You may have something here but consider,

Since January of this year, there has bee a surplus of oil production and capacity. But.. here is the rub. Normal supply and demand forces don't apply because the surplus is owned by the OPEC producers. They have no reason to compete for our business and we have no alternative. So, they hold back and we pay dear.

However,
Highly publicized and recent indications from the US that we will begin an agressive program to replace oil with new technologies has had no effect. OPEC sees them as pie in the sky. But...


As soon as we said, "maybe we should start punching more holes of our own," the price of oil has begun to decline. Over 20% in four weeks and no signs of stopping.

roadster with a stick

 

Hey Franc,

Lately I've been trying to get a broader understanding of the situation. My interests are kind of narrow and unfortunately oil production is something I'm not up on, so you have to excuse my somewhat primitive deductive reasoning

After reading your posts, I picked out the above quote as being the crux/center of your arguments. I believe you are saying that (I paraphrase) "The US should become a competitive producer of oil".

Let me know if I'm misinterpreting you.

You'll have to explain to me what is gained exactly by leveraging our own production of oil. What is the benefit that you are proposing exactly? Are you implying that producing our own oil = lower oil prices? I'm just trying to follow you that's all.

Also, I'm not entirely sure what you mean by unproven reserves as being useless.

 

My apologies friend. I usually spend time editing and polishing my posts so that my point is clear. Didn't do that here so the ramble of my thought processes got through to the copy.

That said,

I didn't think of it that way but yes, we need to be a competitive producer of any strategic commodity. Oil would certainly qualify.
Look at agricultural products. We produce the most cost effective bounty of grains, produce and livestock in the world. Food here is cheap. When was the last time we had to import grain to eat or feed our livestock.
Oh, that was last year when we started burning it in our cars. Perhaps a bad example.

If we can produce enough oil here at $40.00 per barrel, how on earth would Saudi Arabia, or our good friend Hugo Chaves, get us to pay $147.00 like we did last July? And don't be concerned that Exxon would instead sell for more than that to the Chineese because Hugo would sell his new "excess capacity" to them for less.
"Leveraging" our own oil simply means that diplomatically, we would not be indebted to others. Particullarly others who are not our freinds. The pressure of oil supplies would not be a fundimental part of our foreign policy relations. If I have my own hammer and tools and lumber and skills, I don't need to borrow them from my neighbor to build a house. He can offer to help but I don't need to negotiate our relationship to get something he knows I must have.

As to the unproven reserves let me take you back a few weeks when there was talk by both candidates about Anwar. We know, from what geologists have told us, that there is about 20 Billion barrels under the Tundra there. But, the Speaker of the House was quick to point out, along with the Senator from Il, that even if we started now it would be ten years before significant production would begin. Therefore such action would not solve our current oil crisis. It pains me to have to say it. But here, they are right.

So what is the value of knowing we have oil deposits of any amount but have not proven them or made it possible to quickly bring them on line and into distibution? In the event of a cuttoff from OPEC, we are not now in a position to turn on the "reserves" to which you referred. From a strategic and from an economic perpective, they are therefore, useless.

There are thousands of wells in America that have been shut down or capped for years because the oil they produced wasn't economically viable to pump. Last year a lot of these wells were working at capacity. Most started pumping when oil went over $ 60.00 a barrel. When the economics indicate different, they will go into fiscal hibernation. Why not have every known reserve tapped and ready to go. Why not let the economics of the commodity determine the flow of oil from our wells or from Hugo's. Let OPEC decide whether to sell oil to us competitively priced or not.

And let us decide whether to buy it from them...... Or not.


roadster with a stick

 

We tend to forget things as more and more "crisis's" flow by.

This old thread came to me after reading this article posted today in R&D magazine.

http://www.rdmag.com/ShowPR~PUBCODE~...ODLETT~IE.html

The legacy of Ethanol's failure continues.

roadster with a stick

 

.....and just 2 weeks ago we had one of the regional Ethanol distributors declare Chap. 11.
Now, let's just hope that Obama does not allow more Fed. monies to be spent on this fiasco!

 

You know the drill,
"If it moves, Tax it, If it doesn't subsudize it"

Ronald Reagan on how the Federal government works