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  • Gulp...oil.

    Okay, hot topic but important. I promise to keep it clean this time.

    First I would really like to ask anyone who is willing to explain their position on drilling/not drilling to do so. Inject party politics into it if you must, politics are not a small part of it, but I am really interested in numbers and how they will translate to you and me. That is something I don't have a firm grasp on, and I admit much of my theories are anecdotally and emotional.

    One thing I want to point out is that oil has continued to drop in price even as the discussion of offshore drilling was flaked on by our benevolent public servants. To me this sort of counters the claim that the first drop in price was due to the rumors of offshore drilling opening up. I think with the complex and artificial bubble we are experiencing in oil futures the short term price fluctuations are not really attributable to just one or two things, and may not really indicate much of anything.

    Now as to why I am not for opening our coasts to offshore drilling-- not without a lot more info. I already stated that I don't trust the conflict of interest in the cabinet today, as well as the vast amounts of $ that goes into lobbies for all positions on both sides of the aisle. To me politicians are owned by many interests, and oil is one of the big ones, so I am willing to dismiss nearly anything they say on the subject out of hand until I see real proof. Bush has said that drilling is more a psychological solution rather than an economic one, and that I am willing to believe because I have yet to hear how it is more than that.

    I have heard that the amount of oil usage the US decreased recently, the first time in ages, was immediately absorbed by Asian countries and that their usage is projected to grow fast. So fast that by the time the proposed offshore wells are up and producing--even at the most optimistic production rates--China and India will easily suck up that amount and more off the world market.

    To me this means two important things. One, the global price per barrel will continue to rise and we will not benefit from any real price relief,. After all, why would any for profit company sell its goods to us for cheaper than it can command on the world market? Sure some countries like Venezuela and Saudi Arabia get their gas for pennies, but those are kingdoms and socialist states, not capitalist countries with private oil companies.

    The second is that if we really want to make an impact on how much money our "friends" in the middle east can make from their resources it is going to take more than just the US decreasing our dependence on them. They will still have Asia to take up the slack and then some meaning they will still be gaining riches and power. Countering this can only be achieved if we come up with a real, non oil-based solution to energy that can not only help us here but get other big industrial nations off the teat of opec as well.

    Environmental concerns are not just big oil spills. That is an easy thing for environmentalist to scream and for pro oil concerns to refute. It is very unlikely to have a major oil spill these days, though not impossible, and the threat goes up the longer we continue to use oil as our primary fuel source. There was a spill in the SF bay recently. But there will be many small spills, a lot more machinery and ships active in the waters and all of the incidental pollution humans cause wherever we congregate. That, and more importantly the fact that the longer we stay on course with our current program of oil consumption, the more fossil fuels burned, the more carbon we create. This can be poo-pooed, but as anecdotally evidence it took a long time and a huge price increase before we stopped using as much oil as we have been. I won't be surprised if usage goes back up a little now that prices have dropped a little. It is just the way we roll in this country--myself included.


    I said a lot here, I hope to start a real conversation about this without too much invested beyond a learning opportunity. Much of this is different things I have heard glued together with my own logic--I am not an economist and I am not repeating this theory, it is just my layman and partly informed ideas on the subject, so if I am misguided or wrong let me know. I really would appreciate it.

    Eli
    A good carpenter makes few mistakes, a great carpenter can fix his own.

  • #2
    Re: Gulp...oil.

    I really think there needs to be drilling (careful) of wells both for oil and natural gas and on USA land and nearby waters. Why should North America rely on getting energy from sources way far away? It's just stupid. With that said we really must look at other sources of energy. I could heat my home all winter if I had a good way to store solar heat from the summer and do so in a cost effective manor. Ocean waves could be used to generate electric power. The problem is that people aren't willing to do the right thing. It's all about the bog hogs making every cent they can and dirty people in control. The real people of the USA don't run it.

    Rant off

    Comment


    • #3
      Re: Gulp...oil.

