Missed in the offshore oil ...

[Bunz]

A few things I will chime in with.

While there is abundant oil offshore of the US, there are several factors that make this whole scenario problematic. While I support offshore drilling in some areas, there are some where it would be unwise to for various reasons.

Making the coast wide open though, or anything along those lines is unneeded. There are millions of acres onshore and offshore that are already open and leased by oil companies just waiting to be developed. But the problem is that, the oil companies have little incentive to do so. I remember 10 years ago when the price of oil was such that investment was minimal. Now that prices are high, and companies are raking in unthinkable amounts of profit, there is no good reason for them as a company beholden only to thier share holders, to spend billions more on increasing production here, and therefore lowering the price of oil. It is a giant catch-22 that companies like Exxon reap the benefits of, while the consumer is stuck with the burden.

The other thing that has only been slightly mentioned is the quality, accessibility, and profitability of much of the reserves is questionable. For instance, there is a ton of shale oil under the Dakotas that is very costly to produce into gasoline. Like it or not, the best quality oil, light sweet crude comes mostly from the ME.

Whilst the solution is not coming tomorrow. There is considerable work being done on the Alaska North Slope in taking back the leases Exxon holds for the Pt. Thompson field and has for the last 30 years failed to develop. Look for either BP and Conaco Phillips, and possibly Shell to jump all over that and begin work immediately on bringing that oil to market in less than 5 years. Also, the Alaska NatGas Pipeline went through a major hurdle last week with the Alaska Legislature and within 10 years, the proven natgas reserves to the tune of 35TRILLION cubic feet, tying into Canadian pipes, will be heating and powering the midwest for a few decades in reality.

Personally, I am a big fan of natural gas powered things over oil.

 

[BigRob]

Are you more sure about this than you were about real estate peaking Bob?

I still think real estate has more time to fall. There have been signs of a bottom, but I think (in some markets) it will continue to go down. If you are going to get in on it, just make sure it is a good market, you get a good deal, and there are signs it will come back.

 

[Libsmasher]

A few things I will chime in with.

While there is abundant oil offshore of the US, there are several factors that make this whole scenario problematic. While I support offshore drilling in some areas, there are some where it would be unwise to for various reasons.

Making the coast wide open though, or anything along those lines is unneeded.

Whaaaaaaaat???

There are millions of acres onshore and offshore that are already open and leased by oil companies just waiting to be developed. But the problem is that, the oil companies have little incentive to do so. I remember 10 years ago when the price of oil was such that investment was minimal. Now that prices are high, and companies are raking in unthinkable amounts of profit, there is no good reason for them as a company beholden only to thier share holders, to spend billions more on increasing production here, and therefore lowering the price of oil. It is a giant catch-22 that companies like Exxon reap the benefits of, while the consumer is stuck with the burden.

In fact, they lave a LEGAL FEDUCIARY DUTY to maximize profits of the corporation. And what you say seems counter-intuitive: if lots of profits are good, wouldn't even more profits be better? Also, libs keep saying offshore drilling WON'T lower the cost of oil - so which is it? It will, or it won't? Also, the lowering of price doesn't necessarily lowering revenue - study a hypothetical price-demand curve:

Revenue is maximized when the rectangle (sales x unit price) is largest.

The other thing that has only been slightly mentioned is the quality, accessibility, and profitability of much of the reserves is questionable. For instance, there is a ton of shale oil under the Dakotas that is very costly to produce into gasoline. Like it or not, the best quality oil, light sweet crude comes mostly from the ME.

I would like to know what those factors are for the the zillions of acres of leased land that libs keep talking about.

Personally, I am a big fan of natural gas powered things over oil.

Unfortunately, the infrastaructure is not in place to support natural gas powered cars, and it shouldn't be even tried, because it is clear to me that the eventual solution will be electric cars. But that requires the nukes that libs not only don't want, but pelosi doesn't even want congress to talk about.

 

[UShadItComing]

A few things I will chime in with.

While there is abundant oil offshore of the US, there are several factors that make this whole scenario problematic. While I support offshore drilling in some areas, there are some where it would be unwise to for various reasons.

