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Is it Worth Drilling For More Domestic Oil?

Newt Gingrich’s American Solutions group has mounted an online petition designed to persuade Congress to open up domestic sites that are currently closed to oil and natural gas exploration. That’s certainly an understandable sentiment, given the skyrocketing increases in the price of oil over the past couple of years. But opening up for exploration is not going to do much for prices right now–oh sure, domestic exploration might drop the price of oil and provide some relief from any speculation driving up the price, but it’s not going to change the fundamentals on the ground for over a decade. In other words, oil might drop in the near term, but it won’t drop that much and it will start to go up again. Additionally, drilling for more oil won’t do anything for the price of gas without a concurrent expansion in refinery capacity.

So, even if we were to open up all of our offshore and onland sites for oil exploration today, it would be at least a decade, if not longer, before that oil started pumping. Meanwhile, over that decade, subsidized consumption in India and China would continue to rise, OPEC fields would continue to be maxed out, refineries would likely still be running at full capacity, and as a consequence, gas prices would still continue to increase at a decent clip. And the consequences of those gas prices rising–more mass transit, more fuel efficient vehicles, more investment in alternative energy sources–would also likely continue.

So after a decade of those trends, how much of a difference are new sources of oil going to make? If it turns out that alt-energy can’t keep the pace yet to make up for oil, then new supplies of oil might not be enough to cover ever-increasing demand. So at best we might just be looking at a slowdown in the pace of oil price increases. If it effects oil prices much at all. Granted, an increase of supply usually causes a decrease in prices, but given that offshore oil and shale oil cost more to extract than sources found in a lot of foreign fields, those costs have to be transmitted into the price. Not to mention the very real danger of demand exceeding supply a decade from now–even with the new oil sources. If that’s the case, our new sources of oil aren’t going to put a dent in the price. So is there really that much of a benefit, here?

On the other hand, if more alternative energy supplies become more feasible and help to decrease the overall demand for oil over the next decade, a sudden glut of new oil supply might threaten to take us one step backward by making oil cheap enough to slow down alt-energy development. Economically beneficial, sure. But even if you’re a global warming skeptic you have to admit that’s not good for the environment from other perspectives. Additionally, increased production from US oilfields would still not be enough to eliminate the necessity of the importation of foreign oil, so the problems associated with that would move back to the forefront.

On the other hand, if over the next decade alternative energy sources and ultra-fuel efficient vehicles become good enough, you might run into a situation where the higher costs of domestic oil extraction make it less profitable for oil companies to continue extraction–especially of shale oil sources. If that’s the case, then what’s the point of opening up the fields in the first place? (This is, admittedly, the least likely of these three scenarios, but it’s not that far out there.)

So what I’m left with here is a pretty high level of skepticism that, given the long time frame involved, opening up more domestic production of oil is going to have much of a benefit for the average American. So while I’m not necessarily opposed to more drilling in principle, in practice I just have to say that right now I’m not sure if there’s much point to it.

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About Alex Knapp
Alex Knapp writes about pretty much everything under the sun, including politics, art, religion, philosophy, sports, music, culture, and science.

Comments

  1. SDM says:

    Drilling for more oil to solve the energy problem is a little bit like finding a backup dealer to solve your heroin problem.

    Like or Dislike: Thumb up 1 Thumb down 1

  2. Hoodlumman says:

    Dems have been using the “it’ll be 10 years before we see a drop of ANWR oil” line for about… 10 years. Nice.

    Like or Dislike: Thumb up 0 Thumb down 1

  3. Steve Plunk says:

    A person could start saving for their retirement early or they could put it off like the grasshopper. It’s the same thing, should we think about the long term future or just worry about what will relieve prices today? It is wrong to think of it in those terms since we can do both. We can authorize drilling in previously forbidden areas while at the same time look to alternatives.

    No one seems to think we will ever see oil below $50 or $60 a barrel ever again so exploration and development of oil shale and even alternative energy technologies should remain feasible. But why should we penalize ourselves now by not drilling? Shouldn’t the transition be slow and controlled rather than at the tip of an oil spike? Such a controlled transition is less likely to permanently damage our economy.

    The gamble here is pretty easy to figure out. Let private companies risk their own money to develop our own oil reserves. If that gamble pays off we save our economy, if it fails we are no worse off. Why is that not a good bet?

    Like or Dislike: Thumb up 1 Thumb down 0

  4. Bithead says:

    So, even if we were to open up all of our offshore and onland sites for oil exploration today, it would be at least a decade, if not longer, before that oil started pumping.

    I will remind you that Clinton vetoed ANWR using that excuse. Barring that, that oil would be avilable to us today.

    Meanwhile, over that decade, subsidized consumption in India and China would continue to rise,

    No. China has already started moving away from such subsidies, as has India. I see no reason for them to move back in that direction.

