Washington Post: Start Drilling

[twa]

Actually it's 1/1000th of the solution.

Yeah Bush gave big oil land, money, and relaxed EPA rules. How's that working out for him? Not a single refinery has been built in this country in almost 30 years.

Thats strange since they are building them here and expanding present ones.

Of course we are not to much for NIMBY

[JMS]

Thats strange since they are building them here and expanding present ones.

There is some modest expansion, but there are no new oil refineries in the United States for three decades. Big oil just has no interest in building them.

No New Refineries in 29 Years

http://www.corpwatch.org/article.php?id=12227

As of yesterday.. 4/29/2008

When top executives of the country's five largest oil companies earlier this month were asked at a House hearing whether they wanted to build a new refinery, each said no.

While no new refinery has been built in more than 30 years, companies have been adding on to existing refineries.

http://ap.google.com/article/ALeqM5i_u5JYufG7IzntX-X8DdNouL6rbAD90BNTJ80

Of course we are not to much for NIMBY

NIMBY isn't really an issue. As I've said Bush has gifted land on former military bases, has relaxed EPA laws, and has even offered federal money to pay for construction of new refineries in the way of tax cuts. That was three or four years ago and no new refineries were built. No new refineries are even planned.

http://www.defenselink.mil/news/newsarticle.aspx?id=31333

The reason big oil dosn't want to construct refineries in the United States is because if they are built in Mexico, and the Carabean, Big oil can charge whatever they like for the gas. If the refineries are built in the United States the US auditors can by law get an exact fix on production costs. Of shore refineries are not subject to the same restrictions and price controls.

This leaves big oil free to play big oil bingo. They can reduce production of gas for niche markets which increases profits all while claiming it's a regulatory issue and has nothing to do with them.

It's just not as profitable to own refineries in the United States, it's the only explaination which explains why their has been a 30 year moritorium on building new refineries.

The reason crude oil prices are high today is because Saudi Arabia and opec which have kept cude oil costs down for decades are pissed. Prices at the pump jumped significantly last few years while crude oil has remained cheap. They see American big oil making record profits by tinkering with the market, while governments are applying taxes to oil and believe they aren't charging enough for their product since obviously the market will and is paying more.

[JMS]

The solution is BOTH. Jeez, it's like people think you have to have one OR the other.

The solution must be based upon the problem. A lack of crude oil production capacity is not the problem. Saudi Arabia has actually dropped crude oil production over the last two years by 10% and they are 20% under their existing acknowledge crude production capacity.

Saudi Arabia has considerable additional production capacity. It's pumping a little over 8.5 million barrels a day, compared to about 9.5 million barrels a day two years ago and has acknowledged the ability to produce as much as 11 million barels a day.

http://ap.google.com/article/ALeqM5i_u5JYufG7IzntX-X8DdNouL6rbAD90BNTJ80

If Anwar came online tommorrow it wouldn't change Opec's ability to control the price. It would literally do nothing but add more profits for Big Oil and destract the nation from the actual problem.

We have a regulatory issue. Regulations written by the Big Oil industry, have lead to record profits for that industry. That is the root of the entire problem.

Deregulation has left us as an economy at the mercy of trusts, just like we were in the 1880-1890's. That's the root of most of our economic problems today. That and graft.

[Tulane Skins Fan]

That's the root of most of our economic problems today. That and graft.

Steffi Graft?

[chomerics]

The solution is BOTH. Jeez, it's like people think you have to have one OR the other.

While we're researching alternative sources, we need to be drilling in better areas to keep costs down. It's not like by July we're going to have some miracle energy source to replace gas all of a sudden...it's going to take awhile.

Answer your own question Spiff, why are they not doing this? They had government for 6 years and nothing was built, why?

Think about economics, and supply vs demand. The oil is worth more in the ground than it is above ground. It is worth more outside the US than inside the US, read JMS' post.

Such a huge problem with society these days...people want results and they want them NOW.

