Are you ready to drill for new oil?

[midcan5]

"First, let’s examine the claim that more drilling can lower gasoline prices. Between 1999 and 2007, permits for drilling in onshore and offshore public lands “increased by more than 361 percent, yet gasoline prices have also risen dramatically,” the House Natural Resources Committee reported in a new analysis. “There is simply no correlation between the two.""

Dear 44: Drilling only benefits Big Oil - Daniel J. Weiss - Politico.com

Even the conservative US News and World Report agrees, ruining our home is a bad idea.

Arctic Drilling Wouldn't Cool High Oil Prices - US News and World Report

 

[editec]

Oil companies also pay taxes to governments for the right to extract oil from public lands and waters.

Taxes? Those are not taxes. That is a quid pro quo business deal. Why are they calling that taxes?

For example, the federal government has collected a total of $48.8 billion in royalty payments from oil companies in exchange for their ability to explore and drill in the U.S. outer continental shelf.

Sweetheart deals, methinks. But of course I have no way of really knowing for sure, because I cannot find anyplace where I can actually look at these royalty payment deals.

I find it suspicious and very troubling that this information is so damned hard to find, to be honest.

Oil companies also pay severance taxes to state governments for the right to drill on state lands. Unfortunately, complete data on state severance tax collections for the period is not available at this time.

Again, odd, that. Such numbers, should be easily findable in the public records, yet apparently, they aren't.

In contrast to excise taxes, corporate income tax payments vary as widely as industry profits. As mentioned above, domestic energy companies earned a total of $630 billion in post-tax profits between 1977 and 2004. Tax Foundation economists estimate that companies paid $518 billion in corporate income taxes to federal and state governments during the same period. These payments varied from a low of $5.1 billion in 1995 to a high of $40.4 billion in 1981. The Tax Foundation - Oil Company Profits and Tax Collections: Does the U.S. Need a New Windfall Profits Tax?

Okay I went to this site and checked out their graph.

Most of the "$518 billion in corporate income taxes to federal and state governments " these people are claiming that the OIL COMPANIES paid, were in fact not taxes paid by the OIL COMPANIES, but rather taxes paid by the consumer.

I didn't have a lot of time to peruse that site, but it appears, based on my first blush evaluation, that this site is somewhat confused about what the word TAXES mean.

 

[CharlestonChad]

BS a majority of their land leases don't contain enough oil for commerical drilling. Why not allow them to drill in proven oil reserves and develop oil shale? We are sitting on 800 billion barrels of oil in oil shale and it is being held up by ultra enviromentalists.....

Why would they still hold the leases then?

You seem to believe that oil companies want to help out the public. They drill for profit and that's it.

 

[KMAN]

Nope. I see no logical reason to tap our own resources to benefit a world market that will eventually crumble and leave us wondering where all of our oil reserves went. I'd rather save our oil, let the price of gas make altEnergy a necessity, and save our reserves for industries and infrastructures that cannot adapt as quickly as other areas of industry. Europe has survived on 8 dollar gallons of gas, and so will America.

How do you know this market will crumble? If alternative energy is the answer what's preventing people from creating alternative energy right now?

 

[KMAN]

Oh it will hurt, but it will also drive invention. Necessity is the mother of invention. If we have $8 gas, then we'll have alternativeE fuel in no time.

And by the way, how do you think drilling domestically will cut down gas prices? Do you realize that unless we nationalize oil, we're sending what we get from FL and Alaska to the world market. We might knock off a few quarters on the gallon, in 5-7 years at the soonest.

PS: Don't try to play the victim. I'm sorry if I hurt your feelings when I said old people don't contribute to culture. Please forgive my brutal honesty.

You have heard of the laws of supply and demand haven't you?

 

[KMAN]

The president gives a speech saying drill and oil drops $9 a barrel. You really do not think that increased drilling will lower the price considerably? We do not need to nationalize oil. You say that oil corporations will be the only ones to profit from domestic drilling. What about the many many jobs it will create even if little oil is found as many liberals claim will be the case in Alaska? What about the land owners who lease to the ones that drill for the oil?

