Posted on 06/15/2008 8:12:08 AM PDT by kellynla
Considering how much untapped oil is known to exist, not just in the United States, but worldwide, one would think that its current price was some kind of anomaly and it is. It is more the result of speculation than anything else.
The most fundamental fact about oil worldwide is that there is lots of it. Though frequently overlooked, the ability to refine crude oil plays an essential role in the supply and demand equation. More refining capacity is needed worldwide. Finally, there’s the fact that, in general, oil is very expensive to get at and often found in the most inhospitable places on Earth.
For sheer insanity, however, consider a nation that has an estimated 31 billion barrels of oil offshore of its coasts and 117 billion barrels of oil under land owned or managed by the government, plus 139 billion barrels beneath privately held land.
In just one area, a desolate place designated a wildlife refuge, there’s an estimated 7.7 billion barrels untapped. The nation with this abundance of oil is, of course, the United States of America. Most of the areas where oil is known to exist have been ruled off-limits to any exploration or extraction by the government.
In the areas where it is accessible, drilling for it is hugely encumbered and often denied by the National Environmental Policy Act, the Clean Water Act, the Endangered Species Act, and the National Historic Preservation Act.
If, however, you connect the dots, you will have noticed by now that America’s energy problems, namely the price of a gallon of gasoline or heating oil, is making everyone miserable thanks in great part to environmental legislation designed to make it impossible to access oil on both public and privately held lands. Then, just to make matters worse, the government requires that every gallon of gasoline include the additive, ethanol, which reduces its mileage and increases its cost.
Further, we’re told that Sen. Barack Obama, if elected, intends to seize “windfall profits.” This is sufficient reason for American oil companies to decide to drill anywhere else. The last time a windfall profits tax was implemented was at the end of President Carter’s term. It had such a negative impact on U.S. oil companies that drilling for oil domestically dropped dramatically. It has stayed that way since the 1980s. Their actual profits are now less than pharmaceutical, high tech, and other elements of the economy. Imagine how thrilled they were to hear Rep. Maxine Waters’ threat to nationalize them.
No profits. No exploration. No drilling. And no domestic oil with which to correct our dependence on foreign oil and thus provide a measure of security to a nation that runs on oil.
If you wanted to bring the United States to ruin, you could not have designed and implemented a more perfect scheme. Along with too many members of Congress, environmentalists are America’s Fifth Column.
As my friend, Seldon B. Graham, a veteran petroleum engineer and oil industry attorney, and a graduate of West Point says of oil, says “If it is worth dying for in the Near East, it is worth drilling for in the United States.”
As to the claim that the Earth is running out of oil, that can be easily dismissed simply by reading information available in respected publications such as Business Week. Its June 9 edition reported the Saudis “already plan to increase production by 300,000 barrels a day in June for a total of 9.45 barrels to meet customer demand. Unlike the U.S., “The Saudis have embarked on an ambitious expansion program that should see more than 2 million barrels of new production capacity come onstream by the middle of next year.”
Those of us who follow energy trends read the Energy Tribune because it has some of the best information available on what is really occurring. In its May edition, Matt Pickard wrote about the expansion worldwide of offshore drilling, noting that today’s prices are being driven by increased demand from rapidly developing nations such as China and India. This demand is going to increase over the next two or three decades.
Unless the United States begins to free up its own oil and natural gas reserves, Americans are going to be paying more at the pump and in their homes for a very long time to come.
The good news is that the offshore oil and gas industry, despite the huge risks and costs involved and despite an aging, understaffed workforce, is making strides to meet demand. Whether it’s in the Gulf of Mexico or the North Sea, the icy waters of the Barents Sea or offshore of Brazil and Africa, massive new reserves of oil are being found.
“Large discoveries offshore Brazil, the continued progress in every region’s major projects, and the ongoing push for Arctic exploration and production point to the industry’s potential for growth over the next 20 to 30 years,” wrote Pickard. Brazil is poised to become a major producer. In its Tupi field, “Petrobas announced an aggressive development plan, with an early production system possible within two or three years,” reports Pickard. The nearby Jupiter field has gas reserves to rival Tupi.
None of this is a secret! Both privately owned U.S. and foreign national oil companies are going to find more oil and gas.