Agreed, it is the American way. Live fast and hard, pay no attention to next month, only tomorrow.

We should be drilling in Alaska and other places closer to home and we should be researching alternative sources. There's no good reason why we can't do both.

Sure there is, there are very good reasons why we should not be drilling, and they all stem to making more money for the oil companies.

[JMS]

So what is the solution? If drilling in Anwar is not the solution because it would accomplish nothing but further increasing big oil profits; what would work?

Introduce competition into the process. Today big oil pumps the crude from the ground, they transport it to their own refineries, and then they ship the finished product gasoline to service stations which they own and control/set the price the consumer plays.

Even if we had some wealthy corporation which wanted to build an oil refinery in the United States they theirfore would not be able to get the crude, transport it to his refinery, or distribute gasoline to the consumer.

So what we have to do is vertically untangle the market. Pumping oil from the ground should not be associated with refining. Companies which refine oil should not be allowed to set the price at the pump. Breaking up the trust vertically will eliminate the ability of a company to sacrifice profits on one arm in order to maximize profits through another arm. Refineries will no longer have a finanancial interest in creating artifical shortages of niche gasoline products. Refinereis which loose money as production is taken ofline, will not be able to count on the hike in gasoline prices which are immediately passed on to the consumer at the pump to make their lack of production more profitable than continued production.

Horizontally we need to also break up the market. 15 years ago we had 18 companies which controlled 80% of the consumer pumps. Today we have 4. And two of those don't count because they are BP solely concerned with Britains North Sea fields, and Shell almost solely concerned with Venezualan oil. Check your neighborhood. If it's anything like mine you have three Exxon/Mobile stations with in a mile of each other. This isn't because your neighborhood is been targeted as super prosperous by Exxon/Mobile. It's because Exxon has purchased the other compeditors who used to ensure a fair market cost for their product.

We need more competition at the pump. Part of more competition at the pump means local owners operators of those pumps should set their own prices based on micro economic costs rather than allowing the national company to control prices based on macro economic tampering. You've seen it. Crude oil prices go up a few bucks per barrel those costs are reflected the next hour at the pump, phoned in from corporate. Crude oil prices go down it takes weeks or months for the price at the pump to go down.

Crude oil prices go up, the national company says our oil is worth more. Whooo Hooo!! Crude oil prices go down, and the national companies say, we still had to pay the old high price for that gas. Prices remain the same.. Whooo Hooo!! Thus any fluxuation in price for big oil is a win win for the company and a loose loose for the consumer.

Good old fashion micro economic competition is the best solution to fix this wagon. Let the local owner operator set his own price by law and control the sale price of that gase.. If he has excess capacity and buys gasoline cheep, he will be able to sell it cheaper when cost jump making him more profitable. If prices go down, the companies who buy that gasoline next will be able to get a micro economic jump on the competition by lowing their prices sooner. The mothership cost of gas is purchased per tank at the station and that's as much as they should control.

Break um up. The challenges in this plan are emense. First you have to do it such that hoizontally their is competition. Refinary X needs to be able to have several choices of companies to transport their oil to them. Gas company Y ( former big oil ) needs to be able to purchase finished gasoline from several competing refineries. The second obstical will be to implement the break up in such a way as to avoid spot shortages as normal distribution paterns are re-organized.

Opec itself is a trust and is anti compeditive; and that will always be the case until either conservation or alternative fuels can be brought on line to compete. Ultimately though we've compouned our problem with Opec by building a trust on top of a cartel.

Breaking up big oil will facilitate alternative fuel distribution too.

[chomerics]

Break um up.

It is simple as that. . .

[Spaceman Spiff]

Answer your own question Spiff, why are they not doing this? They had government for 6 years and nothing was built, why?

Think about economics, and supply vs demand. The oil is worth more in the ground than it is above ground. It is worth more outside the US than inside the US, read JMS' post.

Agreed, it is the American way. Live fast and hard, pay no attention to next month, only tomorrow.

