View Full Version : DRILL,DRILL,DRILL
BMT (RIP)
07-15-2008, 16:25
Tuesday, July 15, 2008
Bush Says Drill, Drill, Drill — and Oil Drops $9! [Larry Kudlow]
In a dramatic move yesterday President Bush removed the executive-branch moratorium on offshore drilling. Today, at a news conference, Bush repeated his new position, and slammed the Democratic Congress for not removing the congressional moratorium on the Outer Continental Shelf and elsewhere. Crude-oil futures for August delivery plunged $9.26, or 6.3 percent, almost immediately as Bush was speaking, bringing the barrel price down to $136.
Now isn’t this interesting?
Democrats keep saying that it will take 10 years or longer to produce oil from the offshore areas. And they say that oil prices won’t decline for at least that long. And they, along with Obama and McCain, bash so-called oil speculators. And today we had a real-world example as to why they are wrong. All of them. Reid, Pelosi, Obama, McCain — all of them.
Traders took a look at a feisty and aggressive George Bush and started selling the market well before a single new drop of oil has been lifted. What does this tell us? Well, if Congress moves to seal the deal, oil prices will probably keep on falling. That’s the way traders work. They discount the future. Psychology and expectations can turn on a dime.
The congressional ban on offshore drilling expires September 30, so that becomes a key date. A new report from Wall Street research house Sanford C. Bernstein says that California actually could start producing new oil within one year if the moratorium were lifted. The California oil is under shallow water and already has been explored. Drilling platforms have been in place since before the moratorium. They’re talking about 10 billion barrels worth off the coast of California.
There’s also a “gang of 10” in the Senate, five Republicans and five Democrats, that is trying to work a compromise deal on lifting the moratorium. So it’s possible a lot of action on this front could occur much sooner than people seem to think.
So I repeat: Drill, drill, drill. Deregulate, decontrol, and unleash the American energy industry. Those hated traders will then keep selling oil as the laws of supply and demand and free markets keep working.
Bravo for Bush. Bravo for the traders.
Now isn’t this interesting?
Yes, Sir, truly.
I suspect the downward move will be modest in scope and duration - but such differences in opinion are what makes markets.
:munchin
Tuesday, July 15, 2008
Crude-oil futures for August delivery plunged $9.26, or 6.3 percent, almost immediately as Bush was speaking, bringing the barrel price down to $136.
Now isn’t this interesting?
Yet, on this same day, gas went up .10 a gallon in my AO.
Last week it was $3.91 a gallon, then it went up to $3.98 by Friday or Saturday. Today? $4.09.
On the same day that the projected price of oil dropped......
The Reaper
07-15-2008, 20:01
Hate to tell you, but wholesale gasoline futures dropped 20 cents per gallon today as well.:D
TR
Hate to tell you, but wholesale gasoline futures dropped 20 cents per gallon today as well.:D
TR
Does that mean gas will go up another 15 cents per gallon at the pump? :D
I'm still trying to figure this stuff out. LOL
The Reaper
07-16-2008, 05:06
Does that mean gas will go up another 15 cents per gallon at the pump? :D
I'm still trying to figure this stuff out. LOL
No, but price declines "take a while to work their way through the system".:rolleyes:
Increases are antcipated and take place ahead of time, in my experience recently.
TR
Ret10Echo
07-16-2008, 06:05
Although I appreciate efforts to reduce my pain-at-the-pump...and think it is insane to not do what is necessary to reduce not only our dependance, but other nations influence...drill, drill, drill remains a stop-gap. The price run-up has actually been getting some alternative solutions back to the forefront. While Exxon-Mobil is out there drilling in the Gulf, they oughta set up some wind farms around the rig :D (two different issues I know...)
Necessity breeds ingenuity.
GratefulCitizen
07-16-2008, 23:36
I think oil prices are going to come down regardless of politicians action/inaction.
They're just positioning to take credit.
(Drilling is still a good idea, though)
A well-reasoned opinion:
http://www.businessweek.com/magazine/content/08_30/b4093000546844.htm?chan=top+news_top+news+index_in vesting
However, there may still be some room left in the bubble:
http://www.bloomberg.com/apps/news?pid=20601116&sid=a.0Yu7_q75n4&refer=africa
My predictions (barring a major Israel/Iran event):
-Prices at the pump will drop steadily in September (especially diesel).
