What Industries Should the US Nationalize?

[I'm Cleo!]

Patroklos,

I never said they were gouging. But they only care about shareholder returns, frequently through pursuing "profit, profit, profit" (and they've done a fantastic job with that lately). They're legally obligated to maximize profits -- that's how our system works.

Cleo

 

[Patroklos]

"Maximize" does not mean strip everything you can in one year, if that was was the case there would be no capital investment. Sustainable profit is the name of the game. I means pull what the market allows, which is the base line rate of return that most companies operate on (including oil).

 

[Cutlass]

"Maximize" does not mean strip everything you can in one year, if that was was the case there would be no capital investment. Sustainable profit is the name of the game. I means pull what the market allows, which is the base line rate of return that most companies operate on (including oil).

Actually, if you are a CEO who's pay is based on stock price, then that is exactly what it means.

 

[History_Buff]

No, you didn't. You stated that they were, despite the fact that they are not being drilled proves by itself that they are not.

Before I start, let me point out that I'm not in any position to evaluate whether drilling the existing leases is actually viable or not, and I haven't the slightest idea as to what the numbers actually are.

Never did I say the existing leases were profitable.

You have been thouroughly boot stomped on this point several times now. Increased supply fullfills demand which moderates prices. The only question is how much it will moderate prices, the fact that it will is not up for debate.

I fail to see where it has been shown that drilling ANWR and the shelf would have any significant effect on fuel prices. Perhaps a few cents in gasoline prices, which is what we like to call negligible.

Or in reality, simple economic sense.

It makes economic sense for the oil companies. It does not make economic sense for the citizens of the United States, who the government happens to be there to serve.

Oh, you know, when you claimed that oil companies were purposely gouging the world by not drilling in currently leased land that you think is profitable. Then when you claimed that not only were they gouging us, but they were also not after ANWAR and the shelf because there was economically viable oil there, but because they were on a quest to dominate the world through exclusive extraction rights (again, at the expense of profit). "They" are apparently Bondesque super villian types bent on world domination (for no reason)!

Now for the part you pulled out of your ass. Where to begin. I did not say that it would be possible to drill in the leases they already hold. All I did was refute the point you made here:

Right now it doens't make economic sense to squeeze minimal oil out of currently leased lands when it is easy pickings in ANWAR and the shelf.

Once again, the existence of a more viable alternative would not make the first option unviable.


As for all the "Bondesque super villian" talk, I assume that's just your default defense in the face of people who claim corporations often do not act in the best interest of the general public?

"Maximize" does not mean strip everything you can in one year, if that was was the case there would be no capital investment. Sustainable profit is the name of the game. I means pull what the market allows, which is the base line rate of return that most companies operate on (including oil).

Actually, it often does. Money now is worth more than money later after all, and the sooner you can realize return from investment, the better off your business is. More simple economics.

 

[I'm Cleo!]

Actually, if you are a CEO who's pay is based on stock price, then that is exactly what it means.

Well that's the great issue of corporate law: how do you deal with corporate ownership and corporate control in different hands? The entire history of corporate law has been an examination of that question.

Cleo

 

[WICKLC1]

For the people who say that drilling in ANWR and the OCS would not affect prices:

The price of oil is based on futures, when speculators see that there will be oil in the future prices go down, if they see that there will be shortages in the future, prices go up. When President Bush lifted the executive ban on drilling in the OCS, the price of a barrel of oil dropped by 20 dollars. It was not a coincidence, oil speculators saw that there would be more oil coming in the future, and today's prices dropped because of it. Prices would go down more if congress lifted their ban.

 

[JerichoHill]

WICKLC1

You obviously haven't seen the President's own DOE report that drilling in the sea or ANWAR has zero impact on price.. The increase in supply is negligible compared to world supply. It was put out about 6 months ago.

I'd happily link to it *again*

http://www.eia.doe.gov/oiaf/aeo/otheranalysis/ongr.html

Table 10. Technicaly recoverable undiscovered oil and natural gas resources in the lower 48 Outer Continental Shelf as of January 1, 2003. Need help, contact the National EnergyInformation Center at 202-586-8800.
Figure 20. Lower 48 offshore crude oil production in two cases, 1990-2030 (million barrels per day). Need help, contact the National Energyi Information Center at 202-586-8800.
figure data
Figure 21. Lower 48 offshore natural gas production in two cases, 1990-2030 (trilliion cubic feet). Need help, contact the National Energyi Information Center at 202-586-8800.
figure data

