Contact your Congress critters to let them know that you are tired of high gas prices.
Posted on 07/06/2008 12:13:17 PM PDT by Donald Rumsfeld Fan
• "Even if drilling works, it'll take a decade or more for the oil to flow."
This is quite an argument coming from the Democratic Party, which has made keeping oil off the market a linchpin of its energy policy for decades.
If President Clinton hadn't vetoed the idea of drilling in ANWR back in 1995, we'd have that oil on the market today. Ditto if Congress had approved ANWR drilling in 2002, when President Bush requested it.
Even so, the larger point is false anyway. New oil will be flowing in some cases within three to four years, according to industry estimates. But the impact on prices will be immediate. Why? Because markets would suddenly have to discount future oil prices for the expected gain in oil supply. That would cause oil prices, especially in futures markets, to drop.
By the way, this isn't just conjecture. President Reagan, within a week of his inaugural in 1981, removed domestic controls on oil. Energy prices began tumbling almost immediately, with oil falling from $34 a barrel in early 1981 to just $11 by 1986.
It worked before, and it'll work again
(Excerpt) Read more at investors.com ...
Makes sense to me.
It’s unlikely that anyone is plugging a well producing 10 barrels of oil a day in today’s price environment.
However, re-entering a well which MIGHT be capable of producing that much is going to cost probably around $300,000. Of course, you’re going to have to pay a royalty percentage to the landowner for every barrel you produce, plus pay severance, ad valorem, and income tax for every barrel.
Then you’re going have to pay a fee to someone to pick up those barrels and take them to a refinery. That’s after you pay to install tanks near the wellhead to store the oil that is produced because trucks won’t be lining up every minute to pick up the next quart of crude you bring to the surface.
If there are other wells that justify a truckload, they’ll come as often as makes sense to them. The contracts an operator signs essentially require a pickup of oil before the tanks get full, but the tanks are pretty dang big.
It's great, except you have to factor in all the deductions and expenses.
Not only are there all the taxes, royalties, and regulatory compliance costs, but there are operating expenses. A ten barrel a day well isn't flowing to the surface by itself. It has a $100 thousand pumpjack. Maybe more or less depending on the depth where the oil is coming into the wellbore.
It doesn't get to the surface for free.
If you have to schedule a workover rig to go out and work on that well making $500,000 a year more than once a year, you're going to go broke.
I grow up where the first oil strikes went through after Drake’s well. There were old uncapped wells all over the place. There was methane coming out of most of them an a low rate. The ones that you could see down into usually had debris and dead snakes and raccons at the bottom.
At the end of WWII when surplus army trucks were available that could go through the brush and woods, guys would put a pump and barrels on the back of the truck and drive around and clean out the wells and pump them. At that time oil brought $8 a barrel at the back dock and day labors in the factories got less than $2/hour. An old well would put out from a barrel/week to 5 or 10 barrels/day. The guys, generally ex-soldiers liked the work, and they made a living wage. I suspect some of them are still doing in.
I talked to a guy with a barrel on the back of his jeep one day during hunting season. He liked doing it and it brought in extra money.
My 2 cents.
The Oil people say ONE year in some cases.
If the "Big Bad Oil Companies" suspended all dividends, all profits beyond upkeep, all maintenance and current costs of doing business, all bonuses to management, how much would that reduce the price of gasoline per gallon?
I think the answer would render all our congresscritters deaf, dumb ---- and suddenly invisible.
Here ya go...
"In my country some 25 years ago, you could make a long-distance call on a privately owned telephone system from San Francisco to New York for $28. For that same amount of money, you could send 1,376 letters. Today, you can make the same telephone call for $2.50 and for that amount you can only send 41 letters. So the government is investigating the Bell system!" -- Ronald W. Reagan, February 2, 1970
[Try coming up with an explanation why Atlantic Richfield would drill into the largest “pool of oil” in the world and then leave it.]
[TinfoilMode on]
Allegedly because the Federal Gov told them to.
[TinfoilMode off]
Contact your Congress critters to let them know that you are tired of high gas prices.
I don’t know what the breakeven point is. But I do know that wells on Signal Hill in Long Beach were pumping 24/7 during the 80’s and 90’s when oil was no where near $140.
Another way tax increases can be mitigated is by an increase in productivity. Sometimes this takes the form of longer employee hours for no more pay and sometimes it comes from subtle threats of the consequences of NOT bringing about said increase.
I suppose you are correct in saying not every single tax increase can be passed to consumers but given that similar industries are generally taxed in a similar fashion then they are all in the same boat when it comes to being competitive with one another. If A suffers a bottom line hit then so will B. Perhaps the one that has the best cash flow/position and holds out the longest until the competition folds wins. Absent competition prices can safely rise.
There is more then one way to skin a cat.
I think we mostly agree on that. I do get tired of hearing Boortz and some others just make the flat statement: “Corporations don’t pay taxes,” as if they’ve said something profound and final. Well, they do pay taxes, and they can’t always pass every increase in operating expenses along to consumers, or they might have to delay passing it along. And corporations do like tax decreases for some reason.
Then we might hear the same people advocating a decrease in corporate taxes because it will make them more competitive in the world market. So, here they’re presenting the reason why corporation can’t always pass on a tax increase, because many of them must compete with foreign corporations who aren’t always subject to the same taxes.
“Barrels per day at $140 sounds pretty good to me. That’s $511,000 annual income from one well. Not bad.”
Have you ever heard of oil well service companies? These companies do the various jobs of reworking old wells to increase their productivity ie fracking, acidizing,new screens
pump jacks,& motors etc. These services do not come cheap. Some wells require services costing hundreds of thousands of dollars to increase production 1bbl/day. it takes several years to recover those costs.
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