    OPEC fields would continue to be maxed out

    ,

    No. Does anyone remember the speculation a month or so back that suggested that the reason OPEC turned us down on raising their output was that they couldn’t? They have raised it now.

    refineries would likely still be running at full capacity,

    That’s a situation that could be solved, short term by eliminating the caffeteria blends and seasonal blends until there is capacity to deal with such requirements.

    What’s lackin,g of course, is the courage to do so.

    As for the “You’re adiccted to oil” nonsense… you know.. I’m forced to admit this:

    Hello, My name is Bithead, and I’m an addict. I’m addicted to air. There are some days when I just can’t get by without it. I’m hoping taht adding a government regulation or a tax will cure me of this addiction.

    Like or Dislike: Thumb up 0 Thumb down 0

  5. Alex Knapp says:

    Steve,

    The gamble here is pretty easy to figure out. Let private companies risk their own money to develop our own oil reserves.

    I’m sympathetic to this argument, but using history as a guide, opening up exploration generally means that oil companies get the use of those lands tax, rent, and royalty free, which lowers the risk/reward ratio for them quite a bit. So taxpayers are going to risk money on this, too. Ideally, we’d charge oil companies to explore federal lands. But we don’t now and I don’t see that changing. So you have to take that into account, too.

    Like or Dislike: Thumb up 1 Thumb down 0

  6. Dave Schuler says:

    Alex, I have a small problem with the thrust of your post. My understanding of the sub-text of it is that you’re looking for the grand, overarching solution to our energy problems. I think that’s a forlorn hope.

    Rather than some 100% solution our energy future is likely to be made up a a hundred 1% solutions. One of those 1% solutions is likely to be more drilling.

    So will commercially viable, sustainable, morally tenable second generation biofuels. And hybrids. And EV’s. And reducing the subsidies for gasoline consumption.

    I just think that all these prospective solutions should rise and fall on their own merits. Don’t subsidize any of them. Tax and regulate them as necessary to ameliorate negative externalities.

    Like or Dislike: Thumb up 0 Thumb down 0

  7. Alex Knapp says:

    Dave,

    I don’t disagree with you about the hydra-esque approach to energy. I’m only questioning if more domestic oil is really going to do anything to ameliorate the problem. My guess, to summarize the post above, is that increased drilling will be a neutral-to-bad idea in terms of overall benefit.

    Like or Dislike: Thumb up 0 Thumb down 0

  8. davod says:

    “So, even if we were to open up all of our offshore and onland sites for oil exploration today, it would be at least a decade, if not longer, before that oil started pumping.”

    Clinton banned drilling in ANWAR 10 years ago and Schumer just said drilling would not solve the problem because it will take ten years.

    The hypocrisy is astounding. We, the enlightened ones, will not drill or mine for energy because we want to protect the environment. All the while shrieking at others to crank up the volume.

    I wonder if this is how some of the earlier great powers died out.

    Like or Dislike: Thumb up 0 Thumb down 0

  9. M1EK says:

    FUNGIBLE. FUNGIBLE. FUNGIBLE.

    We can drill all we want; but it doesn’t go on our market; it goes on the world market. We risk throwing away our future national security (for when oil really does run out enough to not be fungible anymore) so that the entire world can save a quarter a barrel. (Our maximum output is nothing compared to the world).

    Like or Dislike: Thumb up 1 Thumb down 0

  10. Anderson says:

    Alex, I think the question any good Republican has to ask himself on this issue is, What Would Hitler Do?

    I think the people that elect us deserve to know what our plan is. The Republican side has come out with a plan. They say, “Look, we’re gonna take advantage of our natural resources. We’re gonna take advantage of the things that we were God-given in this land. We’re gonna take advantage of our oil reserves, of our natural gas, of our abundance of coal.” We’re gonna take advantage of those things, and we’re gonna use the technology that we’ve been so good about coming up with. We’re gonna take and convert this shale to oil, which Hitler did in the late ’20s. In the late ’20s. And we don’t think that we can do that today?

    Rep. Lynn Westmoreland (R-GA). N.b. that Hitler held no office until January 1933.

    Like or Dislike: Thumb up 0 Thumb down 1

  11. Dave Schuler says:

    My guess, to summarize the post above, is that increased drilling will be a neutral-to-bad idea in terms of overall benefit.

    Why guess? Let many flowers bloom. Quantify the cost of the negative externalities and tax; don’t ban. See where it gets you; repeat.

    Like or Dislike: Thumb up 0 Thumb down 0

  12. Michael says:

    Alex,
    No current oil-alternative will be able to replace a substantial enough amount of the oil-consumption market in 10 years time that additional oil from domestic drilling will not still be beneficial in that time frame. There is also the fact that starting to allow new drilling today has a very high likelihood of producing a usable energy source in 10 years, again something that isn’t true for any current oil alternatives.