Sure there is, there are very good reasons why we should not be drilling, and they all stem to making more money for the oil companies.

No, I agree...the oil companies are to blame. I know you love to blame anything you can on the Republicans but I'm not sure how much blame falls on them right now, though Bush (or anyone else in government for that matter) hasn't seemed to lift a finger to do anything to stop it.

This is price gouging at its finest...

[JMS]

No, I agree...the oil companies are to blame. I know you love to blame anything you can on the Republicans but I'm not sure how much blame falls on them right now, though Bush (or anyone else in government for that matter) hasn't seemed to lift a finger to do anything to stop it.

This is price gouging at its finest...

Big oil was most of the problem over the last few years. Today Opec which has grown red in the face as they've taken most of the blame for high gasoline prices while big Americna oil companies have reaped most of the profits have jumped onto the problem bus.

Opec said fine, If big oil can double their prices at the pump, and if governments can slap on $.50 (US) to $2(EU) in taxes; obviously our crude is under priced. So today we have both big oil and Opec to worry about.

As for the Republicans. Cheney and Bush are both Oil boys. Oil industry was one of the largest contributors to the Bush Presidency. It's no secret that Cheney (appointed head of Bush's Energy task force) had secret meetings with big oil companies within weeks of taking office. Cheney has essencially admitted big oil crafted Bush's energy policy, with the exact details of the meetings and who attended still being conceeled to this day by his office.

http://en.wikipedia.org/wiki/Energy_task_force

We have a regulatory crisis, I personally think holding the authors ( or who should have been the authors) responsible is a reasonable coarse of action.

Even so the roots of the issue do predate Bush and go back to deregulation which occured in the Reagan administration now almost thirty years ago. I don't blame Ron, cause we likely were overly regulated back in 1980. But he did set the ball in motion.

Republicans believe deregulation is always a good thing because it increases efficiency. Massive deregulation along with market contraction can also have detrimental effects in the form of preditory monopolies.

The government does have a role to play in the economy. It's role is to create the framework for competition and defend the free market through regulation from preditory monopolies and anti compeditive acts. I blame the Republicans, especially Bush/Cheney for not grasping this simple concept.

[Thiebear]

Yeah Bush gave big oil land, money, and relaxed EPA rules. How's that working out for him? Not a single refinery has been built in this country in almost 30 years.

Well when my Granddad voted for Bush??? They shot down the military bases for refinaries..

[Ax]

Let me ask you this. If the world used 100 million barrels of oil a day, and you bomb an opec country and take 10-20 million barrels of oil a day off the market. How is that going to make anything better?

By forcing everyone to take a hand in finding a solution.

______________________________________________________________

As for all those trying to hang this on one side or the other...

http://en.wikipedia.org/wiki/Arctic_Refuge_drilling_controversy

In the 1990s and 2000s, votes about the status of the refuge occurred repeatedly in the U.S. House of Representatives and Senate, but as of 2007 efforts to allow drilling have always been ultimately thwarted by filibusters, amendments, or vetoes.

Veto - Clinton

Filibusters - Mainly Democricans & some Republicrats.

Amendments - Republicrats, Democricans, pages, janitors, pizza delivery guy, etc...

And you all damn well know it. So stop with that idiocy, please.

The U.S. consumes about 20 million barrels (3,200,000 m³) daily. If the Arctic National Wildlife Refuge oil reserves were used to supply 5% of the U.S. daily consumption -- most is imported from Canada (19%), Mexico (15%), Saudi Arabia (11.5%), Nigeria (10.5%) and Venezuela (10.5%)[12] -- the reserves, using the low figure of 4.3 billion barrels (680,000,000 m³), would last approximately 4300 days, or almost 12 years. Using the high estimate, the reserves would last approximately 11800 days, or 32 year

5% might not seem like a lot, but, add this to a matching supply from other places mentioned in this thread, and for at least 12 years, and maybe as many as 32, or more, we could tell either Saudi Arabia, Nigeria, or Venezuela thanks, but no thanks. It's certainly not the only option, but what could be so bad about it?

