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546 Comments
- eastwood24, on 06/19/2008, -24/+212I hate to play devil's advocate but here I go. (personal note: I am not a Republican)
The price of oil is inflated due to speculation, but that is necessary and so are record profits. The reality for the oil industry is the wells they are producing are not getting the easy returns anymore. Here in oklahoma we are averaging roughly five barrels of oil per well per day (a fraction of what it was a few decades ago). Or from another perspective, during the peak of domestic oil production in the U.S. (1970s) oil companies were pumping on average 6 gallons water per gallon oil. Today the ratio is closer to 100:1, indicating the fields have matured. Record profits are needed for future investment in wells that are not nearly as productive. i.e. overhead costs have exploded and no company would build new wells when future revenues are less then current liquid capital to build them. Add to the equation Peak Oil. Oil is a very global product. World production output has been flat since 2004, while demand (note China and India) is outpacing supply (also note U.S. consumption is down about 500,000 barrels annually, but this is easily ofset by growth in Asia). Add a devaluing dollar and you will begin to see that this is not a mass conspiracy organized by the oil industry to gauge the consumer. Do not fret though. eventually oil prices will rise to the point till alt energy is more competitive, ( i contend wind energy already is in this region) but it will be a bumpy 5 years or so. - Kythas, on 06/19/2008, -71/+213Buried for being misleading *****.
The fact is, the environmental lobby and the political left has been wanting higher gas prices for years (remember the cries for an additional $1 per gallon tax just a couple years ago?). They figure if the price of gas got too high, then people would stop driving their evil SUVs and more investment would begin to flow into alternative energy research.
While they were dead right on the results of expensive gas, it was what the green lobby was wanting, not the GOP.
The fact is, oil companies make only 4% profit on a gallon of gas. US oil companies drill only 5-10% of the oil consumed in the United States. Their primary purpose today is transportation of the crude oil (almost all of which is purchased overseas), refining the oil into a usable product, and the transport and sale of the final product. The actual pumping of oil is a very small part of the oil business today. Exxon-Mobile has announced it is getting out of the retail gas business because it's not financially worth it anymore to sell refined gasoline as the profit margin is so low. Expect other oil companies to follow suit.
We need to drill in ANWR and offshore. While this is not a long term solution, it will provide a medium term solution (there is no short term as any new drilling platforms will take 5-10 years to come online and productive). In the meantime we must develop other energy sources not dependent on fossil fuels for a true long term energy solution.
We need more nuclear power plants to provide clean energy for business and residential needs. Nuclear power is the cleanest and most efficient means to produce electricity today. When solar cells become more efficient that will begin to become a viable alternate source of energy, but I wouldn't expect that to happen for 5-15 years at least.
I have no idea what we're going to do for cars. Currently, the production of hydrogen is costly and energy intensive. Also, for the enviornmentalists, it's also worse for the environment than burning fossil fuels. I would think electric cars would be feasible if batteries become more efficient and we can produce electricity without dependence on fossil fuels (such as nuclear energy). Again, this is a ways off.
Again, there are no feasible short term solutions short of everyone in the US ditching their cars and riding motorcycles or scooters - which is starting to happen, I think. I'm seeing more and more scooters and motorcycles on the road lately. - Entroper, on 06/19/2008, -33/+139If we began drilling offshore, oil prices would actually fall, because speculators trading in oil futures would bet on prices to be lower in the future. But that's only because we are allowing the speculation in the first place, which has contributed greatly to the wide variability in oil prices we've seen over the last few years.
- BohicaTwentyTwo, on 06/19/2008, -13/+95Both candidates are forwarding two different ideas, but they are by no means mutually exclusive. McCain want's more drilling and refineries, Obama wants more incentives for alternative energy. WHY CAN'T WE DO BOTH?
- Frostman3D, on 06/19/2008, -58/+128I should have guessed this was daily Kos *****.
- active1x0, on 06/19/2008, -52/+116Thanks, DailyKos, for continuing to put forth the stupidest ideas on the internet.
- TCP7, on 06/19/2008, -105/+157It's a scam engineered by big oil interests to dupe the $4 per gallon weary public. Drilling/plundering our coasts for about 19 billion barrels of oil is akin to placing a Band-Aid on the hemorrhaging wound that is our oil-dependent, wasteful lifestyle.