    Now I’m not fan of oil, I’d like to see it’s use all but stopped, but just because our dependence on oil is a bad thing, doesn’t mean that new use should be avoided. Not drilling won’t decrease our dependence on oil in 10 years, and it most likely won’t decrease our demand for oil in 10 years. The only argument to be made would be that the cost of drilling is larger than the benefit that can be obtained from it (which was the usually case at

    Like or Dislike: Thumb up 0 Thumb down 0

  13. Michael says:

    (Sorry for the repost, I didn’t properly convert my ‘<‘ in the first post (oddly the preview page showed the entire contents), so most of it isn’t visible unless you view the page source. James, if you would kindly fix it for me, you can remove this post, as it’s exactly the same).

    Alex,
    No current oil-alternative will be able to replace a substantial enough amount of the oil-consumption market in 10 years time that additional oil from domestic drilling will not still be beneficial in that time frame. There is also the fact that starting to allow new drilling today has a very high likelihood of producing a usable energy source in 10 years, again something that isn’t true for any current oil alternatives.

    Now I’m not fan of oil, I’d like to see it’s use all but stopped, but just because our dependence on oil is a bad thing, doesn’t mean that new use should be avoided. Not drilling won’t decrease our dependence on oil in 10 years, and it most likely won’t decrease our demand for oil in 10 years. The only argument to be made would be that the cost of drilling is larger than the benefit that can be obtained from it (which was the usually case at <$40 a barrel).

    I’m also sympathetic to the argument that making oil cheaper will reduce the pressure to find a usable alternative. However, in this at least we have a rather easy solution: taxes. If oil starts to become too cheap, we can increase taxes to maintain pressure for alternatives, we can even use that tax revenue to fund research and development into those alternatives. There’s also the built-in regulators, the fact that any new sources will be more expensive than current sources, so that if the global cost of oil drops below a certain point, companies will stop pumping from those locations.

    In the end we will need an alternative source of energy because eventually oil will run out. New drilling will only be a tourniquet but usually having tourniquet is better than not. In 100 years our energy sources will likely be a combination of bio-fuel for transportation and solar/wind/hydro for electric. Ultimately nuclear is likely to be the only source that will be able to provide our energy needs 1000 years from now.

    Like or Dislike: Thumb up 1 Thumb down 0

  14. Bithead says:

    We can drill all we want; but it doesn’t go on our market; it goes on the world market. We risk throwing away our future national security (for when oil really does run out enough to not be fungible anymore) so that the entire world can save a quarter a barrel. (Our maximum output is nothing compared to the world).

    As has been discussed previously, you seriously under-estimate the degree to which our commitments to opening up what oil we control, will lower the price. I’ll give you marks for constistancy, but like the man said, consistancy is only a virtue if you’re not a total screwup.

    Like or Dislike: Thumb up 0 Thumb down 0

  15. Beldar says:

    The oil and gas production we have now all had long lead-times and large investments.

    The current acute pain from high prices isn’t going to be fixed by starting major new investments now, that’s true. But that does not mean that the current acute pain should be ignored. It’s a very, very good reason for us to immediately re-evaluate our long-term plans and options.

    In energy production, everything is long-term. Why do you think most of our current petrochemical refining capacity (including plastics industry) is concentrated along the Texas-Louisiana Gulf Coast? It’s because that’s where the federal government started a string of artificial rubber research and development plants in the late 1930s, in anticipation that rubber would become a scarce world-wide commodity in the coming world war. After 1939 those plants and associated refineries were expanded at top speed, just barely in time to keep Great Britain’s war effort afloat despite the predations of German submarines operating in the Gulf. After the war, the major oil companies — who’d been providing the technical expertise for those plants and refineries all along — bought out the federal government’s ownership interests.

    Like or Dislike: Thumb up 2 Thumb down 0

  16. DL says:

    Is it a supply shortage or market speculation? If it’s the later, a well announced full scale attempt to drill,find,drill, find etc would calm the speculators. If it’s a supply problem – even ten years away, we had better get started now -now is always the best time to do this stuff. As any alternate fuels come on line (and we can pay for their discovery – if we don’t foolishly pay for a global warming scam) then as we find alternative fuels -we can close up the wells on an equal basis.

    Why? War -just enough to drain us? How long does the eco-left think they can avoid it when the powers that want to see us fail are watching our energy weakness and our cowardly response to it.

    Like or Dislike: Thumb up 0 Thumb down 0

  17. Wayne says:

    It is pretty lame to say that we weren’t wise enough ten years ago to prevent the trouble we are in now so let’s not be wise now. It is about like someone not exercising then when they have a small heart attack saying “why should I exercise now. It won’t prevent the heart attack I already had.” Granted exercising is only part of what you should do but it is an important part.

    It sound like Alex wants the oil prices to be high so it will encourage less use and increase research. Maybe he thinks we should double the price now instead of waiting for it to go up.

