The Immediate Benefit Of Offshore Drilling

National Review: The Idea That Drilling Won't Bring Down Gas Prices Is Wrong

(National Review Online)  This column was written by Mark Hemingway.

---

After trading at a record high of $147 a barrel Friday, the price of oil saw its largest one-day drop since the 2003 beginning of the Iraq war on Tuesday, falling $6.44 a barrel. Wednesday, it fell another $3.71, to $135.03, and at one point was trading as low as $132.

So what happened? As is usually the case with markets, a variety of factors caused this dramatic drop. According to the Associated Press, the Energy Information Administration announced that U.S. crude-oil supplies rose by 3 million barrels; beleaguered banks have been selling off valuable energy contracts to pay for other debts; and there’s even some speculation that computer programs used by Wall Street may create a “cascading effect” once prices start to drop.

But bizarrely, the AP didn’t mention that on Monday - again, the day of the single biggest one-day drop in oil prices in five years - President Bush removed the executive order imposing a moratorium on offshore drilling in the United States.

To think that this dramatic and unexpected move by the Bush administration didn’t have a significant effect on oil prices is folly. Even Democrats admit that relatively small margins in oil production could have a huge impact on prices.

“If they [Saudi Arabia] produced half a million barrels more oil a day the price would come down a very significant amount and, at the same time, it would stop the speculation that keeps driving up the price of oil,” Sen. Charles Schumer (D., N.Y.) said on the Senate floor Wednesday.

But if half a million barrels a day is all that’s needed to get the price of oil down, why, pray tell, are we at the mercy of the Saudis?

Last December, at the behest (and expense) of the American Petroleum Institute and Shell oil, I flew down to the Gulf Coast to visit an offshore oil platform. They helicoptered me 165 miles out into the gulf and I stepped onto Brutus, a tension-linked platform anchored to the seafloor 3,000 feet below. It would be an understatement to say I was in awe. Until you’re actually standing on one you can’t begin to appreciate the sheer size and complexity of such a thing.

The platform is the size of a few football fields jammed together, and the top of the derrick was easily a few hundred feet off the water. Dozens of people lived on board, and everything - from the computer systems to the actual drilling rig - was state of the art. Brutus produced over 100,000 barrels of oil a day - down from over 300,000 at its peak capacity.

That sounds impressive. But here’s what truly floored me: Shell decided Brutus’s location in the gulf would be profitable for drilling in April 1999. The company then built the massive oil platform, transported it to the right location in the gulf, anchored the floating leviathan onto the seafloor 3,000 feet below, drilled 17,000 feet below that, and began producing oil in July 2001. It took only two years to get Brutus online.

Of course, it helps that the oil companies have plenty of money to throw at the problem. Constructing oil platforms can cost in the billions of dollars. A few new oil platforms equivalent to Brutus off-shore in the U.S. could easily account for the half a million barrels Senator Schumer claims are driving prices up.

Of course, it’s not as simple as saying that, if we allow more offshore drilling, the oil companies will have America’s energy problems solved in a mere two years. It takes time to discover oil, for one thing. But they’re getting much better at finding it. The technology for oil prospecting has improved dramatically. At Shell’s headquarters in New Orleans, I visited their conference room where geologists, engineers, and executives gather to make decisions about where to drill. Suffice to say, it involves looking at scarily accurate maps and computer-generated images of cross sections of the earth’s crust on a 10-foot-high screen the width of the room. And it’s all in 3-D.

But due to restrictions on drilling, much of America’s coastline has never been fully explored, let alone with the latest technologies. Just a few months ago, an oil find was made off the coast of Brazil that might contain 33 billion barrels of oil. Now imagine what a similar find off the coast of America would do for oil prices.

Again, there’s no guarantee that oil will be up and pumping in just a few years. But given the price of oil, and the fact that oil companies have an obscene amount of cash sitting in the bank to throw at prospecting and construction of new facilities, oil companies are highly motivated. There’s an excellent chance they’ll start producing oil much faster than naysaying politicians would have you believe.