      Eli,

      Thanks for starting the thread. Let's hope we can all follow your rules. When Service Guy did the same thing for the presidential race, it resulted in a really interesting and remarkably civil thread.

      Anyway, my position basically boils down to free market economics. I don't trust the government; or even myself to make the best decision. The market on the other hand really includes all of our collective intelligence. Unfortunately, it never gets it truly right, but it bounces around the real answer. I think oil at this point should cost more than the $20-40/bbl that we would like it to based on demand; but that when it went to $140 there wasn't necessarily any good fundamental reason for it; sort of a bit of irrational exuberance if you will. Right now we are seeing some more sense get back into the market.

      Regarding existing conventional oil and drilling, I think we should drill more; because companies think they can make a profit it at. If they can, then it makes sense to drill. However, the leases must be competitively awarded and include good royalty payments to the government. How do you make sure they are competitively priced, I think we should do an auction like we do with government debt.

      As far as conservation, I think that will naturally happen with the increase in oil prices. Even if gas isn't at $4.50 a gallon anymore, $4/gallon is a significant difference from the $1.25/gallon when I started driving 10 years ago. I think that behavior will change. We also need to use our bully pulpit against countries that subsidize fuel. It isn't anyone who sells oils fault that they can get more money for it, so I don't think they should be the target. The target should be governments in Asia and elsewhere, which subsidize the cost of diesel fuel; thus giving their own people no incentive to conserve.

      I also think the market will help bring alternative technologies to market. Venezuela probably has more oil than Saudi Arabia right now, nothing fundamental has changed except the price. Heavy oil which was previously not economically viable is now viable, because the increased refining cost is made up for in the higher price per barrel. Oil sands in Canada are also now viable. At some point we'll figure out how to get the oil out of shale in the American west.

      There are also plenty of technologies that we have right now that should take off. Nuclear power hasn't been expanded in decades; I think there are a lot of us "mad as hell" and don't want to take it anymore. Hopefully, our congress critters will listen for a change and we'll get some new plants and expand existing ones. Wind farms and solar power in the past have been too expensive to make sense; if natural gas stays expensive that won't be true anymore.

      If we remove uneccessary restraints and distortions from the market, then it can sort things out. We've found ways around our energy problems in the past; and I am optomistic that we can do it again.

      Ironically, I think that once we learn how to do things more efficiently we'll actually end up using more energy; because we'll get more utility from them [an electric light bulb is a heck of a lot more efficient than a gas lantern, which in turn is much better than whale oil; and with each generation we used more and more lamps]. There is an interesting book that makes this point. I got from the library a few years after seeing an interview with the author on the Daily Show:
      http://books.google.com/books?id=OVs...um=1&ct=result

      Charles

      Comment


      • #4
        Re: Gulp...oil.

        I was against drilling for years because of the risk to the environment, now I have other objections. I cannot see the benefit to consumers even if discovered immediately without some guarantees from big oil that the price would drop. Unless the price dropped big oil would simply make greater profits and the consumer is no better off! I think if we put all our efforts into drilling it might stall alternatives to oil from being developed. Solar and wind alternatives may have their limits but if the incentives were in place to get more business and home owners to make the investment demand for oil fuels would decrease. If this energy bill ever gets passed and includes substantial incentives for hybrid cars, trucks and buses the demand will further decrease. So, in my opinion allow the exploration and drilling but get some agreements on pricing upfront. Don't be fooled into thinking we can satisfy our demand for energy with oil, start moving towards alterantives including nuclear. Maybe we could ask the French for their help with the nuclear energy, seems to work for them. Those who are old enough to remember the 70's know we lost sight of that little eye opener, we cannot let that happen again. I know I got off track a bit, but what about short term? Millions of Americans are in serious trouble and it will get much worse as Winter arrives. I know the price of crude dropped a bit but it's still twice what it was a years ago.

        Comment


        • #5
          Re: Gulp...oil.