Released: Issues in Focus, AEO2007


The OCS is estimated to contain substantial resources of crude oil and natural gas; however, some areas of the OCS are subject to drilling restrictions. With energy prices rising over the past several years, there has been increased interest in the development of more domestic oil and natural gas supply, including OCS resources. In the past, Federal efforts to encourage exploration and development activities in the deep waters of the OCS have been limited primarily to regulations that would reduce royalty payments by lease holders. More recently, the States of Alaska and Virginia have asked the Federal Government to consider leasing in areas off their coastlines that are off limits as a result of actions by the President or Congress. In response, the Minerals Management Service (MMS) of the U.S. Department of the Interior has included in its proposed 5-year leasing plan for 2007-2012 sales of one lease in the Mid-Atlantic area off the coastline of Virginia and two leases in the North Aleutian Basin area of Alaska. Development in both areas still would require lifting of the current ban on drilling.

For AEO2007, an OCS access case was prepared to examine the potential impacts of the lifting of Federal restrictions on access to the OCS in the Pacific, the Atlantic, and the eastern Gulf of Mexico. Currently, except for a relatively small tract in the eastern Gulf, resources in those areas are legally off limits to exploration and development. Mean estimates from the MMS indicate that technically recoverable resources currently off limits in the lower 48 OCS total 18 billion barrels of crude oil and 77 trillion cubic feet of natural gas (Table 10).

Although existing moratoria on leasing in the OCS will expire in 2012, the AEO2007 reference case assumes that they will be reinstated, as they have in the past. Current restrictions are therefore assumed to prevail for the remainder of the projection period, with no exploration or development allowed in areas currently unavailable to leasing. The OCS access case assumes that the current moratoria will not be reinstated, and that exploration and development of resources in those areas will begin in 2012.

Assumptions about exploration, development, and production of economical fields (drilling schedules, costs, platform selection, reserves-to-production ratios, etc.) in the OCS access case are based on data for fields in the western Gulf of Mexico that are of similar water depth and size. Exploration and development on the OCS in the Pacific, the Atlantic, and the eastern Gulf are assumed to proceed at rates similar to those seen in the early development of the Gulf region. In addition, it is assumed that local infrastructure issues and other potential non-Federal impediments will be resolved after Federal access restrictions have been lifted. With these assumptions, technically recoverable undiscovered resources in the lower 48 OCS increase to 59 billion barrels of oil and 288 trillion cubic feet of natural gas, as compared with the reference case levels of 41 billion barrels and 210 trillion cubic feet.

The projections in the OCS access case indicate that access to the Pacific, Atlantic, and eastern Gulf regions would not have a significant impact on domestic crude oil and natural gas production or prices before 2030. Leasing would begin no sooner than 2012, and production would not be expected to start before 2017. Total domestic production of crude oil from 2012 through 2030 in the OCS access case is projected to be 1.6 percent higher than in the reference case, and 3 percent higher in 2030 alone, at 5.6 million barrels per day. For the lower 48 OCS, annual crude oil production in 2030 is projected to be 7 percent higher—2.4 million barrels per day in the OCS access case compared with 2.2 million barrels per day in the reference case (Figure 20). Because oil prices are determined on the international market, however, any impact on average wellhead prices is expected to be insignificant.

Similarly, lower 48 natural gas production is not projected to increase substantially by 2030 as a result of increased access to the OCS. Cumulatively, lower 48 natural gas production from 2012 through 2030 is projected to be 1.8 percent higher in the OCS access case than in the reference case. Production levels in the OCS access case are projected at 19.0 trillion cubic feet in 2030, a 3-percent increase over the reference case projection of 18.4 trillion cubic feet. However, natural gas production from the lower 48 offshore in 2030 is projected to be 18 percent (590 billion cubic feet) higher in the OCS access case (Figure 21). In 2030, the OCS access case projects a decrease of $0.13 in the average wellhead price of natural gas (2005 dollars per thousand cubic feet), a decrease of 250 billion cubic feet in imports of liquefied natural gas, and an increase of 360 billion cubic feet in natural gas consumption relative to the reference case projections. In addition, despite the increase in production from previously restricted areas after 2012, total natural gas production from the lower 48 OCS is projected generally to decline after 2020.

Although a significant volume of undiscovered, technically recoverable oil and natural gas resources is added in the OCS access case, conversion of those resources to production would require both time and money. In addition, the average field size in the Pacific and Atlantic regions tends to be smaller than the average in the Gulf of Mexico, implying that a significant portion of the additional resource would not be economically attractive to develop at the reference case prices.



Contact: Dana Van-Wagener
Phone: 202-586-4725
E-mail: dana.van-wagener@eia.doe.gov

 

[potatokiosk]

I don't care who runs the oil business as long as the government gets money out of it so it can cut taxes for everybody else. Rather than nationalize oil production I think we should just tax it more.

