House to look at opening US waters for drilling today.

[jeryst]

The "Supply and Demand" price of a barrel of oil is around $50. There is plenty to go around. You dont see any rationing, closed stations, etc. OPEC is pumping more than ever and the price still goes up. The rest of the price above $50/barrel is due to unregulated and uncontrolled speculation and holding.

How much more OPEC provides, how much more drilling is done, or how much less we use will have little effect until the unregulated speculation is reined in. The price will just continue to rise as long as the speculators control the market. The same people that are prediciting the price of a barrel of oil, are the same people that are buying and holding the oil, so we are at their mercy until Congress fixes the problem.

[hutch]

The "Supply and Demand" price of a barrel of oil is around $50. There is plenty to go around. You dont see any rationing, closed stations, etc. OPEC is pumping more than ever and the price still goes up. The rest of the price above $50/barrel is due to unregulated and uncontrolled speculation and holding.

How much more OPEC provides, how much more drilling is done, or how much less we use will have little effect until the unregulated speculation is reined in. The price will just continue to rise as long as the speculators control the market. The same people that are prediciting the price of a barrel of oil, are the same people that are buying and holding the oil, so we are at their mercy until Congress fixes the problem.

Congress cant fix a problem the way you recomend.  The free market needs to fix it.  The speculation is that US and other nations are not commited to increased production so they are betting the price up because they know supply cant meet demand in the future.  Congress willl try and 'fix' the problem by turning screws on the market and that will case more problems the likes we have never seen in this nation.  We are a free market Economy and when governments get involved in regulating free markets it creates shortages every time.  Just like we saw in the 70's before people pushed DC to let the pipeline in the artic to open. As soon as it did the barrel when to less than 10 bucks.

What you recomend congress to do by fixing a free market will turn our Capitalist Free Market system into one based on Socialism and that never works.  Look at every nation in the history of the world that tried to correct food shortages and food prices by doing this.  When what they should have done is push for increased food production.  Its simple.

[hutch]

The "Supply and Demand" price of a barrel of oil is around $50.

And by the way, the supply and demand price for a barrel of oil is what someone is willing to pay for it.  Their is no fixed price in a free market.  You make an offer on a trading floor and if someone pays 500 bucks for it the market price is 500 bucks.

[mikepmcs]

Man, I'm learning a bunch on this thread.. Had some idea but.....

[Ghoste]

And yet, if our other way of keeping costs low is by enjoying "falling prices at Wal-Mart", don't those lower costs translate directly into eliminating the middle class and raising the standard of living in China (where virtually every single thing in Wal-Marts inventory is manufactured) thus lowering our ability to purchase energy and raising the Chinese ability to outbid us on the speculators market which thereby lowers the real purchasing power of Joe Six Pack which ensures he needs the falling prices at Wal-Mart which helps the Chinese to outbid us on oil which sucks up more of our disposable income which means we are forced to shop at bargain stores like...

[hutch]

And yet, if our other way of keeping costs low is by enjoying "falling prices at Wal-Mart", don't those lower costs translate directly into eliminating the middle class and raising the standard of living in China (where virtually every single thing in Wal-Marts inventory is manufactured) thus lowering our ability to purchase energy and raising the Chinese ability to outbid us on the speculators market which thereby lowers the real purchasing power of Joe Six Pack which ensures he needs the falling prices at Wal-Mart which helps the Chinese to outbid us on oil which sucks up more of our disposable income which means we are forced to shop at bargain stores like...

yep, us paying for their growth is one of the reasons why demand is so high for oil.  And dont forget most that money people give walmart goes right into the Chi-Com military so they can point nukes right at the USA.  I do have issues with free trade with commie nations like China.  Its bad news for the world if you make commies rich.

[Ghoste]

Ah, but doesn't that fly right into the face of the "One and Only True Religion of the USA", the "Free Market Economy"?  Lower prices rule and if you can't compete you die deservedly.  And remember, all I'm doing is playing devils advocate so don't flame me personally, I'm just trying to encourage some debate here.

[Khyron]

After reading this whole thread there is only one conclusion i've come to...













I need to go put gas in my car, I forgot to do it earlier and it's almost empty.