          Originally posted by cpw View Post
          Eli,

          Thanks for starting the thread. Let's hope we can all follow your rules. When Service Guy did the same thing for the presidential race, it resulted in a really interesting and remarkably civil thread.

          Anyway, my position basically boils down to free market economics. I don't trust the government; or even myself to make the best decision. The market on the other hand really includes all of our collective intelligence. Unfortunately, it never gets it truly right, but it bounces around the real answer. I think oil at this point should cost more than the $20-40/bbl that we would like it to based on demand; but that when it went to $140 there wasn't necessarily any good fundamental reason for it; sort of a bit of irrational exuberance if you will. Right now we are seeing some more sense get back into the market.

          Regarding existing conventional oil and drilling, I think we should drill more; because companies think they can make a profit it at. If they can, then it makes sense to drill. However, the leases must be competitively awarded and include good royalty payments to the government. How do you make sure they are competitively priced, I think we should do an auction like we do with government debt.

          As far as conservation, I think that will naturally happen with the increase in oil prices. Even if gas isn't at $4.50 a gallon anymore, $4/gallon is a significant difference from the $1.25/gallon when I started driving 10 years ago. I think that behavior will change. We also need to use our bully pulpit against countries that subsidize fuel. It isn't anyone who sells oils fault that they can get more money for it, so I don't think they should be the target. The target should be governments in Asia and elsewhere, which subsidize the cost of diesel fuel; thus giving their own people no incentive to conserve.

          I also think the market will help bring alternative technologies to market. Venezuela probably has more oil than Saudi Arabia right now, nothing fundamental has changed except the price. Heavy oil which was previously not economically viable is now viable, because the increased refining cost is made up for in the higher price per barrel. Oil sands in Canada are also now viable. At some point we'll figure out how to get the oil out of shale in the American west.

          There are also plenty of technologies that we have right now that should take off. Nuclear power hasn't been expanded in decades; I think there are a lot of us "mad as hell" and don't want to take it anymore. Hopefully, our congress critters will listen for a change and we'll get some new plants and expand existing ones. Wind farms and solar power in the past have been too expensive to make sense; if natural gas stays expensive that won't be true anymore.

          If we remove uneccessary restraints and distortions from the market, then it can sort things out. We've found ways around our energy problems in the past; and I am optomistic that we can do it again.

          Ironically, I think that once we learn how to do things more efficiently we'll actually end up using more energy; because we'll get more utility from them [an electric light bulb is a heck of a lot more efficient than a gas lantern, which in turn is much better than whale oil; and with each generation we used more and more lamps]. There is an interesting book that makes this point. I got from the library a few years after seeing an interview with the author on the Daily Show:
          http://books.google.com/books?id=OVs...um=1&ct=result

          Charles
          Thanks Charles!

          I will have a lot of time to read soon with the new job (after training and before I get into school) so I will most definitely pick that book up from the library.

          Nuclear power is another heavily emotionally based topic. I don't even know enough about it to have an opinion to share one way or the other. I know enough not to be too concerned with meltdowns and the like, but I do recall from my elementary school days and specifically Bill Nye the Science Guy raising issues of heavy water and nuclear waste disposal. How far we have come from the 80's and what solutions there are to those problems, or even how much a problem they really are to begin with I don't pretend to know.

          I really appreciate your point of view on the free market working itself out, and I agree that too much regulation can and does throw a wrench in the system. I think on this topic there nay be more at stake than just how we affordably fuel ourselves in the future. Capitalism doesn't make a lot of concession for diminishing resources all the time. The Buffalo, redwoods and several different mineral rushes can show that we as a society don't necessarily either. We do tend to ride it till the wheels fall off. And there is the national security angle as well as the pollution angle that will hold different weights to different people, but can't be dismissed as non-existent. I am not an alarmist on this topic, but this alarm has been being ringing since before I was born. The opec embargo happened and we still are under opecs thumb. Sure there were real roadblocks put in the way of drilling here by environmentalists, but no other solution in 40 years? I think that is a combination of greed and apathy that came from a combination of big oil being very, very powerful and a generation or two that has not seen widespread hunger. Spoiled. We have had it so easy for so long we don't even believe that it is possible for things to be different. I hope it is not a case of us not believing poop stinks till we smell it, because all indicators point to that being the case. The lack of questions like Franki's--ie how will this really help us--is an indicator of that I fear. And the sub-prime thing, the credit card debt phenomenon, cheap goods from overseas. As a society we want to eat now and pay later, and if we can't pay later we want to get out of it for free. I know that is traditionally a liberal point of view, and still is in a lot of ways, but it really seems a lot more universal these days. I am afraid that it is heavily involved in the overwhelming rush to believe this is a solution that we will feel in the pocketbooks.