The only ones that will not benefit from the drilling would be the dead beat guy that does not work or drive. He lives off the government so it will not affect him. The politician that keeps his office by preaching hate and fear such as Obama, Hillary, Kerry, and Kennedy have a lot to lose by the US become independent of forgien oil.

Great points... There is no reason not to drill right now while the alternative energy technology is perfected.

 

[KMAN]

Lowering fuel costs, is not the only, or even the best reason to drill for our own oil. The trade deficit, and funding nations that hate us, are 2 very good reasons to do it.

Great points... You would think everyone would want to stop funding countries that hate us, but then again you have some people in the country who want the country to fail for some reason.

 

[KMAN]

Lmao....that's the reason oil prices has dropped over 10% after Bush announced he was dropping the executive ban on offshore drilling. That's in 4 days, imagine what oil prices will do if Congress lifts the legislative ban....

Amen brother. It's amazing that people don't want to recognize this fact.

 

[KMAN]

Our government depends on oil companies for tax revenues, imagine if new drilling was allowed what the tax revenues would be?


Figure 1 illustrates the magnitude of government tax collections versus industry profits between 1977 and 2004. During this period, the 29 largest domestic energy firms earned a collective $630 billion after adjusting for inflation. These profits varied dramatically—from a low of $7.9 billion in 1995 to a high of $42.6 billion in 2004—based upon world market demand, supply, and international events. In contrast, the taxes paid or remitted by domestic oil companies have been consistently far greater than their profits and now total more than $2.2 trillion (adjusted for inflation) over the past quarter century. The largest share of those taxes is federal and state gasoline excise taxes. In 2004, governments collected $58 billion in gasoline excise taxes. Overall, governments have collected $1.34 trillion in gasoline excise taxes since 1977.

Today, U.S. consumers pay an average of 45.9 cents per gallon in gasoline taxes. The federal gasoline excise tax is 18.4 cents per gallon while the average state and local tax is 27.5 cents. The vast majority of these taxes are levied at a flat rate per gallon—regardless of whether a gallon of gas costs $1.49, $2.49, or $3.49. Thus, the effective rate of these taxes can vary wildly, from roughly 31 percent in the former case to 13 percent in the later.

Federal and state governments also collect a substantial amount of excise tax from the sale of diesel fuel. In today’s dollars, governments have collected $160 billion in diesel fuel excise taxes since 1977.

Oil companies also pay taxes to governments for the right to extract oil from public lands and waters. For example, the federal government has collected a total of $48.8 billion in royalty payments from oil companies in exchange for their ability to explore and drill in the U.S. outer continental shelf. Oil companies also pay severance taxes to state governments for the right to drill on state lands. Unfortunately, complete data on state severance tax collections for the period is not available at this time.
In contrast to excise taxes, corporate income tax payments vary as widely as industry profits. As mentioned above, domestic energy companies earned a total of $630 billion in post-tax profits between 1977 and 2004. Tax Foundation economists estimate that companies paid $518 billion in corporate income taxes to federal and state governments during the same period. These payments varied from a low of $5.1 billion in 1995 to a high of $40.4 billion in 1981. The Tax Foundation - Oil Company Profits and Tax Collections: Does the U.S. Need a New Windfall Profits Tax?

These points will be conveniently ignored.

 

[CharlestonChad]

How do you know this market will crumble? If alternative energy is the answer what's preventing people from creating alternative energy right now?

The market hasn't crumbled yet, thus altE isn't a necessity.

 

[CharlestonChad]

You have heard of the laws of supply and demand haven't you?

Like I said in the post you quoted, drilling now will knock off a few quarters on the gallon in 5-7 years.

 

[CharlestonChad]

Great points... There is no reason not to drill right now while the alternative energy technology is perfected.

Bush's speech had no effect on oil prices.

 

[Care4all]

in 1995 the Congress rescinded the law that prevented oil companies from selling OUR OIL OVERSEES.... there is nothing to stop them from taking our oil and selling it overseas...they sold a great deal of the oil gotten out of Alaska to Japan and China i believe, then congress put in a law to stop them from selling OUR RESOURCES overseas, but in 1995 the Republican congress rescinded this law and oil companies once again have free reign to sell OUR OIL to foreigners....