Neither candidate for President is telling the truth these days because both believe global warming is real and both keep blathering on about “alternative” energy. The big problem for the rest of us is that you can’t pour wind or solar energy into a gas tank.
The U.S. mandate for ethanol as a gasoline additive has already significantly put the world’s food supply in jeopardy, but most Americans are blissfully unaware that it requires 1.5 gallons of ethanol to produce the same energy as a gallon of gasoline. It actually emits more carbon dioxide than gasoline. It is an environmental hoax.
The world is afloat an ocean of oil. Meanwhile, the United States continues to rule 85% of its offshore oil off-limits to exploration and extraction. This is occurring while the Chinese prepare to pump oil just offshore of Cuba, a merely 90 miles from Florida. It is occurring while the Russians are looking to plant their flag on potential reserves of subterranean oil in the Arctic.
The next time you hear a politician say we need to be “energy independent”, ask him or her why Americans cannot have access to the oil reserves known to exist in California, in Alaska, and in many of our other States or off the coastlines of Florida and elsewhere.
Ask them why the fate of the condors and little known species is more important than the family budget of Americans forced to make choices between more food and more gasoline.
Ask them why they continue to claim that global warming is a threat when the entire Earth is now in a decade-old cooling cycle.
Ask them why they insist on blaming investor-owned oil companies whose own reserves are barely four percent of the all the oil that exists worldwide? Ask them how they expect these oil companies to compete in the global marketplace when they threaten to seize their profits.
Energy is the master resource. It determines which nations thrive and which lag behind. For now, America is being ill-served by a Congress that refuses to permit access our own energy resources.
Ask yourself how we have arrived at a point in time when both candidates for President believe in a non-existent global warming and whose proposals offer no practical solution to our current and future energy needs.
Ask them why the fate of the condors and little known species is more important than the family budget of Americans forced to make choices between more food and more gasoline.
Ask them why they continue to claim that global warming is a threat when the entire Earth is now in a decade-old cooling cycle.
Ask them why they insist on blaming investor-owned oil companies whose own reserves are barely four percent of the all the oil that exists worldwide? Ask them how they expect these oil companies to compete in the global marketplace when they threaten to seize their profits."
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According the USGS’s outdated survey using old seismic acquisition and imaging technology the ANWR is said to hold 10-16 billion barrels of recoverable crude oil. Multiply that by 4-5 and that is what you can recover from that area.
Just pure runaway insane liberalism at work -—
Speculators are a symptom of the problem, not the problem. Fix the inelasity of supply in the current Oil market and you will the speculation problem.
That, of course, is why the scheme was designed and implemented.
Marxist revolutions don't happen when the peasants a warm, happy, well-fed, and comfortable.
Here in Oregon (my temporary home) people actually believe all that greenie moonbat crap. And they think that the sun shines out of Obama’s butt.
Insane. Can't wait to get home.
The "Evil Corporate Capitalist Fat Cat Oil Companies?"
Only 6.5% total are the "Evil Corporate Capitalist Fat Cat Oil Companies."
The rest would be paid by you and I. See how the DummieCRAPS lie.
AMEN!!! AMEN!!!! AMEN!!!!!!!
AMEN!!! AMEN!!!! AMEN!!!!!!!
I'm almost afraid to read beyond this opening fallacy.
To our commie environmentalists and their enablers it is not a matter of how much and where the oil is located, as long as the US doesn’t drill for it.
These environmentalists have absolutely no interest in the preservation of the environment but only in the destruction of this nation. (And to think that many of these treasonous “environmentalists” occupy seats in Congress is an outrage.)
Grand strategy by hostile powers foreign and domestic, also, to be sure. But there is no fundamental reason for this price level for oil. We could drop it by half tomorrow if we were halfway sane about anything.
This “speculation” blame game is nonsense.
The price of oil has been going up for SIX YEARS.
Only in the short term - weeks at most - can speculation drive prices.
In the long term, price is dictated by the harsh reality of supply and demand.
The people who buy and sell oil contracts are full time professionals.
The result of EVERY trade they make is “zero sum.”
When one trader wins $1000, the trader on the other side of the contract loses $1000.