It’s also worth noting that existing oil production in America is declining, particularly in the Gulf Coast. The long-term path to energy independence can’t focus exclusively on offshore drilling at the expense of other forms of energy and new technologies.

California governor Arnold Schwarzenegger recently said that the idea that more offshore drilling would bring down gas prices amounted to “blowing smoke.” The cigar enthusiast might want to reconsider that statement-as should Obama, who also opposes more drilling. It’s a losing political issue. With gas $4 a gallon, a June Gallup survey found that 57 percent of Americans support drilling off-shore and in wilderness areas.

Saying offshore drilling won’t bring down gas prices is demonstrably wrong. The price of gas dropped significantly upon Bush’s word that more domestic offshore drilling was one small step closer to becoming a reality. How much more will it drop if we actually start drilling and producing oil?

[ubrew12]

So offshore drilling will bring down the price of oil. Will it bring down the earth''s temperature?

If conservatives won''t accept any solution but their own (and you KNOW that''s their problem with Gore''s message), take the T Boone Pickins solution: invest in wind power and use the natural gas otherwise burned for energy to be used for transportation: bye bye foreign oil.

The advantage of offshore oil is its like money in the bank. Are we REALLY at the point where we MUST access it? I don''t think so.

Regarding oils price, it''s clear that the Reagan/Bush $10 trillion debt, Gramms mortgage banking deregulation, Greenspans low interest rates in support of loose mortgages, and 30 years of absolute Republican opposition to the very idea of alternative energy has led to an economic crisis in which OIL is the world''s new stable currency. Now they''re holding the rest of us HOSTAGE to its price to FORCE us to open up our remaining oil stocks. Regardless of whether we do or not, NOTHING is going to change the logic or trend of these statistics:

New Oil Discoveries:
1960s: 47 BBbl/year
1970s: 35 BBbl/year
1980s: 24 BBbl/year
1990s: 14 BBbl/year
2000s: 4 BBbl/year

[jimfinster]

Cause and Effect:

There is no evidence that the announcement had ANY effect on the price.

[joyous88]

republicon greed is the problem not the solution,

so what! we drill offshore, helll we could even have the oil companies drill on the leases we have already given them, for once,

so what,

sooner or later it will be gone, and if we do not have the alternative energy set established, even
the greed driven republicon pigs will be sorry

[terrapin78]

Closing the Enron Loophole will bring down prices faster than any hole in the ground!

[jjp735i]

"As for the Outer Continental shelf, more drilling could indeed produce more oil, but not right away. The Energy Information Administration says that there are "substantial resources of crude oil" offshore. However, it also notes that both time and money would be required to produce any oil from areas that are currently off-limits. Specifically, it estimates that no production would begin until 2017 and that it would take until 2030 to reach peak production, increasing total domestic production by 3 percent.

And even then, the EIA study says, "Because oil prices are determined on the international market, however, any impact on average wellhead prices is expected to be insignificant."...factcheck.org

So even after waiting 22 years the impact is expected to be insignificant. The CBS article is pure Conservitive Bushit. And the sad part is people will buy it and Congress will give in to Bush & Friends.

[bluestardad]

DONT DO ANY GOOD WHERE WE DRILL OVER HALF THE ALASKA OIL IS SOLD TO THE FAR EAST!


SOUNDS LIKE MORE REPIG BUSHIT TO ME!

[ramos937]

Right now, most of the oil coming from the Alaska Pipeline is going into tankers bound for Asia. Unless enforceable way is found to dedicate the offshore oil to the US, what benefit would this oil be to us?

We now have a great opportunity to develop a crash emergency energy program to develop alternate fuel sources. Even with the associated prices, alternate fuels would be competitive with petroleum products. It would also help lessen our dependence on foreign oil.
We can exploit this opportunity or blow it as we did the last time we had a similar fuel emergency.

[eggy1620]

Despite the source, there is some truth to this argument. The price of oil & gas is high not because current supplies are tight, but because future supplies are expected to be tight as long as current production capacity is expected to not increase with future demand. Any announcement/policy statement/action taken that signals an increase in future capacity will reduce the buying price. Commodities investors are very much like deer. They%u2019re spooked by the slightest thing and reassured by the absurd.