 

[CharlestonChad]

Great points... You would think everyone would want to stop funding countries that hate us, but then again you have some people in the country who want the country to fail for some reason.

If you're on a diet, is it smart to order a BigMac combo and justify it with a diet coke? Nope. Just bite the bullet and eat a damn salad.

We're still going to send massive amounts of money to Iran, Iraq, and SA for the next 5-7 years regardless of how much drilling we start doing. The oil won't hit the world market for half a decade. If oil jumps another 50%, we're going to be SOL waiting on our reserves to start flowing. AltE is the only real solution.

 

[KMAN]

If you're on a diet, is it smart to order a BigMac combo and justify it with a diet coke? Nope. Just bite the bullet and eat a damn salad.

We're still going to send massive amounts of money to Iran, Iraq, and SA for the next 5-7 years regardless of how much drilling we start doing. The oil won't hit the world market for half a decade. If oil jumps another 50%, we're going to be SOL waiting on our reserves to start flowing. AltE is the only real solution.

Where did you get your information that the oil would not hit the world market for 5-7 years? I've heard much sooner.

So I assume we are less than 5 years away from a viable alternative? What is it and will the poor be able to afford it?

 

[Care4all]

"When we drill more, OPEC drills less,"

Pickens says U.S. must act to curb foreign oil use - Jul. 22, 2008

 

[CharlestonChad]

Where did you get your information that the oil would not hit the world market for 5-7 years? I've heard much sooner.

So I assume we are less than 5 years away from a viable alternative? What is it and will the poor be able to afford it?

I doubt you've heard much sooner. Never once have I heard or read a figure less than 4 years. Most between 5-10. These are coming from oil companies, the AP, and random blogs and whatnots.

 

[Wow]

Bush's speech had no effect on oil prices.

Obviously, a Republican led Congress did!

Oil prices have tripled and gas prices have doubled since Democrats illegally invaded Congress based on lies.

 

[CharlestonChad]

Oil: New Drilling Wouldn't Cut Prices

Oil: New Drilling Wouldn't Cut Prices
It would be years before production hits the market—and Big Oil would have to spend heavily. Even then, prices may not drop
by Moira Herbst

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Speculation—But Not Manipulation
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linkedin connections High energy prices are painful for consumers, but they're giving politicians plenty of rhetorical opportunities. On June 18, President George W. Bush kicked off a speech with an empathetic refrain heard often in Washington these days. "For many Americans, there is no more pressing concern than the price of gasoline," he said at a press conference. "Truckers and farmers and small business owners have been hit especially hard. Every American who drives to work, purchases food, or ships a product has felt the effect. And families across our country are looking to Washington for a response."

Bush's preferred response: lift a ban on drilling off the U.S. coast, open Alaska's Arctic National Wildlife Refuge to drilling, develop oil shale resources, and expand domestic oil-refining capacity. He echoed the views of the GOP Presidential candidate, Senator John McCain (R-Ariz.), who this week also called for more offshore drilling and new nuclear power plants. They follow the June 17 announcement by Florida Gov. Charlie Crist, who surprised many by reversing his long-stated opposition to drilling off that state's coast. "I mean, let's face it, the price of gas has gone through the roof, and Florida families are suffering. And my heart bleeds for them," Crist said, according to the Associated Press.

As U.S. consumers reel from the effects of an oil market rife with uncertainty and climbing prices, a proposal calling for more drilling at home sounds promising. In theory, if the U.S. boosted supply, prices would slip and the country would be less dependent on foreign energy sources.

Blaming Speculation
Unfortunately, the oil market is far more complex. For one thing, oil production requires enormous investment, and companies such as ExxonMobil (XOM), BP (BP), and Chevron (CVX) won't start major new projects until it is clear the project can be profitable. Any new domestic supply would take nearly a decade to tap. Moreover, much of the change in oil markets in recent years has come more from trading than fundamentals. Investors have poured vast sums into commodities, driving prices higher and causing many people to blame rampant speculation for the surges.

In other words, the President's proposals cannot have a significant short-term impact on oil prices, and only a questionable effect in the long run. "It's five months before Americans go to the polls, and both parties are trying to come up with a solution," says Stephen Schork, an energy consultant in Villanova, Pa., and editor of The Schork Report, a daily energy newsletter. "But there's no realistic near-term solution either party can offer."