          I wonder, just for the sake of discussion--if for some reason oil became even more expensive--all but prohibitively expensive. An oil embargo and a call in of international debts making the dollar plummet for example--would the US wither on the vine or would we see solutions come faster? I am certain that they would not all be palatable to the concerns I have the luxury of naming today, probably coal and immediate drilling everywhere viable as well as less refined versions of our gas and much, much less concern for emissions. But would there be more alternative ideas pushed faster as well? Is there a tipping point that doesn't require disaster to spark the movement?

          Eli
          Last edited by woodenstickers; 08-04-2008, 11:48 PM.
          A good carpenter makes few mistakes, a great carpenter can fix his own.

          Comment


          • #6
            Re: Gulp...oil.

            "I wonder, just for the sake of discussion--if for some reason oil became even more expensive--all but prohibitively expensive. An oil embargo and a call in of international debts making the dollar plummet for example--would the US wither on the vine or would we see solutions come faster? I am certain that they would not all be palatable to the concerns I have the luxury of naming today, probably coal and immediate drilling everywhere viable as well as less refined versions of our gas and much, much less concern for emissions. But would there be more alternative ideas pushed faster as well? Is there a tipping point that doesn't require disaster to spark the movement?"

            Eli

            Eli, as much as I want to believe Americans would pull together and work beyond such a crisis, I am pretty sure it would be a disaster. Too many of us do not have alternative transportation and need to drive to work, schools and other non recreational places. Our society would be in a state of panic. I'm sure in the years since the last oil crisis of the 70's many millions of Americans have moved far away from the cities, and are now totally dependant on their personal transportation. Think of the millions who drive to medical facilities for life saving treatments? On the topic of Americans being spoiled, I think part of the blame lies with the advertising industry. I'm in my mid fifties and I remember as a child we only got icecream if a icecream truck slowed down or a special occassion whe we went to an icecream parlor. Our refridgerator was small and held some frozen meat, and basic foods like milk, eggs and butter. Over the years more and more processed foods found their way into the home and suddenly we could eat a wide variety of foods without ever leaving the home. My refridgerator is huge, icecream is always on hand and there is enough frozen food to feed our family for several days without eating the same thing twice. Years ago only high end cars had power accessories and air conditioning. Most folks had to roll their car window up and down by hand, AM radio only, no rear defroster, you can't imagine how far we have come and how spoiled we are! I was not in the service, but I worked with plenty of guys who were and being in the military toughens a person. If you took away our gasoline and air conditioning, disrupted our supply of packaged foods and made life difficult, it would not be a pretty picture. I have learned and adopted certain survival skills and my home is well stocked with emergency supplies and tools, but most of my neighbors don't even own a flashlight! Please don't even think of what a disruption to our fuel supply would do, we are not a prepared people in my opinion.
            Last edited by Frankiarmz; 08-05-2008, 12:26 AM.

            Comment


            • #7
              Re: Gulp...oil.

              tl;dr
              Northern Kentucky Plumbers Twitter Feed | Plumbing Videos

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              • #8
                Re: Gulp...oil.

                "Be sure to put the mask on BEFORE any children in your care."

                The instructions on airline oxygen masks, if you pass out while scrambling to put one on your child, you're useless to thyem.