Health care however might need some government intervention. The health insurance companies are inefficient because they have an incentive to deny people health care.

 

[Patroklos]

Never did I say the existing leases were profitable.

Oh, so you want oil companies to drill on the existing leases regardless and really jack up prices then? You are digging yourself a whole, stop.

I fail to see where it has been shown that drilling ANWR and the shelf would have any significant effect on fuel prices. Perhaps a few cents in gasoline prices, which is what we like to call negligible.

If supply and demand is that far beyond you I am sorry. And a few cents is hardly neglidgible on a global scale. Again, the idea that because one course doesn't by itself effect a complete solution we should just not mitagate the problem at all is the height of incompetance.

It makes economic sense for the oil companies. It does not make economic sense for the citizens of the United States, who the government happens to be there to serve.

It does not make sense to ease supply pressure? It does not make sense to have a physical domestic supply? It does not make sense to keep petro-dollars here?

How about this, tell me one reason it does make sense not to exploit our resources.

Now for the part you pulled out of your ass. Where to begin. I did not say that it would be possible to drill in the leases they already hold. All I did was refute the point you made here:

No, that is exactly what you said. You said that they should drill there before ANWAR, regardless of anything.

Once again, the existence of a more viable alternative would not make the first option unviable.

The existance of ANWAR, like I told you itself, has no effect on whether the current leases are viable because ANWAR is not currently viable either, it is ILLEGAL to drill there. The current leases are not viable base on the effort needed to get to what is there, period. If they were viable, they would be drilling them right now. There is zero reason for them not to since there is obviously money to be made.

As for all the "Bondesque super villian" talk, I assume that's just your default defense in the face of people who claim corporations often do not act in the best interest of the general public?

Oh, if that was your only ridiculous claim then I might let you rant unmolested. You are saying the corporations are not acting in the OWN best interests.

Actually, it often does. Money now is worth more than money later after all, and the sooner you can realize return from investment, the better off your business is. More simple economics.

Really? So Exxon sold all its assets and laid off all its employees today? Interesting. I wish I had filled my tank this morning.

 

[History_Buff]

Oh, so you want oil companies to drill on the existing leases regardless and really jack up prices then? You are digging yourself a whole, stop.

That's not what I said at all. I said you were wrong. And now you insist that I said they should drill any non-viable leases they hold.

If supply and demand is that far beyond you I am sorry. And a few cents is hardly neglidgible on a global scale. Again, the idea that because one course doesn't by itself effect a complete solution we should just not mitagate the problem at all is the height of incompetance.

Supply and Demand is by no means beyond me. But the scope of the supply and demand, as well as the time frame seems to be beyond you. A cent here and there is negligible.

And you are correct, the fact that drilling ANWR and the OCS will not solve America's fuel problem does not mean that they should not be drilled. But stop and ask yourself, why is illegal to drill there in the first place? I'm guessing it's because of ecological concerns (and that is just a guess), and the government correctly feels that infinitesimal economic gains do not justify the ecological damage that would result.

It does not make sense to ease supply pressure? It does not make sense to have a physical domestic supply? It does not make sense to keep petro-dollars here?

It makes perfect sense to ease supply pressure. Too bad this won't do it. A physical domestic supply doesn't seem to hold real benefits unless you fear your foreign supplies will be cut. Leaving it in the ground leaves the same strategic reserve.

Reaping benefits in the form of employment and taxes from oil companies does make sense, but does it justify opening these areas, that were surely protected for a reason?

How about this, tell me one reason it does make sense not to exploit our resources.

Ecological preservation.
Maintaining strategic reserves.
Artificially inflating fuel prices to encourage innovation, public transit, etc.

No, that is exactly what you said. You said that they should drill there before ANWAR, regardless of anything.

No, I said the existence of another more profitable field (ANWR according to you) does not make the existing fields unprofitable by default. They may be unprofitable, but not because ANWR exists.

The existance of ANWAR, like I told you itself, has no effect on whether the current leases are viable . . .

O RLY?

Right now it doens't make economic sense to squeeze minimal oil out of currently leased lands when it is easy pickings in ANWAR and the shelf.

I smell a contradiction.

Oh, if that was your only ridiculous claim then I might let you rant unmolested. You are saying the corporations are not acting in the OWN best interests.

Where did I make this claim?

Really? So Exxon sold all its assets and laid off all its employees today? Interesting. I wish I had filled my tank this morning.

If they could suck every drop of oil out of the ground in an instant, you bet your ass they would. The longer is takes to finish production, the more money is tied down in overhead and assorted periodic cash outlays. That transcends the oil business, it's simple project economics.