-Oil will be volatile until mid-August, and then go into decline.
TR
No, but price declines "take a while to work their way through the system".:rolleyes:
My wife and I were talking about that last night. How the price at the pump can skyrocket over night, but will probably take 1-3 weeks to decrease.
BMT (RIP)
07-18-2008, 05:09
Dear Nancy and Howard,
We all understand the importanace of our next National election's and the need for money. Due to the current cost of food and fuel, I can't afford to donate anymore money to the Democrat party. Maybe when better time's return I can again support the party.
Helmut Schmidt
TR
No, but price declines "take a while to work their way through the system".:rolleyes:
My wife and I were talking about that last night. How the price at the pump can skyrocket over night, but will probably take 1-3 weeks to decrease.
Yes and no. In a past life I work for a wholesale distributor that bought and sold commodities like copper and stainless. If the manufacturer raised the price our price went up immediately, if it went down our pricing followed suite within days if not immediately. And it didn't matter what our actual cost was we followed the market good or bad.
And the reason being was that we had competitors that lowered their prices and if we didn't lower our prices we would lose business.
In my area there used to be Phillips 66, Standard/AMOCO, Sinclair, FISCA, Hudson, Workingmans Friend, Clark, Chevron, Texaco too name a few. We even had a refinery here.
Now we have BP, Shell, QuickTrip, Phillips 66 and no refinery.
Point being there is little to no competition these days and thus little to no competition/motivation to lower the price.If it was truely a competitive market my local BP, Shell, Quicktrip and Star 66 would not be laying dormant with the same stagnant price as their competitior across the street. IMO.
The Reaper
07-18-2008, 07:51
Retail gasoline pricing strategy has changed over the past few years. We have discussed it here before, but essentially, rather than the past practice of taking the wholesale price, plus delivery charges, plus taxes, and adding a couple of cents mark-up, with the price held for a week or so till the next delivery, the current policy is that the corporate owner of the station surveys the area of each station for the competition's pricing, looks at the futures and trend line, and sets the retail price at least daily, sometimes more than once per day. My understanding is that they want to charge as much as the local markets will bear, and they do not want to be the last one to raise prices, or the first to drop them.
The gasoline futures (which were supposedly driving the wholesale and retail gasoline pricing) dropped another 10 cents yesterday. That would mean more than 30 cents of price drop in less than a week.
My observation around town this morning is that they raised retail prices another 2-3 cents this week.
Go figure.:rolleyes:
TR
Retail gasoline pricing strategy has changed over the past few years. We have discussed it here before, but essentially, rather than the past practice of taking the wholesale price, plus delivery charges, plus taxes, and adding a couple of cents mark-up, with the price held for a week or so till the next delivery, the current policy is that the corporate owner of the station surveys the area of each station for the competition's pricing, looks at the futures and trend line, and sets the retail price at least daily, sometimes more than once per day. My understanding is that they want to charge as much as the local markets will bear, and they do not want to be the last one to raise prices, or the first to drop them.
The gasoline futures (which were supposedly driving the wholesale and retail gasoline pricing) dropped another 10 cents yesterday. That would mean more than 30 cents of price drop in less than a week.
My observation around town this morning is that they raised retail prices another 2-3 cents this week.
Go figure.:rolleyes:
TR
True.
But would you not agree that if there were more refinering capacity and suppliers the chances are that the game would likely change and the price per gallon could drop considerably?
On another side of the coin, I would be much happier paying 5 to 10 bucks a gallon if 90% of that revenue were staying in the good ole USA, providing better wages for US workers, building US refineries and thus stumulating the US economy and the greater good of the nation instead of the foreign economies.
True.
But would you not agree that if there were more refinering capacity and suppliers the chances are that the game would likely change and the price per gallon could drop considerably?
On another side of the coin, I would be much happier paying 5 to 10 bucks a gallon if 90% of that revenue were staying in the good ole USA, providing better wages for US workers, building US refineries and thus stumulating the US economy and the greater good of the nation instead of the foreign economies.