[Ghoste]

   I'll be pulling in right after you buddy. 

[Mike DC]

 
How's this for an example of the Free Market:



We artificially subsidize the burning of gasoline:  We subsidize the oil industry in a bunch of ways that I'm not gonna bother to list but they're well known.  We let our land-management decisions make a total mess of the countryside to fit cars instead of humans.  Probably the greatest architectural achievement of our whole civilization is a gigantic road system for cars built with public money (probably trillions overall).   We even go to war to stabilize oil-rich regions because we've become so overly-dependent. 

And then to try to put the brakes on the growth of all these problems, we don't manipulate things LESS but rather MORE:  We artifically tell people what they can and cannot buy at the dealership (CAFE/mpg, calalytic converters, etc).  It's an attempt to promote this automobile-happy existence in spite of the fact that the raw market-driven price of gasoline should have kept our total driving less ever since the 1970s OPEC crisis.   



So in the final situation here in 21st century America, everyone ends up basically forced to buy & maintain & insure about $30K worth of transportation just for everyday life existence.

The automobile is a private industry's product, it carries little/no gov't protections as to its financial costs, and yet it has been allowed to slide into the position of being an absolute utility of modern life here.  Where's the freedom of choice in this?  Where's the small-govt and free market idealogy in this?   





The most ironic thing of all is this: 
If somebody proposed that perhaps the poor could use a "low income cars" program just like housing and other utlilties, there would be a huge outcry that it would fly in the face of our "free market" society. 
 
America is pretty quick to embrace or reject its Free Market ideals whenever it stands to help or hurt our lifestyle. 

[Ghoste]

No one put a gun to our heads and forced us to buy one.  (especially old Chargers which are nothing more than extravagant toys)

[Mike DC]

Tell me with a straight face that you can feasibly exist in most of America without a car these days.



 

[Mike DC]

(Whoa!  Okay, I'm totally ranting now.  Time to step back & get a grip.) 

[Ghoste]

Me personally yes, most of NA, no.  Can we exist in NA without old Chargers?

I don't think you're ranting Mike, I think your expressing the dichotomy that most of us on this board try to rationalize or pretend isn't there.  Let's face it, there is absolutely no justifiable reason in global good conscience for any of us to drive these toys.  Nor should anyone be entitled to private aircraft, yachts, atv's, gas powered lawnmowers for most residential lawns, etc. etc.
But we do, because we are free to make that choice and wealthy enough to indulge ourselves.  People lived on this continent for thousands of years without oil and if forced, could do so again but that would just be unAmerican.

[Big Lebowski]

Well, how much progress have we made on that front since September of 2001?
 

       Lots, on both fronts. Saddam (killer of a million people) and his evil sons are in Hell where they will roast for eternity.

   
   Back to the original question...Drill, drill, drill & refine everywhere, at least untill your local tree hugging congressman puts a stop to it.

[hutch]

 
How's this for an example of the Free Market:



We artificially subsidize the burning of gasoline:  We subsidize the oil industry in a bunch of ways that I'm not gonna bother to list but they're well known.  We let our land-management decisions make a total mess of the countryside to fit cars instead of humans.  Probably the greatest architectural achievement of our whole civilization is a gigantic road system for cars built with public money (probably trillions overall).   We even go to war to stabilize oil-rich regions because we've become so overly-dependent. 

And then to try to put the brakes on the growth of all these problems, we don't manipulate things LESS but rather MORE:  We artifically tell people what they can and cannot buy at the dealership (CAFE/mpg, calalytic converters, etc).  It's an attempt to promote this automobile-happy existence in spite of the fact that the raw market-driven price of gasoline should have kept our total driving less ever since the 1970s OPEC crisis.   



So in the final situation here in 21st century America, everyone ends up basically forced to buy & maintain & insure about $30K worth of transportation just for everyday life existence.

The automobile is a private industry's product, it carries little/no gov't protections as to its financial costs, and yet it has been allowed to slide into the position of being an absolute utility of modern life here.  Where's the freedom of choice in this?  Where's the small-govt and free market idealogy in this?   