- inactive, on 06/19/2008, -25/+73I get so tired of hearing juvenile half-wits talk about our "wasteful lifestyle". If you want to live in a mud hut in Burma, feel free. Me, I'm kinda glad that I live in a country with indoor plumbing, Plasma televisions, iPhones, broadband connections and computers. But then, you are too, considering that you're using at least some of the aforementioned technology to be a douchebag on Digg. So unless you're actually spending 95% of your time sitting around in a cave so as to not "waste" resources, I politely suggest that you shut the hell up.
- Kythas, on 06/19/2008, -4/+38We can and we should.
- SethEllis, on 06/19/2008, -6/+37The entire article is misleading. They spend all of this time complaining about unused oil leases, but this argument has already been ripped to shreds: http://digg.com/political_opinion/Let_s_Really_Loo ...
- TinternAbbot, on 06/19/2008, -34/+64Author of this article needs to take off the tin foil hat.
- sirloin, on 06/19/2008, -2/+28nope.. see the saudis have increased production.. no price drop.. the worldds reserves are at record highs, no price drop, mexico opened that huge feild to drilling, no price drop.
Iraq is producing more oil than pre invasion.. no price drop
SO I have to cry bs when anwar wil produce les than the recent saudi increase that did nothing for the price of oil
majority of oil price is the dollar tanking.. after that there is a small security premium that stays up so high due to the loud rhetoric on iran. - inactive, on 06/19/2008, -11/+33How about each of you mind your own business and live lifestyles however you choose. He can continue to drive up the price of his own gas, and you can walk to work.
- blatantninja, on 06/19/2008, -24/+46That has to be the most biased article I have read in months. "The oil and gas industry, buoyed by their Right-Wing minions are on a coordinated and well-thought out mission to end the twenty-six year old moratorium on off-shore oil and gas drilling. The goal? To at once embarrass Barack Obama, take down the Congressional Democrats, increase corporate profit and further drive up the price of energy." Conspiracy theory much? Seriously, who takes sites like this as a news source? It's as bad as the 9/11 truthers and those fundamentalist idiots that claim dinos hung out with Jesus.
- inactive, on 06/19/2008, -2/+23Speculation isn't technically necessary, in fact it's something of a problem in unregulated markets. In the US it's not so big of a deal because we have the CFTC who does a great job at regulating the very complex futures market. But the US commodities market (NYMEX) is really down in terms of volume compared to other markets around the world. Although I think what eastwood24 meant was "hedging". I can't be sure.
Hedging and futures markets are used to control volitility for companies who require oil on a regular basis. For instance, take heating oil. If you've ever purchased heating oil, you've noticed they quote you something called the "spot rate". The spot rate is the value they've calculated based on an oil future they purchased the previous season to give them a predictable cost for oil in the future. If they had waited to purchase oil on the open market, they would take on the risks that the price of oil could skyrocket. If the price of oil did skyrocket, you can be sure that smaller companies that depend on futures and the predictability that they bring, would surely go out of business.
Oil companies aren't involved in the futures markets beyond the "selling of oil". The reason Wall St. is in on it is that it is very difficult to calculate the price of a futures contract due to the amount of math involved. It's pretty fancy stuff, often times using methods as complex as the Stochastic Mesh method. Although, due to all the geopolitics and other oddball factors outside of economics, it's usually just a guessing game.
I understand that derivatives and futures can be confusing and therefore frustrating, but don't blame the markets. Lots of business use the for their intended purpose. What is being confused here is you hate speculators, not futures markets (I think.) These are people who have no purpose for the oil itself, and typically just resell the contracts once they go up in value and never exercise them. As I'm sure you can imagine, people taking on contracts, then letting the gain in value, before they sell them off drive up the price of futures while the guy who buys a futures contract then collects on the oil doesn't, or at least no more than the economic law of supply and demand dictates.
Hope that helps. - kaelyiesta, on 06/19/2008, -2/+23While speculation itself may not be illegal, some of the other (claimed) causes of high oil prices are:
http://digg.com/business_finance/Our_gas_shortage_ ...
As for this article, there are some obvious questions that should be answered before I'd agree with the conclusion. First, it is indeed a ban if coastal waters are off limits. Playing word games doesn't change this. Its good that they point out that there is plenty of open water farther out that is available for drilling, and that the oil industry only drills on 17% of that. However, that doesn't necessarily imply what they say. What if the rest of that water has no oil? What if it has oil(25 BILLION barrels they claim), but is too costly to get at? This bias in this article is nearly tangible. I have no doubt that the oil industry is a racket, but not for these reasons. If they answered these questions, then I'd be less hesitant. - regeya, on 06/19/2008, -0/+19Because, that would require accepting parts of plans from two different parties. Better to continue partisan sniping as Rome burns.