[ubrew12]

eggy1620 said: "Commodities investors are very much like deer. They%u2019re spooked by the slightest thing and reassured by the absurd."

That''s true. And we should set our energy policy like cattle make decisions during a stampede.

What did I just hear Cheney say? ''Git along doggies?''

[eggy1620]

ubrew12 said %u201CAnd we should set our energy policy like cattle make decisions during a stampede.%u201D
Well, we are being led by a bunch of Longhorn rustlers.

[pvperson]

So if Bush''s statement caused the oil price drop, what did Bush do to cause the oil price to double in the first place? Wait, let me guess, Bush didn''t have anything to do with the price increase, right? As usual neo-cons won''t accept responsibility for the bad things that happen under their watch, but jump out there claiming credit for anything good that happens. Bushshit.

[aaabee-2009]

Posted by jamesm12341 at 01:26 PM : Jul 17, 2008

What did President Bush the First and other Republicans install the Outer Continential Shelf Moratorium in the first place, not known as he was for being any kind of environmentalist.

"Except for Pres. Clinton extending Pres. Bush Sr.''''''''s first moratorium, it has been all republican presidents, and govenors who stopped the drilling. Sen. Obama and Sen. Clinton voted for the drilling. Sen. McCain''''''''s NV looks pathethic with his hollow calim to help find new American Oil."

"That Former Fla. Govenor Jeb Bush has been silent on the possiblity of drilling off the coast of Fl."

"In 1981 a Congrees passed the Outer Continental Shelf (OCS) Moratorium. That prevented the off shore drilling.

"In 1990 Pres. George H.W. Bush authored an additional protection until 1990.
That congress has continued through bi-partisan support to keep the moratorium.
If Pres. Bush Sr. did not save the moratorium, there would have been drilling."

http;//www.csmonitor.com/2

[aaabee-2009]

Posted by jamesm12341 at 01:26 PM : Jul 17, 2008

What did President Bush the First and other Republicans install the Outer Continential Shelf Moratorium in the first place, not known as he was for being any kind of environmentalist.

"Except for Pres. Clinton extending Pres. Bush Sr.''''''''s first moratorium, it has been all republican presidents, and govenors who stopped the drilling. Sen. Obama and Sen. Clinton voted for the drilling. Sen. McCain''''''''s NV looks pathethic with his hollow calim to help find new American Oil."

"That Former Fla. Govenor Jeb Bush has been silent on the possiblity of drilling off the coast of Fl."

"In 1981 a Congrees passed the Outer Continental Shelf (OCS) Moratorium. That prevented the off shore drilling.

"In 1990 Pres. George H.W. Bush authored an additional protection until 1990.
That congress has continued through bi-partisan support to keep the moratorium.
If Pres. Bush Sr. did not save the moratorium, there would have been drilling."

http;//www.csmonitor.com/2

[Razzl]

Hemingway''s argument is a total non sequitur. Not a single relevant issue about oil prices, such as peak oil or Chinese demand or investment pressure on futures contracts, was discussed. To claim that allowing drilling in areas where, by his own admission, we don''t even know if any oil exists is guaranteed to bring down oil prices shows all the signs of the faith-based reasoning that constitutes political conservatism these days. The bottom line is that conservatives hate conservation (pretty ironic, isn''t it, when you consider the shared root word) because it isn''t "their" movement and they would rather petulantly destroy the California coast or Alaska tundra just to spite those who resist them. With conservatives it''s all about their paternalistic desire to control and they''re prepared to burn down the house if they can''t be in charge...

[cfin5]

I don''t mind President Bush rattling the "We''re gonna dump foreign oil" saber ALL DAY LONG. It worked quite well didn''t it? Hey George! Time for an encore and really belt out some of "their" fears,....do the hot mic thing :)

[hypnotoad72]

As long as companies who put up fancy expensive commercials say they are investing on new sources, let''s work on the immediate problems now.

