Home Forums Hunting & Shooting Hunter's Campfire Who here really thinks domestic drilling lowers the price of oil/gas?

Now we can talk for days (and I�m sure we will, because people here are just incapable to sticking to the subject) about why we should drill domestically for oil.

But I would like to keep this discussion focused on domestic drilling and how it lowers the price of oil or gas at the pump. The intent is to bust the myths associated with this subject.

It won't lower the price,no matter where it is pumped. Oil prices are controlled by the world market/specualators

+1

Ok I'll bite and here's a stab:
Aside from the obvious increase in supply eventually (Keeping in mind 87% of the continental shelf remains unexplored and untapped, not to mention the huge oil shale deposits out west, and of course ANWR and the Cuban Basin so that "we only have 3% of the world's petroleum reserves is a red herring),
the oil market is highly speculative (six cents on the dollar gets you in the game). Once the world realizes we are commited to this endeavor, the price of oil will drop. Yes it is a LOT cheaper for the Saudis to extract oil (about five bucks/barrel), but an unprecendented and unexpected commitment on our part will definitively go a long way to ameliorate the issue.

Good luck with this thread, Kevin.

No matter what happens, I know you had good intentions.

Certainly it lowers the price. It lowers it from the perspective that the speculators see the potential for increased supply and act accordingly and it lowers the price in the real world when the supply increases.

There are lots of reasons to drill and decreasing the price of oil overall is just one of them.

Of course it doesn't have anything to do with the price of oil if you believe the price is controlled by a vast conspiracy. Is that your position?

Imagine the current supply/demand structure, even with speculators. Now add 30% to the supply side, projected for the next 30 years. What do you think will happen? Think instead of the current supply/demand structure for the Winchester 63 .22LR rifle, and imagine if somebody found a warehouse with 4 million new in box rifles. What would that do to the price?

There's nothing magical about oil in terms of economics. It can come from anywhere in the world, and the final product is basically indistinguishable. If the US reduces imports by 30%, it will put a glut of oil on the market and prices will drop. OPEC will manipulate what they can, but that just brings things into balance in the new environment.

Supply and demand. While speculation is definitely a part, and has been responsible for many of the extreme price hikes, production plays a part as well, especially during recessions when demand is lower.

In the end speculation is based on a perceived future demand/production scenario. When it's perceived that a large producer may be effected by a catastrophic event, prices go up, when it's perceived that production will increase, prices go down.

The US as of March 2011, the US has the largest oil reserves in the world!! 163 billion barrels or 90 years worth at current usage!!!!!!!!

http://dailycaller.com/2011/03/10/new-report-says-u-s-has-largest-fossil-fuel-reserves-in-world/

Obama is desperate to "pretend" he is dropping oil prices and that is why he is head this charade of drilling until after he gets relected.

In 2008, Bush dropped oil prices from $147 a barrel to $32 by opening more drilling in 5 months.

Gas pump prices are driven by the "spot market" where people speculate on buying/selling contracts in the future. the bet (rightly so) has been that Obama will live up to his promise of raising gas prices to $5 a barrel. Only reality is starting to hit the clutz, that if gas stays where it is at, he will not be re-elected. Ergo, the false drilling shrill campaign until 2013 and then he cuts it off again to raise gas to his goal of $5 a gallon.

Drilling known reserves will kill the speculators and drop prices immediately. Known fact done before.

How stupid is it to let China and other countries drill right off our coast and not US companies.

FYI the oil companies make .02 per gallon consistently regardless of the price of a barrel. The difference is the spot market after it has been refined, not the oil companies.

BH

Why would oil companies risk billions of dollars in exploration, drilling, infrastructure, and refining capacity, all for the privilege of charging less money for their products?

The only reason Drilling occurs in many places is cause the price is high. Drilling will stop in many fields if the price drops to far. Makes drilling and completion too expensive.
Nautral Gas drilling is slowing down, oil drilling is up because the price of crude is up and natural gas is down.

Remember the gas and oil will still be in place 20 years from now.

A little example of reality.

March 2006, Prudhoe Bay suffers a leak, resulting in an August 2006 shutdown.

Oil prices in late 2005 - early 2006:

Nov - $53.20
Dec - $53.24
Jan - $57.85
Feb - $55.69
Mar - $55.64
LEAK discovered
Apr - $62.52
May - $64.40
Jun - $64.65
Jul - $67.71
Aug - $67.21

An 8% reduction in U.S. production resulted in a 10% increase in crude prices overnight and a 20% increase when it was announced that production would be shut down indefinitely.

Noooo..... U.S. production doesn't effect crude prices...

Well, the report actually said there were 143 billion bbl of recoverable oil and vast reserves of natural gas. Since we use 20-25 million bbl/day, the 143 billion gives us 17.3 years at current consumption.

To answer Kevin's question, yes, I do believe that domestic drilling will keep the speculative price swings in check because of supply/demand fundamentals. Whether the country has the political will to do so is another question entirely. We do have an enormous amount of fossil fuels of all types, the question is whether we have the political will to recover it, as the easily extracted energy is almost gone.

BTW, anyone who tries to sell you on electric vehicles has absolutely no knowledge of energy density and battery efficiency, or about the demands on our power distribution grid.

Here's a thought question, how much diesel fuel is the equivalent of a 10 hour charge for an electric vehicle?

Answer: .33 gallons. Energy density and BTU's favor diesel/gasoline over all other energy sources for motor vehicles. I would favor a diesel-electric or gasoline-electric hybrid over an all electric vehicle, but prefer an all diesel because of engine longevity.

Do you know the difference between profit and profit margin and more importantly do you know what the average profit margin the oil companies work with? The real issue is what I alluded to regarding the Saudis. Here's a hint, their profit margins are HUGE and where domestic production has to deal with OSHA,higher wages for the American worker and of course the ever present pestilence of unions, the Saudis can always have better control of the price. Still, when speculators can roll the dice by only exposing six cents on the dollar, we are going to have a volatile market. Also, higher prices recently are due to the huge decline in the dollar's value (about 30%) and of course we pay almost fifty cents/gallon to the Feds in the way of taxes. Bottom line still remains, drill here, drill now, pay less.

Don't forget the EPA Jorge. They just shut down a lease that Shell oil had paid $2.5 billion to drill, because they changed the air quality standards to such an extent that Shell couldn't meet them. That's what I mean by political will.

You have to have a product to sell.

All commodities are based on futures pricing. All companies that produce commodities, balance increasing production with stabilizing pricing....cattle, corn, oil, gold etc.

It does no good to rely on prices increasing from lowered production, if your (XYZ Corp) production is decreasing because you stopped expansion and your wells are drying up. You're just making ZZZ Corp's bottom line look good, who increased production to cover your decreasing/stagnant market share.

Absolutely the EPA. MArk that as another white elephant to be slain. They insist on among other things, over twenty six different blends of gas throughout the country based on junk science.

Speculators don't drill oil - oil companies do. Bringing more oil to the market will reduce speculation and the base cost of oil. Demanding that oil companies invest billions to undercut the price of their product ain't gonna happen.

I always felt that the USA should drill whenever and wherever we can and solely use our own crude. (if that is possible)

NOT relying on other countries...just our own.

I think fuel prices would be lower and we wouldnt be supporting other countries, just our own.