- SchrodingersCar, on 06/19/2008, -5/+24God. How many times do I have to explain this to you people? If you have a milkshake and I have a milkshake and I have a straw and my straw reaches across the room and starts to drink your milkshake. I drink your milkshake! I drink it up!
- mustafya, on 06/19/2008, -2/+20the speculation is neccessary to a degree to provide liquidity in the futures market. This liquidity maeks it easier to trade the futures which allows the hedgers to do their thing and reduce risk.
Basically speculators are the ones that assume the risk.
I will not though that there is such thing as over-speculation. This is what usually causes bubbles and is what I think is happening here. - bullhead2007, on 06/19/2008, -12/+29Yeah because that's TOTALLY feasable for people who have families and live in suburbs. Try living in Arizona *****. If you want a decent paying job and a decent neighborhood you're looking at a 30 minute drive on the lower end up to 2 hours.
Get off your high horse you pretentious prick. - OC73, on 06/19/2008, -39/+56Right wing drilling scam says left wing asshat from DailyKrap.
- warnergt, on 06/19/2008, -2/+18The federal government makes more money on gas by taxing it than the oil companies make in profits. Then, they won't let the oil companies invest the profit in finding more oil.
Congress (i.e. the Democratic party) is forcing us to enrich dictator-run oil-rich countries and preventing us from creating jobs and energy at home. - PabloMac, on 06/19/2008, -4/+20"Daily Kos" translates into "*****" in many languages.
- jphillips1, on 06/19/2008, -4/+19Interesting post. My question to you is, why is speculation necessary?
- rorster, on 06/19/2008, -9/+24I second that. Also, has anyone considered that increased gas prices increase the price of food worldwide? Do you realize how many more people will starve as a result of selfishness masked as environmentalism?
- archiesteel, on 06/19/2008, -1/+16Funny, I've got a few computers, game consoles, HDTV, broadband connection...and yet I don't drive a car to work.
I understand it's impossible for some people to look into transportation alternatives, but for the rest there's really no excuse except apathy/inertia. - EarlOfLade, on 06/19/2008, -0/+15I'm no tree hugger, my trips to the nature consist of 18 holes of golf, but it has been general knowledge for the past 40-50 years that the US city infrastructures would not be able to handle an oil crisis or a cost level prohibiting people from using their cars. So, I find the current US "anger" somewhat artificial.
- EBFoxbat, on 06/19/2008, -13/+27@Kythas I respect your opinion because it is articulated well however I fundamentally disagree. $4 is oppressive to the average American. This pushes alternative energy to the forefront which is where it needs to be for change to happen.
Optimistically there's 2 years worth of crude (and it's probably not sweet crude) off the coast of the US. If we add 20% to our current oil supply it'll last 10 years. It'll take 5 years or so to have any gasoline in your tank that came from off the US coast. You're now 5-15 years away and still just as dependent on oil.
The economic problem is that we're dependent on foreign oil. The ethical problem is that we're dependent on oil. If we move to alternatives we can solve both problems. If we drill off the coast we still will have the ethical and environmental problems.
We need "Big Oil" to become "Big Hydrogen." Someone has to be the first. It's a lot easier to make the case to the board of directors when it's a front page story.
While I don't think drilling off the ANWR will cause ecological harm, the emissions from the burned oil that comes out of the ANWR most certainly will.
No more band-aids. Let's use the technology and intelligence we have and solve this problem. - diggnate, on 06/19/2008, -0/+14Good grief, finally someone on Digg that knows a little about basic economics!
Global demand is up and will continue to rise, no matter how much Americans conserve. Forced conservation through windfall profit taxes won't lower global demand, and this won't lower the price (not that it would matter anyway, as soon as prices fell, demand would rise again).
Fact is, there is no "easy" solution to this problem, and certainly no Presidential candidate can help (regardless of what Obama might say). As you mentioned, this will be a tough 5 years or so, but the energy market will correct itself when the equilibrium price is reached. But the title of this story is true as well ... drilling off shore or in ANWR won't bring down the price much at all, if any.
Oil companies don't have the incentive to drill more with prices so high. The overhead of new drilling isn't offset by the revenue from that oil, especially considering the price drop with the introduction of new supply through new drilling. It simply wouldn't make much sense financially for them to increase supply. It would hurt the bottom line.