 

[GoodGame]

I'm for the free market, though nationalizing porn might actually give more Americans a chance to get laid. And that just might have a trickle down effect to solving all our other 'problems'.

 

[El_Machinae]

I personally am opposed to drilling anywhere. If all businesses were nationalized (I'm waving the red flag here ) , then we could accomplish Al Gore's carbon-neutrality-by-2018 goal.

You can drill oil and still be carbon neutral. There are more and more opportunities for sequestration coming online each year.

 

[Theige]

JerichoHill: The point WICKLC1 is making is about the day-to-day change in the price of oil, which seems to be very sensitive to all kinds of news.

Surely, at the very least, the lifting of the bans would cause a significant 1 day drop in prices on the oil futures market.

 

[Elrohir]

Elrohir: Social Security is a raging success. I know people don't like to emphasise it, but it's actually built a lot of wealth and has been a very good investment.

No, it's not. It was set up like the Norwegian pension plan - where the money would be invested and grown over time, so that compound interest could be used to pay it off for future generations. But our politicians couldn't keep their hands in the cookie jar, so we instead have a pay as you go plan, which is probably going to be insolvent within a half century from now.

I think it's probably a sad commentary on the US government that that is what's pointed to as a raging success.

 

[JerichoHill]

JerichoHill: The point WICKLC1 is making is about the day-to-day change in the price of oil, which seems to be very sensitive to all kinds of news.

Surely, at the very least, the lifting of the bans would cause a significant 1 day drop in prices on the oil futures market.

Day to day price movements, in general, are completely random and can't really be predicted, because we cant really predict what happens in a day. I took his point to mean oil would go down for a period of time, which is not true

 

[WICKLC1]

WICKLC1

You obviously haven't seen the President's own DOE report that drilling in the sea or ANWAR has zero impact on price.. The increase in supply is negligible compared to world supply. It was put out about 6 months ago.

I'd happily link to it *again*

http://www.eia.doe.gov/oiaf/aeo/otheranalysis/ongr.html

Table 10. Technicaly recoverable undiscovered oil and natural gas resources in the lower 48 Outer Continental Shelf as of January 1, 2003. Need help, contact the National EnergyInformation Center at 202-586-8800.
Figure 20. Lower 48 offshore crude oil production in two cases, 1990-2030 (million barrels per day). Need help, contact the National Energyi Information Center at 202-586-8800.
figure data
Figure 21. Lower 48 offshore natural gas production in two cases, 1990-2030 (trilliion cubic feet). Need help, contact the National Energyi Information Center at 202-586-8800.
figure data

Released: Issues in Focus, AEO2007


The OCS is estimated to contain substantial resources of crude oil and natural gas; however, some areas of the OCS are subject to drilling restrictions. With energy prices rising over the past several years, there has been increased interest in the development of more domestic oil and natural gas supply, including OCS resources. In the past, Federal efforts to encourage exploration and development activities in the deep waters of the OCS have been limited primarily to regulations that would reduce royalty payments by lease holders. More recently, the States of Alaska and Virginia have asked the Federal Government to consider leasing in areas off their coastlines that are off limits as a result of actions by the President or Congress. In response, the Minerals Management Service (MMS) of the U.S. Department of the Interior has included in its proposed 5-year leasing plan for 2007-2012 sales of one lease in the Mid-Atlantic area off the coastline of Virginia and two leases in the North Aleutian Basin area of Alaska. Development in both areas still would require lifting of the current ban on drilling.

For AEO2007, an OCS access case was prepared to examine the potential impacts of the lifting of Federal restrictions on access to the OCS in the Pacific, the Atlantic, and the eastern Gulf of Mexico. Currently, except for a relatively small tract in the eastern Gulf, resources in those areas are legally off limits to exploration and development. Mean estimates from the MMS indicate that technically recoverable resources currently off limits in the lower 48 OCS total 18 billion barrels of crude oil and 77 trillion cubic feet of natural gas (Table 10).

Although existing moratoria on leasing in the OCS will expire in 2012, the AEO2007 reference case assumes that they will be reinstated, as they have in the past. Current restrictions are therefore assumed to prevail for the remainder of the projection period, with no exploration or development allowed in areas currently unavailable to leasing. The OCS access case assumes that the current moratoria will not be reinstated, and that exploration and development of resources in those areas will begin in 2012.