I was with you, but you lost me somewhere after 5 and before 10. :eek: We start talking those numbers and I say that we just need to declare war on somebody, make it clear that it is ALL ABOUT oil and commence to ass-kicking until we end up with our very own brand-new (used) oil field, then run up the stars and stripes and stick an "under new management" sign in the ground.
I was with you, but you lost me somewhere after 5 and before 10. :eek: We start talking those numbers and I say that we just need to declare war on somebody, make it clear that it is ALL ABOUT oil and commence to ass-kicking until we end up with our very own brand-new (used) oil field, then run up the stars and stripes and stick an "under new management" sign in the ground.
LOL! I wouldn't want to pay 5 to 10 dollars per gallon but if it came to that...
What I was getting at was that we are spending say $4 plus dollars per gallon and the larger percentage of those funds are going to companies outside the US, supporting economies outside the US. So if we are sending say $2.80 per gallon to say Saudia Arabia and pocketing a mere $1.20 for the US we are committing economic suicide. If we kept 80 percent of that at whatever price because were produce our own resources it gets dumped back into the US economy, that in turn reinvigorates an industry and creates jobs, which adds an influx of spending and taxes.
As it stands the US Oil Industry isn't much more than a broker or middleman for the Arabs making a sales commission. That is low overhead, less risk and environmetally friendly! But it isn't friendly to the economy.
Our wholesale price dropped 40 cents in 2 days and has since stabalized. we are buying for 3.429 regular. This wont translate to our customers very quickly, non the less it seems the market has found its peak. Good sign for the retail custumer. You gentlemen should see a marked drop in your price bye mid next week 5 - 8 cents.
What I was getting at was that we are spending say $4 plus dollars per gallon and the larger percentage of those funds are going to companies outside the US, supporting economies outside the US.
That's sort of the idea behind foreign trade--we trade either goods or funds in other countries to obtain goods from other countries.
As it stands the US Oil Industry isn't much more than a broker or middleman for the Arabs making a sales commission.
According to the U.S. Energy Information Administration, two of our top 3 sources of crude and petroleum products are Canada (#1) and Mexico (#3), and the top 5 sources add Venezuela and Nigeria. Has there been a large influx of Arabs to these countries' oil fields that I missed?
According to the U.S. Energy Information Administration, two of our top 3 sources of crude and petroleum products are Canada (#1) and Mexico (#3), and the top 5 sources add Venezuela and Nigeria. Has there been a large influx of Arabs to these countries' oil fields that I missed?
Word
That's sort of the idea behind foreign trade--we trade either goods or funds in other countries to obtain goods from other countries.
According to the U.S. Energy Information Administration, two of our top 3 sources of crude and petroleum products are Canada (#1) and Mexico (#3), and the top 5 sources add Venezuela and Nigeria. Has there been a large influx of Arabs to these countries' oil fields that I missed?
I am aware of that, the Arabs just example, trade is quite complicated and not easy to balance.
But to some degree buying foreign oil is screwing an American (a Tax payer) out of a job or higher wages. Which I don't find much different than paying a 'Private Contractor' 150k to visit Iraq and paying our US Personel a stipend of that.
Just my opinion it is trade, but many times it is not in our best interest.
But then again life ain't always fair:D
The Reaper
07-18-2008, 21:06
What is the real downside to domestic drilling?
TR
What is the real downside to domestic drilling?
TR
At home for a minority the the downside is a lower price, loss of a subsidy or the loss of a political bargaining chip. Possibly a decline in research for alternative sources of energy.
Outside the US, maybe less income, potential political strife, loss of shakey but needed allies.
GratefulCitizen
07-19-2008, 11:41
Specialization and trade have proven to be a highly effective form of economics.
If foreign oil is a cheap source of energy, it makes sense to trade for it.
Artificially escalating the price of domestic oil (through regulation and restriction) doesn't make sense.
Our "dependence" on foreign oil is only a matter of how quickly we can react to market variations.
When energy consumption becomes a larger part of GDP, energy is used more efficiently and new/different supplies are developed.
The problem is that Americans in general, and politicians in particular, aren't very tolerant of long-term business cycles.
The capitalization necessary for energy takes time.
Political action which creates uncertainty ties the hands of those who would tend to future needs.
(An interesting link on this subject: http://www.wtrg.com/prices.htm)
Simple supply and demand.