[JMS]

By forcing everyone to take a hand in finding a solution.

Ax, We've already seen their solution. Their solution is to charge more.

As for all those trying to hang this on one side or the other...

http://en.wikipedia.org/wiki/Arctic_Refuge_drilling_controversy

Veto - Clinton

Filibusters - Mainly Democricans & some Republicrats.

Amendments - Republicrats, Democricans, pages, janitors, pizza delivery guy, etc...

And you all damn well know it. So stop with that idiocy, please.

The isue is not that the Democrates are blocking drilling in Anwar. They are. The issue is Republican's claiming that Anwar is part of a solution. It is not.

In 2005, the Energy Information Administration estimated that it would take about 10 years before oil would flow from ANWR if drilling were approved. By 2025, it said, the additional oil would have only a slight impact on global oil prices and cause a decline in gasoline prices of less than a penny a gallon, using constant 2003 dollars. Oil imports would drop from an expected 68 percent of U.S. demand to 64 percent, the EIA said.

http://hosted.ap.org/dynamic/stories/B/BUSH_ENERGY_FACT_CHECK?SITE=DCSAS&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2008-04-29-15-59-43

Besides that since we already know OPEC controls crude oil prices and their largest producer Saudi Arabia is sitting on 20% oil production capacity. It's very optomistic to think that anwar would even have a penny a gallon effect at the pump. Not like Anwar is going to give us a controling interest in Oil Production !

5% might not seem like a lot, but, add this to a matching supply from other places mentioned in this thread, and for at least 12 years, and maybe as many as 32, or more, we could tell either Saudi Arabia, Nigeria, or Venezuela thanks, but no thanks. It's certainly not the only option, but what could be so bad about it?

I think you are adding 1 and 1 together and getting 4. Opec has controled global oil prices for decades. Sometimes they are better at it than other times; but anwar is not going to wrest control of the price from this cartel. All it's going to do is put more money in the pockets of big oil.

Our problem has nothing to do with production of crude oil. Our problem has to do with cartels, trusts, and now ineffective regulations set up to control them.

[Sarge]

Wow, even the tree huggers at the Compost are getting a clue

Here's my question though. Recently Chertoff overrode every law on the books to build the border fence citing "national security"

Why won't the adminstration do that to jump start drilling off shore and in Alaska?

[stevenaa]

It is simple as that. . .

Crap. I agree with Chomerics and JMS in the same thread. This has to be a sign of the appocalypse. The oil industry is not operating under the rules of free market and now has a monopoly on an inelastic product. Consumers can't fight back in any meaninful way. The US also has lost it's influence on OPEC to keep prices down because there are other consumers in the world that will pick up any lost exports to the US. We still need to drill new wells and extract from shale if we hope to get the prices back down. Longterm we need to be working on alternative fuels, as well.

[JohnLockesGhost]

No, I agree...the oil companies are to blame. I know you love to blame anything you can on the Republicans but I'm not sure how much blame falls on them right now, though Bush (or anyone else in government for that matter) hasn't seemed to lift a finger to do anything to stop it.

This is price gouging at its finest...

Reminds me of an episode from the Reign of Diocletian. Diocletian continued the debasement of the Roman currency to fight wars and build monuments, so prices continued to climb. He passed price controls.

http://en.wikipedia.org/wiki/Diocletian

The Edict on Maximum Prices (Edictum De Pretiis Rerum Venalium in Latin) was issued two to three months after the coinage edict, somewhere between November 20 and December, 10 301. It survives in many different versions, written on wood, papyrus, and stone. It is the best-preserved Latin inscription surviving from the Greek East. In the edict, Diocletian declared that the current pricing crisis resulted from the unchecked greed of merchants, and had resulted in turmoil for the mass of common citizens. The language of the edict calls on the people's memory of their benevolent leaders, and exhorts them to enforce the provisions of the edict, and thereby restore perfection to the world. The edict goes on to list in detail over one thousand goods and accompanying retail prices not to be exceeded. Penalties are laid out for various pricing transgressions.

