Oil: Don't Give Up The Coast {Energy Policy}

Investor's Business Daily ^ | 5/8/2006 | Investor's Business Daily

[thackney]

Energy Policy: What is the opposition to increased offshore drilling for oil? That it's a dirty business and will foul the environment? That won't stand up to scrutiny.

Since 1985, according to the National Ocean Industries Association, more than 7 billion barrels of oil have been produced in U.S. territorial waters. Of that, less than one one-thousandth of a percent (0.001%) has been spilled.

Not perfect, we'll grant. But pretty close. And a record, we would think, that should mute even the most ardent opponents of increased drilling in the U.S. outer continental shelf.

But there's even more than usually meets the eye. Of the petroleum found floating in U.S. waters, just 2% is from drilling and extraction and 3% from tanker transport.

Nearly a third, or 10 to 15 times as much, is caused by boats and cars. And by far the most petroleum pollution of our waters — 63% — doesn't involve man at all. It comes from natural seeps that have been around since time immemorial.

Given these facts, maybe it's time that opponents of lifting federal restrictions on offshore drilling moved on to other arguments. But here, too, they run into trouble when the facts are fairly presented.

We keep hearing, for example, that there simply isn't enough oil offshore to bother with. This, of course, is one of the big arguments against developing fields in Alaska's Arctic National Wildlife Refuge: They would yield "only" a million barrels a day.

Well, using the 1.4 million barrels a day that former Interior Secretary Gail Norton used for ANWR, that happens to be more than three times the oil that we now import from Iraq. And keep in mind that ANWR is estimated to hold as much as 16 billion barrels...

[thackney]

As a nation, we strangle ourselves.

[thackney]

[3dognight]

Since 1985, according to the National Ocean Industries Association, more than 7 billion barrels of oil have been produced in U.S. territorial waters. Of that, less than one one-thousandth of a percent (0.001%) has been spilled.

I've spilled more coffee at my desk than that.

[tobyhill]

This is incredible! Over half of our oil use per day could come from off-shore drilling but we can't get it. With this combined with Ethanol, interior drilling within the mainland and a little help from Mexico and Canada we could be almost completely energy independent and wouldn't have to rely on terrorist supporting nations.

[mysterio]

Foreign nations are drilling our oil and we are not. That is absolutely incredible.

[thackney]

It seems to be a moot point

No, it is a completely valid point since oil production will be going on near Florida anyways, why aren't we doing it?

[Marine_Uncle]

I am convince at this point, that it is not a matter of the US becoming oil independent, from the governments perspective, but how oil traders, suppliers, and refiners can interact on a world wide basis to keep the present system on an even keel.
Put another way. Oil is a global commodity. Big oil companies want things to stay as is. Don't rock the boat. It stands to reason, that selling one's oil based on what the markets can bear is far more desirable then having to make arrangements to sell at a fixed price to one nation, allegience to that nation, based on patriotic principles.
For US companies to put America first, as many of us would like to see happen, e.g. literally use our own oil and perhaps offset it with Canadian oil, sort of goes against the capitalistic way. Capitalism is based on the concept of having the ability to make money by whatever means one can within the laws of the land. The goal is to get rich.
To ask US companies to limit themselves to extracting oil, refining it into end products then only distributing the end products within the USA, would go against the capitalist philosophy of maximizing profits. That assumes of course the idea was for oil companies operating in the USA only to sell their oil to companies operating in the USA, with the end products only being used in the USA.
As much as I would like a middle ground, where we could become self sufficient, I realize it is a pipe dream. As you are very much aware, we just stumbled into a very good thing way back when, and in the natural progression of industrialization had earlier on, created a petroleum industry that fitted nicely into our growing industrial complex. Once what became cheap oil was discovered in the ME, to name one place, the ball game changed.
Countries like Brazil seem to be a sort of anomaly. They do not effect the huge world wide distribution of oil to significantly. For the USA to use only it's own oil for it's own needs would require a different form of government to come into being. One quite frankly, most here dread.
It pains me to have to reach this conclusion.
Perhaps if my thinking is truely flawed, some Freepers will provide me with a way out of this not so nice conclusion.

[tobyhill]

The foreigners aren't there yet and it certainly could be a race to the finish if our Reps would get off their lazy as*es and do something or better yet they can stay on their lazy a*ses and just vote.

[VRWCmember]

One thing you appear to miss is that even with oil companies selling their production at world market prices, if our US oil companies are able to produce volume equal to or in excess of US oil consumption demand, we are not dependent on the ME or other OPEC nations for our oil. Also, the OPEC nations will not have as much influence and ability to manipulate world oil prices. The policies advocated by this article do not require that US oil companies sell only to the US and at below market prices.

[Carry_Okie]

Foreign nations are drilling our oil and we are not. That is absolutely incredible.

That's what happens when you collateralize the national debt with natural resources. The environmental regs are to control who has access.