Making the coast wide open though, or anything along those lines is unneeded. There are millions of acres onshore and offshore that are already open and leased by oil companies just waiting to be developed. But the problem is that, the oil companies have little incentive to do so. I remember 10 years ago when the price of oil was such that investment was minimal. Now that prices are high, and companies are raking in unthinkable amounts of profit, there is no good reason for them as a company beholden only to thier share holders, to spend billions more on increasing production here, and therefore lowering the price of oil. It is a giant catch-22 that companies like Exxon reap the benefits of, while the consumer is stuck with the burden.

The other thing that has only been slightly mentioned is the quality, accessibility, and profitability of much of the reserves is questionable. For instance, there is a ton of shale oil under the Dakotas that is very costly to produce into gasoline. Like it or not, the best quality oil, light sweet crude comes mostly from the ME.

Whilst the solution is not coming tomorrow. There is considerable work being done on the Alaska North Slope in taking back the leases Exxon holds for the Pt. Thompson field and has for the last 30 years failed to develop. Look for either BP and Conaco Phillips, and possibly Shell to jump all over that and begin work immediately on bringing that oil to market in less than 5 years. Also, the Alaska NatGas Pipeline went through a major hurdle last week with the Alaska Legislature and within 10 years, the proven natgas reserves to the tune of 35TRILLION cubic feet, tying into Canadian pipes, will be heating and powering the midwest for a few decades in reality.

Personally, I am a big fan of natural gas powered things over oil.

You're amazing Bunz! You are living proof that an American understands. Yes, there is oil in the world to be had but the question all hinges around the cost of getting it. It's a very simple equation which is not being acknowledged because the political game is being played at the moment. So here's the goods on it which at least you seem to understand: Oil at 120 to 130 bucks a barrel is bandrupting the US because it's costing an estimated 700 billion a year. T. Boone Pickens has it right on the money. And if oil stays high then that offshore oil will be mined. The question is merely one of how high does oil have to go before it's worthwhile. There is no great mystery or great conspiracy over anybody preventing the oil companies from getting to it. Just as there is no great mystery why the oil companies don't recover oil in the continental US. It's the cost of recovery of course. At the moment oil from the Alberta tarsands is cheaper and will remain cheaper for the foreseeable future. But supply and demand has pushed our oil price up to the danger point for the US. You do consume 20 million + barrels a day and your country has not been as proactive as it should have been in developing alternatives.

Now we are simply in a situation where the Iraqi oil must flow freely and in large quantities in order to bring the price to a level where it won't bankrupt the US economy.

But never mind, the facts are much less important than the politics at the moment. After the election maybe some people will start to inform the public what it's all about and they might even start to listen!

If you have an interest you can go to peakoil.com and hear what many very wise individuals have been saying for a long time. Just be able to separate the wheat from the chaff there because there are still many who are more interested in playing politics.

 

[Bunz]

In fact, they lave a LEGAL FEDUCIARY DUTY to maximize profits of the corporation.

That is more or less what I said. They are beholden only to thier share holders, not to a government or the consumer. Both are held hostage by the price, of which the oil companies have no good reason to ease the burden felt by those at the pump and through other goods that are influenced by oil prices.

And what you say seems counter-intuitive: if lots of profits are good, wouldn't even more profits be better?

There becomes a tipping point where more profits arent better. There is a point where when the price of anything gets to expensive and the consumer looks to another source for a similar fuction. $150 a barrel of oil, makes people use less and go to methods of driving and electrical generation from other sources.

Also, libs keep saying offshore drilling WON'T lower the cost of oil - so which is it? It will, or it won't?

I think I said fairly clearly in my post that expanding domestic drilling would ease the price. Where is the confusion?

Also, the lowering of price doesn't necessarily lowering revenue - study a hypothetical price-demand curve:

Revenue is maximized when the rectangle (sales x unit price) is largest.

While you can bring out all the graphs you like, us Dems like the purdy colors!
The nature of the oil business is a bit different though. For simplicity, breaking it down to a single oil well, there is the costs of getting that well online and producing. This number varies widely of course depending on many factors. But either way, once the costs are recovered for construction, the rest is minimal operational maintenance and labor costs. Raking in money hand over fist. The problem is that the companies are only going through the motions of appearing interested in expanding thier production. When in practice they are doing very little. Study Pt. Thompson as a perfect example.