So the leader who ruins the currency blames merchants to deflect blame from himself and the people believe him.

People don't change, I guess.

[Sarge]

Break um up. The challenges in this plan are emense.

Roosevelt did it with Standard Oil

[JohnLockesGhost]

Roosevelt did it with Standard Oil

Standard Oil did more to improve the lives of average Americans than any pretentious politician ever did. During the heyday of Standard Oil the price of a quart of oil fell from 30 cents to 12 cents allowing more people, poor people, to stay up later and be warm. David Rockefeller did more for poor people in this country than Teddy ever did.

Incidentally, Standard Oil's market share at its peak was over 80% (don't remember the exact number). When they were later broken up, their market share had fallen to around 60%.

[twa]

There is some modest expansion, but there are no new oil refineries in the United States for three decades. Big oil just has no interest in building them.

You need to figure out just who Big Oil is,long gone are the days of private oil companies.

Most consolidated or sold out major interest to foreigners.

When was the Bill passed..early 06??....Give it time

There has beenat least six ethanol plants built in this area and several Bio-fuel ones...

Modest expansion?

Only $20 billion or so,with more in the works.

08:52 AM CST on Tuesday, December 11, 2007

By ELIZABETH SOUDER and JIM LANDERS / The Dallas Morning News

Two foreign companies broke ground Monday on construction of the largest oil refinery in the U.S. in the Gulf Coast town of Port Arthur.

Motiva Enterprises LLC, owned by Royal Dutch Shell and Saudi Aramco, will invest $7 billion to expand an existing refinery.

The Port Arthur project will surpass Exxon Mobil Corp.'s facility in Beaumont, currently the largest U.S. refinery.

http://www.dallasnews.com/sharedcontent/dws/bus/stories/121107dnbusrefinery.2894c91.html

January 2007 Marathon Oil received final approval from the Louisiana Department of Environmental Quality (LDEQ) for a $3.2bn, 180,000bpd expansion of the Garyville refinery. On completion this project will provide an increase of 7.5 million gallons of transportation fuel a day for the US domestic market.

http://www.hydrocarbons-technology.com/projects/garyvillerefinery/

Hyperion Resources Inc. of Dallas is considering Union County for an $8 billion refinery that would turn 400,000 barrels of crude oil from Canada per day into low-sulfur gasoline and low-sulfur diesel fuel.

http://www.iptv.org/mtom/archivedbazaar.cfm?Bid=959

[ChocolateCitySkin]

i don't see why you can't blame the government... since oil was discovered people were saying it was too valuable to use as fuel...

truth of the matter is this wouldn't have been a problem if people had electric cars. hell california had the infrastructure in place for electric cars... too bad, the automotive companies wouldn't renew the leases on any of the cars.

ah well, i guess this really boils down to when reagan decided that oil was the future of our country and took down those silly solar panels carter put up on the white house. its always refreshing too watch that speech on oil is good as they took down those "eye sores"

[PeterMP]

Break um up. The challenges in this plan are emense. First you have to do it such that hoizontally their is competition. Refinary X needs to be able to have several choices of companies to transport their oil to them.

Actually, first you have to prove their is a monopoly. Just because JMS says so doesn't make it so.

There are legal obligations to proving monopoly before you can break them up, and I think you are going to have a hard time doing that with 4 companies (and yes there are 4), unless you can actually demonstrate collusion.

[twa]

Go ahead and break em up,the new kids on the block are trustworthy

The New seven Sisters

1. Saudi Aramco (Saudi Arabia), formerly Aramco

2. JSC Gazprom (Russia)

3. CNPC (China)

4. NIOC (Iran)

5. PDVSA (Venezuela)

6. Petrobras (Brazil)

7. Petronas (Malaysia)

You could throw in Pemex,but they are faltering big time.

