Oil is a global commodity. It goes to the highest bidder. By the time any new oil would actually be on the market, which would be at least ten years,
This is one of the many energy myths propagated by the libs. It is essentially based on periods in the past, which usually involved years of leasing litigations and government red tape, after oil had actually been discovered. But with the government working in concert with the oil companies to confront this energy crisis, which has become a threat to national security, there is little reason to believe production would take as long as it has in the past. Not with todays sense of urgency.
But I never understood this argument anyway. What exactly is beasties's point? That solar and wind is more feasible and would produce results much faster than drilling? This is demonstrably false. The fact is, we have been sitting around with out thumbs up our butts when democrats could have made a difference years ago:
If President Clinton hadn't vetoed the idea of drilling in ANWR back in 1995, we'd have that oil on the market today. Ditto if Congress had approved ANWR drilling in 2002, when President Bush requested it.
Even so, the larger point is false anyway. New oil will be flowing in some cases within three to four years, according to industry estimates. But the impact on prices will be immediate. Why? Because markets would suddenly have to discount future oil prices for the expected gain in oil supply. That would cause oil prices, especially in futures markets, to drop.
By the way, this isn't just conjecture. President Reagan, within a week of his inaugural in 1981, removed domestic controls on oil. Energy prices began tumbling almost immediately, with oil falling from $34 a barrel in early 1981 to just $11 by 1986.
It worked before, and it'll work again -
http://www.ibdeditorials.com/IBDArticle ... 7602247481
This reinforces the same thing I said earlier. When President Bush recently removed the executive ban on drilling, gasoline prices dropped by 17 percent over the next few months. It was as low as $3.38 in Atlanta a few weeks ago, down from $4.10 in March. This, with no benefit of increase in oil production. How is this possible if what beastie says is true? OPEC responds to politics. It responds to wars. It responds to perceived "tensions" that might ensue. It has responded to America's action to become self sufficient, and it will again. But the main point is that we have to become energy independent and now is the best time to start. Even if it takes ten years, ten years is better than never.
Further, democrats have been playing a numbers game while contradicting themselves. Democratic Senator Chuck Shumer argued strongly that if Saudi Arabia had increased its output by a million barrels a day, that it would cause gas prices to immediately drop by 62 cents. This is how he argued on May 13th, 2008 on the Senate floor:
"If Saudi Arabia were to increase its production by 1 million barrels per day that translates to a reduction of 20 percent to 25 percent in the world price of crude oil, and crude oil prices could fall by more than $25 dollar per barrel from its current level of $126 per barrel. In turn, that would lower the price of gasoline between 13 percent and 17 percent, or by more than 62 cents off the expected summer regular-grade price - offering much needed relief to struggling families."
A week later the following took place during the Senate Judiciary Committee hearings:
SENATOR CHUCK SCHUMER, (D-NY): Next question is for, I guess -- let me ask any of you. If Iraq -- sorry, if Saudi Arabia increased its production tomorrow of a million barrels of oil a day, let's just assume they do -- we know they can, because they've -- it's lower by about several hundred thousand barrels a day than it was in 2005, and they've added production -- how much would the price of oil go down in the next few months? Just if you can give me an approximate guess. Does anyone want to hazard a guess?
PETER ROBERTSON, VICE CHAIRMAN OF THE BOARD, CHEVRON CORPORATION: No. I mean I think it would go down. I think the real -- what really is important for the market is what's going to happen in the future. Maybe they could produce a million barrels a day for some short...
SCHUMER: Well, what if they committed for two years?
ROBERTSON: I think it would make a difference. And I think if we all, any of us that showed that we were going to increase production by some significant amount over a significant period of time, would make a difference.
SCHUMER: And most people -- the estimates I've seen, not done by me, but from experts, say it could go down -- if they did a million barrels of oil a day increase from today, it would go down about -- the translation to gasoline would be about $.50 a gallon, maybe $.62.
Does anyone think that's out of line, seriously out of line?
STEPHEN SIMON, SENIOR VICE PRESIDENT, EXXON MOBIL CORPORATION: I would have no way of estimating that, Senator.
SCHUMER: Right. How about -- OK, would it go down significantly? Does anyone disagree that it would go down significantly? A million barrels a day?
SIMON: One point I would like to make, Senator, is when you look at the market today, it is well supplied. And so, if you take a well- supplied market and then you throw another million barrels a day in it, yes, it will go down.
SCHUMER: Right. And if you all are preaching to us that you need new exploration so you can find more oil, which is something I don't always disagree with. I support it. I was -- with a handful of Democrats to support more drilling in the east Gulf so we could do just that.
Then clearly a million barrels a day production now would have a significant effect, because you can't -- it's a contradiction, isn't it, that you finding new supplies and producing them will keep the price in line, but Saudi just pumping a million barrels wouldn't keep the price in line? Right?
