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wildman
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Astronuc said:
Oil can't be pumped out all at once. Large fields take 30-60 years to pump out. That means that even if we develop all the above fields, it still would be a fraction of the oil we consume. The party is over.
Astronuc said:So if ANWR has 15 billion bbl, that's good for 721 days (about 2 yrs) equivalent. Of course, there is other oil, so really that would stretch out.
For the entire 75 billion bbls cited in the NY Times article, at present consumption, it would be gone 3606 days or ~ 9.9 years, barring other supplies. Matching those supplies elsewhere would simply extend the consumption to 20 years, barring alternative fuels.
Two decades would pass quickly, and my kids' generation would be stuck in the same dire situation we now face. I don't want to leave the next generation and subsequent ones to suffer from the folly of this generation or previous ones.
mheslep said:Certainly the US wouldn't want ANWR as a sole source nor could it be. Consider instead that ANWR provided just 4 million bbl/day, i.e. double the best ever flow rate of the Trans-Alaska pipeline. :
Not sure what you mean by "rapidly", but I should warn you to not get impatient over the next decade or two or three.mheslep said:Certainly the US wouldn't want ANWR as a sole source nor could it be. Consider instead that ANWR provided just 4 million bbl/day, i.e. double the best ever flow rate of the Trans-Alaska pipeline. That would cut imports from 13m bbl/day to 9 and places the country back under 50% imported oil. That could be sustained for 10 years out of ANWR alone, and would have the desirable effect of rapidly cutting the price of oil back down to something manageable, and improves the geopolitical energy security problem.
EIA said: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.
Yes understood it would take some time, I mean when it eventually comes online, which it would be now if Clinton had not vetoed it in the 90's. Let's not make the same mistake again.Gokul43201 said:Not sure what you mean by "rapidly", but I should warn you to not get impatient over the next decade or two or three.
According to the DOE's Energy Information Administration:
http://www.eia.doe.gov/oiaf/aeo/otheranalysis/ongr.html
Yes I read about 1.5; to make a dent the offshore fields need to be drilled too.wildman said:It is doubtful that ANWR will produce more than 1.5 million a day.
Nice sentiment. Other than making blog posts, what's the plan for doing that 'now'?Astronuc is right, we need to get off oil and now.
There's is also the economic theory that says just announcing ANWR and offshore drilling would immediately drop the price of oil as the market recalculates price based on increased future supply.Gokul43201 said:Not sure what you mean by "rapidly", but I should warn you to not get impatient over the next decade or two or three.
mheslep said:There's is also the economic theory that says just announcing ANWR and offshore drilling would immediately drop the price of oil as the market recalculates price based on increased future supply.
Not at all. ANWR is not starting from scratch infrastructure in the way that Prudhoe did, because of Prudhoe. See here for instance:DrClapeyron said:That would have a very long term impact, not short term. Drilling in a remote wilderness with no existing infrastructure and zero capital growth is not the same as renting a drilling platform off the coast of Texas where the infrastructure is heavily invested and capital growth increasing. Even offshore Texas fields take years to produce once oil is found.
All you have in ANWR are carribou and wolves. When congress announced it would drill in Prudhoe in the early 1970's it had no effect on markets, albeit there were no futures for oil back then. Oil produced from new fields isn't cheap either, the oil is tremedously more expensive than the oil from a mature field; so tax breaks are the rule not the exception.
...
Speculators reacting today to something that is a decade away? By itself, if nothing else happened, that doesn't sound like it will be a significant effect. But add to this the economic theory that says oil production from ANWR will result in reduced production in other countries...and that squashes most of the expected gain in price. I believe the EIA calculated a peak price reduction (for light crude) of less than 1%...to be expected about 2 decades from now. That's hardly a few pennies on the gallon.mheslep said:There's is also the economic theory that says just announcing ANWR and offshore drilling would immediately drop the price of oil as the market recalculates price based on increased future supply.
mheslep said:Yes I read about 1.5; to make a dent the offshore fields need to be drilled too.
Sure, 5, 10, 20 years. A significant factor in the value of a commodity today is the expected quantity of supply in the future, reflected back to today's price by net present value calculation. The time lines relevant to someone calculating todays price are based on the time lines involved in changing the supply and the demand. That way if it is known, for instance, that the world supply of some commodity will be totally exhausted in 10 years at current demand, a price signal is sent _now_ that reflects that looming depletion, and of course vice versa if it is expected that the supply will increase in 10 years.Gokul43201 said:Speculators reacting today to something that is a decade away? By itself, if nothing else happened, that doesn't sound like it will be a significant effect. But add to this the economic theory that says oil production from ANWR will result in reduced production in other countries...and that squashes most of the expected gain in price. I believe the EIA calculated a peak price reduction (for light crude) of less than 1%...to be expected about 2 decades from now. That's hardly a few pennies on the gallon.