The solutions (light rail, biking, walking, et al) are q

[hypnotoad72]

(sorry for hitting ''publish'' so early)


...quite evident. Just do your part as an individual and things will work out.

[tibu987]

What if they find out, in the future, that the billions upon billions of barrels of oil served a purpose above the Earth''s core.
Much like it does in machinery for cooling and lubrication.
Hmmmmmm.

[ubrew12]

"The Immediate Benefit Of Offshore Drilling"

In 2001, the headline read:
"The Immediate Benefit of Tax Cuts"
how did that work out?

LOL! Old ''penny-wise-pound-foolish'' conservatism strikes again!

[rudy654-2009]

This continuation of the dumbing down of the public by means of stupid articles like this is pathetic. How in the world can this article ignore the fact that greedy speculators and a weak dollar are the prime reasons of a surge in gas prices when there is no gas shortage? Does anyone really believe that the highly profitable oil companies are really just the innocent victims of all that money? Get real.

[cfin5]

Posted by rudy654 at 06:59 PM : Jul 17, 2008--- The problem with the prices at the pump are twain, speculation (think auctioneer) and our monetary system backed up by the success of the speculators instead of the Gold Standard. Henceforth in our economy these days, words from a powerful figure whether cool or hot verbally, are like an "economic radiator" with that same, or others like him, being the radiators thermostat. Off hand, I don''t know how else I can make this comment simpler into a "lower common denominator" for ease of comprehension. Just think about what I''ve said for a bit. The "Internet Homework" that I have done in the last year has proven that RON PAUL has got it right. And his voting record walk always matched his campaign talk. I''m so bummed that he wasn''t listened to,.....but maybe by 2012 the public''s ears will work again.

[ioweign]

"We need an energy bill that encourages consumption." George W Bush - Trenton, N.J., Sept. 23, 2002

If you are going to do any drilling, how about tapping the above numbskull first...

[joyous88]

the only immediate benefit is to make some more money for the greed driven republicons running our country into the ground

bush and his criminak cabal belong in prison for treason

that includes McBushSame as well

[elz523]

Pure propaganda from NRO.

It is no accident that Bush took office and the natural gas industry (by way of Enron) went nuts.

It is no accident that in the waning days of his presidency his friends in the oil industry are getting theirs, while at the same time doing what they can ($4 a gallon gas) to convince Americans to let them drill anywhere they want. Right now most Americans would sell their soul for $2 gas. It seems a small price to pay to allow them to drill anywhere and everywhere.

What do you think Cheney and his oil buddies planned in their private government meetings on energy when Bush took office?

Shame on Bush and Cheney and shame on NRO!

China will really NEED oil in 10 years, it''s to the highest bidder, not US

In 2001, the headline read:
"The Immediate Benefit of Tax Cuts"
how did that work out?

results were 19,000 hidden tax shelters in Swiss bank accounts

[sparks224]

The Immediate Benefit of the Death of Movement Conservatism

[andor3]

yeah everyone opposes drilling.. it is a bad idea with no benefits. who cares what some lame-duck, 4th rate President with no power left wants. Let him issue orders.

[joyous88]

the republicon conservatives are criminals

[gunfighter51]

The democrat LIBERALS are wimps and whiners.

Would you like some cheese with your whine, joyous

[itgranny]

I just got into this but ubrew-where are you getting your info on just 4 billion barrels found in the 2000''s? Obviously it''s cherry picked info because Brazil just found a new offshore area that they believe contains 33 billion barrels.

http://www.sfgate.com/cgi-bin/article.cgi?file=/n/a/2008/04/14/financial/f095934D37.DTL&type=printable

Like you, oil companies and speculators are cherry picking numbers to come up with a scenerio that benefits themselves and screws everyone else.

Personally, I think america needs to come up with new energy ideas that don''t involve burning up stuff for energy. Renewable bioenergy isn''t as renewable as we think it is. Somebody''s land pays for it and so does our air quality. Like gore says we need to find something better. I hope in the next 10 years. But, unlike T. Bone Pickens, it should NOT be left to companies. Too many slimey snakes in the grass to rely on that. The debacles of late have taught us that energy companies can''t be trusted.

