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Gas Prices and the Economy

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Covers Rehab
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Posted: #26
 
Let's make a rule to limit the number of times a person can "Glad Hand "     in a single thread...................
 
All-Star
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Posted: #27
Quote Originally Posted by FriedShrimp:

Gas prices are the root of it all
 
Gas prices were $2 gallon 30 years ago.  Inflation alone explains a lot of it. 
 
As a percentage, Tomatoes have increased more in prices.  So have homes and autos, and everything else.  Why the Republicans just zero in on gas is just myopic or it's propaganda.
 
 Gas was $1.35 during the crunch in '78 ,if you could fine it. Price wasn't the problem, availability was.
 
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Posted: #28
Quote Originally Posted by SarasotaSlim:

 
Let's make a rule to limit the number of times a person can "Glad Hand "     in a single thread...................
 
MVP
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Posted: #29
What makes anyone think that drilling in America or off our shores will equate to lower prices? I'm sure the oil companies and refineries will be so glad to have the oil that they will want to sell it at a discount?  It only makes sense that they will drill for American oil, and sell it for THE SAME prices that we already pay for it, allowing the rich that we already bitch about and all their profits to make more money.  "Home grown gas, 2$ a gallon", are people really that stupid.  I imagine if we drill domestically, that we will be paying just as much if not more for it.
 
The problem is The Dollar
 
what i don't get is why people bitch about paying x amount for gas, what about milk, and water? I'm sure there's plenty of you paying 2$ a gallon for water, and 4$ a gallon for milk . but 3.80 for gas is sooooo expensive.  Somewhere along the line, gas missed the inflation curve, and when it caught up, everyones left with 10 mpg SUV's bitching about the gas prices.  Let's work on lowering the price of water and milk, things you need before you bitch about paying 4$ gallon gas
 
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Posted: #30
Ok, I'm not the economics guru here but I have some questions.
 
1) If oil was drilled on American soil who owns it? Does the government own it? If so, who are they going to pay to refine it and how much will they pay? Enough to cover the loss as a result of the falling oil price due to less demand?
 
If if the oil companies own it then why will they sell it at a discount to market price?
 
2) If we do drill wouldn't OPEC just cut demand by the new U.S output to keep demand high and supply in their grounds a little longer?
 
How about Congress focus on alternatives to oil as opposed to playing the blame game on drilling. I watch the jetsons, where's my flying car running on vegetable oil?
 
Covers Linesmen
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Posted: #31
Second,

Good questions and here are a few answers I have.

I dont think OPEC would cut production if the US increases supply because they as countries have become dependant on the dollars from oil exports, to have them mutually agree to cut long term production would be very tough and I dont think it would work.

The owner of the oil is the owner or lessor of the land..so not the US government in any case.

Congress is too stupid to focus and fund alternative solutions, which IS the answer because it requires a large investment and the US congress wants quick solutions that dont cost more than one budget cycle.  
 
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Posted: #32
Ed,
 
My understanding is that the U.S. demand is falling as a % of global demand (i.e India and China are demanding a greater share of the pie). When the last 2 other countries joined OPEC recently the existing members cut their production to keep the supply the same. If OPEC was producing 2 million barrels a day and the 2 new nations produced 200,000, then the other OPEC nations cut supply to 1.8 million.
 
Congress is too stupid to focus and fund alternative solutions, which IS the answer because it requires a large investment and the US congress wants quick solutions that dont cost more than one budget cycle
 
Or one election cycle
 
Covers Linesmen
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Posted: #33
SA,

The US could double their supply and not meet demand.

Until the country crosses the net import point, then as a nation the US is still dependant on OPEC for our consumption, and even if we poked everywhere we could it will take 10 years before we break free as a country.

And as you say, China and India are massive consumers, so a slight drop in consumption here wont do much to the global supply and demand picture.
 
Captain
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Posted: #34
WSC:
 
Saudi Arabia is the only one that has a valve that turns both ways rather easily and doesn't have monetary concerns (to the extent that the other OPEC members do) to maintain cash flow. 
 
Right now they are sitting on something just under 2 million bbl oil/day in spare capacity.
 
In another 12 months they will have about 2.5 mil/day in spare capacity.
 
They can unilaterally increase and decrease their production without OPEC consent.  All of them cheat anyway when they can.
 
 
 
SA:
 
Land (and mineral leases) are held either by private parties (you and me) or the federal government.  Most of the US West is all Federal Land (Fee Land as we call it).  That means they hold the surface and the mineral rights.  All offshore mineral rights are federally owned.
 
Surface land can also be owned by private parties, but the mineral rights can be federally owned.  Finally, some private owners own both the surface and mineral rights.
 
Anything that is federally owned (except National Parks, designated Wilderness Areas, etc) can be leased to anybody that wants it when it comes up for lease.  You pay a couple bucks an acre to win the lease, and then a couple bucks an acre annually till the lease runs out or you give it up.  You cannot own leases of more than about 250,000 acres in any one state at a time.
 
When you drill and are lucky enough to produce oil, gas, or both, you pay the government (or the private party if they own the rights) a royalty of 12.5% of the value of what you extracted that year.  You continue paying that royality till the wells run dry and are abandoned on that lease.
 
So Uncle Sam does get a portion of almost everything that is produced in the US, because the private mineral rights holders are only a small part of the picture.
 
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Posted: #35
Is it safe to say that extra drilling does not make a single difference?
 
Is it also safe to say that we need to start kissing some Muslim ass?
 
 
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Posted: #36
Kuj-  Sorry to interrupt the convo but I have friends that actually do own oil wells.  You guys think I'm full of shit but it's more than true.
 