Yes but that is all trivial compared to the scope of what had to be done to get into Prudhoe - pipeline, ice roads, etc; access is no longer a barrier (on that scale).DrClapeyron said:100 miles from Prudhoe is still thousands of miles from the nearest industrial center. You'd have to go to Korea to find rigs, ships and other heavy equipment or have everything routed from Houston, through Panama on up to ANWR...
I not aware of any political leadership that says 'that is all we have to do'wildman said:The problem is that there isn't enough oil even in the offshore fields. That doesn't mean not to drill them, just don't think that is all we have to do.
Wildman you said get off oil 'and now', that's to what I was referring. Again, can you cite a plan for getting off oil 'now'.Getting off oil is not just a nice sentiment. It is necessary or we are scr_wed.
Yes I see that argument posed quite a bit now. I havn't looked carefully, but it seems to me that if the 800 lb gorilla producer argument really held true then nobody would ever mine/drill/farm for some resource unless they were the world's largest producer, as then logically the larger producer could always just reduce its production rate and defeat your efforts to depress price. Visibly, this is not universally true. I suspect not mainly because the large producer most often maximizes income at high production unless a glut state is reached. The only impact the large producer can have is to cause short term spikes to punish or attempt to bankrupt smaller producers, which can't be done here.Gokul43201 said:... But add to this the economic theory that says oil production from ANWR will result in reduced production in other countries...and that squashes most of the expected gain in price. ...
Here it is, being posed by the EIA(DOE):mheslep said:Yes I see that argument posed quite a bit now.
With respect to the world oil price impact, projected ANWR oil production constitutes between 0.4 and 1.2 percent of total world oil consumption in 2030, based on the low and high resource cases, respectively.17 Consequently, ANWR oil production is not projected to have a large impact on world oil prices. Relative to the AEO2008 reference case, ANWR oil production is projected to have its largest oil price reduction impacts as follows: a reduction in low-sulfur, light (LSL) crude oil18 prices of $0.41 per barrel (2006 dollars) in 2026 in the low oil resource case, $0.75 per barrel in 2025 in the mean oil resource case, and $1.44 per barrel in 2027 in the high oil resource case. Assuming that world oil markets continue to work as they do today, the Organization of Petroleum Exporting Countries (OPEC) could neutralize any potential price impact of ANWR oil production by reducing its oil exports by an equal amount.
Gokul43201 said:Here it is, being posed by the EIA(DOE):
http://www.eia.doe.gov/oiaf/servicerpt/anwr/results.html
Yes no doubt they could. The interesting argument is whether they would. I argued above it is counter to their interests to do so as they'd lose income. I observe that major commodity suppliers only cut production when supply greatly surpasses demand causing a possible glut and price collapse, such as with US farmers paid to leave fields fallow; that is not going to happen with oil given world demand.EIA said:...Assuming that world oil markets continue to work as they do today, the Organization of Petroleum Exporting Countries (OPEC) could neutralize any potential price impact of ANWR oil production by reducing its oil exports by an equal amount.
mheslep said:Sure, 5, 10, 20 years. A significant factor in the value of a commodity today is the expected quantity of supply in the future, reflected back to today's price by net present value calculation. The time lines relevant to someone calculating todays price are based on the time lines involved in changing the supply and the demand. That way if it is known, for instance, that the world supply of some commodity will be totally exhausted in 10 years at current demand, a price signal is sent _now_ that reflects that looming depletion, and of course vice versa if it is expected that the supply will increase in 10 years.
I used that boundary case to show clearly how future demand / supply expectations are factored into today's prices, not to imply any serious market movers think the world supply will exhaust in 10 years.quadraphonics said:What you're missing is that the speculators are not bidding up on the premise that oil supply is going to run out in 10 years.
