Want lower gas prices? Drill, Baby Drill! Or Not.

[cardgame]

It wasn't the drilling that lowered prices, it's entirely OPEC's call... the oil drum is in their court, so to speak.

 

[JollyRoger]

Why is the GOP complaining that Obama let the free market decide rather than utilizing more government resources? Seems he was correct in that call.

 

[El_Machinae]

It wasn't the drilling that lowered prices, it's entirely OPEC's call... the oil drum is in their court, so to speak.

Well, that will always be true. There's strong consensus that it was the drilling that caused OPEC to lower prices by maintaining their output. The goal was to wipe out large-infrastructure speculative investments. That people will likely increase their consumption without thinking of the future is just icing on the cake for when the bankruptcies help reduce supply and the price goes back up

 

[luiz]

It wasn't the drilling that lowered prices, it's entirely OPEC's call... the oil drum is in their court, so to speak.

OPEC simply did not cut production. What brought down the price was all the new drilling taking place at the shale plays. More drilling does obviously lower gas prices, ceteris paribus.

 

[luiz]

Also alot of the GOP and Democrat drilling comments back then were directed at opening up sites in Alaska and off-shore that would not have yielded oil for years, and thus would not have been part of the current trend.

Nope, when betting on future oil prices the speculators also look at future prospects. So opening up sites in Alaska or offshore California would drop prices today, even if it would take many years for the oil to reach the pumps.

 

[onejayhawk]

I wonder what others things Democrats are 100% wrong about.

The Democrats were not 100% wrong. New methods of extraction does indeed prolong our use of fossil fuels. It also undermines their subsidies of alternate energy sources, which they do not like.

It wasn't the drilling that lowered prices, it's entirely OPEC's call... the oil drum is in their court, so to speak.

This is simply off base. What gave you this idea? A lot of OPEC countries are hurting badly at this price level.

The Saudis have a lot to do with the way the price continues to decline, but it is mostly reactionary. Fracking and oil sand development in USA and Canada are what started the price decline in the first place. They have established a price ceiling about $50 a barrel lower than where prices were in 2010.

J

 

[Samson]

From the beeb:

Italian oil group Eni has warned oil could shoot up to $200 a barrel if the Opec cartel fails to cut supplies.

Eni's chief executive, Claudio Descalzi, said the oil industry would cut capital spending by 10-13% this year because of slumping prices.

He said that would create longer-term shortages and sharp price rises in four to five years' time.

Mr Descalzi was speaking at the World Economic Forum in the Swiss resort of Davos.

He said: "Opec is like the central bank for oil which must give stability to the oil prices to be able to invest in a regular way."
...
People's Bank of China governor Zhou Xiaochuan said low oil prices could slow down China's development of renewable energy projects.

He said: "We worry a little bit that the price signal may give disincentive for new energy types to develop and could reduce investment in new non-fossil energy,
...
Opec secretary general Abdullah al-Badri, also speaking at Davos, defended the group's decision not to cut output.

He said: "Everyone tells us to cut. But I want to ask you, do we produce at higher cost or lower costs?

"Let's produce the lower cost oil first and then produce the higher cost,"

"We will go back to normal very soon," he said.

 

[onejayhawk]

From the beeb:

I wonder if he composts that for sale. My roses could use a nitrogen boost.

$200. That's funny.

J

 

[timtofly]

That's Russian $'s.

 

[onejayhawk]

That's Russian $'s.

200 Rubles is about $3.12 these days. That won't do it either.

It could be worse. 200 Mexican pesos is about 7 cents.

J

 

[El_Machinae]

$200 seems high, but the concern is legit. There's a goal of bankrupting some of the major producing projects, which will then bring dial-up infrastructure offline.

On the whole, low energy prices are good for an economy. Everyone literally has more money in their pocket to invest as they wish. Plus, more projects have an easier time being profitable. But, if people aren't spending a portion of these saved monies on preparing for higher prices, they're making a mistake. Now's the time to insulate the house, not buy a gas-guzzler.

 

[onejayhawk]

$200 seems high, but the concern is legit. There's a goal of bankrupting some of the major producing projects, which will then bring dial-up infrastructure offline.

On the whole, low energy prices are good for an economy. Everyone literally has more money in their pocket to invest as they wish. Plus, more projects have an easier time being profitable. But, if people aren't spending a portion of these saved monies on preparing for higher prices, they're making a mistake. Now's the time to insulate the house, not buy a gas-guzzler.

No, it is NOT legit. What was demonstrated in USA and Canada is that new methods have changed the calculus.

There is sufficient reserves at below $100/barrel to render the threat impotent, at least in the West. Even if various concerns go bankrupt, the assets, meaning the production rights, stay in the game. They just go inactive and change hands.

This has always been the problem with Peak Oil. There is an assumption that non-viable reserves stay non-viable. The assumption is necessary, since non-viable reserves dwarf viable reserves. When there is money to be made it is usually best to bet on ingenuity.

J

 

[bhavv]

Whatever happened to the development on non oil powered cars?

 

[onejayhawk]

Whatever happened to the development on non oil powered cars?

Still ongoing. They are not close. Never were.

J

 

[El_Machinae]

I've promised myself that the car I buy in the 2020's is going to be electric.

 

[onejayhawk]

I've promised myself that the car I buy in the 2020's is going to be electric.

I'm so sorry, unless it's a fuel cell version.

J

 

[El_Machinae]

Naw, I'm reasonably optimistic. And, y'know, at some point there's an onus to be the change you want to see in the world.

 

[onejayhawk]

Since I have no problem releasing CO2, it widens my options.

J

 

[El_Machinae]

How does your moral calculus operate if you later become convinced that the earlier warning signs should've been sufficient? We've known since '92 that we were working off a limited budget. You'll double-down on your efforts?

 

[onejayhawk]

How does your moral calculus operate if you later become convinced that the earlier warning signs should've been sufficient? We've known since '92 that we were working off a limited budget. You'll double-down on your efforts?

We have not known, still do not know, that there is a limited budget.

J