The BEST solution to this problem is to increase supply the retro-classical way, by removing the barriers to entry into the oil production industry, and building new refineries. Straight competition. The prospect of increased competitors producing new oil and gasoline. THAT would reduce, or at least stay the price increase of a barrel of oil.
I'd explain it more, but I've already gone long. - Sogui, on 06/19/2008, -20/+34Wow, a complete rambling from someone who has no idea how oil and gas drilling works.
PROTIP: The idea isn't to drill as much oil as possible in as short a period of time as possible, opening up other areas of the US coastline would allow for other drilling projects to begin that could help ease prices for the next few decades... drilling every last drop out of the Gulf of Mexico however would do absolutely nothing but push prices down for a couple years and then have them go higher than ever.
Buried as stupid. - cwmather, on 06/19/2008, -36/+50It's nice to see some people recognizing a hippie, fundamentalist, propaganda-laden article for what it is.
Cue the digg downs because I said hippie. - OMRebel, on 06/19/2008, -7/+21Those idiot democrats neglected to mention that it is "exploratory" area where there hasn't been any oil found.
Come on liberals - stop believing every lie you're told and do some research! - DaySeven, on 06/19/2008, -17/+30Are you sure it's not the tree-hugging liberals (loosely using that term) who want/have wanted to "protect the environment" without thinking about the resulting financial state of just about every person and business in this country?
I'll admit right now, I haven't done any research on the topic, but I'm detecting sensationalism in this article and the above comment. Pretty sure gas companies are making the same amount of money on $4/gal gas as they were when it was $2/gal. - ender7074, on 06/19/2008, -41/+54Stupid. Just stupid. So we should just go broke in the meantime because we are to stupid to go and get our own oil. How about you pay for my gas then?
- OMRebel, on 06/19/2008, -25/+37I'm sorry, but this is complete *****. The reason the price of oil increases is due to the speculators flooding the market. It has nothing to do with the "right wing".
Fact - there is enough shale oil that has been found in the NorthWest that would supply the oil demands of the U.S. for 200 years. Last time I checked, it wasn't the "right wing" bellyaching about saving some animal, or that it would destroy the environment. It was the liberal left.
Fact - Democrats have been in control of Congress for the past two years, after making pledges before they took over Congress to lower the price of gas. They haven't done a single thing. They got elected by a bunch of gullible morons.
Fact - Democrats want the price of oil to rise. The reason for that - NATIONALIZATION OF THE OIL INDUSTRY. They have perpetuated that oil prices are all due to the "big bad" oil companies. Those that are weak minded, and too damn lazy to research it, bit it hook, line, and sinker. They created a slave race of voters during the "Great Society" with welfare, and have trapped generations into relying on the government for their living. Now, with the possibility of implementing more socialism, they'll be in even more control. Don't believe me? Read this:
------------------------
House Democrats call for nationalization of refineries
Wednesday, Jun. 18 2008 House Democrats call for nationalization of refineries
Per Pergram-Capitol Hill
House Democrats responded to President's Bush's call for Congress to lift the moratorium on offshore drilling. This was at an on-camera press conference fed back live.
Among other things, the Democrats called for the government to own refineries so it could better control the flow of the oil supply.
They also reasserted that the reason the Appropriations Committee markup (where the vote on the amendment to lift the ban) was cancelled so they could focus on preparing the supplemental Iraq spending bill for tomorrow.
At an off-camera briefing, House Majority Leader Steny Hoyer (D-MD) said the same. And a senior Republican House Appropriations Committee aide adds that "there were multiple reasons for the postponement" including discussion on the supplemental. But the aide said there was the thought that Democrats may wish to avoid a debate today on energy amendments.
Here are the highlights from briefing
Rep. Maurice Hinchey (D-NY), member of the House Appropriations Committee and one of the most-ardent opponents of off-shore drilling
1115
We (the government) should own the refineries. Then we can control how much gets out into the market.
Hinchey on why they postponed the Appropriations markup
1119
I think there aren't enough votes for the Peterson amendment. It wasn't taken up (the Interior spending bill) because of the omnibus Appropriations bill. That's the main focus of the Appropriations Committee.
Rep. Rahm Emanuel (D-IL)
1116
They (Republicans) have a one-trick pony approach.
Rep. Nick Rahall (D-WV), Chairman of the Resources Committee
1106
You cannot drill your way out of this.