[omnibus66]

More NRO misinformation and outright lies. If you are brainwashed enough to buy into this garbage, you should seek serious help.

[concerned222]

You know, I''m not really for the drilling, however I''m tired of relying on other countries to provide it and set these ridiculous prices- causing inflation everywhere. I think the US is smart enough to provide what we need. We just have to be smart enought to have the guts to do it. Off shore drilling may prove to other countries that we don''t need them. It''s time we looked after ourselves for a while. This country has major problems and no one is doing anything about it.

[markangeloo]

We cut down all the redwoods for fenceposts.

Amerika has oil on the brain -- drill there.

Save the stuff in the ground for future generations;

this current one doesn''t deserve anymore.

NASCAR still blows leaded gas round & round in a circle.

[ubrew12]

itgrammy said: "ubrew-where are you getting your info on just 4 billion barrels found in the 2000''s? "
Sorry. That''s 4 gigabarrels per year in the 2000''s, in new oil discoveries. It''s estimated that about 1000 gigabarrels of oil remain in the ground, and about another 130 gigabarrels in new oil will be discovered before the discoveries run dry. Global consumption is about 30 gigabarrels per year, increasing by about 30% in the last 10 years.

[tejasdemo]

Ah. The National Nazi at it again.

[joyous88]

there is no way to drill our way out of the oil mess,

we can thank shortsighted FOOLs like Reagan, Bush and

gunfighter51, with his mindless voting, for the current energy crisis, President Carter had set the

USA of the road to energy self reliance only to have the conservatives,

with their GREED driven agenda,
under the criminal Ronald Reagan dismantle the entire effort.

[arnldmartin]

I get awful tired hearing that America can''t get off their addiction to oil.I''m not a damned addict,I just go to work every day and try to stay warm in my home.Can I afford all those new fangled energy saving cars and heating units,hell no so I end up paying through the nose especially on my heat.I''m not addicted,I''m just trying to work in the system that this country has created in the last 100 years,so get off the addiction bull.

[kofiananimus]

Posted by arnldmartin at 12:30 PM : Jul 18, 2008: I get awful tired hearing that America can''''t get off their addiction to oil.I''''m not a damned addict,I just go to work every day and try to stay warm in my home.Can I afford all those new fangled energy saving cars and heating units,hell no so I end up paying through the nose especially on my heat.I''''m not addicted,I''''m just trying to work in the system that this country has created in the last 100 years,so get off the addiction bull.
- - -
Addiction is a dependence on a substance that a person is powerless to stop. If you can%u2019t stop using oil, you are an oil addict. Everyone I know is an oil addict, myself included. It is the system you mentioned that we need to change, to wean people off of oil. Government intervention to lower oil prices won%u2019t help change the system. Government incentives for alternative energy will. Government financially assisting low-income people instead of the rich would help ease the withdrawal symptoms caused by high oil prices.

[kofiananimus]

Posted by arnldmartin at 12:30 PM : Jul 18, 2008: I get awful tired hearing that America can''''t get off their addiction to oil.I''''m not a damned addict,I just go to work every day and try to stay warm in my home.Can I afford all those new fangled energy saving cars and heating units,hell no so I end up paying through the nose especially on my heat.I''''m not addicted,I''''m just trying to work in the system that this country has created in the last 100 years,so get off the addiction bull.
- - -
Addiction is a dependence on a substance that a person is powerless to stop. If you can%u2019t stop using oil, you are an oil addict. Everyone I know is an oil addict, myself included. It is the system you mentioned that we need to change, to wean people off of oil. Government intervention to lower oil prices won%u2019t help change the system. Government incentives for alternative energy will. Government financially assisting low-income people instead of the rich would help ease the withdrawal symptoms caused by high oil prices.

[taus007-2009]

The fact that the price drops based on Bush''s spoken words merely helps to validate the influence that SPECULATION has on price--and validates the need to to ensure that commodity speculation is under control, that there is adequate oversight, that risk-reward relationships are fiscally responsible, and that prices aren%u2019t being manipulated for sport and profit?