The most ironic thing of all is this: 
If somebody proposed that perhaps the poor could use a "low income cars" program just like housing and other utlilties, there would be a huge outcry that it would fly in the face of our "free market" society. 
 
America is pretty quick to embrace or reject its Free Market ideals whenever it stands to help or hurt our lifestyle. 

Give us an example of how we subsidize the oil industry.  The US oil industry is the most heavily taxed oil industry in the world.  Russia and China tax their respective oil industries far less than ours because they want to promote more drilling and searching for oil.  We punish ours by over taxing.  We need to cut Oil company tax even more.  We are way over taxed as a nation.  By far the worst in the world for tax rates.  Tax is a way to punish not reward.

http://www.russiatoday.ru/business/news/25818

We gave tax breaks a few years ago to help them come up with new ways to find energy and produce gas cheaper and they are doing that, that's not subsidizing that's reducing financial restriction.

We do subsidize corn in a way for farmers to produce ethanol and that's caused our food prices to shoot up like never before.  And we apply heavy import taxes the import of sugar cain ethanol from south America and that causes ethanol to stay expensive. 

Free market works every time, the examples you guys want to come up with where it does not is when the government gets involved.


And for your quote above

The automobile is a private industry's product, it carries little/no gov't protections as to its financial costs, and yet it has been allowed to slide into the position of being an absolute utility of modern life here.  Where's the freedom of choice in this?  Where's the small-govt and free market idealogy in this?   

The prices of cars are directly related to what the government has done to the industry. The government forces safty standards and MPG standards on them, and they have to spend billions of dollars trying to find ways to meet the standards.  That cost is passed driectly onto us by the price.  Thats why good cars cost 30K.  And its total free market, I dont have to buy an expensive car if I dont want to. I can buy an old beater and fix it up.  The market price is not my price so i dont buy it. 

I dont think I undersand your question because it sounds like you dont like the fact we depend on cars?  We depend on cars and trucks because we like to get our products to market or we like our Pizza fast or we like to live in the country and work in the city for a higher paying job.

the highway system is a tool to enable free market to function better is the way I see it.

[Mike DC]

 
I don't question whether the oil industry is heavily taxed.  I agree that it is. 

But I bring up the fact that it's also heavily subsidized.


------------------------------------


--  They often get construction bonds at low interest rates or tax-free.  Stuff like below-cost loans with lenient repayment conditions.  Income tax breaks, especially featuring obscure provisions in tax laws designed to receive little congressional oversight when they expire, etc.

--  Gov't R&D programs at low or no cost.  The US assumes the legal risks of exploration and development in a company's stead in some cases. 

--  Income tax breaks, especially featuring obscure provisions in tax laws designed to receive little congressional oversight when they expire.  (the U.S. has given tens of billions of dollars to the World Bank and U.S. Export-Import Bank to encourage oil production internationally, according to some sources).

--  Sales tax breaks - It's been argued that taxes on petroleum products (not just the final liquid gasoline we pump) are lower than average sales tax rates for other commodities.

--  What would oil cost if the industry had to pay to protect its international shipments?  These are valuable loads being hauled.   

--  What if the environmental impact of burning petroleum were considered a "cost"?  What if the industry was held responsible for the particulate matter in people's lungs (like with the tobacco industry that we villify)? 

--  Look hard at the amount of royalties the industry pays to the US versus the market value of what they're pumping from our lands.  See if you can strike some other mineral or something on USgovt land and get a royalties deal like that.

--  The U.S. Strategic Petroleum Reserve exists.  It stabilizes the supply, which encourages more complete dependence on the part of the public, and discourages everyone from keeping the "backup" ability to get by without automobile usage.

--  Somebody is constructing, maintaining, and protecting the entire road & highway system.  We would still have built at least some fraction of the current system anyway, but most of that money would not be spent if it wasn't for such widespread automobile usage by the public.

-------------------------------------------------------------------




I'm not trying to say that everything I listed is all a bunch of horrible atrocities or anything.  But I'm just trying to say that the US govt made a CHOICE to do this for the last 75 years or so. 

The other nations that did not do this  .  .  .  They put that money in other places (like healthcare, public transportation, etc), and they have reaped other benefits for it.  And it's not an accident that they also happen to be suffering MUCH LESS when oil stops being so cheap. 