Mr. Robertson, you're shaking your head.
ROBERTSON: No, I not shaking -- I'm nodding...
SCHUMER: Shaking your head yes.
ROBERTSON: I think that the really critical thing here are signals to the world that there's a determination to increase production for the foreseeable future.
SCHUMER: Correct.
ROBERTSON: We could do that in our country, I believe...
SCHUMER: The Saudis could do it tomorrow, couldn't they?
ROBERTSON: Well, the Saudis are making significant investments to increase capacity. They could.
(CROSSTALK)
SCHUMER: But right now...
ROBERTSON: ... in the world that made a significant -- you're talking about a short term -- anywhere in the world that made a commitment for the long term to increase production by a significant amount would have an effect on oil...
SCHUMER: But here, Senator Kohl was asking you about OPEC and how OPEC restrains supply and that keeps the price high. And you all go along with OPEC.
SCHUMER: Now, the bottom line is, if there weren't an OPEC, and if Saudi -- or within OPEC -- Saudi decided to do what they could do tomorrow -- from what I understand they have 2 million barrels more of capacity -- the price would go down significantly.
And I think there's agreement from all of you about that, not that you can force them to do it. No one is saying that. And I see that everyone's nodding.
Anyone disagree with that?
SIMON: Again, when you look at the market today, though, Senator, it is well supplied.
SCHUMER: I didn't ask you that. I asked you -- well supplied is a very flexible definition. OK? I asked you -- I want to now then ask you, yes or no, if Saudi Arabia tomorrow said for the rest of their -- for the next three years they're increasing supply by a million barrels a day and it will not stop, would the price go down significantly?
SIMON: It would go down today because then you be flooding the market with an extra million barrels a day to a well-supplied market.
SCHUMER: OK.
Schumer's daily magic number of 1 million barrels
is the exact increase experts believe we would today be pumping through the Alyeska pipeline had Bill Clinton not vetoed ANWR drilling back in 1995. And even the most rabid anti-domestic-drilling Democrats don't take issue with that figure.
So then, the increase he demands of "Bush's friends," the Saudis - which he claims would reduce prices by up to 25 percent -- is the exact amount he argued earlier this month would only "reduce the price of oil by a penny" were it coming from ANWR - eco-sacred breeding ground of the Porcupine Caribou.
So, Schumer was chastising these executives for wanting to explore for more oil while getting them to admit an additional million barrels available per day would bring prices down significantly even though he believes the extra production if it came from ANWR would be totally irrelevant.
Why weren't media all over this glaring hypocrisy?
http://newsbusters.org/blogs/noel-shepp ... g-flipflop China's geometrically escalating demand for oil will double the world's demand for oil by 2025. So any oil produced by opening places like anwar would go on the market at the same time that China would be replacing the US as the major consumer of oil. The oil companies will sell that anwar oil to the highest bidder.
Beastie simply doesn't understand how the oil market works. An increase in output will result in lower prices. All experts agree with this. This is supply-demand 101. And for the most part, OPEC determines the price by controlling the flow of production. China's increase in demand is irrelevant to the point being made here. Even if China is buying oil from American before it can put it to use for itself, then this only means China is not buying as much as it used to from OPEC countries, which means demand, as far as OPEC is concerned, has dropped dramatically since its second biggest buyers is buying elsewhere. Beastie envisions America going through all this trouble to tap into its own resources, just so it can sell it all off to China, as if it we would be forced to do this by some cosmic petro law she has in mind.
This isn't rocket science. The reason this country is in such serious trouble is because its citizens act like it is.
ROFL.
This, coming from someone who thinks that, without our say-so, China is just going to buy up all our oil if we end up going through a concerted decade long plan to acquire it. Even in this weird scenario, nothing changes the fact that the price of oil in twenty years will be far less with America as a major oil producer. We're the number one consumer of oil in the world. We drink nearly three times as much oil as China. If we become energy independent, as Brazil has become - after their recent discoveries off their own coast - and stop importing oil from other countries, then why the hell would China want to buy from America when OPEC will have had no choice to to drop their prices through the floor?
In any event, beastie and other libs miss the point, and they have distorted the argument:
It is government's job to think long term, which is exactly why Congress should allow more offshore oil exploration. I've already written in this space about the absurd moratorium on oil-shale production. As far as offshore drilling goes, what's most frustrating is we can't even have an informed debate.
There may be very little undiscovered oil in the outer continental shelf (OCS), or there may be a multiple oil fields the size of Tupi - the monster field that Petrobras discovered off the coast of Rio de Janeiro in 2006. We just don't know how much oil is out there
because oil companies have no incentive to do the costly seismic surveys required to find out. -
http://money.cnn.com/2008/08/13/news/ec ... g.fortune/
“All knowledge of reality starts from experience and ends in it...Propositions arrived at by purely logical means are completely empty as regards reality." - Albert Einstein