Wednesday, July 09, 2008

OPEC's Strongest Ally: U.S. Congress

Congressional attacks on speculation do not alter the oil market's fundamental demand and supply conditions. What would lower the long-term price of oil is for Congress to permit exploration for the estimated billions upon billions of barrels of oil domestically available, not to mention the estimated trillion-plus barrels of shale oil in Wyoming, Colorado and Utah.

Some politicians pooh-pooh calls for drilling, saying it would take five or 10 years to recover the oil. I guarantee you we would begin to see a reduction in today's prices even if it took five to 10 years for us to get the first barrel.

Put yourself in the place of an OPEC member knowing there would be a greater supply of U.S. oil five or 10 years, hence maybe driving oil prices lower to say $40 a barrel. What will you want to do now while oil is $130 a barrel? You would want to sell as much oil now and OPEC's collective efforts to do so would put downward pressures on current oil prices.

Right now the U.S. Congress is OPEC's staunchest ally.

From "Scapegoating Speculators," Walter E. Williams' latest column


At 7/09/2008 8:18 AM, Anonymous Anonymous said...

If I were OPEC I'd be laughing and buying property in the U.S. while funding lobbyists to lobby against drilling or energy self sufficiency.

My wiser brothers would just sit back and continue buying the U.S. because by the time the red tape is dealt with we won't have any oil to sell anyway but we will own the U.S.

At 7/09/2008 11:17 AM, Blogger bobble said...

". . . a greater supply of U.S. oil five or 10 years, hence maybe driving oil prices lower to say $40 a barrel."

i'm not against drilling, but $40/barrel? where are you getting your data?

it may make you feel better to criticize congress, lord know they deserve it. but drilling in ANWR and offhsore won't help.

from the White House's own Energy Information Agency:

ANWR "Additional oil production resulting from the opening of ANWR would be only a small portion of total world oil production, and would likely be offset in part by somewhat lower production outside the United States. The opening of ANWR is projected to have its largest oil price reduction impacts as follows: a reduction in low-sulfur, light crude oil prices of $0.41 per barrel (2006 dollars) in 2026 for the low oil resource case, $0.75 per barrel in 2025 for the mean oil resource case, and $1.44 per barrel in 2027 for the high oil resource case, relative to the reference case."

offshore "any impact on average wellhead prices is expected to be insignificant"

At 7/09/2008 3:16 PM, Blogger juandos said...

I see bobble seems comfortable with the idea that so many dictators have made the countries they rule the owners of the crude and natural gas...

But we have our own problems...

Or, they find new wells in hard-to-reach places, like Chevron’s huge deepwater Jack discovery last year about 270 miles southwest of New Orleans in the Gulf of Mexico.

But worldwide oil production could still lag behind demand if politics get in the way of access, Watson said.

“The truth is we could still run short of oil, above ground where access and politics come into play,” Watson said.

He specifically mentioned lack of access to areas of the Gulf of Mexico, calling it a “great policy contradiction” to promote energy independence in the United States while blocking the ability to drill in off-limits areas of the Gulf.

Watson said other above-ground risks include gaining access when national oil companies control about 80 percent of the world’s reserves

Tens Of Billions Of Additional Barrels Of Oil Remain To Be Tapped Miles Below Gulf Of Mexico, Cornell Geologist Says

N.D. study estimates 167 billion barrels of oil in Bakken

At 7/09/2008 5:30 PM, Blogger bobble said...

juandos rants:"I see bobble seems comfortable with the idea that so many dictators have made the countries they rule the owners of the crude and natural gas..."

i said that? juandos, put down the kool-aid, take a deep breath and go back and read my post.

what i said was:

1. i am not against drilling

2. experts who have studied the potential deem it unlikely that drilling offshore or in ANWR will significantly reduce the price of a barrel of oil.

At 7/10/2008 10:52 AM, Blogger OBloodyHell said...

bobbie, while I grant your sources are valid, I question their reasoning, because the exact statements made could and should hold a wide degree of variance dependent on the actual amount of oil taken out. If they are giving specific numbers to the pennies, that's like the IPCC making tenth of a degree predictions a hundred years from now when they can't even guesstimate what the average temperature is going to be THIS year within 3 degrees.

I thus wonder what axe they have to grind (The admin does not micromanage the individual agencies, look at Hansen at NASA and Global Warming).

The amounts of oil in question are HUGE compared to the current numbers for oil in-country, which SHOULD have a serious effect on the price of oil in-country.

And the fact that oil is being produced outside OPEC areas is not going to hurt the price by any means. It can and will cause one or more members to cheat on their monopoly (one of the reasons the price of oil broke in the late 70s was members "cheating" and producing above agreed-upon limits, which caused others to cheat, and the monopoly broke into a looser form), which will cause the majority of them to deliberately increase production.

In the meantime, the higher prices are going to spur serious consideration and development of true alternatives (i.e., not solar or wind), to say nothing of the development of oil shales and tar sands in NorthAm, which amounts appear to be larger than all currently proven reserves, I believe. Obama has already come out against THESE, too, demonstrating that he has no intention of doing anything to help the American consumer, that he intends to toe the ecofascist line all the way.


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