                In other words, we absolutely MUST do whats in our immediate interest, regardless how wrong it may seem...or we're gonna be pledging allegiance to a whole new flag pretty soon.

                Drill, DEFINITELY.
                But under no circumstances should we ever stop research and developement of alternative sources of energy.

                Comment


                • #9
                  Re: Gulp...oil.

                  i for one am opposed to just drill, drill, drill. that is not going to do anything in the long run, IMHO. conserve, now that seems to be working...somewhat. i drive a small suzuki jeep and a 3/4 ton van. the van is a necessity for work and the suzuki is for everything else i need to do.

                  venezuela crude is more like venezuela crud. the have the sludge oil and it IS NOT anywhere close to the crude from most other places. we have Hovensa, one of the largest refineries in the world. it's about 10 miles from my house. they get their crude from venezuela (definately not $120/bbl oil) only 400 miles away. it is refined here and we are paying pennies less than CONUS. they explain world markets, yada, yada. we say BS, but they have the oil. sorta like the golden rule, "he with the gold rules"

                  there are still more SUVs per capita here than most places in n. america. no one wants to give up their SUVs. people are driving less. but not enough to make a difference.

                  everyone screams "tighten your belt" but no one wants to.

                  the short term is to cut back and save as much as possible. the long term is not in oil. maybe America can lead the way out of oil dependancy. it sure won't be asia.

                  and in the very long run it will be survival of the fittest.

                  steve
                  In the never ending struggle to keep the water flowing.... The Poo Poo Cowboy rides again!!!

                  Comment


                  • #10
                    Re: Gulp...oil.

                    Who is Big Oil?

                    My dad is a retired school teaches. He's 82, never made more than 35 grand a year working. He pretty much lives off his Canadian oil stocks.

                    The teachers union I belong to has a couple thousand members. Our retirement has some of it's money vested in oil and energy stocks.

                    big oil isn't some big fat old guy behind a mahogany desk, smoking a cigar and counting hundred dollar bills. It's you and me and our neighbor.

                    For now every single aspect of the economy is driven by the cost and availability if energy and oil is at the center of the supply chain. In a few years maybe hydrogen, wind, wave, solar or who knows. But for now it's crude oil. As things stand now, it costs the refineries more to make gasoline than to sell it. Think about the ramifications of that.

                    Will drilling solve all our problems? Probably not, but untill we come up with viable alternatives, and because we know there is oil out there, why not use all available sources as we move a different direction?

                    YOU STUPID LIBERALS

                    I had to toss that in just for the fun of it. No real insult intended.
                    sigpic

                    Comment


                    • #11
                      Re: Gulp...oil.

                      Lets not be hasty about oil as it pays a nice dividend each year.

                      Tony

                      Comment


                      • #12
                        Re: Gulp...oil.

                        Thanks for replying guys.

                        I'm starting to see a pattern emerge, capitalism ie $ to be made vs other concerns.

                        NH. Something you wrote interests me because it seems to contradict something Mark has said regarding the profits in oil. He has maintained that if drilling becomes too difficult/expensive due to politics that the companies will give up on exploration altogether and just refine, that way they wouldn't be sinking their limited percentage of profits into exploration and extraction in the places they do have available that are not as potentially lucrative as those unavailable right now. You said that refining loses money for the companies. I am not playing a gotcha here, I really don't know the answer myself, so i want to clear it up for all of us.

                        I can understand the money aspect of this issue. I know that a huge portion of our (the US) economy and that of the world depends on the oil industry. If the concern is that American oil companies and their share holders are not making the money from our own resources that we could be, it is not the argument being floated by the politicians or the pundits. Not even in terms of how that would be beneficial to all of us in terms of the economy.