    Hate to say this but Michael has some good points. Alex is hoping that some new technology will solve our problem why discounting known solutions to the demand problem. Remember fusion technology has been only 20 years away for decades now. I hope new technologies will be realized but I’m not going to bet my house on it. Wind generators have made some pretty good advance but many of the rest have been coming up short. We need to do it all including new exploration and refineries.

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  18. Alex Knapp says:

    It sound like Alex wants the oil prices to be high so it will encourage less use and increase research.

    That would be nice, yes, but it’s not my #1 priority. I am simply skeptical that, given current trends, drilling is going to make a difference in a decade.

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  19. Michael says:

    It sound like Alex wants the oil prices to be high so it will encourage less use and increase research.

    Which is a perfectly reasonable goal. We just have to make sure that we’re clear that this is the goal.

    Hate to say this but Michael has some good points.

    Heh, and I’ll never let you live it down either.

    Like or Dislike: Thumb up 0 Thumb down 0

  20. We can send a man to the moon in less than ten years but somehow we cannot get oil out of the ground — even when we know where it is — and to market in the same time frame.

    As for any new oil not affecting demand and prices, please. Are you serious? Prices are rising based on expected demand and supply for the future, not the present. If demand is going to keep rising and we don’t increase the supply, even if it is many years down the road, then we are going to be looking at $8 or $12 or who knows per gallon of gasoline. Soon.

    Meanwhile, keep rolling out those if statements about magical new technologies, that presumably must be available in less than ten years (or shouldn’t we should begin drilling now?) as though hope for change is going to solve all our problems. Oh, I can only hope (there I go again) I didn’t just violate any of Senator Obama’s copyrights. But if Peak Oil won’t happen on its own, I guess you want to force it to happen. I tend to put my faith a little more in the invisible hand to determine when alternate forms of energy and transportation will become economically viable. Take a look at ethanol production from corn to get an idea of how things work out when the “good people” decide what’s best for us independent of actual reality. I think that’s usually called the triumph of hope over experience, but I have to be careful because I think that’s also one of Senator Obama’s campaign themes this year.

    In the meantime, by all means, I hope brilliant minds form all over keep looking for alternative sources of energy and better modes of transportation, but wanting them and having them are two entirely different things. But while environmental extremists keep pushing the pendulum higher and higher watch out when it swings back and hard. My guess is somewhere around $6 a gallon, the public is finally going to say enough and the no compromise approach to drilling is going to be completely thrown aside, not just tweaked.

    Environmentalism and the church of Gaia may be about to get its first real push back in about 40 years. Otherwise, I wonder if we’ll still hear the “no blood for oil” chant when the food/job/oil riots of 2010 take the shine off hoping that change will save us.

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  21. Boyd says:

    If high prices for gasoline (as in Europe, where taxes have long pushed prices to stunningly high levels) encourage the development of alternatives, why haven’t we seen any alternatives coming out of Europe? They’ve had ridiculously high prices there for decades!

    Like or Dislike: Thumb up 1 Thumb down 0

  22. Michael, any idea what people one-hundred years ago, not to mention one-thousand years ago, would have thought our primary modes of transportation and sources of energy would have looked like? I suggest that your projections now will be no better than their projections then.

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  23. Alex Knapp says:

    If high prices for gasoline (as in Europe, where taxes have long pushed prices to stunningly high levels) encourage the development of alternatives, why haven’t we seen any alternatives coming out of Europe?

    Europe does have vehicles with much higher fuel efficiency than the U.S., actually. But I think that the population density in Europe also made mass transit an easier, cheaper option in Europe.

    That said, Boyd, I think that’s an excellent question that’s worth considering when looking at the costs/benefits of increased oil production.

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  24. c. wagener says:

    Granted, an increase of supply usually causes a decrease in prices, but given that offshore oil and shale oil cost more to extract than sources found in a lot of foreign fields, those costs have to be transmitted into the price.

    Well yeah, more supply, lower prices.

    Once expensive sources, such as oil sands, come on line prices decline. The increased cost is not “transmitted into the price”. As long as the producer is selling above his costs he will produce.

    Among other reasons we should drill here include the trade deficit (including sending money to our enemies), jobs and the environment. The notion that alternatives to oil are better for the environment are rather sketchy. Damns, wind farms, electric cars and biofuels all have significant problems. Further, drilling here under the scrutiny of rich Americans is considerably more environmentally friendly than drilling near poor folks in the third world.

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  25. Steve Plunk says:

    Boyd’s point just smacked me upside the head. If there is some magical miracle cure out there waiting for gas to reach $8 before manifesting itself why haven’t the Europeans developed it and sold it to us? It appears the one major difference is their willingness to use nuclear energy but thanks to Jane Fonda, Michael Douglas, and Jack Lemmon we have rejected that solution.

    Dave S. said it as I have said it numerous times before, it is a hundred 1% solutions and drilling is one of those solutions.

