Question for the "drill baby, drill" crowd?
As I understand it, your argument is pretty simple. If we let the oil companies drill in more places, then they will discover more oil which will increase supply, which will bring prices down at the pump. It's all supply and demand.
Now I want you to put your feet in the shoes of the big oil companies and ask what happens if they discover large supplies of new oil. Obviously, the price goes down at the pump, which makes their profits smaller, which makes their investors unhappy. So, with that in mind, what is the incentive of the big oil companies to discover large amounts of oil which will ultimately reduce their profits? Here are some possible answers for you:
A) The big oil companies are completely ignorant of this, and therefore it is not an issue.
B) The big oil companies are aware of this, but it is more important for them to discover new oil so that people like them than it is for them to make outrageous profits like $14 billion per quarter.
C) The big oil companies know this, and there is a well documented history of them stockpiling supplies so that they can pocket profits. It is known about analysts that increased domestic drilling has not lead to lower gasoline prices historically. Moreover, the big oil companies have not been drilling on much of their already licensed land so there is no need to give them access to new areas beyond the outrageous amount of land that they already have access to and are not using.
D) Other -- explain.
Now I know I can trust you all to be honest on this and first give your answer before looking up the truth, which is here: http://resourcescommittee.house.gov/images/stories... . But I will give you a hint that you are allowed to look at now. Exxon is back in the news again today: http://finance.yahoo.com/news/Texas-high-court-agr...
I hear a lot of responses, but none addressing my question. PLEASE READ CAREFULLY. And those who think the money is all going to the middle east, I suggest you have another look at Exxon's profits. FYI, Exxon is headquartered in New York!
- 1 decade agoBest Answer
I already researched this and know that George W. Bush had vowed to open drilling in what was protected lands, including the Alaska Wild Life Preserve during his 1999 election campaign. In 2005 Congress allowed a bill to increase the Federal Oil Reserve, then when prices spiked in 2008 it took an act of Congress to force Bush to allow for the demand of the Federal Oil Reserve to be suspended temporarily to reduce demand and allow oil prices to decrease again. All the while the Oil Producers were sitting on 68 million acres which they had not even begun to drill on. Keeping the shortage by NOT producing kept prices high so that they could continue to sit on leased lands and demand even more land to be placed under their control to prevent any new Oil Producers from getting land to produce oil from. It was a form of hidden price fixing by controling as much oil land as possible without producing any oil.
Larsen Votes to Help Get Gas Prices Under Control, Make Oil Producers “Use or Lose” Land They Have Already Leased
July 17, 2008
Washington, D.C. — Today U.S. Representative Rick Larsen (WA-02) voted to help get gas prices under control by making oil producers “use or lose” land they have already leased, and by increasing our domestic supply of oil from land already designated for energy production. The legislation (H.R. 6515) failed to pass the House today under a suspension of the rules which requires a two-thirds majority for passage.
Sixty-eight million acres of federal land have been leased by oil companies for energy production but remain unused – that’s 75% of all lands leased for production. The legislation Larsen voted for today will require producers to drill on the leases they already have or give them up.
Tue May 13, 2008
Congress defies Bush on oil reserve
"The U.S. Energy Information Administration predicted oil prices would fall by about $2 a barrel -- which would shave 4 to 5 cents a gallon off the price of gas -- if deliveries to the reserve are suspended.
But Sen. Byron Dorgan, D-North Dakota, who wrote the amendment, said suspending the shipments could cut the cost of a barrel of the sought-after light sweet crude up to 10 percent.
The amendment would stop new deliveries to the Strategic Petroleum Reserve for six months as long as the price of oil remains above $75 a barrel.
"When the American consumer is being burned at the stake by energy prices, the government ought not be carrying the wood. Sticking oil underground is wrong in this point in time and this amendment says stop it, halt it," Dorgan said.
Just look at all the thumbs down! Nothing like varified facts to upset some people.Source(s): This article can also be accessed if you copy and paste the entire address below into your web browser. http://www.cnn.com/2008/POLITICS/05/13/congress.oi...
- wichitaor1Lv 71 decade ago
Try using a little math in your "logic". Unless the percentage of increase of oil production is equal to the percentage of decrease in oil prices, oil company profits will actually increase.
If oil production increased ten fold and oil prices are cut in half, the oil companies would still make five times the profit, a 500% increase just to boggle your mind.
- Rudy HLv 71 decade ago
Well, you don't know what you're talking about. There is insufficient refining capacity for the peak theoretical usage the world has now. Also, shortages would occur in the refining process, which would be real as most states don't allow construction of new refineries. Also, you can't sell more oil than is consumed, at least not for very long. According to your incorrect and simplistic scenario, they would make the most money by not drilling for or pumping anymore oil at all. So what is your point anyway? You want cheap oil? You don't want there to be any oil used at all? You want to nationalize the oil companies? As you drive your car, and fly around to your global warming conferences and protests, and buy your food delivered by truck, and live in your house built with machinery by men who drove to the jobsite and on and on....try to understand that you know nothing about how the process works, and are hypocritical in your usage of energy vs. you Lib/Socialistic/Commie view of your own existence.
- clean truckLv 71 decade ago
Drilling in America will make Americans more money. Not the oil companies, the landowners on which the oil is produced, thus helping the American economy.
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- Mystery ManLv 61 decade ago
Hopefully with Obama and the Green Movement we won't need to drill so much. We are already seeing a demand for oil drop since the greedy ones drove prices up well over $100 a barrel last year and prices reached over $4 at the pump.
- Anonymous1 decade ago
we have more oil off the coast of texas than the whole of the middle east...i have worked in the oil business my adult life...your premise is wrong...the lions share of oil money goes to the countries that produce,not the corporations...if they were allowed to drill,for oil that we already know where it lies,the middle man(oil producing countries) would be bypassed.. that profit would stay here...we are not allowed to drill here because of onerous environmental regs...
- Anonymous1 decade ago
The oil belongs to the American people. We should drill, but we should also get our cut and put every dime towards renewable fuels or at least getting off foreign oil.Source(s): How Democrats could stick it to the American people at 140 dollars shows who their real masters are.
- smsmith500Lv 71 decade ago
And who is it that stops oil companies from drilling thus keeping the prices high and increasing the taxes collected on the fuel that does get sold. Hint, its not the "drill baby drill" crowd.
- Anonymous1 decade ago
You mean like the gigantic find that BP just had in the Gulf of Mexico in September??
- Anonymous1 decade ago
Right now billions of our dollars are filling the pockets of rich oil Arabs. If we utilize our own oil reserves, that money stays here. Think of what all of those billions staying HERE, and the good it would do for us.