                        I know that the "oil barons" as I have called them are not the classic capitalists wearing top hats and monocles. But using my own recent company as an example I can tell you what a greedy corporate interest, publicly traded, can do. My ex-company had a formula for putting every competitor in refacing out of business everywhere they expanded to. It worked very well. They were able to undercut the prices by using their partners enormous buying power and also by running at a loss or near loss for as long as it took to drain the business from the small, medium and even not so small guys who were established. After they obliterated big box, and long standing local family business alike they raised their prices-in some cases higher than the competitors had them benchmarked. The argument could be made that they had an obligation to their shareholders to do this, it was a smart move as far as capitalism. But the customer lost because they have no choices anymore, the workers lost because as work dried up they were the only game in town (and believe me they used that to squeeze us every chance they got) and the community lost because local businesses that had served them disappeared. Should the community have tried to sue them or block them from being able to do their business because it was unfair? No. But would it have been in their best interests not to support them? In the long run, yes. As a whole, yes. With oil you are talking about not having that choice, a critical part of the free market.

                        So yes, big oil does exist. It is and has been a very powerful industry, powerful enough to shape politics and international relationships. Powerful enough that they will invest in the future as soon as it becomes too difficult to turn a buck by drilling and refining. That is how it works. Right now with their biggest reported earning in the history of capitalism they could invest in almost anything they want and become very successful at it--maybe not with the kind of profits they are posting now, not immediately, but free market or not it becomes a moral issue at some point. If the argument is that some people are doing very well financially from the recent surge in prices it is at the expense of millions of others who will suffer greatly because they are paying more than is affordable for a necessary commodity. Is that how the free market is supposed to work? If that is the case, then no, I don't want more drilling because I don't want some Americans, monocle and top hat or not, to get wealthier off the resources, environment and misery of the rest of us. If it truly is a profit driven position to want to drill I don't think it is in the majorities interests, even if the majority can be convinced that it is because they are scared right now.

                        But i still am not sure how it will effect the prices for the consumer. Is that truly part of the argument behind pro-drilling? How will it benefit those who are not invested in oil stocks? What are the reasons we should support it?



                        Eli
                        Last edited by woodenstickers; 08-05-2008, 10:13 AM.
                        A good carpenter makes few mistakes, a great carpenter can fix his own.

                        Comment


                        • #13
                          Re: Gulp...oil.

                          Originally posted by NHMaster3015 View Post
                          Who is Big Oil?


                          YOU STUPID LIBERALS

                          I had to toss that in just for the fun of it. No real insult intended.
                          Hey, man, you almost made me spit my mocha latte chai half caf right on my incense burner!


                          Peace.

                          Eli AKA ~brother-soil~
                          A good carpenter makes few mistakes, a great carpenter can fix his own.

                          Comment


                          • #14
                            Re: Gulp...oil.

                            Originally posted by woodenstickers View Post
                            Thanks for replying guys.
                            NH. Something you wrote interests me because it seems to contradict something Mark has said regarding the profits in oil. He has maintained that if drilling becomes too difficult/expensive due to politics that the companies will give up on exploration altogether and just refine, that way they wouldn't be sinking their limited percentage of profits into exploration and extraction in the places they do have available that are not as potentially lucrative as those unavailable right now. You said that refining loses money for the companies. I am not playing a gotcha here, I really don't know the answer myself, so i want to clear it up for all of us.
                            Refining isn't losing money right now, and can't for any period of time, because the companies will just stop doing it or go out of business. They aren't making as much though. Valero is a refiner only (unlike the integrated majors); their second quarter net profit dropped 67% from last year.

                            http://www.marketwatch.com/news/stor...7D&dist=msr_28

                            Comment


                            • #15
                              Re: Gulp...oil.

                              Originally posted by cpw View Post
                              Refining isn't losing money right now, and can't for any period of time, because the companies will just stop doing it or go out of business. They aren't making as much though. Valero is a refiner only (unlike the integrated majors); their second quarter net profit dropped 67% from last year.

                              http://www.marketwatch.com/news/stor...7D&dist=msr_28
                              So where are these record profits being made?

                              BTW, this is awesome. I have already gained a lot of perspective and information I didn't have before.


                              Eli
                              A good carpenter makes few mistakes, a great carpenter can fix his own.

                              Comment

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