Oil industry lashes out at drilling ban

[babylonsister]

Veiled threat to raise the price of gas?

Oil industry lashes out at drilling ban
By Ben Rooney, staff reporterMay 29, 2010: 9:40 PM ET


NEW YORK (CNNMoney.com) -- The government ban on deep water oil drilling could stifle economic activity and lead to job losses and higher energy prices, an industry group said Friday.

"An extended moratorium on safely producing our oil and natural gas resources from the Gulf of Mexico would create a moratorium on economic growth and job creation," said Jack Gerard, president of the American Petroleum Institute, the main U.S. trade association for the oil and natural gas industry.

On Thursday, President Obama announced a six-month moratorium in response to the Gulf oil disaster, which is considered the worst spill in the nation's history.

The ban, Gerard said, will hurt growth "by undercutting our nation's access to affordable, reliable, domestic sources of oil and natural gas."

more...

http://money.cnn.com/2010/05/28/news/companies/BP_safety_review/?postversion=2010052921

[AllentownJake]

1. Do it

I dare them to raise the price of gas right now. They will have the competing image of dolphins covered with oil and rising gas prices.

[FarCenter]

3. The oil prices are controlled by speculators on the exchanges

The so-called "oil major" companies don't set prices.

OPEC has longer-term control by managing member production quotas.

I'd expect prices to go up, since Saudi Arabia is the only country that can raise production quickly.

However, I believe that their excess production is held in reserve to replace the lost Iranian production in case of war with Iran.

[AllentownJake]

5. Speculation only last as long as there are underlying fundamentals

You can temporarily drive up the cost of a commodity. The price increases of 2008 were a function of supply and demand based on where the fuel consumption of the industrial west and new members of the club India and China were going combined with Peak Oil.

[FarCenter]

8. So the 6-month ban on drilling will not have much of an effect

But if it is extended there will likely be an effect. And speculators may drive up prices on the expectation that the ban will be extended.

My understanding of the ban is that even production wells that are currently in the process of being drilled have to stop and pull their tools up at the first safe opportunity. It doesn't just apply to exploratory well or to new starts.

6 months is long enough that rigs will move out of the Gulf of Mexico to new opportunities, e.g. Brazil, North Sea.

Likely it will take some time to charter rigs, tow them back and to resume drilling after the 6 month ban expires.

[AllentownJake]

9. I think the current economic conditions

Don't justify the current price of oil...and China and India are about to have some major problems with their demand curve for exports with their number one trading partner (EU). The domestic demand side of the equation in both countries is running into a brick wall as neither has the domestic culture to encourage the building of their own middle class. India has a better chance than China. A middle class demands a voice in government and in politburo run dicatatorships that does not end well for the politburo.

They can yell all they want to, the demand curve is taking a down-turn. The major powers are broke and the developing ones don't have the culture to support the demand.

[FarCenter]

11. Asian economies will continue to grow and demand more oil

The East Asian economies are starting to grow on the basis of intra-region trade and trade with South America and Africa. They will become less dependent on exports to Europe or the US. China uses about twice as much oil as India, so even with a lower growth rate, China's influence will be greater.

Note also that more oil is being consumed in the Middle East as they develop their economies and start to use more oil for things like running desalinization plants.

[AllentownJake]

12. It depends on safe sea lanes

Have you been reading the reports of piracy lately ;-)

Give you a hint, our navy is not doing what it did 10 years ago because it has other distractions.

China will implode. They cannot develop economically and maintain a stable government at the same time. As people develop economically their demand for a voice increases. China does not have the ability to control 1,000,000,000 people of diverse ethnicities for long without brutal oppression...they will simply implode on themselves.

They require 100,000 troops to keep their elites safe when they have a meeting.

[FarCenter]

14. The Chinese will treat pirates with the same delicate consideration as the Russians

What? There's no court out here? Never mind, we're letting you go. Back in your boat. Good luck with that.

They are far from any economic or political collapse.

[AllentownJake]

15. The Chinese walk a tight rope everyday

Believe what you want about the Chinese miracle. The country is constantly teetering on small revolutions all throughout its borders. Brutal repression is the only way they survive and you cannot have a strong consuming middle class and brutal repression.

The Chinese do not have the naval capablity to police the waters in Asia, let alone facilitate world trade.

Whether we like it or not, the key to World Trade is US naval power, without it, the world becomes much like it did the day after the Roman legions stopped patrolling their roads.

[Jennicut]

2. Will they ever learn?

We are tied to them to make our life work they way we are used to. But they are pushing the limit that anyone could take. Regulate the hell out of them. And what job creation? Does it produce that many jobs?

[earthside]

4. Good.

There needs to be some sort of consequences to all Americans of the Deepwater Horizon disaster (besides the increase in the price of shrimp).

This catastrophe is a clanging alarm bell that we have reached the end of the plateau of petroleum production. Sadly it appears that it will only be a severe economic penalty that will make Americans stir from the seats of their motor boats, ATVs, RVs, shiny 4x4s, etc. to change our lifestyles enough to deal with the new reality of expensive oil.

And, the truth probably is that our oil supply cushion is so thin that ceasing deepwater drilling in the Gulf will mean high prices at the pump.

[metapunditedgy]

6. Essentially, the industry is saying "we'll use our power to stop you."

This is not an economic calculation on their part. It's a declaration of war. The government should treat it as such.

[sellitman]

7. Bingo!

They should be treated as the "Terrorists" they are.

[Webster Green]

10. Gee guys, can we at least test your stupid shear rams to see it they work?

Brazil requires that drilling companies demonstrate the shear rams in action (above water), to make sure they are actually functioning properly, and capable of shearing off the type of pipe they are using.

Would that be OK? Oh, please gark masters.....can we? Pretty please??

[RC]

16. And record the process on video for the record, along with the Serial Number.

Makes it harder to shuffle the same one around like each is a different one at each site.

[Union Yes]

13. Can we lash oil industry execs? nt