Really Big Oil

Big Oil is pretty small next to the industry's true giants: the national oil companies (NOCs) owned or controlled by the governments of oil-rich countries, which manage over 90% of the world's oil, depending on how you count. Of the 20 biggest oil firms, in terms of reserves of oil and gas, 16 are NOCs. Saudi Aramco, the biggest, has more than ten times the reserves that Exxon does. Those with misgivings about oil—that its price is too high, that reserves are running out, that it damages the environment, that it is more a curse than an asset for countries that produce it—must look to NOCs for reassurance.

http://www.economist.com/opinion/displaystory.cfm?story_id=7276986

[PeterMP]

Crap. I agree with Chomerics and JMS in the same thread. This has to be a sign of the appocalypse. The oil industry is not operating under the rules of free market and now has a monopoly on an inelastic product. Consumers can't fight back in any meaninful way. The US also has lost it's influence on OPEC to keep prices down because there are other consumers in the world that will pick up any lost exports to the US. We still need to drill new wells and extract from shale if we hope to get the prices back down. Longterm we need to be working on alternative fuels, as well.

If oil is inelastic does it matter how much competition you have. Isn't the definition of an inelastic commodity that demand is flat vs. price?

If that's the case, then what does it matter if there is 1 company or 100?

I guess if you have more companies there are greater odds that one will be benevolent and say that they don't need to be making that much money and out of good will they will charge less, but that has nothing to do with supply and demand and will probably be balanced by companies that figure they can (and they will be able to do) really gouge people and hike up the prices.

I'll agree oil is inelastic, but that actually hurts the arguement for monopolies.

The question then becomes, why did companies selling an inelastic commodity decide to actually use that inelasticity to their advantage and hike up their prices (unless you believe oil just became inelastic, which I don't)?

[Thiebear]

You need to figure out just who Big Oil is,long gone are the days of private oil companies.

Most consolidated or sold out major interest to foreigners.

When was the Bill passed..early 06??....Give it time

There has beenat least six ethanol plants built in this area and several Bio-fuel ones...

Modest expansion?

Only $20 billion or so,with more in the works.

08:52 AM CST on Tuesday, December 11, 2007

By ELIZABETH SOUDER and JIM LANDERS / The Dallas Morning News

Two foreign companies broke ground Monday on construction of the largest oil refinery in the U.S. in the Gulf Coast town of Port Arthur.

Motiva Enterprises LLC, owned by Royal Dutch Shell and Saudi Aramco, will invest $7 billion to expand an existing refinery.

The Port Arthur project will surpass Exxon Mobil Corp.'s facility in Beaumont, currently the largest U.S. refinery.

http://www.dallasnews.com/sharedcontent/dws/bus/stories/121107dnbusrefinery.2894c91.html

January 2007 Marathon Oil received final approval from the Louisiana Department of Environmental Quality (LDEQ) for a $3.2bn, 180,000bpd expansion of the Garyville refinery. On completion this project will provide an increase of 7.5 million gallons of transportation fuel a day for the US domestic market.

http://www.hydrocarbons-technology.com/projects/garyvillerefinery/

Hyperion Resources Inc. of Dallas is considering Union County for an $8 billion refinery that would turn 400,000 barrels of crude oil from Canada per day into low-sulfur gasoline and low-sulfur diesel fuel.

http://www.iptv.org/mtom/archivedbazaar.cfm?Bid=959

If your not going to provide links.. stay focused.

I was just skimming it till i saw the Bee Arthur marathon mentioned.

[twa]

The question then becomes, why did companies selling an inelastic commodity decide to actually use that inelasticity to their advantage and hike up their prices (unless you believe oil just became inelastic, which I don't)?

I tie it to the time when foreign interests bought in heavily after the oil bust in the 80's and they are simply looking for good returns w/o a overriding concern for our interest,but I admit to strong nationalist bias.

[Ax]

Bottom line, there is no good reason why drilling in new areas should not be part of an ongoing search for a solution to dependence on foreign oil.

None.