McCain credits Bush for drop in oil price

[dragonrider]

No one has suggested that we need to switch our entire infrastructure over to alternative energy sources immediately or that it would even be possible to do so. Only that we need to BEGIN immediately. It will take years to completely switch over, and we need to start now. My argument is that lifting the ban on offshore drilling and drilling in ANWAR will do almost nothing to ease that transition. Those resources, if brought completely on line, would amount to a small fraction of our total energy usage. You could affect the energy market in the same positive way by switching an equivalent small percentage of our energy use to an alternaive source. It would take years to gain any benefit from new offshore leases or ANWAR leases, so I think it is practical to think we could switch an equivalent fraction of our energy usage to an alternative in the same time frame.

[Psycho4Bud]

My argument is that lifting the ban on offshore drilling and drilling in ANWAR will do almost nothing to ease that transition

I don't see how you can state that when just having Bush lift the Presidential ban dropped the price of crude by $15 per barrel.

Those resources, if brought completely on line, would amount to a small fraction of our total energy usage.

Oil shale in Colorado, Utah and Wyoming could yield 800 billion barrels of oil for the global market. That is more than the proven reserves of Saudi Arabia and certainly enough to help drive down gas prices in America. But political posturing has prevented us from even beginning to plan how we can utilize this resource.
Skewed logic over oil shale - The Denver Post

The federal government estimates the nation's outer continental shelf might hold 85.9 billion barrels of crude, including 10.13 billion barrels off California. For comparison, the United States consumes about 7.56 billion barrels of oil per year. The nation's sea floor also could hold 419.9 trillion cubic feet of natural gas, equal to U.S. consumption for 14 1/2 years. But the federal estimates are just that - estimates.
The lowdown on offshore oil reserves

What more can be said? The numbers speak for themselves......

Have a good one!:s4:

Once again, the numbers speak for themselves.

Have a good one!:s4:

[dragonrider]

I don't see how you can state that when just having Bush lift the Presidential ban dropped the price of crude by $15 per barrel.

I can state it bacause I do not believe the price dropped in response to Bush lifting the Presidential ban.

Once again, the numbers speak for themselves.

If you read the article you linked to for those numbers. It says that of that 85.9 billion barrels of crude that MIGHT be held in the outer continental shelf, 75% is already in areas being actively drilled or open to exploration. The ban affects possibly 21 billion barrels that MIGHT be there. It's not worth it.

Your article also had this to say:

In addition, offshore oil exploration is slow and costly.

If the federal government opened California's coast to drilling tomorrow, the first exploratory wells probably wouldn't be drilled for at least six years, Medlock said. Bringing newly discovered oil fields into full production would take longer.

That means any new oil wouldn't arrive on the market until midway through the next decade, at the earliest. The process is slow enough that the Energy Information Administration, the statistics branch of the U.S. Department of Energy, estimated last year that opening the coasts to offshore drilling would have no significant impact on oil prices before 2030.

I'm thinking that if we got started now, maybe we could have a better solution in place by 2030 wthout endangering our coasts to tap the last 25% of our estimated reserves.

[thcbongman]

I thought it would take us at least 7 to 10 years before we could even start using that oil?

Lowered the price didn't it?

Although this is only band-aid.

[dragonrider]

I've even seen reports on t.v. that stated one year within 15 miles of the coast. Fact is if we had the green light on this it would drive speculators out of the market. They said speculation was worth $60/barrel.....that would bring it down to $80/barrel from the $140 mark that it was.

Have a good one!:s4:

Wow.. $60/barrel. I hadn't actually heard a figure on what inflation speculation was worth. That is insane, that is about 40% of the current value of a barrel.

Let's hope congress votes on this... Let's also hope that our government doesn't lose sight of what's important and still continue to research alternatives fuels/energy so we don't run into this mess again.

Someone has got to explain to me how this futures market works and how it affects today's spot price. I thought the whole point of futures contracts was to accurately know the future price of a commodity based on future supply and demand predictions, or eliminate the risk of not knowing. How does runaway speculation affect that? Why would anyone buy a futures contract saying "I agree to buy a barrel of oil next year for $130 dollars" if predicted supply and demand say a barrel should only be $70 next year? How does that work? Seems like the market would just correct that out pretty quickly. And if supply and demand say that today a barrel should go for $70, then how does a futures contract for a future barrel of oil change today's price? I don't see how that works at all.

