Discussion in 'Economy' started by Annie, Apr 6, 2005.
I have two theories about this....
1) Either the admin knows some serious shit is coming down the line and so they need to stock up (read an attack on Iran)
2) We are trying to get gas to stabilize at a higher price so that a) Americans get used to it so that b) We can drill for oil here in the USA and not rely on foreign supplies.
We still have a lot of oil here in the USA, but our wells must be drilled much deeper than in the ME where the average well is something like only 200' deep. In the US, we have lots of oil in places like Nevada, but the oil is up to 5,000' and more deep which means it costs, on average, about $50 a barrell to drill for it. When you can drill for oil in the ME for less than $12 a barrel (I am talking about the cost of drilling, not the cost it is sold at), it makes no sense to tap into our oil fields here.
Except for this:
Sorry, I am not following you on the "execpt for this" part.....
Put that badly, rather the cost is now inline with R & D and tapping available reserves...
Exactly. That was my point. Now that we are getting used to higher prices, we can tap into our supplies here in the USA and the American people won't necessarily be as eager to return to cheaper oil since we are, frankly, getting used to the higher prices. If we release the strategic reserves, that will lower prices and then we will again clamour for cheaper oil.
I hope I am making sense.... I know what I am wanting to get across, just not sure if it is coming out the right way....
I hear you and I've been in favor of the development of alternative sources since the 70's. I'm not in favor of 2.39 per gallon, much less double that! :chains:
I am not sure I agree with this "bubble" theory that likens oil prices to stock prices.
Stock prices were "pure" speculation based on potential, not P/E ratios. Yahoo once had a 400 P/E ratio (a good one should be around 12-15 or lower). Oil may be speculation about supply, however, this speculation is grounded in the fact that oil truly is a non renewable resource, unlike buying stock in Yahoo. I know the speculation that oil may run out in 20 years is only speculation, despite some scientific facts to back it up, however, it is not too much of a stretch of the imagine to see what will happen to oil reserves or oil in the ground or future oil (like ANWR) if say, China consumes per capita as much oil as the US. As you can imagine, oil demand would be extreme, thus driving prices higher.
I also read a recent story that oil demand is actually increasing. The article did not mention that this was regardless of the price of oil, but I wonder, if oil prices are so out of control, why is demand rising? Because, for now, oil is a one of a kind stock (commodity) that has a limited amount. It seems to me though, that the price of gas can only rise so high without having a major impact on the ecomony (shipping/trucks) and also people's driving driving habits (tourists). This is why I strongly support the research of alternative fuels/energy.
It is my personal opinion that even if Bush were to release some of the reserves, this would have little if any impact on the price of oil. The price of oil is concerned with future supply and demand. Therefore releasing some oil now will only, possibly, decrease prices for a very short time, if at all. Further supporting my belief is this:
Even if we released all the reserves, it would go very, very quickly.
Other interesting facts:
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