Rep. Ed Markey (D-MA), chairman of the House Select Committee on Global Warming
1111
The White House has become a ventriloquist for the oil and gas energy. The finger should be directed back at them. They had plenty of opportunity to (arrange an energy policy). But they did not put an energy policy in place.
Markey
1123
The governors of California and the governors of Florida are going to scream this is not the way to go.
Hinchey
1125
There are a lot of arrows in the President's quiver that he decided not use.
Hinchey
1128
What we do has to be in the interest of the American people. Not major corporations.
Emanuel
1131
It's like when I talk to my kids. Before we're going to talk about dessert, we've got to talk about what's on your plate. I hope I'm a little more successful with the oil industry than I am with my kids.
Markey7
1132
There are so many red herrings out there they might as well construct an aquarium.
From House Majoirity Leader Steny Hoyer (D-MD) when I asked him if the markup was canceled because of potential Democratic defections on the Peterson amendment..
"No. The reason the markups aren't going through is because we're trying to get the supplemental on the floor tomorrow."
And from a Senior Republican House Appropriations Aide..
"There were multiple reasons for the postponement including ongoing negotiations on the (supplemental) and a (Democratic) wish to avoid debate and votes on the energy amendments.
----------------------------------------
Just remember one thing - 'A government big enough to give you everything you want, is big enough to take away everything you have.' Thomas Jefferson - Foot56, on 06/19/2008, -12/+23"Congressional Democrats were quick to reject the push for lifting the drilling moratorium, saying oil companies already have 68 million acres offshore waters under lease that are not being developed."
- VoxRatio, on 06/19/2008, -2/+13I'll go a step further and say it's IMPERATIVE that we do both. As well as finding better ways to process and refine shale oil, since our reserves of shale in the rockies would put us at 3 TIMES the oil reserves of Saudi Arabia.
- TacoHell, on 06/19/2008, -8/+19"I'll admit right now, I haven't done any research on the topic"....."Pretty sure gas companies are making the same amount of money on $4/gal gas as they were when it was $2/gal."
Considering the record profits they have been posting, some research may be advisable. - inactive, on 06/19/2008, -6/+16I never thought I'd see the day where a rational idea came from you. Dammit, now I'm expecting it to start raining frogs.
- Chahrlie5, on 06/19/2008, -7/+17Too bad those acres don't have any ***** oil
- kuzotz, on 06/19/2008, -4/+14I wish I could live closer to my job, but not many people have that luxury.
- inactive, on 06/19/2008, -2/+12Economic Fail.
- burningmanstan, on 06/19/2008, -2/+12For 500 years at a much higher cost. Not every oil reserve in the world is easy to access, easy to extract, and easy to refine like saudi crude. We aren't running out of oil we are running out of cheap oil.
- razor150, on 06/19/2008, -1/+11Are you so simple to actually think opening everything up to drilling will actually help? The earliest assessment that if they started drilling today it wouldn't be for another 10 years that this oil would get on the market, some estimates are as late as 2030. Then they say it will have very little impact on oil prices.
Also, lets not forget about what this article is actually talking about where the oil companies are sitting on the majority of the leases for exploration they currently have right now waiting for oil prices to get even higher before drilling. - eh123, on 06/19/2008, -34/+43buried as dailykos spam
- MrHateMan, on 06/19/2008, -0/+9"Congress (i.e. the Democratic party)"
- joeanon, on 06/19/2008, -3/+12We use 7 billion barrels a year and it will take years to setup the drilling 55 billion barrels is a drop in the bucket.. OIL is dead, get over it, we need to bank on a new fuel and commit. Even if we did drill, that oil on the global market under a weak dollar.
BUT don't dare sell it only to Americans... that's communism.
Algae biofuel is the solution... it's the only renewable source that can produce enough oil per acre, far more than soy or corn, which is why it's actually practical. - ZenMojo, on 06/19/2008, -3/+12Enron loophole, anyone? Thank McCain campaign co-finance chair Phil Gramm's wife, Wendy, the former head of the CFTC for giving Enron special treatment and immediately leaving her job and joining their board of ***** directors.
***** McCain, ***** Big Oil. - inactive, on 06/19/2008, -9/+18It wouldn't surprise me to hear that hopes of the environmentalists are to see oil eclipse the price point of current alternative energy. Then they can say "look oil is $20 a gallon, but (insert energy here) is only $17, we should be going green to save money".
Even though no real money is saved. Oddly enough, those in the alt energy game become the new people in America to bitch about.
And we'll come full circle, while still being raped by somebody. -
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