Oil’s Perspective on What’s Behind the Energy Crisis

New York Times ^ | June 21, 2008 | JAD MOUAWAD

[Donald Rumsfeld Fan]

David J. O’Reilly, the chairman and chief executive of Chevron, spoke about why Congress should allow more access to offshore drilling ....

Q. Democrats say oil companies are sitting on unused leases and they should drill there first before more regions are opened up to production.

A. What I would encourage the Democrats to do is to look at the facts. We should not be making these crass statements without facts. There are already existing limitations on leases. Already you have to use them or loose them. It takes time for geological exploration to occur. In our case, over 80 percent of our leases are being actively worked. We turned back many of them last year, even before they expired, because many don’t have anything on them.

A. This is a case of demand-driven increases. The time we could count on cheap oil and cheap gas is ending. In prior periods, you’ve had price spikes because of big disruptions in supplies. But in this decade, the new phenomenon is that demand has been the main driver.

A. I am a believer that most of this is related to fundamentals. Those are concerns about supplies. Last year, oil supplies did not grow in total. What the market is looking for is more visibility in future oil supplies. That is one of the main drivers for the difference between the prices five years ago and the prices we’re seeing now.

Q. What has been the impact of financial investors or “speculators” in the market?

A. I am not quite sure that I know that. It is quite possible that they have added some volatility. But the bulk of the price of oil that we see today relates to concerns about the outlook for physical supplies in the long term.

[Donald Rumsfeld Fan]

I always listen to people whose opinion I value. This Oil Company CEO, David O'Reilly, knows of what he speaks.

[alecqss]

“We should not be making these crass statements without facts. “

He said that to dems? I hope he at least enjoyed casting pearls...

[ozzymandus]

Bill O’Reilly keeps bashing the oil companies and claiming the oil co. CEO’s are “hiding under their desks”. I wish this O’Reilly would go on the other O’Reilly’s show and explain to him what supply and demand are. Unfortunately, Bill wouldn't understand a word of it. So much for that “Harvard education” he keeps bragging about.

[upsdriver]

Q. President Bush this week called for lifting the moratorium on offshore drilling. What impact will this have on future oil supplies in the United States ?

A. It is a good thing. The president is going in the right direction here. But I would have gone even further and lifted the moratorium with a presidential order. But you also have to remember that the lag time between exploration and first production is still in the range of eight to 10 years. Still, it would send a very strong message to the world that U.S. energy policy is shifting and is going toward a little more supply.

Nice interview. I believe as soon as the U.S. shows seriousness on new drilling domestically, the prices will stabilize and even drop.

[upsdriver]

Bill O’Reilly is so full of himself. he doesn’t realize that he is full of it. I can’t watch him.

[RightWhale]

David J. O’Reilly is speaking for himself, but he didn’t get to be CEO of a major by being wrong very often. Haven’t heard a Congressional Dem making any sense at all about oil matters recently.

[WilliamofCarmichael]

What I would encourage the Democrats to do is to look at the facts. We should not be making these crass statements without facts.

Headline:
Oil companies make unreasonable demands, say Democrats
"We're Democrats."

[Cobra64]

Bill O’Reilly keeps bashing the oil companies and claiming the oil co. CEO’s are “hiding under their desks”. I wish this O’Reilly would go on the other O’Reilly’s show and explain to him what supply and demand are. Unfortunately, Bill wouldn't understand a word of it. So much for that “Harvard education” he keeps bragging about.

O'Reilly is a moron. Just listen to his grammar. Furthermore he has no clue about business, nor basic economics.

Two weeks agon, Dick Morris was discussing Gore and Slick. O'Reilly didn't know that the VP has an office in the White House. Morris looked at BOR as if, "You gotta be kidding me!"

[TigersEye]

What I would encourage the Democrats to do is to look at the facts.

The planet actually will spontaneously combust before that happens.

[WilliamofCarmichael]

Even the Nytimen drive and buy gas. This is not the typical Nytimese grilling of an “enemy of the people.”