It's just not always convenient in terms of election cycles.
Some historical perspective:
* Energy expenditures as share of GDP
**Standard deviations away from 1970-2005 average (8.8%)
Year ---- Percent* --- Deviation**
1970 ---- 8.0% ---- (0.44)
1971 ---- 8.0% ---- (0.44)
1972 ---- 7.9% ---- (0.50)
1973 ---- 8.1% ---- (0.38)
1974 ---- 10.2% ---- 0.79
1975 ---- 10.5% ---- 0.96
1976 ---- 10.6% ---- 1.01
1977 ---- 10.9% ---- 1.18
1978 ---- 10.4% ---- 0.90
1979 ---- 11.6% ---- 1.57
1980 ---- 13.4% ---- 2.57
1981 ---- 13.7% ---- 2.74
1982 ---- 13.1% ---- 2.41
1983 ---- 11.8% ---- 1.68
1984 ---- 11.1% ---- 1.29
1985 ---- 10.4% ---- 0.90
1986 ---- 8.6% ---- (0.11)
1987 ---- 8.4% ---- (0.22)
1988 ---- 8.0% ---- (0.44)
1989 ---- 8.0% ---- (0.44)
1990 ---- 8.1% ---- (0.38)
1991 ---- 7.8% ---- (0.55)
1992 ---- 7.5% ---- (0.72)
1993 ---- 7.4% ---- (0.78)
1994 ---- 7.1% ---- (0.94)
1995 ---- 6.9% ---- (1.05)
1996 ---- 7.2% ---- (0.89)
1997 ---- 6.8% ---- (1.11)
1998 ---- 6.0% ---- (1.56)
1999 ---- 6.0% ---- (1.56)
2000 ---- 7.0% ---- (1.00)
2001 ---- 6.9% ---- (1.05)
2002 ---- 6.3% ---- (1.39)
2003 ---- 6.9% ---- (1.05)
2004 ---- 7.4% ---- (0.78)
2005 ---- 8.4% ---- (0.22)
Source: http://www.eia.doe.gov/emeu/aer/txt/ptb0105.html
But to some degree buying foreign oil is screwing an American (a Tax payer) out of a job or higher wages.
So we as citizens have a social responsibility to pay higher prices on goods to ensure the employment of others? Isn't that a "hidden" tax and indirect welfare?
So we as citizens have a social responsibility to pay higher prices on goods to ensure the employment of others? Isn't that a "hidden" tax and indirect welfare?
One way or another the answer is yes, and one way or another we are already paying it. The difference is they will actually be working and producing, at least they won't be getting 600 Million bonus for running company into backruptcy which seems to be all the rage.
If the money stays in the US economy it circulates, as it stands it is like a 4" hose draining down a large tank with a 3/4" Garden Hose trying to refill it.
If you can get a job working a rig for 2 to 3 times what your making at McD's or Wal-Queda your likely to become a asset to society, your likey to buy a vehicle, a house and much much more. In turn someone must fix the house, the car, provide fuel. Part of the reason we will have difficulty building Nuke Plants is that we don't have the industrial/manufactuing capacity.....we sent all to China, so we could buy it back so it qualified for the Buy American Act.
We've had a garage sale on US Industry for years, hell we even subsidized it! The steel industry is gone, Auto is dying, Oil has been dead, Produce, Textiles etc, etc, etc. About all we produce these days is paper work, hot air and human waste.
Plain and simple you can't survive as nation of consumers and trying to sell out of an empty wagon. That equates to running up your credit cards with no income.
We drill you put an industry back on the map which provides jobs that actually produce something, you don't drill and your throwing fellow Americans under the bus.
GratefulCitizen
07-19-2008, 16:40
If the money stays in the US economy it circulates, as it stands it is like a 4" hose draining down a large tank with a 3/4" Garden Hose trying to refill it.
"Money" is made up of relatively worthless pieces of paper.
It is merely an arbritrary mechanism to mediate the exchange of goods and services.
If you can get a job working a rig for 2 to 3 times what your making at McD's or Wal-Queda your likely to become a asset to society, your likey to buy a vehicle, a house and much much more. In turn someone must fix the house, the car, provide fuel.
It is not society's obligation to provide easy opportunity for those who refuse to actively pursue more difficult opportunity.