Analysts say a number of obstacles are already impeding more domestic production, and lifting government prohibitions won't change the workings of the industry. There is currently a shortage of ships used for offshore drilling, which will slow oil exploration for such projects. The cost of these ships, and of scarce skilled workers for these projects, is also slowing development. Analysts say that it could be up to 10 years before supply from such sources reaches the market.

Long Lead Times
"We couldn't expect near-term price relief," says Craig Pirrong, a professor of finance and energy markets at the University of Houston's Bauer College of Business. "Drilling projects have a long lead time, not to mention tremendous bottlenecks because of high costs and a shortage of qualified engineers and geologists. Every little bit helps, but the short-term benefit would be very modest indeed."

The federal Energy Information Administration estimates that 18 billion barrels of oil are in the area covered by the moratorium, and the White House says that is enough to match current U.S. production for 10 years.

But a 2007 analysis by the agency concluded that opening up drilling in the moratorium area "would not have a significant impact on domestic crude oil and natural gas production or prices before 2030."

Congress banned most offshore drilling in 1981, and former President George H.W. Bush issued an executive order banning drilling in the wake of the 1989 Exxon Valdez oil spill in Alaska.

Stalling Production?
Critics of the oil and gas industry say that oil and gas companies are stalling energy production (BusinessWeek.com, 3/20/08) in some areas until they can better profit from it. "The oil and gas industry has millions of acres of leases that they're doing nothing with," says Erich Pica, an analyst at Friends of the Earth, an environmental group. "Even if we were to open up every piece of land in the country to drilling, these companies wouldn't necessarily produce more. They're in the business to make money, not to lower prices for consumers."

Representatives Rahm Emanuel (D-Ill.), Maurice Hinchey (D-N.Y.), Edward Markey (D-Mass.), and Nick Rahall (D-W. Va.) on June 12 announced plans to introduce legislation that would compel oil companies to use the 68 million on- and offshore acres that are currently being leased by large oil companies. The representatives said that oil companies are producing on only 20% of the acres they hold offshore and on less than 30% of the acres they hold onshore. "Big Oil seems more concerned with pumping up prices than pumping more oil," Markey says.

Oil industry representatives, who have been lobbying for increased access, dispute claims they are holding back supply. Rayola Dougher, economic adviser for the American Petroleum Institute, an industry trade group, explains that only a small number of leases explored prove suitable for production. "There's a lack of understanding about how exploration works," says Dougher. "Companies get a number of leases to explore, and production comes from a small share of them. In today's dollars, no one is holding back [from producing]. That's not a reasonable assertion."

Volatile Market
The other reason more drilling access won't cut prices is that oil prices are no longer determined strictly by supply and demand. In the past several years, more investors have entered into the commodities market to hedge against inflation and to diversify investments. Many analysts say these inflows can have more of an impact on oil prices than actual supply increases or reductions in demand (BusinessWeek, 5/29/08). For example, in the past seven months, Brazil's national oil company, Petróleo Brasileiro (PBR), has announced vast new deep-shore discoveries estimated at more than 33 billion barrels. The announcement had no effect on oil prices, which have surged 33% so far this year.

"The oil market is on steroids," says Fadel Gheit, senior energy analyst at Oppenheimer Holdings (OPY). "[Oil] is a financial game more than a physical one. Even if we lift the ban tomorrow, the best we can do is cool off some of the unprecedented euphoria in the market."

 

[Charles_Main]

I doubt you've heard much sooner. Never once have I heard or read a figure less than 4 years. Most between 5-10. These are coming from oil companies, the AP, and random blogs and whatnots.

Does anyone actually think we would be off of oil in 5 years, even if we find an alternative. Most of the cars people drive today need oil, do you really think everyone in the country is going to junk their gas burners and go out and by one that uses some alternative fuel, all with in 5 years? I think not. It will take 10 maybe 15 years before that happens. People are not going to just throw away their current cars in favor of new one that run on an alternative. To think they will, or could afford to, is just silly. Even if we stopped making gas burning cars right now, it will be at least 10 or 15 years before the last ones are off the road.