    The cost/benefit equation is very simple, since the costs are borne by private companies let them decide. As for charging royalties just make them reasonable and get the deal done.

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  26. Zelsdorf Ragshaft III says:

    If there was an oil shortage, there would be lines at the gas station. I find I can buy all the gasoline I want at $4.49 a gallon. The other day oil rose about $10 a barrel because of a rumor a pipeline was attacked in Kenya or some such place. That, folks, is speculation. Funny how this is an election year and the price of gas is going through the roof which benefits just one party according to them. Had Willie Jeff allowed drilling in Anwar, that oil would be on line now. We do not get much oil from Kenya, or most of the middle east, however we have not increased our capacity to produce or refine in quite a long time thanks to the environmentalists and other Democrats. George Soros recently said this was a price bubble and would soon burst. I wonder where his money is in all of this. My point being we have tremendous oil reserves on land and off shore. The Chinese are drilling for oil off the coast of Cuba. Alex makes it sound like it would be his money invested in exploration. Alex, the oil companies do not waste much money on speculating where oil is, they know where it is. Oil shale is abundant in Colorado. Some estimate 10 trillion barrels. That is more than Saudi Arabia has. It is not feasible to extract it at $40 a barrel yet at $60 it is profitable. Coal to liquid is another process available to us now, if Congressional Democrats would allow it. There is untold oil off our coasts. Let’s get it before someone else does. All we here is reasons why we should not, have not and won’t. The results of such thinking are becoming clear at the pump. Pay more. I like my solution best. To decrease demand. I like the Stalin solution. If you don’t want us to drill and consider yourself an environmentalist. Off to the gulag. All the big coastal cities would be empty. Hence, demand falls.

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  27. Wayne says:

    Michael
    I understand why someone may want the price of oil to be high. I just want them to state it up front. People like Alex should be praising the high prices and not complaining. When they complain when it is in fact their goal then it makes them a hypocrite. It wouldn’t surprise me if many Dems want high oil prices. Their actions sure make it look that way. I just think it is hypocritical of them when they turn around and complain about it.

    I for one want low energy prices since affordable energy is a major factor in the economy. Environmental impact should be considered but I think that crowd has greatly overstated the impacts.

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  28. Bithead says:

    Environmentalism and the church of Gaia may be about to get its first real push back in about 40 years. Otherwise, I wonder if we’ll still hear the “no blood for oil” chant when the food/job/oil riots of 2010 take the shine off hoping that change will save us.

    Personally, I counter the no blood for oil with ‘no oil for Democrats’.

    The other day oil rose about $10 a barrel because of a rumor a pipeline was attacked in Kenya or some such place

    Well, yes,that was the official reason. The real reasonhowever was because of the attitudes displayed in Congress the day before that huge hike, as expressed by Maria Cantrell:

    Sen. Maria Cantwell (D-Wash.) suggested that oil companies may be manipulating energy markets as Enron did in 2001, and that the Federal Energy Regulatory Commission and the Federal Trade Commission needed to more aggressively regulate all futures markets

    The following day, the prices went through the roof. Again.

    The comments of Cantwell and others, show clearly that Congress is not ready to do what needs be done. Rather, they’ll continue down the path of trying to regulate their way out of the situation, rather than simply get out of the way, which is in reality the only way out.

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  29. Bithead says:

    If high prices for gasoline (as in Europe, where taxes have long pushed prices to stunningly high levels) encourage the development of alternatives, why haven’t we seen any alternatives coming out of Europe? They’ve had ridiculously high prices there for decades!

    The answer, of course, is that there are no viable alteratives. And so cutting ourselves off from what works now, is downright foolish.

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  30. Alex Knapp says:

    I understand why someone may want the price of oil to be high. I just want them to state it up front. People like Alex should be praising the high prices and not complaining.

    Actually, while I am generally in favor of gas prices not being kept artificially low (as they have been for the past five decades until recently), I do have deep concerns about the rate of oil price increases.

    Additionally, I’m dubious about spending taxpayer dollars on a project of opening federal lands to oil exploration when the long term benefit of same might well be nil.

    Contra what some commenters in this thread have stated, the oil companies most certainly do not bear the bulk of the risk when it comes to exploration and drilling. Taxpayers do. If the system was set up so that oil companies bore the primary risk burden, I’d be more amenable to allowing more drilling. But it isn’t. And that has to be a consideration when you’re discussing opening up lands to oil drilling.

    And Wayne, I wouldn’t be so quick to dismiss environmental concerns. I consider myself a conservationist, rather than an environmentalist, so I don’t particularly care about the habitat of the three-breasted slug worm. I do care, however, about the effect of increased particulates in the air on the asthmatic, the effects of offshore drilling on coral and other species that are central to the life cycles of the oceans, the effects of increased acidification of the oceans due to CO2 emissions, and, yes, climate change. I don’t care about nature per se–but I do care about the Earth remaining a habitable place for the human race, and fossil fuel use threatens that future.

