I know there has been a lot of discussion(arguing) about new oil leases off shore and Anwar. I have a question and am wondering if any one here knows the answer and can fill me in. If we grant the leases to drill, will the oil stay in the U.S. or will it be put on the world market and we would then buy it back at market prices.
The Saudis increased their oil production 200,000 barrels then 300,000 barrels a day in the past couple of months and I'm not sure how much that helped what we pay at the pump. So if we allow offshore and Anwar oil to be sold on the world market would it really help our prices or would it just help big oil's sagging profits(just making a bad joke here).
I would like to keep environmental arguments out of the mix, no fighting about tree huggers, just the cost benefits or not of granting the leases.

We could stipulate that it is for domestic use ;but it would still be subject to world market prices. But it really would not matter . Let's say it all gets sold to foreign sources. It still has a positive impact on the economy because it is an export that would help in the balance of trade.

I have posted replys on this elsewhere .


A loophole signed into law by Clintoon in 2000, did nothing to the oil markets for 6 years, until the Democrats took control of Congress. Imagine that .
Then, with the markets assured that no new oil would come from the United States, the oil prices shot through the roof.. And the argument now is blame the speculators who have taken advantage of this Clintoon era loophole instead of basic supply and demand principles . I don't buy it.

I have no love of commodities at all because they tend to rely on shortages and bad news to propel them . But commodities trading is vital for the economy. If we clamped down on trading in the United States ,these speculators will just continue to trade unregulated on British futures market or other nations commodities exchange. The Dubai exchange opened in 2005 and much of the futures market is traded there .


Quote:
In the short three week period since the launch of the WTI contracts, over US$3.07 billion of business has been transacted on the Exchange, making the Crude Oil contract launch the most successful in the Exchange's history.
DGCX WTI Volumes Hit All Time High - Eye of Dubai News (http://www.eyeofdubai.com/v1/news/newsdetail-23345.htm)

If we began a policy to seriously drill ,prices would drop immediately because speculators bet on long and short term prices and also OPEC and others would pump more oil into the supply to maintain their market share .
But if the supply does not expand to meet expanding demand ;prices will continue to rise regardless of speculators actions. Speculators only bet on the direction and the direction is more Demand than Supply.In other words ,speculators are only reacting to the market not directing it.
Speculators actually help stabilize prices in the market. For every buyer, there is a seller.They are not buying up the oil and storing it in a giant underground tank.

But regular market forces are being stalled by Government regulation . I'm the first to admit that some of the regulation is warranted ;but the net effect is this : If someone owns a piece of land that has oil/gas /or any other resource on it they cannot just put a drill or shovel into the ground to start exploiting it. It takes years to get through the bureaucratic /environmental /legal road blocks before a profit is realized if approval ever actually happens. Regular market activity would be to produce and profit from the resource .That is not happening .

We have done nothing on energy for years,and are paying the price for that.If we added domestic oil to the market then it would have an instant impact on the trade deficit as petro-dollars would come into the country instead of leaving the country .This would have the effect of strengthening the dollar... Which in itself would help on the prices of all goods and services in the US.

Drilling and increased refining would add jobs... high paying jobs... "jobs Americans will do " . So I do not understand the Democrat resistance . To me it is a no brainer . It will buy us time to transition to a time when their panacea of a petro-carbon fossil fuel free energy source is viable (if ever ).

https://www.askmehelpdesk.com/government/you-tired-high-gas-prices-then-do-237567.html

Even the threat of drllling has had to a small degree ,an impact on the prices because commodities investors are betting on future supplies. To me it is a no-brainer to increase domestic production , in concert with increasing refining capacity .

More here
https://www.askmehelpdesk.com/government/petrolium-imports-236335.html

tomder55
Thanks for the answer, your right. In my mind I couldn't see how prices would drop. But if it helps the balance of trade, then I agree we should drill. Or at least until someone give me as compelling a reason not to.

Jeremy
How would it help us drift away from foreign oil? Are you saying the oil would stay here even though the price is driven by world market prices? I haven't heard that in any discussions. Is there a plan stating that oil pumped here stays here? And what will big oil say if we require them to use our oil if they can get light sweet crude from the world market (mid east) which would be easier and cheaper to distill.

Like in Anwar, it would not make sense to ship it all the way to the plants in the south of the US. It would make a lot better idea to sell it in closer markets and buy other oil from like South America. Since the shipping issues having to go all around South America, can't go though the channel with it. But then if and when issues in political systems come up, we would own it and could keep it for ourself

Fr_chuck
Good answer.

Drilling domestic oil would only make us energy independent if it is part of a comprehensive approach that includes oil, natual gas ,coal ,nuclear.. as well as investing in future technologies. ( although I would reconsider this idiocy of turning food into fuel)

To me the logic of domestic drilling is in ,as I said above,in the increase in world supplies driving down prices at the pump ,and not necessarily energy independence . We cannot achieve energy independence on the back of petroleum.

tomder55
I hear you when you say the price will decrease if we increase our domestic output. But to be the devils advocate, in my mind opec seeing what we are willing to pay at the pump will just decrease their output to keep supplies the same. A wash so to speak. But as your previous statement says, our increased supplies will help the trade imbalance, that's the biggest reason I can see for drilling. And having a ready supply if things turn sour in other markets.
But I just don't see prices coming down to a point where we don't cringe at the pump, we better get used to it, and put alternatives on the fast track.

Agreed Opec might reduce supplies but they could no longer maintain their market share.But they have been losing their market share anyway. Seemingly every country that has any supply at all is exploiting it. We buy oil from sand imported from Canada. Canada and Mexico are 2 of our 3 largest suppliers.
Crude Oil and Total Petroleum Imports Top 15 Countries (http://www.eia.doe.gov/pub/oil_gas/petroleum/data_publications/company_level_imports/current/import.html)

If prices did come down to the levels of the past then domestic production would not really be an option. The oil companies will not drill and refine if the costs outweigh the profits. That's reality .

I'm only looking for a gap solution to buy time for when alternative become viable (if ever) . That is why my approach was comprehensive. No single proposal is a solution in itself. WE cannot achieve energy independence by drilling alone. But drilling and refining in tandem with conservation;increased efficiency in autotechnology ,nuclear power ;clean coal ;natural gas ;certain sensible biofuels (converting corn into fuel not being one of them) and development of the renewable future energies is the path we should take.

Set America Free is a bipartisan group that generally has the right idea.
http://www.setamericafree.org/index.htm

http://www.setamericafree.org/blueprint.pdf

Hello:

I know as little about this subject as anyone...

The Dems say they can't give any more oil leases out because the oil companies aren't drilling on the ones they already have... That's all I know.

However, I surmise that the oil companies know there ain't any oil in the ground where they already have leases. They want new leases where there's a good possibility of finding oil.

Or, maybe I'm not so smart.

excon