About offshore and other domestic drilling (which is a pres. campaign Issue)

[Kurt_and_Hunter]

Steny Hoyer gave a very good presentation today about the upcoming Democratic energy bills. I was full of tough talk about the 88 million (or billion?) US acres currently leased or available for lease for oil drilling. There is also talk about the alaskan natural gas pipeline, offshore drilling, and who knows what else.

I am assuming that the upcoming series of Democratic energy bills will be folded into our presidential campaign platform. And there will be bills upon bills... nobody in congress is going into Novemeber without having voted for a lot of energy bills.

But no matter what Dems come up with, McCain will still be calling for more new US production than Democrats will be calling for. So something to realize about seeking domestic oil supplies...

The oil industry in America is not nationalized, and we don't get subsidized gas from domestic production, so it doesn't make a lot of difference whether we drill here or someone else drills elsewhere. No matter where it comes from, it is still going to cost $140/barrel.

There is a Democratic bill in the works to prevent Alaskan oil being sold overseas. Again, what difference does it make? It's a global market. We sell Alaskan oil to China. We buy Saudi oil from the Saudis... it's all the same. (By boat, Saudi Arabia is much closer to New Jersey than the Alaskan oil fields are, and the Alaskan fields are obviously closer by boat to China than they are to refineries in Houston, and so on...) But "American Oil for Americans Only" is probably good politics, and fairly harmless.

Oil is expensive because people all over the world want oil. There is only one thing we can do today that would reduce the price of oil, and I wouldn't recommend it... nuke all Chinese centers of industry. Short of that, there's no easy fix.

For new US production of oil to change the price of gas in the USA we would need to produce enough to meaningfully affect GLOBAL supply.

That said, there's probably a lot to be said for increasing domestic production as a purely political issue. We will see how it all plays out.

On a rhetorical note, it may be worthwhile for Obama to point out that oil would be cheaper today if Iraq were not producing two million barrels a day less than they were before we blew up their country. (And that was under the old limited production, oil-for-food sanctions regime!)

[grantcart]

1. It is also a completely fraudulent issue to raise - there are no rigs available

No rigs for Ocean drilling are expected to be available in the next 4 years.

The rigs needed for drilling are simply not available and if you ordered today you wouldn't get it for 5 years and the cost would be $ 500 million.

It is all just a smoke screen.

Huge fields have been discovered off of Brazil and they cannot get their rigs for another 3 years even though they are expected to be much more profitable than anything in North America.

The oil from those fields will not enter the market place until 2013.



http://www.starnewsonline.com/article/20080619/ZNYT01/806190306/0/ARTICLE

Demand is so high that shipbuilders, the biggest of whom are in Asia, have raised prices since last year by as much as $100 million a vessel to about half a billion dollars.

“The crunch on rigs is everywhere,” said Alberto Guimaraes, a senior executive at Petrobras, the Brazilian oil company that has discovered some of the most promising offshore oil but has been unable to get at it.

“Almost 100 percent of the oil companies are constrained in their investment program because there is no rig available,” he said.

As a result, drilling costs for some of the newest deepwater rigs in the Gulf of Mexico — the nation’s top source of domestic oil and natural gas supplies — have reached about $600,000 a day, compared with $150,000 a day in 2002.

These record prices have spurred a new wave of drill-ship construction. This boom could lead to renewed offshore oil exploration that would eventually bring more supplies to the oil market, and push down prices.

Already, 16 new drill-ships are scheduled to be delivered to oil companies this year — more than double the number delivered over the last six years combined. In fact, 75 ultra-deepwater rigs should be delivered from 2008 to 2011, according to ODS-Petrodata, a firm that tracks drilling rigs.

[babylonsister]

2. Thank you both for this dose of reality. Can you endure

another one?

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x3597623

I am sad and don't know what to believe. But I guess I do.

[Kurt_and_Hunter]

3. And of off-shore drilling somehow lowered the price of oil a lot, then the price of oil would be

too low to make off-shore drilling profitable.

I love how people seem to think that Americans will get all this new American oil for free or something.