And since the USA public's oil dependence was not exactly built with a 100% free-market scenario for the last 75 years, then maybe we don't owe them a continued 100% free-market situation here now that they're trying to charge us more?   (Like, say, govt controls to stop being screwed?  And maybe some major gov't investment in other non-oil/auto methods of living?)


We didn't cry "Socialism!" when public money was supporting this private industry for the last 75 years.  Maybe it's not "Socialism" to decide that we should invest some major public money into getting ourselves out from under this industry now. 

[Dave22443]

I honestly don't see any viable alternative to oil anytime in the near future.  But does that mean that we shouldn't be looking for it?  Absolutely not.  But does that mean we shouldn't tap what we already know we have?  Heck no!

A viable oil alternative is not here today.  But a very real problem with our oil supplies is.  The fact is, the United States is dependent upon outside sources for its oil.

Oil may well be on a global market and subject to global influence, but it doesn't have to be that way for us.  If we drilled, refined and produced enough of our own oil, we could remove our oil production from the world market and set our own prices.  Then and only then could a free market dictate the prices.  Oil is not a free market when its a global supply.  Its a monopoly.

I say we should first open up our own oil taps, make the U.S. oil independant and remove our oil from the world market.  Then we should invest seriously into research of real permenant replacement.  And by real, I don't mean the current "alternatives" that cost more energy to make than what they produce.

My 

[Mike DC]

   
I would like to see it, but I don't see how the US could be an oil-independent nation.  We'd exhaust our domestic supply too quickly. 

At least with anything resembling the current usage.





I don't see it as any matter of effort or money invested, it's just a matter of the raw in-the-ground supply that we have to work with. 

We can recover more than we did in the past, but I don't think that's enough to grow the supply to what we'd need for decades to come.  Some of the barriers to recovery are just cold hard laws of physics.  It's unlikely that we'll ever invent our way around some of these issues before we hit the energy-per-barrel cost barrier.


 

 

[Dave22443]

I just did a quick google for "American Oil Reserves" and found this interesting article.  The main site also has a lot of energy related news.

http://www.nextenergynews.com/news1/next-energy-news2.13s.html

[jeryst]

The "Supply and Demand" price of a barrel of oil is around $50. There is plenty to go around. You dont see any rationing, closed stations, etc. OPEC is pumping more than ever and the price still goes up. The rest of the price above $50/barrel is due to unregulated and uncontrolled speculation and holding.

How much more OPEC provides, how much more drilling is done, or how much less we use will have little effect until the unregulated speculation is reined in. The price will just continue to rise as long as the speculators control the market. The same people that are prediciting the price of a barrel of oil, are the same people that are buying and holding the oil, so we are at their mercy until Congress fixes the problem.

Congress cant fix a problem the way you recomend.  The free market needs to fix it.  The speculation is that US and other nations are not commited to increased production so they are betting the price up because they know supply cant meet demand in the future.  Congress willl try and 'fix' the problem by turning screws on the market and that will case more problems the likes we have never seen in this nation.  We are a free market Economy and when governments get involved in regulating free markets it creates shortages every time.  Just like we saw in the 70's before people pushed DC to let the pipeline in the artic to open. As soon as it did the barrel when to less than 10 bucks.

What you recomend congress to do by fixing a free market will turn our Capitalist Free Market system into one based on Socialism and that never works.  Look at every nation in the history of the world that tried to correct food shortages and food prices by doing this.  When what they should have done is push for increased food production.  Its simple.

Congress CAN fix the problem because they created it. If financial institutions want to buy stocks on margin, they need to have 50% of the funds up front, however, beacuse of recently created loopholes, they only need 3% to purchase energy securities on margin. There are now unregulated foreign entities selling, and rebuying the oil futures and we are now letting them do it on the "Honor system". Also, wording on how energy securities are policed has changed. It used to be that the companies buying and selling the securities had to prove that they were doing everything correctly before they could proceed. Now, it is up to the regulatory committies to prove that the companies are doing someting wrong. With no increase in staff, they are totally swamped, and simply cannot keep up. This all came about because of loopholes in bills that Congress passed, that those financial institutions are taking advantage of. If they fix the bills, they'll fix the problem. Watch the Senate hearings that I posted a link to.

