Offshore Oil Drilling and the Oil Rig Disaster in the Gulf

[RiversideGator]

Typical nonsensical response.  I see you do not intend to respond seriously in this thread, probably because you cannot mount a plausible argument to defend your positions.

[Midway ®]

Nukular is the answer:

[gatorback]

During the past storm I saw a graphic showing the locations of the offshore drilling platforms.
What a mess.  The gulf of mexico near TX and LA are filled with them.  Like nasty billboards every 1/25 of a mile--do you really want to see that off FL?

[Doctor_K]

A supply of things that might happen at some time in the future is NOT a 'supply' that will meet the price that arises from 'demand' in the near future.

This might get down to semantics, and for that I apologize.  However:

All the active oil fields throughout the world were drilled in the past to supply the demand that exists now, or in its future.  Well, ok, they were drilled for production and profit; but essentially, you have to drill and produce to supply both present and future demand. 

Just like Ronzoni has to make lots of pasta now to be sold and consumed later.  And I buy Ronzoni on sale in bulk sometimes in order to consume at a later date.  I want a supply now in my pantry to satisfy future demands of meals for me and the wife, guests, etc.

IMO the "Drill here drill now" argument is, among other things, supporting a continuation of this already-established concept.  Demand will do nothing but increase - not only domestically, but globally.  India, China, and plenty of other Developing Countries are making the transition into petroleum-reliant economies.  Thus, there is indeed future demand that needs to be supplied.  And it takes a long time to bring the supply online.  Reference the '7 to 10 years' argument once again being trotted out by drilling detractors.

Midway's newspaper article is at least from the mid- to late-70s, if not sooner, as it makes references to the Shah of Iran and is persumably before the Three-Mile Island disaster.  This is when the Peak Oil theory was in full swing and enjoying widespread notoriety.  The Peak Oil timetable continues to be pushed back, as more and more studies are done.  So, I don't know what relevance that has.

Gatorback:  the question is, are they visible from shore?  Previous posts showed rigs clearly visible from the shore of the mainland, but that's apples to oranges, IMO.  The latest attempt at offshore drilling has time and again stressed that any rigs would be so far offshore that they wouldn't hinder the scenic beauty of beaches.  If indeed that is the case, I see even less of a compelling argument against the whole thing.

[RiversideGator]

A supply of things that might happen at some time in the future is NOT a 'supply' that will meet the price that arises from 'demand' in the near future.

Do I really have to post again the articles from economists and oil executives which prove you are wrong?  Proposed and approved oil drilling in the future brings down the spot price of oil now.  Every time.

BTW, I heard from a friend that you were seen exiting one of your old haunts last night.   

[RiversideGator]

Doctor K.  If you went to the store, and told them that you wanted a lower price on the basis of all the future pasta that Ronzoni was going to be making, the store clerk would make decisions as to whether you were dangerous or not.

This argument isnt about supply and demand.  Its nominally about the theory that one might possibly be able to psych out the market based on potential policy changes.

It doesnt create a single ounce of 'supply', nor does it cancel out a single gallon of 'demand'.

The truth, which has been repeatedly posted on this site is that there are millions of acres of land which the oil companies have rights to that they havent even cracked open yet.

Why isnt the potential 'supply' from those sights affecting the 'demand' and the market?

having this discussion is literally ludicrous.

Im not sure what my own position on offshore drilling is.  It would depend on a couple of factors i suppose.   Need.   Protections and controls.   Guarantees that they would only be for our domestic markets.

But I am offended that some people think we are so damned stupid that we can be buffaloed by these nonsensical arguments which do nothing except give away resources for free to trillionaires.

Pasta is not a commodity traded on the futures market.  Your reductio-ad-food-items argument does not have anything to do with commodity pricing on the futures market.

[Doctor_K]

RSG - that was me drawing poor analogies.  My bad.

[RiversideGator]

This argument isnt about supply and demand.  Its nominally about the theory that one might possibly be able to psych out the market based on potential policy changes.