I know I don't know enough about how future's trading works, but it seems like bubbles would not be such a big problem and would rapidly self-correct, and I definitely don't see how it affects today's price.

I am thinking that today's high price is probably NOT due to some kind of futures bubble that has somehow added a 40% premium onto the supply-and-demand price of oil. That just seems like such a huge market distortion for such a heavily traded high-volume commodity that it would have to collapse.

Does anyone know how this works and can explain it to me?

[thcbongman]

When oil supplies dwindle and they forsee a demand in oil going up, it'll drive the price of oil futures. Since oil is a non-renewable resource, there is expectation that the price would continue to go up. Oil futures sends signals to the physical market because after all, it's correlated. If speculators think that they'll be less supplies, they'll continue to increase the value of oil as a commodity, making it a profitable investment.

When there is news that increases the oil supply, the wagers go from up to down. The futures market is simply that speculation. Bush temporarily changed the expectations.

Though the futures market effect on oil price is limited, but none the less apart. It's not a long-term solution, a simple band-aid.

[Psycho4Bud]

Someone has got to explain to me how this futures market works and how it affects today's spot price. I thought the whole point of futures contracts was to accurately know the future price of a commodity based on future supply and demand predictions, or eliminate the risk of not knowing. How does runaway speculation affect that? Why would anyone buy a futures contract saying "I agree to buy a barrel of oil next year for $130 dollars" if predicted supply and demand say a barrel should only be $70 next year? How does that work? Seems like the market would just correct that out pretty quickly. And if supply and demand say that today a barrel should go for $70, then how does a futures contract for a future barrel of oil change today's price? I don't see how that works at all.

I know I don't know enough about how future's trading works, but it seems like bubbles would not be such a big problem and would rapidly self-correct, and I definitely don't see how it affects today's price.

I am thinking that today's high price is probably NOT due to some kind of futures bubble that has somehow added a 40% premium onto the supply-and-demand price of oil. That just seems like such a huge market distortion for such a heavily traded high-volume commodity that it would have to collapse.

Does anyone know how this works and can explain it to me?

The top CEOs of U.S. companies such as AMR Corp.'s American Airlines, Delta Air Lines Inc., Continental Airlines Inc. and US Airways Group Inc. this week asked their customers to press Congress to rein in speculation, which they say could contribute between $30 and $60 a barrel to current oil prices trading near $140.
Free Preview - WSJ.com

From what I've heard on t.v. and read there are MANY oil tankers off our coast at the present time filled with crude that's already accounted for or bought through speculation. Since this is removed from the supply side we have our increase. I guess there are many firms putting their retirement funds into this since it is so much of a money maker at this time. Let congress vote in a measure to allow drilling and these people will run for the hills.:thumbsup:

Do a google search on "Oil Speculation"....maybe you can find some better info than this on the subject. If so, please share for the rest of us!:thumbsup:

Have a good one!:s4:

[dragonrider]

Some people are claiming that there is a $60 dollar premium on the current price of a barrel because of speculation. Even oil producers are saying that. So that does not make sense to me. If it curently costs say $50 to make a barrel, and a producer can sell it for $60 and make money, then if that producer's competitor says to a customer "I'm charging $120 based on futures speculation," that first producer would jump in and say, "Holy crap! A $60 premuim for speculation! Screw that! I'll GLADLY sell you all the oil you can take for $70 and still make DOUBLE what I usually make!" The current spot market should correct and track a lot more closely to supply and demand than to allow such a huge markup based on futures speculation. It would seem like the only way you're going to make money in futures is to know what the price really is going to be. I mean it does you no good at all to agree to buy a barrel at $130 next year if the price is really going to be $60. Unless this really is a true bubble and people are just passing the overpriced contracts on to bigger and bigger suckers, until the bubble pops, and someone is left holding a poisonous 130-dollar contract to buy 60-dollar oil.

[Fugitive]

yeah yeah yeah just you wait!!! how great the bush managed to make it drop lol! it it will rise again!

[Markass]

Instead of dropping the price of oil only, maybe they should drop the amount of ethanol in gasoline so that my car and the others affected by it will stop running poorly...

but per every 20,000 gallons of gas, it must be nice to have an extra 2,000 to sell again...this ethanol crap is b/s that's what I'm worried about...it's getting harder and harder to find a station with pure gas