Yes demand will go up but new supply will come on line like the large Brazilian offshore. I suspect the US is actually looking at a price hike up to $6-$9/gal in 5 yrs w/ no drilling, versus perhaps maintaining small price increases by opening ANWR and offshore. Certainly the current price is not telling anyone be happy, don't worry.They're bidding up on the premise that *demand* for oil is going to continue to ramp up over the next decades, due to China and India (not to mention the US). Increasing world oil production by a couple of percent is not going to alter that fact. It might produce a momentary slowdown in the increase of the price of oil, but on the other hand the signal it would send to consumers (don't worry about cutting back, just keep consuming)
The main speculative pressure is due to the weak dollar and inflation, not consumer spending habits which have indeed changed without oil price effect....would tend to reinforce the specualtive pressures.
With gas prices at record levels above $4 a gallon, Americans are driving less and abandoning gas-guzzling vehicles, according to government data. Americans drove 1.4 billion fewer highway miles in April compared with the same month last year, and 400 million fewer miles than they did in March, according to the Transportation Department.
I don't know if conserve is the appropriate verb, but certainly gas use has declined.edward said:People are apparently starting to conserve.
http://www.startribune.com/business/20586524.html?location_refer=Business
http://newsminer.com/news/2008/may/22/gop-ready-roll-out-energy-plans/...However, one of the sidebars suggested another consequence of drilling. Speculators have been blamed for driving up oil prices, but as Alaskan Republican Rep. Don Young pointed out, drilling in ANWR would scare off some of the speculators driving gas prices up.
Young, ranking Republican on the House Natural Resources Committee, introduced a measure Wednesday to allow development in the coastal plain of ANWR.
“The way you address high gasoline prices is to increase supply,” he said.
Rolling out legislation to open ANWR has become Young’s personal never-ending task in the House, but this time he’s hoping consumer anger over record prices at the pump will spur moderate members of both parties to support the measure.
“If we passed ANWR, it would drop $10 to $15 off the price of a barrel of oil because speculators would see that we’re serious about increasing domestic production,” he said.
mheslep said:I not aware of any political leadership that says 'that is all we have to do'
Wildman you said get off oil 'and now', that's to what I was referring. Again, can you cite a plan for getting off oil 'now'.
The US is, now. Are you familiar with the sums of money being spent on renewable energy installation and research in the US?wildman said:Well duh! By "now" I mean we need to start working on the problem in a serious way now.
I think the chief beneficiaries of that import tariff would be oil companies with domestic reserves and leases....Here is a possible set of ideas. I don’t know if they will work, but we need to start thinking creatively.
The first thing we need to do is guarantee a bottom to oil prices so they Arabs can’t manipulate the price of energy in this country. Say $100 a barrel. If it drops below that level, we add taxes to the imported oil. (Domestic oil would not be taxed). That will give private companies a guarantee that they will not be taken for a big loss if they invest in energy like what happened in the 70’s. The people who invested in oil shale at that time had the rug pulled right out from under them. We need to prevent that from happening again. Keep in mind that the Arabs (unlike the rest of the World) are not yet at peak oil (maybe) and can therefore manipulate the price (if what I think is true). This is also the real reason a lot of the oil in the Gulf of Mexico hasn't been drilled. It is too expensive and the oil companies are afraid of be undercut by the Arabs.
Not just people, only businesses can claim a light truck (>14000lbs) costs, or a portion of lighter truck costs (>6000lbs), or heavy truck costs like a tractor trailer, or farm equipment, or even a copy machine. Still, I'd go along w/ going the rest of the way and killing the business deduction for very light trucks intended for road use (leave the farmers alone).Next, we need to change the tax laws to encourage conservation. Do you realize there is a law that gives people who purchase Hummers a big tax break?
Greatly increase it to what? $500B/yr? $1T/yr? Why don't you believe this would have the same effect as the Arab oil price manipulation above? Suppose I start up an oil-shale company scrounging madly for investors along the way, and all the federal funding at $500B/yr goes into biofuels and nuclear ( a good bet). How much success would I have getting investors then? Nill. The point: there's a downside to having the government pick R&D winners in a big way. Also, crash R&D programs only work on very narrowly defined problems. That is, one can define an crash program to send 2-3 guys to the moon, one can not do the same w/ a program to lift everyone in the country, say, just to orbit. I'd go along with some moderate increases in govt. energy R&D spending, but just throwing money at the problem doesn't mean its being addressed 'seriously'. Finally, after all of this expense and no drilling you may still come up with zip.Then greatly increase spending for research and development in the energy sector.