I have seen many individuals pass up marvelous opportunities in my own profession simply because they didn't want to work hard or invest time for delayed reward.
Part of the reason we will have difficulty building Nuke Plants is that we don't have the industrial/manufactuing capacity.....we sent all to China, so we could buy it back so it qualified for the Buy American Act.
We can't build nuke plants because of regulatory obstruction.
We've had a garage sale on US Industry for years, hell we even subsidized it! The steel industry is gone, Auto is dying, Oil has been dead, Produce, Textiles etc, etc, etc. About all we produce these days is paper work, hot air and human waste.
I do agree that, for strategic reasons, a reserve of industrial capacity and product should be encouraged.
I do not agree that this should be done purely for local economic benefit.
Plain and simple you can't survive as nation of consumers and trying to sell out of an empty wagon. That equates to running up your credit cards with no income.
As foreign economies mature and become richer, a market is created where we can sell our goods and services.
Also, their production costs start increasing, which help make our domestic production more competitive.
Unfortunately, these things don't always happen with convenient timing for some individuals.
The world economy isn't made up of a finite amount of goods and services.
More "stuff" is being produced all of the time.
If demand for "stuff" increases, some entrepreneur will produce more "stuff" so he can then trade it for different "stuff".
We drill you put an industry back on the map which provides jobs that actually produce something, you don't drill and your throwing fellow Americans under the bus.
For various reasons, it costs more to produce extra oil here than it does to import it.
Deregulating would reduce the cost of domestic oil production and would reduce the overall cost of oil to society.
However, the argument should not be stretched so far as to promote protectionism.
Protectionism drives up the cost of whatever is being imported.
Those increased costs are passed on in the form of price increases and reduced wages/employment.
Someone still gets thrown under the bus.
Microeconomic analogies don't always apply to macroeconomics.
(But it does make for good politics)
The Reaper
07-19-2008, 17:10
If you can get a job working a rig for 2 to 3 times what your making at McD's or Wal-Queda your likely to become a asset to society, your likey to buy a vehicle, a house and much much more.
You know, they are called "entry jobs" for a reason.
I see few people with dedication and pride in what they do being stuck in these jobs forever.
If you are a buggy whip maker, you should see that the end of the line is fast approaching, and acquire a new job or marketable skills.
With steel products quickly approaching $1 per pound, I do not think the US mills are hurting right now, nor are those willing to work in them.
Shipping cost increases (due to fuel) are quickly making the shipment of raw material overseas for production and return for retail sale a much less attractive business model.
TR
My apologies getting off topic on a rant.
I was brought up that all good things come with time and it took work to achieve and appreciate things in life. Take pride in what you do. You take care of those that take care that take care of you. Always remember that when you think you have it bad, there is always someone worse off than yourself. Your only as good as your word.
In my mind no one should get thrown under the bus, if they get there it is under their own power.
I don't find many people with half those qualities so it is just another sign I am getting old and idealistic.
I repair homes generally 5 to 10 years old, and generally I wouldn't be there if somone had taken an extra 5 minutes or spent few dollars to do it right. The contractor saved a few hundred dollars that ends up costing a home owner thousands. The home owner would have gladly paid a $100 dollars extra to have that drip edge cut a mere 1/4" longer (10 ft is maybe $3.00).
If you won't spend the money to fix it right we don't do business. I won't work on rental property and I won't work for a-holes. The customer isn't always right and neither am I. If you can't see it that way, make another call.
All in all my customer and I work together as a team.
My suppliers and I are a team, it takes all of us working in harmony, respectfully, honestly, our ability adjusting to change and sometimes sacrifice to survive. A concept all of you are familair with.
If I and many others don't pay that little extra to smaller wholesalers we will sooner than later get stuck with the mind numbing mediocrity of Lowes, HD and Walmart.
We pay more for that service because it benefits us and it is for the greater good.
Thats where I am coming from.....Older, loyal, Idealistic, Buy American ,Mom/Pop Stores and set in my ways.
So would drilling be in the greater good of the nation and worth the extra expense? A convoluted subject that touches so many.
I say do it, if for no other reason than to just show we can. Because in reality oil is like a loaded gun, it offers protection if you have it, if you don't your at the mercy of those that do.