    Yes, there has to be a balancing act. Yes, alternative energy sources aren’t ready yet. Yes, too high energy costs are dangerous to the economy, and yes that’s a real concern.

    But if we’re going to spend taxpayer money on oil exploration (and again, that’s what’s going to happen if we open up the fields the way Washington works and will continue to work), then we damned well better be getting something out of it, and right now I’m not convinced that we will.

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  31. Michael says:

    Michael, any idea what people one-hundred years ago, not to mention one-thousand years ago, would have thought our primary modes of transportation and sources of energy would have looked like?

    Given that the early 1900s where then internal combustion powered automobiles really started taking off, they probably though it’d look a lot like it does now. In 1008 there wasn’t even a concept of an energy-based society, but barring any nuclear Armageddon, we will still have an energy-based society in 3008.

    I suggest that your projections now will be no better than their projections then.

    I’m not sure if this is real or not (so far I haven’t found anything to discredit it), but if it is then predictions from 100 years ago were actually pretty good. I’d be happy to be anywhere close to that kind of accuracy.

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  32. Michael says:

    Boyd’s point just smacked me upside the head. If there is some magical miracle cure out there waiting for gas to reach $8 before manifesting itself why haven’t the Europeans developed it and sold it to us?

    Because while Europeans pay more $/volume, the probably pay roughly the same $/time simply because they consume less volume/time.

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  33. davod says:

    “Environmentalism and the church of Gaia”

    When will parishioners wake up to the fact that many of their priests are teaching paganism.

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  34. davod says:

    How is the price of oil being kept artificially low?

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  35. Michael says:

    Contra what some commenters in this thread have stated, the oil companies most certainly do not bear the bulk of the risk when it comes to exploration and drilling. Taxpayers do. If the system was set up so that oil companies bore the primary risk burden, I’d be more amenable to allowing more drilling. But it isn’t.

    I that makes me wonder, if we assessed the value of those public lands based on the predicted quantities of extractable oil, and sold that land to the oil companies based on that, what would the price/acre be and would the oil companies buy?

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  36. … so far I haven’t found anything to discredit it …

    Epistomologically, this is not a sound basis for reasoning. Or in other words, absence of evidence is not evidence of absence. Perhaps if you racked your brain harder…

    (P.S. I apologize for the last cheap shot and dead horse kicking. Snark just gets the better of me. Maybe it is time to quit again.)

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  37. Michael says:

    Epistomologically, this is not a sound basis for reasoning. Or in other words, absence of evidence is not evidence of absence. Perhaps if you racked your brain harder…

    I checked the usual sources, snopes.com and google, all I found were other references to it, and to a scanned image of the purported article. Snopes forums discussing it seem to think that the predictions are at least taken from a real article published at that time in the mentioned publication.

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  38. Bithead says:

    Because while Europeans pay more $/volume, the probably pay roughly the same $/time simply because they consume less volume/time.

    Well, yeah. They tend not to travel nearly as much. I posted some documentation to this point taht I can brng up at need, but I fail to see how not traveling as much is an advantage.

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  39. Michael says:

    Well, yeah. They tend not to travel nearly as much. I posted some documentation to this point taht I can brng up at need, but I fail to see how not traveling as much is an advantage.

    It means that they’re not feeling the same amount of economic pressure from high oil prices as we are, thus they don’t have the incentive to produce a cheaper alternative, which is why they haven’t.

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  40. Steve Plunk says:

    I fail to be convinced that taxpayers have risks associated with oil exploration and development.

    If we allow oil companies to drill and pump how exactly does that cost the taxpayer? Now the federal government may not get the royalties it thinks it deserves and that conceivably could be considered the taxpayer losing money but more likely the taxpayers would be rewarded with lower energy costs and come out the winner in the grand scheme.

    How about this? Let everyone vote on putting their particular share of federal land into a pool of available drilling areas. No royalties just cheaper gas. We know where this would lead us, to a good chunk of ANWR, the continental shelf, and where ever else oil resides being drilled and pumped. The federal government doesn’t own it, we do.

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  41. [...] answer to the question is a resounding YES. That plays on this matter, too. I’m telling you, folks… the party [...]

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  42. Wayne says:

    As I recall the Federal government gets billions of dollars in royalties from past land lease. Also much of the oil that goes into the oil reserves are from these leases. I don’t recall off the top of my head the federal government giving away oil laden land for free. Some of these off limit lands are not own by the government but only regulated.

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  43. M1EK says:

    Bithead, spare me the lectures from an economic illiterate. The price of oil is set right now based on demand, NOT based on marginal cost of production; and any small increase in world production from our end would be swamped in the numbers. No, a small amount from us wouldn’t do squat.

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  44. M1EK says:

    As for why high gas prices haven’t led to innovation – look no further than your local zoning code. The market would love to provide us with dwellings closer to work and play, but the strict suburban nature of the zoning code pretty well stymies it in doing so.