I would like to know what those factors are for the the zillions of acres of leased land that libs keep talking about.

Talk about quality of posts. Gross exaggeration followed by inaccurate inuendo on a group of millions of people.

Either way, all these billions of barrels of oil you talk about, often already have the leases in place. But in terms of different types of oil, such as shale it was explained to me by someone in the oil business, obviously this is simplistic, but I think the point will get across. In places like Prudhoe Bay, or the large fields elsewhere, they are pumping oil from a sea of oil. Whereas shale oil is like pumping from thousands of small ponds.

Unfortunately, the infrastaructure is not in place to support natural gas powered cars, and it shouldn't be even tried, because it is clear to me that the eventual solution will be electric cars. But that requires the nukes that libs not only don't want, but pelosi doesn't even want congress to talk about.

Libs, you missed the point of my comment on natural gas entirely. I never said word one about a natural gas powered car. I said heating,(as in home and commercial business heating) and powering(as in electrical power production). While I dont think a natgas powered car is feasible, and electric will be online before that infastructure would be in place like modern gas stations. We are much farther away from an electrically powered piece of heavy machinery. City buses, construction equipment, etc could all be powered by natgas.

Also, the beauty of natgas is there is often a more local/regional access to it, because it is much wider spread that crude oil.

 

[Libsmasher]

Quote:
Originally Posted by Libsmasher
In fact, they lave a LEGAL FEDUCIARY DUTY to maximize profits of the corporation.

That is more or less what I said. They are beholden only to thier share holders, not to a government or the consumer. Both are held hostage by the price, of which the oil companies have no good reason to ease the burden felt by those at the pump and through other goods that are influenced by oil prices.

No - you said oil companies have no incentive to pump more oil, when in fact they DO have the basic incentive that ALL business has - more profits.

Quote:
And what you say seems counter-intuitive: if lots of profits are good, wouldn't even more profits be better?

There becomes a tipping point where more profits arent better. There is a point where when the price of anything gets to expensive and the consumer looks to another source for a similar fuction. $150 a barrel of oil, makes people use less and go to methods of driving and electrical generation from other sources.

What I showed you by example of the graph, which is straight out of Econ 101, and completely independent of what a company produces, is that you are MISTAKEN when you say that lower price necessarily means less revenue. Eg, every single electronic consumer gadget that comes out is initially very expensive, but the price comes down as many more people buy it. By your theory, this would never happen - BUT IT DOES. Get it yet?

Quote:
Also, libs keep saying offshore drilling WON'T lower the cost of oil - so which is it? It will, or it won't?

I think I said fairly clearly in my post that expanding domestic drilling would ease the price. Where is the confusion?

I was clearly talking about libs as a group - glad you disagree with the majority of libs. Now, if you can only get over your confusion about price and revenue ...........

Quote:
Also, the lowering of price doesn't necessarily lowering revenue - study a hypothetical price-demand curve:

Revenue is maximized when the rectangle (sales x unit price) is largest.

While you can bring out all the graphs you like, us Dems like the purdy colors!

Oh - sorry for confusing you by bringing some actual economics into the discussion.

The nature of the oil business is a bit different though. For simplicity, breaking it down to a single oil well, there is the costs of getting that well online and producing. This number varies widely of course depending on many factors. But either way, once the costs are recovered for construction, the rest is minimal operational maintenance and labor costs. Raking in money hand over fist. The problem is that the companies are only going through the motions of appearing interested in expanding thier production. When in practice they are doing very little. Study Pt. Thompson as a perfect example.

The oil business, from the standpoint that matters in this discussion, is no different from any producing company - if profits can be made, barring incompetent management, they'll be made.

Quote:
I would like to know what those factors are for the the zillions of acres of leased land that libs keep talking about.

Talk about quality of posts. Gross exaggeration followed by inaccurate inuendo on a group of millions of people.

This has been said OVER AND OVER again by prominent libs, especially in congress.