The futures market is all about supply and demand - future supply and demand.  Again, I will explain it to you:

Futures traders serve a useful purpose in bringing current prices to a level designed to accommodate future supply and demand.  So, if a shortage is seen on the horizon, traders drive up prices now which results in more production and less consumption before the problem strikes.  Conversely, if traders foresee a glut in the future (caused by increasing supply or reduced demand), prices will decline.  It really is Economics 101.

[RiversideGator]

It is beginning to look like a bad film festival around here.  Perhaps you should limit your movie clips to the Arts Section, Stephen.

Back to offshore drilling, it appears that it is less harmful to the environment than are natural oil leaks into the ocean:

The California nearshore and coastal areas are replete with natural seeps.  It is estimated that over 1,000 barrels of oil each week are released into the environment from these seeps.  (From the Coal Oil Point seeps alone, almost 200 barrels a day may be entering the ocean.)

http://www.mms.gov/omm/pacific/offshore/oil-and-gasfaq.htm

In fact, drilling may reduce such natural leakage:

There is some evidence that commercial production of the reservoirs offshore has reduced the amount of oil that would naturally seep into the marine environment by reducing pressure in the reservoirs.

http://www.mms.gov/omm/pacific/offshore/oil-and-gasfaq.htm

[RiversideGator]

Oh yes, and according to the National Acadamies, accidental oil spills are just a mere fraction of the leakage of oil into the oceans from natural sources:

accidental spills from platforms represent about one percent of petroleum inputs in North American waters and about three percent worldwide.

http://books.nap.edu/html/oil_in_the_sea/reportbrief.pdf

So, the information is out there if you just do some research.  Or, you could go looking for silly movie clips on youtube...

[RiversideGator]

Yes, Winston.  2 + 2 = 5.

Yes, this does sum up your silly, non-serious theories.

[Midway ®]

During the past storm I saw a graphic showing the locations of the offshore drilling platforms.
What a mess.  The gulf of mexico near TX and LA are filled with them.  Like nasty billboards every 1/25 of a mile--do you really want to see that off FL?

DRILL HERE!!! DRILL NOW!!!

[RiversideGator]

I see you boys are still offering your usual intelligent commentary.   

[Midway ®]

We don't have the benefit of your superior eugenics, so that's the best we can do.

We're just human, as opposed to  you, who are superhuman.

[RiversideGator]

Thanks for recognizing the truth finally, midway.   

Now, back to the topic at hand.  The declines in oil prices began when Bush rescinded the executive order banning offshore drilling.  And, large numbers of people now tell pollsters they favor offshore drilling in the US.  In response, some members of Congress are working to make this all a reality.  Is the recent drop in oil prices then proof that the futures market is responding to potential additional future supplies of oil which may come about if the drilling is finally approved?  Economist Larry Kudlow thinks so.  Read more here:

The Oil Tax Cut Is Good for Growth, Lower Inflation, and Solving the Credit Crunch   [Larry Kudlow]

The tax-cut effects of lower oil prices are the single-biggest economic story right now. Even with Fannie Mae’s terrible reported earnings, stocks are up 240 points in today’s trading. Why? Because oil is down another $4 to $116. That’s a more than 20 percent drop from its peak in mid-July, about the time President Bush launched his drill, drill, drill offensive to roll back the moratorium on offshore and domestic production, including shale and ANWR.

Bush removed the executive moratorium order, and now the entire country is clamoring for Congress to remove its moratorium. So far the Reid-Pelosi Democrats continue to dither and oppose new drilling. And as Kim Strassel wrote in today’s Wall Street Journal, the so-called “Gang of 10” compromise is a lousy deal. Obama is flirting with that compromise, but he has basically positioned himself as the anti-driller. Fortunately John McCain has repositioned himself as the pro-driller, and his rising polls show popular support.

But oil markets see the political tide in favor of drilling. As poll after poll is released â€" showing huge public support for drilling â€" oil traders are selling contracts short in anticipation of greater oil supplies in the future. And while all this is going on, the oil shock of the past six-to-nine months has curbed energy demand and promoted conservation. In other words, markets work. The combination of expected future supply increases and a pullback in demand is working to bring down prices.

http://www.kudlowsmoneypolitics.blogspot.com/