Fixing this problem correctly will not collapse our economy or cause Socialism, or ruin the free market. It would simply fix a problem that Congress created. By closing loopholes that allow large financial institutions to amass and hold huge amounts of energy securities without hardly any investment, this whole thing would come to a quick end. This does not mean that the government is going to screw with supply and demand, or the oil companies, or the free market. These unregulated practices are creating a bubble, much bigger than housing, or muscle cars, or anything else. The longer this is allowed to continue, will determine how bad the outcome is when the bubble bursts, as all bubbles do. In the meantime, these investment companies will rake in billions of dollars, the CEO's will get paid obscene bonuses, and they will make tons of cash for their clients. When the bubble bursts, it will be up to us, once again, to pay the bill to bail out the ecomony.

Look at it this way. Suppose they create a bill to demand stiffer punishment for people that rob banks with guns. But, inadvertantly, a loophole gets created, that basically protects anyone that robs a bank with a knife. How many people would start robbing banks, with a knife, if they knew that they could get away with it scott free? A LOT! So you just fix the wording in the law, to include any other weapon. It may not be a good analogy, but I'm just trying to get my point across to those who dont understand what is really going on. The free market cant fix this problem, because the free market is being held hostage by the large investment firms and foreign companies that are not playing fair by using the loopholes that Congress created.

[SeattleCharger]

Argument:   in my business, when my costs go up, such as expenses like gas to get to the job etc., I usually don't go and raise my contract prices immediately, I sort of have to make a little less money and eat the extra cost,  because I would be raising my prices all the time.

    Now, say my costs go up ten bucks per job,   so I go to the people and say I gotta raise prices twenty bucks.   I raise the price for my extra cost and then raise the price more to make more profit on top of that.   ya, right, who the hell does that?

   see?  the oil companies say they raise their prices because the price of a barrel of oil goes way up, ok, I get that,  their costs went up, they need to charge a little more,  but how come as their costs go up (they should be making a little less profit like every other company who's costs have gone up)  the oil companies have record all time profits.    TOTAL B.S.!!!

[0X01B8]

If you've got the time, here's a good article on what's really happening with oil prices.  Perhaps 60% of today's oil price is pure speculation

Remember the 2000-2001 California energy crisis?  Rolling blackouts, bla bla bla.  Basically Enron gaming and manipulating the "deregulated" energy market in CA.  Now we've got similar shenanigans with the oil market.  I don't know how long this one will last, but just like the housing market bubble, it will eventually correct itself.  Of course, by then we all may be too poor to care anymore.

[Mike DC]

I don't dispute that oil could be cheaper today.  But I dispute the idea that oil can still remain cheap in another 5-10 years. 




Seriously, there is no way in hell that Congress could cheapen the oil back down to pre-speculation prices right now, and then expect the public to continue planning for the future higher prices.

The public would just convince itself that the threat of higher future prices is all just a scam as usual.  We'd go right back to burning oil like there's no tomorrow, and then when the real price increases hit in the coming years America will crash that much harder.

 

[chargerboy69]

they should be making a little less profit like every other company who's costs have gone up

Why should they do that? I work for a small family owned business and we are raising are prices. Why should we eat the cost?

I sell stuff on E-Bay all the time. Shipping prices are going though the roof. Should I charge my customers shipping prices from a year ago, and eat the extra cost because I am a nice guy? Hell no I am not going to do that. What kind of stupid business move would that be on my part. The oil companys are in business to make a profit,  just like everyone else.

the oil companies have record all time profits.    TOTAL B.S.!!!

Sure they have all time profits, they are selling so much more than they were two years ago. The demand is there.

Please keep in mind they are making 8.5 percent profit. I can tell you that my company I work for is making more than that. A lot of the companys in the US are making more than 8.5 percent profit, but know one is complaining about them. Most hedge funds are making over 80 percent profit and yet you hear nothing about that.

It's funny, eggs have gone up 50 percent in the last 10 months. But I do not hear anyone complaining about "Big Egg".