[taus007-2009]

The fact that the price drops based on Bush''s spoken words merely helps to validate the influence that SPECULATION has on price--and validates the need to to ensure that commodity speculation is under control, that there is adequate oversight, that risk-reward relationships are fiscally responsible, and that prices aren%u2019t being manipulated for sport and profit?

[jtdev1]

Immediate Bennifit: Instant tax write-off for the Oil Companies, thus maximizing their profits...

[taus007-2009]

Sounds like BUSHCRAP to me! Before we drill more holes, in American territories, the American Oil Companies must settle the score with the American consumers for the BILLIONS of dollars in taxpayers%u2019 subsidy payments, for which we%u2019ve received no direct benefit%u2014while they raked in record profits. We want a REFUND! They%u2019ve used our money for their own self-interests. Now, we need it back for our self-preservation. We want a REFUND of those subsidies%u2014in verifiable and comparable pump price reductions! Then we can talk about drilling.

[taus007-2009]

As a part of a serious multifaceted Energy Strategy, I would be able to support more drilling by American Companies, on American territory, if Americans were to receive a specific, meaningful and direct benefit in the price of gasoline. However, as long as American Oil Companies continue to charge Americans %u201Cworld market%u201D prices for %u201CAmerican%u201D oil%u2014the NIMBY mantra seems justified. In our time of War, American Oil Companies even charge the American Military for gasoline and diesel fuel, based on world market oil prices. How unpatriotic is that???

[andor3]

Bush and his cronies should not be allowed to get away with this con job--they seek to distract people with an endless debate on something everyone knows is a bad idea, meanwhile they continue to benefit from high prices and profits and keep everyone tied up in knots and unable to address the real issues. Of course the mouthpieces like NRO jump in and help their sinking neocon buddies.

more kudos to Congress for doing the right thing and not being swayed by this con and disinformation campaign. Drilling on natural preserves will not help gas prices significantly and would damage natural reserves that are protected for a reason.

[andor3]

Do not miss the quote below in the article. It shows the author is neither impartial nor a journalist. Journalists and editors are forbidden by ethical rules from taking trips funded by corproations they cover. If you need to see why, this article proves the point that they can be swayed to the point of lying.

"Last December, at the behest (and expense) of the American Petroleum Institute and Shell oil, I flew down to the Gulf Coast to visit an offshore oil platform"

[hasher47]

What Mr. Hemingway fails to mention is that Big Oil ALREADY has 41 million leased offshore acres.
Only 19.8% are in production.
That leaves approx. 32,000,000 acres to explore, drill, and bring into production.
These lease acres DO NOT have a moratorium on them.
Write and ask your Congressman or woman why Big Oil is NOT developing already existing leases.

Big Oil HAS millions of leased offshore acres.
How many oil exploration teams do you people think there are? They NEED to explore their already existing leases...PERIOD. Big Oil and the Repubublicans, who don''''t give a c rap about Americans and the economy are using the Oil shortage to get every last area to exploit. WAKE UP, PEOPLE!!!

[bombadil4]

Fashionable as it has been lately to bash Jimmy Carter, Joyuous88 is correct that the Carter Administration had a sane and reasonably low-pain plan to achieve energy independence. Unfortunately Reagan was elected and promptly announced it was morning in America again and too many people were stupid enough to buy into it. It was hardly morning--more like mid-afternoon and now it''s twilight time. In fact there is a growing feeling that the supposed "vast" reserves in Saudia Arabia may be a myth because the Saudis don''t currently have the technology to extract it. In other words, the "Peak Oil" scenario may already be knocking at the door and the party''s over.

[chatmandu002]

So many whiners with no solutions. How about drilling off shore by trading those leases that don''t produce oil for leases that do produce oil. Give "big oil" all the tax write offs they need to make us oil independent ASAP. Open up the arctic reserve. Make the tax code friendly to free market forces that will produce other forms of energy. This process will reduce our carbon emisions by 50% within 30 years and ease the transformation to alternate sources of energy. Nothing will happen overnight but the process has to start and start now.