[TigersEye]

The Europeans have a strong environmental record but the Norwegians and the British have been able to safely encourage offshore developments. Brazil was a recent example of success offshore. So what’s wrong with this country? It is a shame that we need to get to $100 a barrel for oil or $4 a gallon for gasoline to have this discussion.

It's a shame and a disgrace. Congress is forcibly making us a 3rd world nation that can't even follow much less lead.

[VOA]

bump

[SAJ]

Must disagree. The crude mkt is plenty smart enough to know and understand that politicians will say anything during an election campaign, and the crude mkt won't do squat because of any sort of 'statement of intent' or announced 'plan'.

However, if/when someone, esp the Regress, actually does something, then the price will begin to drop, and heftily.

[Mad_Tom_Rackham]

The current problem is about demand outrunning supply, with speculators predicting that supplies will NOT increase in the future due to the influence of the socialist Democrats and their brethren, the EnviroMarxists. Prices and futures are market signals bout supply and demand, and are ignored at our pain and peril.

[truthguy]

Yes I agree. I think Bill O’Reilly is a buffoon on this oil company profit issue and many other issues as well. I just do not think O’Reilly is a very smart guy. I don’t think O’Reilly spent more than a few months at Harvard. Perhaps someone on Free Republic knows more.

[upsdriver]

That’s what I meant by seriousness, actually setting up drilling rigs in coastal waters or ANWR. The article stated it would take 8 to 10 years for production to come on line. My belief is the mere action of the new activity will spur the other oil producing nations to ramp up production to fight for market share.

[truthguy]

A few groups and individuals who are responsible for this mess we are in with energy (in no particular order)
1. Congress (Mostly Democrats but some Republicans as well)
2. MSM (Main Stream Media) has done a horrific job of reporting and educating the general public on energy and environmental issues. The stories are almost always from a liberal or even far left perspective. There are just a very few good reporters- John Stossel at ABC comes to mind but they are few.
3. U.S. Educational System- Almost as bad as MSM and each of these groups reinforce each other. Of course the Public Schools are the worst. Many students are exposed to propaganda on energy and environmental issues. Example-the fraud movie “An Inconvenient Truth”.
4. Enviromental Organizations (I've saved the best or worst for last). What constitutes an “Environmentalist” ? I think that it is sheer assertion. If you say you are an environmentalist then defacto you are one. Most of the major environmental organizations: Sierra Club, National Resources Defense Council, Wilderness Society, etc are complete frauds. This is where poor reporting comes in. These organizations were hijacked a long time ago by far left radicals who have an agenda that has nothing to do with real environmentalism. Someone out there needs to write the definitive book on this issue. Most of the general knuckle dragging public is completely ignorant about this.

[SAJ]

Don't think so. The very LAST thing OPEC et al. want is another battle for ''market share''. The last two such battles (namely, 1985-86 and 1997-1998) collapsed the price of crude 60% or more.

You're right, though -- if we start to act like we're about to produce (keeping in mind there's a rig shortage AND a shortage of drill ships...), all the tension goes right away from the crude mkt, and prices should go to clearing levels fairly quickly.

We can accelerate the process, too. Have CFTC reclassify banks-acting-as-agents for clients as ''large specs'' instead of their current classification as ''commercials" (aka hedgers). Specs must obey position limits; commercials are not even bound by position limits and hence can (and have, you betcha, which is part of the problem) quite literally buy all the crude futures they want.

Net result: upwards of 1.1 billion barrels of ''paper'' crude gets sold back into the mkt in 30-90 days' time, and the price drops $40-50/bbl ... and all without even setting one rig. Add to that a coherent and credible restarting of crude production in this country, and you've got $50-60 crude again.

[lonestar]

Bill O’Reilly is a self-centered idiot, IMO!...on a lot of topics!

[IronJack]

Already you have to use them or loose them.

The word is "lose," pundit. "Loose" rhymes with "goose," and is generally an adjective. "Lose" is the verb.

Leave it to the New York Times ...