[kellynla]

BTTT

[Marine_Uncle]

"The policies advocated by this article do not require that US oil companies sell only to the US and at below market prices."
Your feedback is faultless. I have no problem with it. I should have been more specific in how I addressed my words. I should have made the point that my thoughts where aimed against those that think the price of gasoline, fuel oil, jet fuel, and the many other fractions could be significantly reduced for America. I wrote without delving into the key point I meant to address. Shame on me.
Really.
If I may. I believe even if we had a near oil glut based on US supplies, e.g. we literally had more then enough to support the US demand for crude and all that comes from it by significantly increased refinery capacities, I believe the world oil markets/gasoline and other oil derived commodity markets would still set the price of crude as well as refined products and their distributive costs to stay at levels they can make very handsome profits.
It always goes back to what can the market bare. And it appears the market can bear the current costs.
As we understand, one simply passes the costs off to the end user. That is what I should have said to begin with.
I truely am interested in any input that can better educate me on these issues. My views could be flawed as I said in the original.
I write with the understanding that "handsome profits" go deeper then just selling gasoline. Fuel oil, Diesel Fuel, kerosene, the main fractions such as benzene, toulene, naphalene etc., that then get sold to petrochemical plants etc., fit into the equation. And based on how a particular refinery is set up (which cuts get a given % yield), can add quickly to what the refineries final profit turns out to be.
This stuff obvioulsy becomes quite complicated. I only undertand some of the basic principals, I am open to gaining a better understanding. Thanks for your reasonable reply.

[thackney]

Oil is a global commodity. Big oil companies want things to stay as is

I don't think you realize just how big the oil industry is. Exxon/Mobil, BP, Royal Dutch Shell, Chevron, Total/Fina, and Conoco/Phillips all combined only produce 17% of the worlds oil.

Reference links in previous post

These companies and other are investing billions of dollars now to produce oil in new areas.

To ask US companies to limit themselves to extracting oil, refining it into end products then only distributing the end products within the USA, would go against the capitalist philosophy of maximizing profits.

I want to see limits taken off the oil companies, not more restrictions added. ExxonMobil is often refered to as a US company, but they do most of the buisness overseas. I do not want to make the US less competitive than it already is.

[thackney]

Foreign nations are drilling our oil and we are not.

Actually, they are drilling their oil. The US has an exclusive economic zone 200 miles out. But when a country is closer like Cuba, the difference is split. i.e. 90 miles away so we each control up to 45 miles.

I like to point out, if we were drilling on our side, we would have spill response equipment ready to deploy in the area. Without drilling off Florida, we will be at a higher risk if Cuba has a major spill.

[Marine_Uncle]

" I want to see limits taken off the oil companies, not more restrictions added."
Understand your desire. Same here. And I can appreciate the chart you showed in the original post, as well as why oil companies should be allowed lightly regulated access to the whole shooting match as well as any yet to be discovered high potential sites. I am all for it.
Interesting for me was I was surprised the oil companies mentioned actually extract 17% of the world's crude oil. I would have thought it would have comprised a lower percent.
T. In your opinion, not to put you on the spot. From a theoretical viewpoint, so no one can nail you down the pike.
If both ANWR as well as the off shore sites where able to be fully expoited. And lets add, that it was found early on, that many of the offshore shelves contained a lot more then estimated.
Do you think, once all where fully operational AND, lets say 10% additional new modern refineries where built along all three main coastal areas. Would this have a pronounced effect that would drive gasoline,fuel oil, jet fuel prices down in say five years from the once both full drilling was reached and the new refineries made operational?
Both activities starting lets say tommorow.
Like I say I am not holding to an answer. Just would like your gut feeling.

[Marine_Uncle]

"Without drilling off Florida, we will be at a higher risk if Cuba has a major spill."
Very interesting point. I hope folks understand what you are indicating. Unless I am mistaken, if we where to put the plateforms in place, then provisions would be in place to keep any Cuban/China spills from getting to our shores,e.g. gulf coast, Keys, Florida mainland.

[thackney]

Not exactly what I meant. If the US had there own drilling around Florida, there is mandated spill response equipment that must be kept on hand and in operational equipment, to handle any spills that might occur.

Right now, with no drilling on the US side, there is no spill response equipment in the area. If Cuba has a major spill that currents and/or wind push towards Florida, spill response equipment must be brought from elsewhere, perhaps Louisiana. That travel distance will greatly slow up the starting of cleaning up the spill and therefore allow the spill to spread over a greater area.

[thackney]

One of the great driving forces to the current spike in oil prices is fear of disruption of supply. Speculation that places like Iran, Venezuela or Nigeria have interruptions in supply create fear that oil will be in short supply in the near future. If more oil is produced in politically stable areas, including the US, it reduces that fear and gives less reason for speculation.

It is ridiculous to me that people suggest a million barrels per day more from Alaska would have no impact in prices. A million barrels or less has been the amount OPEC typically changes their quotas to effect oil prices, sometime more, but usually not. Even if OPEC reduces their output to match additional production from the US, it is still all good for us. The taxes and royalties paid on that oil production would stay in the US instead of funding foreign governments.