Quote:
Unfortunately, the infrastaructure is not in place to support natural gas powered cars, and it shouldn't be even tried, because it is clear to me that the eventual solution will be electric cars. But that requires the nukes that libs not only don't want, but pelosi doesn't even want congress to talk about.

Libs, you missed the point of my comment on natural gas entirely. I never said word one about a natural gas powered car. I said heating,(as in home and commercial business heating) and powering(as in electrical power production).

Then you are missing the whole point of the current issue, which is what I thought you are talking about - the US has tons of coal and uranium to heat house - heating bills (except for the small minority heated by fuel oil) isn't the issue. The ISSUE is imported oil to make gasoline to fuel cars.

 

[Bunz]

No - you said oil companies have no incentive to pump more oil, when in fact they DO have the basic incentive that ALL business has - more profits.

Geez, think about it this way, Right now, and into the near and potentially forseeable future oil is going to be over $100. With the current situation, there is little incentive towards shale and other low quality sources of oil because the profits dont match. Profits are huge right now, why would anyone want to increase production, driving the price lessening profits.

What I showed you by example of the graph, which is straight out of Econ 101, and completely independent of what a company produces, is that you are MISTAKEN when you say that lower price necessarily means less revenue. Eg, every single electronic consumer gadget that comes out is initially very expensive, but the price comes down as many more people buy it. By your theory, this would never happen - BUT IT DOES. Get it yet?

CAPITAL LETTERS ARE NOT NECESSARY

You are correct in a theoretical model, but the situation on the ground is an entirely different thing. The market will ultimately correct itself, but in the meantime, you are seeing the most dramatic shift of wealth in this country since the new deal.

I was clearly talking about libs as a group - glad you disagree with the majority of libs. Now, if you can only get over your confusion about price and revenue ...........

My point being is that grouping together any large group of individuals as a whole and making blanket statements about them is pointless and really makes the credibility of other arguments shallow.

The oil business, from the standpoint that matters in this discussion, is no different from any producing company - if profits can be made, barring incompetent management, they'll be made.

Come on now, you are smart enough to know the oil business is about MUCH MORE than economics. The oil business is more political than politics. By its very nature is the most valuable commodity in the world, that tie the most powerful nations in the world with the worst despots out there.
At this point, oil is less economic than it is political.
Today I got paid. I went and filled 4 drums (55gals) with 87 octane gasoline a6.97.

This has been said OVER AND OVER again by prominent libs, especially in congress.

Nobody has ever said zillions of acres. So lets chalk this one up to the other thread you have going about the quality of posts. But it is reality that there are millions of acres opened and leased and ready for development in this country and have been for decades, but the oil companies have developed them.

Then you are missing the whole point of the current issue, which is what I thought you are talking about - the US has tons of coal and uranium to heat house - heating bills (except for the small minority heated by fuel oil) isn't the issue. The ISSUE is imported oil to make gasoline to fuel cars.

No, I think I get the point fairly well. We do have lots of resources here and ready for development. The same ones that big oil in large part hasnt developed. I said from a personal standpoint that I think natgas is a good alternative to others and should be better developed. Coal has it purposes, as does nukes, so does natgas. Natgas powers homes and electrical plants, and could be much more viable in vehicles than the others suggested. Also, as I said earlier, the availablity of natgas is more.

 

[Libsmasher]

Quote:
Originally Posted by Libsmasher
No - you said oil companies have no incentive to pump more oil, when in fact they DO have the basic incentive that ALL business has - more profits.

Geez, think about it this way, Right now, and into the near and potentially forseeable future oil is going to be over $100. With the current situation, there is little incentive towards shale and other low quality sources of oil because the profits dont match. Profits are huge right now, why would anyone want to increase production, driving the price lessening profits.

OK, you are genetically unable to grasp the relationship of price and revenue - I hereby stop tutoring on that. The "shale oil" is a straw man - the issue is OFFSHORE DRILLING (maybe you could peek at the thread title??)

Quote:
What I showed you by example of the graph, which is straight out of Econ 101, and completely independent of what a company produces, is that you are MISTAKEN when you say that lower price necessarily means less revenue. Eg, every single electronic consumer gadget that comes out is initially very expensive, but the price comes down as many more people buy it. By your theory, this would never happen - BUT IT DOES. Get it yet?