The problem with most of the "renewables" people is that is all they want to do. They don't want to drill, they don't want to explore for more reserves, they don't want to do anything but research, research, research....The problem with most of the "drill more" people is that is all they want to do. They don't want to finance research, they don't want to encourage conservation, they don't want to do anything but drill, drill, drill.
Do you really think Don Young is a more reliable source than the DOE for doing this calculation right? Is there any other non-partisan/relatively reputable body that estimates anything like $10 per barrel?mheslep said:Some other opinions: $10-15/barrel
No I don't necessarily consider him more reliable, I recognize he's politician. I also recognize even professionals at DoE, EPA can also have agendas and be misled, though I have no reason to doubt them here.Gokul43201 said:Do you really think Don Young is a more reliable source than the DOE for doing this calculation right?
mheslep said:The problem with most of the "renewables" people is that is all they want to do. They don't want to drill, they don't want to explore for more reserves, they don't want to do anything but research, research, research.
No risk, yet big profits/bonuses or big losses, and the consumers pay. So increased cost and not added value - it's simply overhead.. . . .
Congress, however, has grown increasingly concerned over speculative investors' role in the energy market in comparison with those buying futures contracts to hedge against risk from price changes. Lawmakers are expected to consider legislation to set strict limits -- or in some cases, an outright ban -- on speculative trading in energy futures in some markets, the Journal reported.
. . . .
In 1991, according to documents provided by the agency to the committee's investigators, the Commodity Futures Trading Commission authorized the first exemption from position limits for swap dealers with no physical commodity exposure, the report said. This began what Dingell said was "a process that has enabled investment banks to accumulate enormous positions in commodity markets," according to the report.
WASHINGTON (MarketWatch) -- The price of retail gasoline would fall by half, to around $2 a gallon, within 30 days of passage of a law to limit speculation in energy futures markets, four energy analysts told Congress on Monday.
Testifying to the House Energy and Commerce Committee, Michael Masters of Masters Capital Management said the price of crude oil would quickly drop closer to its marginal cost of around $65 to $75 a barrel, about half the current $135.
Fadel Gheit of Oppenheimer & Co., Edward Krapels of Energy Security Analysis and Roger Diwan of PFC Energy Consultants agreed with Masters' assessment at a hearing on proposed legislation to limit speculation in futures markets.
Krapels said it wouldn't even take 30 days to drive prices lower, as fund managers quickly liquidated their positions in futures markets.
"Energy speculation has become a growth industry and it is time for the government to intervene," said Rep. John Dingell, D-Mich., chairman of the full committee. "We need to consider a full range of options to counter this rapacious speculation."
The committee will likely consider legislation that would rein in speculation by imposing higher margin requirements, setting position limits for speculators, requiring more disclosure of positions, and preventing pension funds and investment banks from owning commodities.
I fail to see how any such action by Congress will do anything other than put the Merc out of business as all its trading volume would simply pack bags and move to ICE and other exchanges.Astronuc said:Gas could fall to $2 if Congress acts, analysts say
Limiting speculation would push prices to fundamental level, lawmakers told
If speculation is limited, commodities prices should drop and the stock markets should rise.
mheslep said:I fail to see how any such action by Congress will do anything other than put the Merc out of business as all its trading volume would simply pack bags and move to ICE and other exchanges.
Intercontinental Exchange may be forced to limit the size of U.S. oil trades on its London energy market, U.S. Commodity Futures Trading Commissioner Bart Chilton said Friday.
Intercontinental, known as ICE, controls about one-fourth of the trading of U.S. West Texas Intermediate oil futures, with the New York Mercantile Exchange handling the remainder. ICE's London market operates without trading limits and is allowed to offer U.S. investors access to its U.K. exchange under a no-action letter from the CFTC. The letter may be revised to have ICE adopt trade limits imposed by Nymex, Chilton said.
"The issue is manipulation of oil prices," Chilton said. "It's critical we have as comprehensive as possible a view of all trading position in WTI."
The energy exchange's regulator, the U.K.'s Financial Services Authority, does not set limits on contracts held by investors on its London exchange, meaning those traders can build larger trades in U.S. oil than rivals on the Nymex, which sets limits. The position limits are aimed at reducing the ability of traders to influence prices near the expiration of futures contracts.
That certainly would be a concern. I heard a few weeks ago that an exchange (bourse) in one of the Gulf States, IIRC Dubai, is looking to start trading commodities including oil.mheslep said:I fail to see how any such action by Congress will do anything other than put the Merc out of business as all its trading volume would simply pack bags and move to ICE and other exchanges.