    In the rare cases where zoning restrictions are actually lifted, as happened recently in the West Campus area of Austin, the crane becomes the local bird of choice.

    Bithead is right on one thing: there IS no alternative, if by alternative you mean “some kind of fuel that will let us keep driving 20,000 miles by ourselves in huge vehicles”. That’s why part of the solution has to be getting rid of strict suburban low-density mandates, and then investing a ton of money in rail transit (which unlike automobiles can EASILY be fueled by electricity, which IS something the Europeans have done and are continuing to do).

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  45. John425 says:

    Previously, this very blog posted what were “needed alternatives” to the using of one cubic mile of oil.

    E.g.:Solar panels

    Assuming annual electricity capture of 2.1 megawatts per solar panel, we’d have to place them on 4.2 billion rooftops. In other words, we’d have to install on them on 250,000 roofs per day for the next 50 years to have enough solar panels to offset our current annual oil usage (and this ignores things like coal; see below).

    Wind power

    What about wind power generators? You’d need 3 million to equal one CMO. That would require the installation of 1,200 per week for the next 50 years.

    Are we supposed to wait until these critical masses are met? A journey of a 1000 miles begins…

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  46. Bithead says:

    If we allow oil companies to drill and pump how exactly does that cost the taxpayer?

    Well, for one thing with more supplies, the government would be hard pressed to find excuses for invoking ‘windfall’ taxes on oil compaines.
    [/smirk]

    The price of oil is set right now based on demand, NOT based on marginal cost of production;

    Actually, it’s priced on perception and on myth. That’s why it’s called a bubble. All that’s needed is to turn the perception. this is a point that even George Soros stipulates to. How is it you (credibly) disagree?
    (Snicker)

    As for why high gas prices haven’t led to innovation – look no further than your local zoning code. The market would love to provide us with dwellings closer to work and play, but the strict suburban nature of the zoning code pretty well stymies it in doing so.

    People simply are not interested in moving ito high crime, high density areas that our masters at the UN would have us moving into.

    Bithead is right on one thing: there IS no alternative, if by alternative you mean “some kind of fuel that will let us keep driving 20,000 miles by ourselves in huge vehicles”. That’s why part of the solution has to be getting rid of strict suburban low-density mandates, and then investing a ton of money in rail transit (which unlike automobiles can EASILY be fueled by electricity, which IS something the Europeans have done and are continuing to do).

    For zall that, though, they still don’t USE it. They tend to stay at home, like good little serfs. they’re priced out of the market. I do not see that as a good thing. Do you?

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  47. TJIT says:

    Dave,

    You said,

    the effects of offshore drilling on coral and other species that are central to the life cycles of the oceans, the effects of increased acidification of the oceans due to CO2 emissions, and, yes, climate change. I don’t care about nature per se–but I do care about the Earth remaining a habitable place for the human race, and fossil fuel use threatens that future.

    Unfortunately biofuels, the main proposed alternative to petroleum, are far worse for the environment then petroleum production is.

    What About the Land? A look at the impacts of biofuels production, in the U.S. and the world

    The hype over biofuels in the U.S. and Europe has had wide-ranging effects perhaps not envisioned by the environmental advocates who promote their use.

    Throughout tropical countries like Indonesia, Malaysia, Brazil, and Colombia, rainforests and grasslands are being cleared for soybean and oil-palm plantations to make biodiesel, a product that is then marketed halfway across the world as a “green” fuel.

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  48. TJIT says:

    The quote above I attributed to Dave was actually by Alex.

    in other words “Daves not here man”

    Sorry for the confusion.

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  49. TJIT says:

    Alex you said,

    Additionally, I’m dubious about spending taxpayer dollars on a project of opening federal lands to oil exploration when the long term benefit of same might well be nil.

    and

    Contra what some commenters in this thread have stated, the oil companies most certainly do not bear the bulk of the risk when it comes to exploration and drilling. Taxpayers do.

    That is dead, flat, ignorantly wrong. If you want your comments on this topic to be taken seriously learn the facts which are.

    1. The oil companies pay for the right to explore.

    2. They spend their money exploring and drilling

    3. If they produce anything they pay a portion of the production to the federal government as royalties (around 12 percent of the amount of produced petroleum).

    Oil and Gas Lease Sales in Gulf of Mexico Attract $3.7 Billion

    Two federal sales of offshore oil and natural gas leases in the Eastern and Central Gulf of Mexico attracted more than $3.7 billion in high bids today, inaugurating enhanced revenue sharing with oil and gas producing Gulf states, instituting higher royalty rates and underscoring the region’s continuing importance as a vital source of domestic energy production for the nation.

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  50. TJIT says:

    M1EK, You said,

    As for why high gas prices haven’t led to innovation – look no further than your local zoning code. The market would love to provide us with dwellings closer to work and play, but the strict suburban nature of the zoning code pretty well stymies it in doing so.