CAPITAL LETTERS ARE NOT NECESSARY

You are correct in a theoretical model, but the situation on the ground is an entirely different thing.

You simply don't understand. I wasn't trying to offer a model, but rather to get you to grasp that lower prices does not imply lower revenue.

The market will ultimately correct itself, but in the meantime, you are seeing the most dramatic shift of wealth in this country since the new deal.

Not relevent to the thread topic, and the wealth shift to OPEC dwarfs BY FARRRRRRRRRRRRRRR any profits made by Exxon. This is the puzzling attitude of libs - they are completely silent about the oil cartel, the ACTUAL biggest hijacker of wealth in human history, but instead want to whine about american corporations.

Quote:
I was clearly talking about libs as a group - glad you disagree with the majority of libs. Now, if you can only get over your confusion about price and revenue ...........

My point being is that grouping together any large group of individuals as a whole and making blanket statements about them is pointless and really makes the credibility of other arguments shallow.

The implication was libs in general, not every single lib who ever existed, that should have been obvious, and you are making A BIGG BIGGGGGGGGG deal over NOTHING instead of focussing on the thread topic.

Quote:
The oil business, from the standpoint that matters in this discussion, is no different from any producing company - if profits can be made, barring incompetent management, they'll be made.

Come on now, you are smart enough to know the oil business is about MUCH MORE than economics. The oil business is more political than politics. By its very nature is the most valuable commodity in the world, that tie the most powerful nations in the world with the worst despots out there.
At this point, oil is less economic than it is political.
Today I got paid. I went and filled 4 drums (55gals) with 87 octane gasoline a6.97.

OK - the oil company DOESN'T want to make profits. Wait wait - aren't you libs always complaining that it DOES make profits??? Are you coming or going?

Quote:
This has been said OVER AND OVER again by prominent libs, especially in congress.

Nobody has ever said zillions of acres. So lets chalk this one up to the other thread you have going about the quality of posts. But it is reality that there are millions of acres opened and leased and ready for development in this country and have been for decades, but the oil companies have developed them.

Oh, now you DO admit to it, and your BIG, BIGGG, BIGGGGGGGGG point is that it's millions, not zillions.

 

[UShadItComing]

Good point on Bill Moyers' journal last night by a couple of economists. Offshore drilling will produce .2% of the world's oil supply and it won't lower the price of gasoline at the pump until around 2030 and then by onlly a few cents. And on top of that the fact that no oil company may actually choose to drill in those areas.

John McCain is simply playing a dishonest game with the people. If Americans buy his line then they deserve what is coming.

According to those economists, a declining standard of living for most Americans which is getting to the danger point.

A broken healthcare system which absolutely must be fixed before it gets any worse.

And everyone is convinced that both jobs can't be done at the same time. One thing everyone agrees on is that the incoming president is going to inherit one hell of a mess from Bush.

 

[Libsmasher]

Good point on Bill Moyers' journal last night by a couple of economists. Offshore drilling will produce .2% of the world's oil supply and it won't lower the price of gasoline at the pump until around 2030 and then by onlly a few cents. And on top of that the fact that no oil company may actually choose to drill in those areas.

Their names? Links to their research? Methodology?

John McCain is simply playing a dishonest game with the people. If Americans buy his line then they deserve what is coming.

Back up what you say with facts.

According to those economists, a declining standard of living for most Americans which is getting to the danger point.

Proof?

You make sweeping claims, but you have nothing to back it up. You also (I'm guessing you're parroting our resident commie Moyers) use unquantifiable ill-defined concepts such as "standard of living". You don't even mention the all-important causes of a supposed decline, much less offer evidence for the causes. This stuff is hollower than an Obama speech to a bunch of screaming bots.

 

[UShadItComing]

libs- Watch the program when it airs again and stop frothing at the mouth at eveything that displeases you.

Moyers a commie? ha!

A shining example of what America used to be and libs brands him a commie!

Our libs, the boy that posts 30 line posts of animal sounds and squeeks and squaks in capital letters. Now there's somebody all American can identify with!