According to the “speculation” theory, journalists know why prices are going up, politicians know why prices are going up, news anchors know why prices are going up, and the man in the street knows why prices are going up.
But, thousands of professional oil traders - the guys who have been losing their own money by the billions for six years - they have NO CLUE why the price is going up!
So what's next?
Now that oil is at record prices will speculators force the price down?
Short sellers can make exactly the same amount of money on the way down that long buyers made on the way up.
Of course not.
The price of oil will come down when, and only when, there is more supply than demand.
In truth the Left is merely using the environment to reduce the power and prosperity of the US, which they loath, because they are self-loathing.
If you buy a contract in a speculation inflated position, when push comes to shove, nobody will buy your position back from you. Who wants to buy a contract to purchase oil at $130 when it is available for delivery at $125 at the end of the month.
The “speculators are driving the prices up” buzz words are better translated as the politicians want control of the free market.
IF people fall for this in America, socialist control of the markets will do what it always does, make the people who control the markets rich and destroy the economy.
For the politicians pushing for this, as long as they get rich and secure, if a million starve it is a good trade.
The reason Oil is going up is the dollar is falling and the Chinese are willing to pay what it takes to get the oil.
To say the price of oil is raising the price of everything is also a political lie. An example: A shipment of grain will go up because it costs more to deliver it, but a diamond ring will not, because it does not in relation to its price. The price of oil going up only raises the price of an object in direct relationship to its mass and size.
Gas prices doubling do not double the price of a diamond ring, because it takes very little gas to make it or move it. The price of grain will go up in a ratio of the cost of shipping, and the cost of manufacture. Yes it too will be higher, as oil is used to plant and manufacture. But the price of wheat, and diamond rings is going up nearly the same ratio.
Oil prices are a great indicator of the value of the dollar, than anything else. It is a commodity that is delivered at a constant rate, and is used at basically constant rate that is very very slowly increasing day by day.
We are in a bidding war with China and the rest of the world for oil. The price of oil is set in dollars.
But the value of our dollar is set on REAL ESTATE here in America. Everyone invested in real estate, and the market is having a setback. SPECULATION IN REAL ESTATE drove the value of the dollar UP, not speculation in a simple commodity drove the dollar down.
Real estate is not a commodity, it is a product. It is manufactured not dug out of the ground like copper, gold and oil.
Americans over invested in a market, and went into debt to do it. Investment by debt is a real unstable position and it is backfiring on many people who went into massive debt and bought at the peak of the market.
To make money you have to buy low and sell high, not go into debt to buy high and sell low. Not only do you loose money on the investment, but now you have to service the debt too.
Ouch.
But the big ouch is if we let the politicians and the talking heads brain wash the sheeple into calling for government regulation of the markets.
Even the Communists are smart enough to move away from that disaster, our leaders are stupid enough to move toward it.
As a people, Americans tend to have a very short term viewpoint. And our leaders don't care for the country's future, but their pockets today.
Evey time you hear someone repeat the speculators mantra, shoot them down for your futures sake.
Free Markets is all America has left now that property rights are gone.
That is because the dollar is falling, not because of shipping costs. Far more of the cost of wheat is farmer labor and packaging than shipping.
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More importantly, we are AWASH in convertible hydrocarbons, from agriculture waste, like the Butterball turkey carcasses being converted into diesel in Carthage, Missouri right now, to sewage sludge, to wood scraps and now algae that excretes ethanol, not to mention coal and oil shales.
The only issue is the cost of the finished product. At $4/gallon, it appears that many alternate technologies are way above break even.
The notable fact will be: watch what the left, the news media and their sympathetic politicians cheer. Notice that when stunning breakthroughs are made, they hardly cheer, and what cheering there is has a very short half-life.
For example: A process was recently announced where algae, swimming in seawater is used to produce ethanol. One would think this is a world-class announcement, one that environmentalists would cheer loudly because it is right in line with what they have been demanding for years.
Right? Judge for yourself. A search of news.google.com for “algae ethanol seawater” returns SEVEN hits:
“http://news.google.com/news?hl=en&ned=us&q=algae+ethanol+seawater&ie=UTF-8
see best story at:
http://venturebeat.com/2008/06/13/the-algae-claims-just-keep-getting-better/
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