further. Why? Demand in the US is dropping. Funny how just the threat of drilling can be linked to that drop, innit? What you refuse to understand is that drilling will bring up supply, and slow the continued flow of wealth from the West to the Middle East. What you refuse to understand is that, during those 10 years it takes to get that oil out of the ground, we can invest in the technologies necessary to get off the teat. What you refuse to understand is that there is no way that drilling will hurt the current situation...only help. Go ahead...bring up the environment yet again, and I'll point to Cuba and China drilling to their heart's content less than 90 miles from the coast of Florida with no legal ramifications.
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You're thinking locally, when you should be thinking globally. Any drop of oil drilled offshore is going to go into the world oil market and be priced as such. The middle-east will continue to receive American greenbacks based on the percentage of oil they produce vs. overall world production. If you manage to quadruple your oil production due to off-shore drilling (one hell of an increase in the number of wells, btw) thus equaling the amount that you buy yearly/daily, the overall change in what percentage of overall money going to the Middle-East doesn't change that radically.

Keeping the overall supply/demand in mind...China and India are increasing their demand and will continue to do so because of what's happening with the 1st world economy. With every increase in their demand, your share of the global production pie will lessen. The middle-eastern countries don't have to pay billions of dollars to increase their output in the same way as off-shore drilling will, nor are they limited by a timeline of 10+ years.

While you're planning on drilling, and buying/building platforms, the market demand will outstrip your potential output.

I don't have a lot of time to type this out right now. Basically, you're making a bet meant to stop 'sending American money into foreign hands', which sounds good on TV/radio/internet...but the realistic outcome will do no such thing.
 
MrBishop said:
You're thinking locally, when you should be thinking globally. Any drop of oil drilled offshore is going to go into the world oil market and be priced as such. The middle-east will continue to receive American greenbacks based on the percentage of oil they produce vs. overall world production. If you manage to quadruple your oil production due to off-shore drilling (one hell of an increase in the number of wells, btw) thus equaling the amount that you buy yearly/daily, the overall change in what percentage of overall money going to the Middle-East doesn't change that radically.
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I think you're wrong on that. You, yourself, cited the 12 cent per gallon drop once the oil sands came on line. Add to that the actual cost of getting the oil out of the sand, and you have a lower price by drilling. This, however, says nothing about speculation...the real driving force behind the price of oil. Bringing more oil on-line will affect that speculation negatively, which will lower oil even more. If you really want to see the bottom drop out, just open a few more refineries. NIMBY be-damned.

Bish said:
Keeping the overall supply/demand in mind...China and India are increasing their demand and will continue to do so because of what's happening with the 1st world economy. With every increase in their demand, your share of the global production pie will lessen. The middle-eastern countries don't have to pay billions of dollars to increase their output in the same way as off-shore drilling will, nor are they limited by a timeline of 10+ years.

While you're planning on drilling, and buying/building platforms, the market demand will outstrip your potential output.

I don't have a lot of time to type this out right now. Basically, you're making a bet meant to stop 'sending American money into foreign hands', which sounds good on TV/radio/internet...but the realistic outcome will do no such thing.
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However...the demand will still increase, making prices higher unless you can increase supply. Its not rocket science, no matter what you'd like us to believe. Drilling will slow the crisis long enough to get other sources on-line...provided we have an intelligent debate. What you are subscribing to is...in a word...defeatism. We shouldn't drill because it will make no difference. That is where your argument falls flat. An increased supply to close in on the increasing demand is the only way to decrease prices.
 
Gato_Solo said:
However...the demand will still increase, making prices higher unless you can increase supply. Its not rocket science, no matter what you'd like us to believe. Drilling will slow the crisis long enough to get other sources on-line...provided we have an intelligent debate. What you are subscribing to is...in a word...defeatism. We shouldn't drill because it will make no difference. That is where your argument falls flat. An increased supply to close in on the increasing demand is the only way to decrease prices.
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Paying less per gallon isn't the end-goal (or it shouldn't be). Having to buy less oil is the end goal..getting off the teat.

I'm saying that you're advocating drilling for more of the product that you're trying to stop using, at a great financial expense and potentially a great environmental expense as well. It's like a crack-addict looking for one more hit whilst ont he way to his AA meeting.

What do you want to do..get off of oil or drop the prices so that you don't have to get off of oil?
 
And what he's saying is, until that time, suckle on your own teet instead of someone else's, keep the money in North America, and use it for developing said alternatives ... something no 'oil producing' country will do.
 
Professur said:
And what he's saying is, until that time, suckle on your own teet instead of someone else's, keep the money in North America, and use it for developing said alternatives ... something no 'oil producing' country will do.
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Again...I repeat. He won't be able to 'suckle his own teat' for 10+ years and even then, will only be reducing his percentage be a very small amount. The money still goes overseas plus there's the added expense of building the platforms.

Best to reduce the usage to what they already produce, or closer. Then you'd be sticking it to the other markets for real...and be able to thumb your nose at'em at the same time.
 
MrBishop said:
Best to reduce the usage to what they already produce, or closer. Then you'd be sticking it to the other markets for real...and be able to thumb your nose at'em at the same time.
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Evidently a collapsing economy does this quite nicely. Unfortunately there are ancillary problem.
 
MrBishop said:
Again...I repeat. He won't be able to 'suckle his own teat' for 10+ years and even then, will only be reducing his percentage be a very small amount. The money still goes overseas plus there's the added expense of building the platforms.
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And again, I repeat...its that kind of constipated thinking that started this crisis at least 10 years ago. You can't have it both ways, Bish. You, once again, miss the point, and you're missing it deliberately.

Bish said:
Best to reduce the usage to what they already produce, or closer. Then you'd be sticking it to the other markets for real...and be able to thumb your nose at'em at the same time.
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It's much easier to thumb your nose when you have your own supply, or are...at least...developing your own supply. See N Korea, Iran, and nuclear weapons.
 
You'd have to nationalize oil production...and take yourself out of the oil-producing nation status...thus avoiding world-market prices.
 
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