What should I tell my oil well friends to do?  Sell now or cap and save it?
 
 
Captain
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Posted: #37
Shrimp:
 
You have to look at how much you intend to bring on line with new drilling against a backdrop of 82 million bbls a day consumption (and rising).
 
What percent is 100,000 bbls/day in new production in a universe of 82 million bbl/day consumption?
 
What percent is 1 million bbls/day in new production in a universe of 82 million bbl/day consumption?
 
If ANWR was drilled and brought to full capacity, which is estimated to be about 1.2  miilion/bbl day, how would that impact a worldwide usage of 82 million bbl/day?
 
Of course it would have an affect, but not anywhere near what people think it will.
 
The biggest effect will be in not shipping those dollars to a foreign producer.
 
Shrimp...your friends own the mineral rights...correct?   Or did they buy lock, stock and barrel the wellhead production equipment?  Are they responsible for the well maintainence and abandonment costs?
 
How much are they producing a day?  Stripper wells....~10 bbls/day?
 
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Posted: #38
Various scenarios..... I should have not have said that here.  Been drinking.
 
For convo sake, not in oil biz, just landholder side.  "One" friend getting $300k month on small piece of land.  Near Lake Charles, LA.  No equipment or maintenance involved for him, he just eats po boys with me
 
Kuj-  I grew up in Tejas, would love to pick your brain about this not in public. 
 
I'll post my email in "my spaces" right now for the next 20 minutes.  Grab it and hit me back.
 
 
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Posted: #39
So, basically all this chest thumping in Washington is just bullshit posturing? The production will not affect prices (both long and short term) very much at all?
 
I cannot see Exxon selling oil produced from U.S soil cheaper because it is from the U.S
 
Captain
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Posted: #40
Shrimp....got it
 
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Posted: #41
Kuj-  Hit me up tomorrow.  Got some "great" oil stories for you.
 
In the meantime, please tell me you like LSU football !!!!
 
 
 
Captain
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Posted: #42
SA: 
 
 No...the industry is not nationalized.....that would be the only scenario under which American oil would be priced below the world market value.
 
Additional US production would minimally affect price if at all....pennies on the gallon by taking away some speculative pricing.
 
I've looked at numbers on my own, and what the Gang of Ten wants to open up is Eastern GOM and some southeast coast of Florida.   Both areas are speculated to contain 3.5 to 4 billion bbl oil.
 
With those size fields, brought into the production stream in normal fashion, they would reach maximum productivity in 8 to 10 years of about 500,000 bbl /day  each area. Field life may be about 30 years or so.
 
East Coast is really speculative.  The biggest structures were drilled in the 70's....50+ wells put in....5 wells had oil shows that were tested ...no commercial production established.
 
Eastern Gulf again was drilled in early 70's before moratorium was put in place....looks to me that mainly natural gas fields would be developed.   Largest structures were tested...no oil...just natural gas. They were not looking for gas at that time so wells abandoned.
 
Cali offshore ever opened up, estimated 10 billion bbl up and down the coast, brought on stream in normal fashion, max productivity in 8 - 10 years would be about 1.4 million/day.
 
Yes...we have oil to be discovered and produced.  Against the backdrop of what we import...13 million a day.....we maybe could reduce that to 10 to 11 million a day.
 
But you have to remember that the 8 million we are producing a day, is declining as we speak.  We need new oil supplies just to keep pace with the ones we are sucking dry.
 
We need to run just to stay in the same place essentially.
 
 
 
 
 
Captain
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Posted: #43
Shrimp...I hate LSU Football     
 
 
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Posted: #44
What about the kissing ass to Muslim angle?
 
Golf, hookers, fried oysters?...... Is there anything we can do to help with that situation?
 
 
 
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Posted: #45
Hookers....the universal currency 
 
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Posted: #46

Well if you hate LSU football then you are really gonna hate Georgia football this year.

Speaking of hookers, the Chinese bribed the Mongols a billion years ago with women.

Send me over there with a 144 golf balls and I can settle all this shit.  This is too easy.

 
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Posted: #47
Write me in for Presidential Candidate, I cannot pass a background check but I will get those gas prices to where they need to be.
 
If I have to use a six iron, I'll do it !!!!!
 
Captain
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Posted: #48
That's 2 golf balls for every virgin...of course you are going to have to sacrifice yourself in the process...but hey...you do what you gotta do. 
 
 
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Posted: #49
Do I get extra credit for hitting a two iron?  Yes, I carry one.  Paint the target !!!
 
Going to sleep.
 
NITE DEMOCRATS !
 
 
 
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Posted: #50

[Quote: Originally Posted by wallstreetcappers] Shrimp,
.Foreign purchases are what kept Bush in office. Having the FED  devalue the currency hid the real effect of the Iraq war, it propped up the housing market, the economy and the stock and bond markets. In my view the cyclical nature of the economy would have turned soft in 2003 or so, just like it did for PAPA Bush and he would not have been re-elected, nor would he have been able to finance the Iraq war. So the FED doing what it did benefitted the repubs quite a bit.

 

Thanks for bringing some factual info to this thread. If this was done to hide the real cost of the war(which we were told would cost 50 billion) is it not reasonable to expect somebody to do a prison term for lying about the true cost?

 

 On the financing of the war part, I would have to disagree. Every cent of this war has been put on the defecit, so technically he wasn't able to finance the Iraq war. It's sad that we don't even have the money to pay for our war.

Actually, it's real scarey. I can't imagine what 8 more years of these kinda policies will do to this country.


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