 

[Andy]

Geez, think about it this way, Right now, and into the near and potentially forseeable future oil is going to be over $100. With the current situation, there is little incentive towards shale and other low quality sources of oil because the profits dont match. Profits are huge right now, why would anyone want to increase production, driving the price lessening profits.

Crude oil current price is $115/barrel down from $145. No one predicted, nor expected this.

You own a oil company and pump 200K barrels a day. At $145/barrel, that is $29 million. If you pump 275K barrels a day, even if the price dropped a mere $30 dollars, you would still earn $31.6 Million. If the price does not drop, you would make $40 million. If on the other hand, you do not increase production, but the price drops, you would only get $23 million.

My point: Increasing production in most cases will result in increased revenue, and not increasing production, does not mean the price will not go down.

Why? Because you are one company of thousands. And those other thousands are going to try and produce more oil to make more money. For example, the story of Anthony Young who sold his little highway rest stop, bought a drilling rig, struck oil 57 times, and now runs Youngs Petroleum Company. Or the guy from Indiana who rented a rig and drilled in his backyard. These are a short list of what is happening world wide. Russia plans to increase production by a million barrels a day by 2010. Brassil is drilling off it's coast. Canada still plans to get production at the oil sands. The Saudis are heavily investing in new wells. Mexico is struggling to find funds for it's socialized oil company, exclusively to increase off-shore oil production.

So why increase production? Because others will regardless of what you do. You either take the opportunity to capitalize on the current market, and increase your production, or risk being left behind.

Come on now, you are smart enough to know the oil business is about MUCH MORE than economics. The oil business is more political than politics. By its very nature is the most valuable commodity in the world, that tie the most powerful nations in the world with the worst despots out there.
At this point, oil is less economic than it is political.
Today I got paid. I went and filled 4 drums (55gals) with 87 octane gasoline a6.97.

I don't agree. If a random dude can go from flipping burgers, to drilling oil wells and become the CEO of a oil company making millions, then, it seems like a simple capitalist system at work to me. If we would simply elect people that would cut the red tape, there would be dozens of independent oil refineries too.

Why don't you guys just build a nuclear power plant, and heat your homes with electricity? Seems that would be far cheaper.

But it is reality that there are millions of acres opened and leased and ready for development in this country and have been for decades, but the oil companies have developed them.

We covered this already. Not every single acre has oil on them. Some that do, are not economically recoverable. Further, the way the leases are setup, the government could yank the lease after the company has made massive investment in the land. No intelligent company is going to do that, and you wouldn't want them to if you have a 401K.

The same ones that big oil in large part hasnt developed. I said from a personal standpoint that I think natgas is a good alternative to others and should be better developed. Coal has it purposes, as does nukes, so does natgas. Natgas powers homes and electrical plants, and could be much more viable in vehicles than the others suggested. Also, as I said earlier, the availablity of natgas is more.

I don't know of many locations owned by bigoil that have not been developed without specific reasons. natgas cars? Sounds like strapping a bomb to your automobile. I'll stick with petrol.

 

[UShadItComing]

Andy wrote:

You own a oil company and pump 200K barrels a day. At $145/barrel, that is $29 million. If you pump 275K barrels a day, even if the price dropped a mere $30 dollars, you would still earn $31.6 Million. If the price does not drop, you would make $40 million. If on the other hand, you do not increase production, but the price drops, you would only get $23 million.

My point: Increasing production in most cases will result in increased revenue, and not increasing production, does not mean the price will not go down.

Thank you for sharing that arithmatic with us Andy!

And your conclusion is utterly astounding!

 

[GenSeneca]

natgas cars? Sounds like strapping a bomb to your automobile. I'll stick with petrol.

LNG, liquefied natural gas vehicles are already on the road all over the world and there are about 150k of them here in the US. Its really no different from petroleum, both are a flammable liquid used to power vehicles.

 

[Andy]

LNG, liquefied natural gas vehicles are already on the road all over the world and there are about 150k of them here in the US. Its really no different from petroleum, both are a flammable liquid used to power vehicles.

You are correct. I forgot about LNG.