One thing has been driving me crazy about this drilling debate -- everyone seems to assume that if we drill for oil in the US, that we will get the oil. And hence, we won't be dependent on foreign oil anymore. But we won't get anything, Exxon-Mobil will.
The oil that comes from that drilling will not be United States property (Republicans aren't suggesting we nationalize the oil companies, are they?). It will be the property of whichever oil company got the rights to that contract. They can then sell it to whoever they like -- and they will. They will sell it on the world market, so the Chinese will have just as much access to the oil that comes out of the coast of Florida as we will.
The Democrats have done a decent job of beating back the argument that this will effect prices in the short run, or even in the long run. But no one has addressed the point above. The Republicans make it seem like we won't be dependent on foreign oil -- and that prices will go down in the US -- if we have our own oil. But it won't be ours. And it will be sold on the world market, so its effect on global oil prices will be even smaller.
When we ask the question of whether there should be drilling off the coast of Florida or in the Arctic National Wildlife Refuge, we should ask the question this way -- would you be comfortable with the Chinese or the Germans or Russians or the Saudis drilling on American land? Because for all intents and purposes, they will be.
Large multi-national firms like Exxon-Mobil are not US property. They sell to the world and their allegiance is to corporate profits. So, when they drill, they drill for the whole world, not just us. Some might find that heart-warming, but it certainly has nothing to do with the US having more oil or lower prices.
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It may or may not actually get us any oil, but it will at least keep them from turning the coastline into a tarball just so they can sell more oil to China.
Cenk, tell your listeners / viewers / readers to take pick up a globe and measure the distance from Alaska to China. Then have them run their fingers all the way down the coast of North AND South America, then back up to the Gulf Coast -- that will make it clear where the ANWR oil would wind up going, as the Panama Canal isn't big enough for tankers and most of our refineries are on the Gulf Coast. No oil company in its right mind would take a 15,000 mile journey when they can stop 6,000 miles away in Asia for a quicker turnaround time.
The Automobile Industry is going to be in the same position as the Airline Industry in the next few months. Unless we get away from gas combustion vehicles, including Hybrids, the automobile industry (as we know it) will die.We need to make drastic moves. America needs to move to ELECTRIC. The vehicles are not as fast, not always as fun to drive, but the move will save Americans money (Billions) and help bring change to our automotive companies. Let's "Be Green"!!!!!!!!!!!! BG Automotive Group Ltd. has a car that will travel 80-100 miles per charge for $15,995. Finally a car that most Americans can afford. Did you know that 80% of all drivers, drive less than 50 miles per day? This new car will cost an equivalent of $0.20-0.25 cents/gallon (depending on electricity rates in your area). Why send $700 Billion per year to OPEC (now buying up U.S. companies) when we can use this money for our schools, health care, social security for all Americans, etc, etc, etc. We can make the difference if WE change.
Mass transit.
So what do I do?
Unlike the West Coast shelf which runs close to the shore, the US East Coast shelf is located hundreds of miles off the US beaches.
http://www.mcclatchydc.com/251/story/40776.html
I bet they call it the Cuban coastal shelf in Havana...
They sell leases in a silent auction to the highest bidder. For example, lease sales netted over $3 billion for the Federal government in the Gulf of Mexico this spring. States and private property holders on land have the same right to lease their property for development.
The government and private landholders build royalty rates into the leases and recover money on each barrel or amount of gas produced as well.
Oil companies make decisions to lease properties based on a probabilistic analysis of success of finding a anticipated amount of reserves on a lease. Success rates in the Gulf of Mexico for finding commercial quantities of oil and gas are around 50%. It costs $100's of millions to find commercially viable discoveries. It costs billions of dollars and many years to bring typical deepwater successful discoveries to market.
Oil companies are given a profit on the sale of the oil in order to entise them to take the risk to develop the oil. Their profits are then taxed again after that.
It's not as if the oil is just given away. If you're unhappy with the royalty rates and leasing strategy, take it up with Congress, which sets all the lease rates through legislation.
Sorry Cent, should have done some research.
Sorry David, you should have done some research.
where in the article does it say that it does? The article rightly points out that every drop of oil we would see from opening up ANWAR or through new off shore drilling would go on the world market, just like the oil we now produce. The idea that drilling in these areas would somehow translate into more energy independence and reduce the amount of oil we import is a dangerous canard and a classic red herring argument meant to seduce low information voters into granting big oil even more largess under the guise of removing the yoke of our dependence on OPEC...