[Maddy McCall]

4. Remember a couple of years ago...

the story was "refinery capacity, not supply" is why gas prices were escalating?

What happened to THAT problem? Have tons of refineries been brought on line in the past couple of years?

[Kurt_and_Hunter]

5. My suggestion was a windfall profits tax with new refining investment 100% deductible from the tax.

I don't know if it would have affected the price of gas, but some good jobs in the US would have been subsidized by it, and it at least sounds like trying to do something.

But, in answer to your question (which may have been rhetorical), I don't think a new refining facility has been built here in 20 years.

[ruggerson]

6. Thanks Kurt

I don't know how the Republicans can offer up an energy "plan" with a straight face after the last eight years. It's literally insane.

We need to start offering creative, outside of the box solutions. And, purely politically, as you note, it makes sense for Democrats to hammer home that the Republican-fostered Iraq war has exacerbated the world oil crisis, not eased it.

[seasat]

7. Not to mention the environmental damage that can be done by drilling

I remember hearing from Repubs during the debate over drilling in ANWR about how environmentally friendly the oil companies had become. They paraded around pictures of caribou grazing right next to the rigs and pointed out that they were doing great. Being a good skeptical liberal, I went online to find out about it and found that BP was fined about 15 million dollars for dumping benzene and other toxic chemicals out on the ground in Purdhoe Bay. They also had to shut down a field due to a leaking 100s of thousands of gallons of oil from their pipelines in Alaska (BP fines PDF) Most of these companies find it more cost effective to risk the fines instead of using good environmental practices.

Now they're asking me to trust these same companies off the coast of my state? If BP breaks the law in area on shore the pollution is contained. Where they will drill near Florida will be near the loop current in the Gulf of Mexico or the Gulf Stream in the Atlantic. That means that a spill and just the general toxic drilling waste from these rigs will be spread from their source all down the coast. A spill in the Gulf can be entrained in the Loop Current pushed down past the Everglades, through the Florida Keys, and then back up the East Coast of Florida by these currents. They're talking about us saving 10 cents a gallon about ten years from now at the risk of a state's entire ecosystem. No thanks. The reefs here in Florida have enough problems without having to put up with toxic chemicals from oil rigs.

[Kurt_and_Hunter]

8. In the case of Florida, you don't even need to invoke environmentalism

Just as a dollars and cents proposition, the effect of an environmental catastrophe on tourism would wreck Florida's economy.

"You'll come for the sun, you'll stay for the tar."

(I'm not minimizing the environment as a concern, just noting that even the most bitter Republicans in Florida would suffer mightily in $$$ from such an event.)

[seasat]

9. Most definitely.

I actually doubt will have drilling here in Florida since the State Chamber of Commerce is hugely Repub, powerful, and dominated by developers. The St Petersburg Times did a good story comparing the beaches of Galveston, TX to Florida beaches. A girl interviewed in the article was afraid to go into the water because it smells like a sewer.

The only danger is that Jebbie's tax cuts have gutting our revenue stream to the point that we're cutting education and services back to the bare bone. The Repubs won't admit that their cuts for the wealthy didn't trickle down. With the drop in tourism due to the down turn in the economy and gas prices, they might get desperate enough to drill. I doubt that they'd approve it but you can't ever predict what those idiots in our state legislature will do.

[TheKentuckian]

10. It's a huge scam

They create this idea that we'll be producing our own oil but they could care less about that and that's not how it works. The usual suspects will of course just throw whatever trickle they get into the market.

Plus, it's an old fashioned land grab. Already Big Oil has free access to the majority of the reserves but they aren't doing a thing but sitting on it. We're being sold out and the country is demanding it because they don't bother to even look beyond the nothing the organization formally known as the press throws out.

There cannot be energy independence without new energy. Oil cannot logically do the trick. Our trickle on the open market doesn't save us a dime, especially as demand rises around the world. No chance. It's another in an unending series of snowjobs on a gullible populace.

[truthisfreedom]

11. $140/bbl oil is a perfect opportunity for solar. Check out nanosolar.com!