    In the rare cases where zoning restrictions are actually lifted, as happened recently in the West Campus area of Austin, the crane becomes the local bird of choice.

    Good point and an excellent argument for the benefits of more cities following Houston’s no zoning model.

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  51. anjin-san says:

    1. The oil companies pay for the right to explore.

    Yea, like they have been doing in the gulf? Taxpayers screwed out of God knows how many millions and the Bush admin shrugs…

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  52. M1EK says:

    Bithead, once again you show your economic illiteracy. In most cases, whenever the strict suburban zoning code is lifted even a little bit, immediate development occurs – so obviously the market DOES want to provide higher density housing.

    TJIT, Houston doesn’t have the separation of uses found in traditional zoning, but it has all the other stuff (parking requirements, lot size rules, etc) which still mandate suburban crap essentially everywhere outside a small area.

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  53. Bithead says:

    In most cases, whenever the strict suburban zoning code is lifted even a little bit, immediate development occurs – so obviously the market DOES want to provide higher density housing.

    But does the market want to BUY it? Mostly, the answer remains ‘no’.

    Are we now to assume that the left’s claims that Wite Flight is no longer the officially valid reason for people moving out of the cities?

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  54. M1EK says:

    Bithead, yes, the market wants to buy it. Once again, you display a stunning economic illiteracy for a self-described Republican.

    If the market is selling it, there have to be willing buyers. Duh.

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  55. Bithead says:

    If the market is selling it, there have to be willing buyers. Duh.

    But not in any large numbers. If there were large numbers wanting to buy such, you’d not have any complaints, would you?

    HAve a nice ‘Duh’.

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  56. M1EK says:

    No, Bithead, the market can’t produce anything remotely close to demand because in almost every square foot of land in this country, strictly suburban zoning laws apply. Do you have a reading comprehension problem?

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  57. TJIT says:

    anjin-san,

    You look like an idiot because you did not bother to read the link I posted.

    You said

    Yea, like they have been doing in the gulf? Taxpayers screwed out of God knows how many millions and the Bush admin shrugs…

    The link I provided described how the oil companies paid 3.7 billion dollars for the rights to explore in wait for it, the Gulf of Mexico.

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  58. Sal says:

    Alex,

    You say it would be at least a decade before we realized any benefits from additional drilling. How long would it be to realize those benefits if we don’t? This “at least a decade” mentality got us into this mess 10 years ago when Bill Clinton refused to authorize drilling in ANWR.

    You say in ten years if alternate energy was not yet able to make up for the increase in the demand for oil that the prices would continue to rise. Isn’t it astonishingly obvious that those prices would rise exponentially faster if the supply was smaller, and especially if the supply continued to be in the hands of other countries? The high price is not the sum total of the problem. Paying the high prices to our enemies is something you’re not taking into account.

    If alternative energies or any other scenario produced a glut of oil within the next ten years, then those poor poor oil companies would have a debt on their hands. Why not let them take that risk? Remove these restrictions now which have taken us to a precarious place and can’t possibly do us any good in the future.

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  59. John David Prince says:

    Oil keeps going up, demand keeps going up in the rest of the world while only going down by a few percentage points in the US. The cost of energy is rising while the dollar keeps falling. The Federal Reserve has devalued our dollar further by continuing to print currency and flood the market with loans in order to bail out the US financial market. This has increased inflation and directly devalued the dollar. Oil is traded on the world market in dollars (for now). We are experiencing sticker shock due partly to the fact that it requires twice as many dollars to purchase a gallon of gas while our wages have not increased. Debt and war deficit financing has further devalued the dollar with additional influence from a stagnant or weakening US economy. Supply and Demand is only one of many influences upon why gas is headed to five dollars per gallon. We could subtract over 30 percent of the cost of a gallon of gas by raising the value of our currency, driving more efficient automobiles, and walking away from gasoline burning engines entirely. Even if we drill off the coast of both coasts and in Alaska, that oil is not required by law to remain in the US for domestic use. All oil ends up on the world market. If we do keep all US oil domestic, it would not be enough to fuel our current or future demand. Has anyone realized that oil, coal, natural gas, even nuclear power is a dead end source of energy (not renewable)? Has anyone thought that about the fact that foreign energy suppliers will reduce their output as US companies increase production in order to keep the cost of energy or profit margins elevated? The answer is not more fossil fuel; the answer is the elimination of fossil fuel. We have the technologies now, with more on the way. We need to convert our civilization for compatibility with the new technologies. We must be motivated for the future, our children’s future and act. But we are facing foes that fear change; we face foes that want to continue to profit from antiquated limited forms of energy. We are facing those who wish to use the fear of high-energy costs in order to fuel their businesses need to evade environmental law. This is all about profit motive rather than a genuine concern for the future of energy.

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