If oil drilled anywhere in the world is sold on the world market, how will more drilling in the U.S. help?

Question

Are we being sold more snake oil by the Republicans? There is no way to make oil companies sell oil drill in the U.S. or refined product from oil drilled here, on the U.S. market only. They are profit-making companies so they will sell to the highest bidder.

http://fuelfocus.nrcan.gc.ca/fact_sheets/oilmarket_e.cfm

Answer 1

An increase in supply will bring prices down globally.

Prices went up globally. They will come down globally as it is a global oil market.

Answer 2

Because a country chooses whether to keep it's resources locally or put them on the world market.

Answer 3

Its all about supply and demand.  Demand is outstripping supplies right now.  Coupled with a weak dollar, the price is extremely high.

If we drill, the oil can be brought to market and there is extra supply which will drive the price down.  If we open up the drilling, I am all for making it a requirement to use it first in the USA before being sold.  But if we get huge inventories, the oil companies should be able to sell it on the open market or to our allies.  

Your being sold snake oil if you believe the alternative fuels are the answer.  The real cost of a gallon of ethanol laced gasoline is more like $6 a gallon if you take away the subsidies.  Hydrogen or CNG fuel are the only real alternatives in my eyes, but the distribution network will take 15 to 20 years to build.  

So until we have that in place and affordable Hydrogen and CNG vehicles, we are going to have to rely on oil.  

Answer 4

Any increase in supply will reduce the price per barrel.  An increase in supply with a decrease in demand would have an even more dramatic effect.

One thing is certain: putting more rigs in offshore won't RAISE the price per barrel.

Saudi Arabians buy gasoline for well under 1.00 per gallon.  That oil is clearly not being bought on the world market, it's coming straight out of their land into the refinery.

Answer 5

There will be more resources on the world market which will lower the demand worldwide THUS lower the prices on what we pay for a barrel of oil.  

Answer 6

Drilling for more oil will increase the world supply, and lower the world cost. You are correct in thinking it is a world market rather than a US market.

The big difference is that the US will be drilling and selling an expensive commodity rather than buying it. Doing so will lower our trade deficit, improve the value of the Dollar on the world market, create high paying jobs in the US, and increase tax revenues.

Answer 7

It all boils down to supply and demand, if you increase the supply, the price will drop. The recent drop in the price of oil is due to 2 things, 1st people cut back on their usage thus increasing supply and lowering cost. 2nd, the value of the dollar increased and I'm sure that was at least partly due to the above.

Answer 8

Genius, the people of Saudi Arabia (who get money for their government oil program) only pay about 50 cents per gallon of their domestically produced gas that Americans pay $3.50 for.

If you produce it in the States, people in those states will pay less. There will be more supply under the same demand, thus prices fall to compensate.

I am not an economist but some of these things are quite simple!

And most oil companies are government owned not "profit-making." I can see that your liberal position has taught you to look at industry as bad and government intrusion as good.

Answer 9

America can nationalize the oil they drill for, if willing.  You don't have to put it on the open market if you intend to use it.  

Answer 10

Supply and demand. It's a fairly simple economic principle to grasp, and I'm sure you could find an Econ 101 course at a community college near you.

Of course, that would mean you'd have a little less time to post questions here, but a real education might be more beneficial in the long run.

Good luck.

Answer 11

This is merely efficient markets theory in action - the price of a commodity quickly adjusts to reflect all facts, beliefs and perceptions about the future.  Look at the way crude oil futures react moment by moment to each and every movement of Hurricane Gustav.

Answer 12

Because the oil doesn't have to be shipped from 10,000 miles away for one. They can run pipelines that take it from the ground directly to the refineries. If you want to talk snake oil, talk about the Democrats that keep shoving Big Green legislation down the throat of every state in the US while they're all very heavily invested in Big Green stock.

At least the Republicans you keep blaming don't own stock in oil companies, lol. Check Pelosi's holdings in alternative energy companies, then look at the billions she wants to hand them in Califormia.

Conflict of interest? Hmmmmm...give me a break.

Answer 13

Well if you actually take the time to research you will find that the United States actually puts very little of our own oil on the world market. Last time I checked we were 17th overall in exports by oil producing nations. However, whether we keep it or put it on the market, more oil reduces price per barrel by driving done speculation due to greater supply. This is basic economics and has been done very effectively for years by the Saudis to help stabilize prices.