I probably wasn't clear enough, but I wanted to make sure that it was noted that these resources are just not stolen from the US. The author's comment "would you be comfortable with the Chinese or the Germans or Russians or the Saudis drilling on American land? Because for all intents and purposes, they will be," in my opinion, insinuates that resources which are the property of the US, are just taken by oil companies, with no benefit in turn to the US. This is not the case.
SOT
They have to drill for new oil offshore or in the arctic or in politically unstable countries. This is expensive, risky and the return comes after years - not weeks or months.
What if they drop a billion or so of their currently fabulous profits into developing prospects that actually have commericial oil - but at $100/barrel. And what if the economy tanks, taking the price of oil with it - we use something like 20% of the 85 million barrels of oil shipped per day.
Nope - way too risky.
NY TIMES: "Exxon Mobil earned more than $1,287 of profit for every second of 2007."
http://www.nytimes.com/2008/02/01/business/01cnd-exxon.html?_r=1&hp&oref=slogin
Way too risky.
"Corporations" belong to "no country," thus "every country" is "a customer" and the-laws-of "any country" (whatever it is...) "Do Not Apply."
"There is a reason," and by-the-way it is a VERY GOOD "reason," why this notion of "nations" and "sovereignty" exists in This World...
... "As You Can See," if this notion DOES NOT exist, human avarice goes Unchecked.
If the goal is to lower the "market price" by flooding the market with more oil, I would suggest we ask exactly how many barrels/day they expect these magical wells to produce. Last time the offshore drilling initiative went before a vote in CA, the consensus was that there was not all that much oil out there anyways (something like a 4 days-supply at current consumption patterns).
The only way that more drilling can effect prices in a positive way is if the supply on the market exceeds demand. There is no evidence that the GLOBAL demand is dropping, and only a few months' worth of evidence that the US is curbing it's appetite. So ironically - our reduction in demand coupled with increases in places like China and India will make oil more expensive here.
The ONLY answer is to replace oil with something else.
Last comment - it's literally YEARS between the time a lease is granted and any oil comes out of a well. So there is no short-term relief here anyways.
I take the train to work every day, 100 mi round trip, 20 days a month. I pay for my train ticket, but I am not buying as much gasoline. It used to take about 4 gallons of gas, round-trip. So if 60% of a barrel of oil goes into making gasoline, I am saving (4 X 20)/0.6 = 133 gallons of oil, or little over 2 barrels.
Why can't the little guy cash in on this energy independence thing? Why not a program to reimburse me for the oil I am saving? I am keeping us from buying as much imported oil and this helps the balance of payments and value of the dollar just as if I was an oil company and discovered new oil.
And its cheaper than what Exxon will have to spend just to find new oil. Maybe Exxon will want to chip in: - I am not using the oil that they will have to drill for offshore or in the arctic, find and then wait three years to sell.
And I won't even charge them interest.
Note that's the exact opposite effect of a "gas tax holiday" which penalizes you and rewards oil consumers and producers.
Or took it out of some social program?
I agree. A tax holiday on gasoline is useless - the stuff is priced too low.
So why not tax gasoline until we get to $8/gal at the pump like in Europe? They get a good mass transit system so you don't even need to buy a car. I'm for that - no more car payments, insurance payments, repair costs, etc.
If a lower price for gasoline via tax breaks is bad, then a higher price based on taxing gasoline is better.
We will use less - and that is what T. Boone says will reduce the "greatest transfer of wealth in history..."
My math is a little off...
A barrel of oil is 42 gallons and you can get about 20 gallons of gasoline out of the typical crude oil.
If am saving 80 gallons of gasoline a month, it takes about 3.8 barrels of crude oil to make. So I am saving the country about $530 dollars because we don't have to buy imported oil at that price. (Which is strange because at $4.50/gal the total monthly cost for me to drive to work is only $360 to buy those 80 gallons. The difference goes to Exxon - or whoever - they are selling the rest of the barrel for lubricating oil, plastics, diesel, etc.)
So there is really no incentive for the oil companies to reduce the use of gasoline in this country (duh!) and yet they get to drill on public lands to find oil they can sell for high prices and profits.
Just like a drug pusher.