Assumptions about exploration, development, and production of economical fields (drilling schedules, costs, platform selection, reserves-to-production ratios, etc.) in the OCS access case are based on data for fields in the western Gulf of Mexico that are of similar water depth and size. Exploration and development on the OCS in the Pacific, the Atlantic, and the eastern Gulf are assumed to proceed at rates similar to those seen in the early development of the Gulf region. In addition, it is assumed that local infrastructure issues and other potential non-Federal impediments will be resolved after Federal access restrictions have been lifted. With these assumptions, technically recoverable undiscovered resources in the lower 48 OCS increase to 59 billion barrels of oil and 288 trillion cubic feet of natural gas, as compared with the reference case levels of 41 billion barrels and 210 trillion cubic feet.

The projections in the OCS access case indicate that access to the Pacific, Atlantic, and eastern Gulf regions would not have a significant impact on domestic crude oil and natural gas production or prices before 2030. Leasing would begin no sooner than 2012, and production would not be expected to start before 2017. Total domestic production of crude oil from 2012 through 2030 in the OCS access case is projected to be 1.6 percent higher than in the reference case, and 3 percent higher in 2030 alone, at 5.6 million barrels per day. For the lower 48 OCS, annual crude oil production in 2030 is projected to be 7 percent higher—2.4 million barrels per day in the OCS access case compared with 2.2 million barrels per day in the reference case (Figure 20). Because oil prices are determined on the international market, however, any impact on average wellhead prices is expected to be insignificant.

Similarly, lower 48 natural gas production is not projected to increase substantially by 2030 as a result of increased access to the OCS. Cumulatively, lower 48 natural gas production from 2012 through 2030 is projected to be 1.8 percent higher in the OCS access case than in the reference case. Production levels in the OCS access case are projected at 19.0 trillion cubic feet in 2030, a 3-percent increase over the reference case projection of 18.4 trillion cubic feet. However, natural gas production from the lower 48 offshore in 2030 is projected to be 18 percent (590 billion cubic feet) higher in the OCS access case (Figure 21). In 2030, the OCS access case projects a decrease of $0.13 in the average wellhead price of natural gas (2005 dollars per thousand cubic feet), a decrease of 250 billion cubic feet in imports of liquefied natural gas, and an increase of 360 billion cubic feet in natural gas consumption relative to the reference case projections. In addition, despite the increase in production from previously restricted areas after 2012, total natural gas production from the lower 48 OCS is projected generally to decline after 2020.

Although a significant volume of undiscovered, technically recoverable oil and natural gas resources is added in the OCS access case, conversion of those resources to production would require both time and money. In addition, the average field size in the Pacific and Atlantic regions tends to be smaller than the average in the Gulf of Mexico, implying that a significant portion of the additional resource would not be economically attractive to develop at the reference case prices.



Contact: Dana Van-Wagener
Phone: 202-586-4725
E-mail: dana.van-wagener@eia.doe.gov

It has a huge psychological effect on oil speculators even if it is a relatively small increase in supply. Also, the more we can produce at home and the less we need to import, the better.

 

[History_Buff]

Also, the more we can produce at home and the less we need to import, the better.

Why? = new char[10];

 

[Theige]

Why? = new char[10];

Because it is more beneficial to the American economy, obviously.

We have an enormous trade deficit, in large part to the enormous amount of oil we import. If we could produce more oil, we could lower the trade deficit and strengthen our economy.

 

[I'm Cleo!]

It was set up like the Norwegian pension plan - where the money would be invested and grown over time, so that compound interest could be used to pay it off for future generations. But our politicians couldn't keep their hands in the cookie jar, so we instead have a pay as you go plan, which is probably going to be insolvent within a half century from now.

I don't think this is true. As far as I know, Social Security was designed and implemented as a PAYGO, and the Trust Fund was developed to hold the surplus. The Trust Fund was expanded to account for the baby boomers, but I don't think it was ever not intended to be PAYGO. Then the government couldn't keep its hands out of the cookie jar, but it replaced all its "withdrawals" with treasury bonds. (And if the federal government defaults on its treasury bonds, we've probably got bigger problems on our hands than a potential reduction in Social Security benefits.)

Cleo

 

[Death_Machine]

What does that mean "reliance on foreign oil"? There is no law requiring domestically produced oil to be sold here or for production to not be manipulated for profit. It would have almost no effect at all on oil prices now or in 7-10 yrs.

No. If we drill domestically then a few things happen:

1. all the expenses of shipping the oil over here from the other side of the planet go away
2. an increase in the Global supply (by us increasing production) will cause the global price to go down
3. all these jerkoffs in turd world nations (see middle east) could no longer screw us by jacking prices whenever they want.
4. the USA should not be depending on any foreign nation for something we can produce at home anyway

I'm all for alternate energy, but none of the stuff being kicked around will be online faster than we could drill more anyway.