Obama - "Drilling won't effect the price of gas..."?

Question

Looking for intelligent discourse here, not just rants...

Obama says Drilling in ANWR and off the coast of Florida will not effect the price of gas appreciably.

ANWR could supply 1.5 million barrels/day, and off the coast of Florida also about 1.5 million barrels/day. (3 million combined) Which is a world wide increase of 3.25 % over our current 80 million barrels/day. It would also be a combined 37.5% increase in US domestic production, and reduce our reliance on foreign oil from 60% down to 45% (based on todays demand) It would also increase the US from the #3 to the #1 producer of oil in the world. (Just above Saudi Arabia who is currently producing 10 million barrels daily, Russia's 9 million daily, compared with the US's 8 million daily.)

Can anyone using sound economic logic explain how Obama can make such a claim? (I am not trying to slam Obama, I'm actually trying to be open minded here....)

Don't get me wrong, I know there are environmental hazards. If Obama said "It may reduce the price of gas, but I still don't think it's worth the environmental risk..." or something like that I could probably see his point. But when he says a dramatic increase in US and the world wide supply won't decrease the price (when we clearly have a worldwide shortage on our hands I might add) it make me wonder....

Answer 1

First of all the amount of oil coming out of the places that you mentioned will go to the world market, not just the U.S.  In other words, the U.S will have to compete for the oil coming out of it for the best price with countries like China.

Second, any amount of oil that does come out of ANWR, Florida etc. will not be able to get to the market for another 7 years since that is how long it will take to find the oil, drill it and start producing it.  That's fact.  Even the oil industry admits that.  So, Obama is essentially right, drilling for oil today will not effect our gas prices today.  And, increasing the oil on the market from ANWR, Florida etc.  will increase the world market supply by 1%.  So, it really isn't going to effect the price of gas today or tomorrow.  That is what Obama is getting at.  We need to decrease our demand for oil by investing in alternative fuels and energy sources and then get the economy in this country going by selling that energy and new cars that rely on that energy to other countries.  That way our country benefits from a new green economy and the world benefits by having less pollutin in the air and less dependency on oil, not just foreign oil.  It can be done alot faster than drilling for oil and waiting 7 to 10 years to get that little pitance of oil out of the ground.

Answer 2

He's right. The whole drilling issue is merely a way for republicans to beat their chests and drive a wedge.

Answer 3

Drilling won't make gas prices much lower than they are now, if at all.  By the time the oil that is drilled makes it to market, inflation will have negated any decrease.  It will decrease prices slightly from what would be in a couple years, though.  

However, I think this line of solving our energy problems doesn't address the main problem.  Fossil fuels are a limited resource.  We should focus on developing renewable energy sources like solar, hydroelectric, wind, and bio-fuels.  The sooner we can make that transition, the better off our nation will be.

Answer 4

Common fricken sense!!!

Answer 5

Bush's department of Energy happens to agree with Obama. Read the links below.  They are direct links to the Department of Energy. The problem is that it will take a long time to get the oil and it is a relatively small amount given the international market.

Bush's Department of Energy  thinks it would take about 5 years. to get significant oil from offshore drilling. the Department of Energy  also says "Because oil prices are determined on the international market, however, any impact on average wellhead prices is expected to be insignificant. "

2007 Energy Department report on offshore drilling

http://www.eia.doe.gov/oiaf/aeo/otherana...

Bush's Department of Energy  thinks it would take about 7 to 12 years to produce oil from ANWR, the Arctic National Wildlife Refuge.

2004 Energy Department Report on drilling in ANWR

http://www.eia.doe.gov/oiaf/servicerpt/o...

Answer 6

No, not really.

Obama never said -Drilling won't effect the price of gas- or - Drilling in ANWR and off the coast of Florida will not effect the price of gas appreciably.

Correct me if you can please.

Obama is for windfall profit taxes on oil companies.

I am not personally.

But oddly McCain's VP pick is.

"Windfall tax lets Alaska rake in billions from Big Oil

While Congress and the presidential candidates debate the wisdom of a windfall tax on oil companies, Alaska has already imposed one, hauling in billions of dollars in new revenue for the state treasury."

"Over the opposition of oil companies, Republican Gov. Sarah Palin and Alaska's Legislature last year approved a major increase in taxes on the oil industry — a step that has generated stunning new wealth for the state as oil prices soared."

Answer 7

Obama is living in lala land.  He doesn't make sense  nor cents.

Answer 8

An increase in the supply of oil is not the issue.  There isn't an oil shortage.  Saudi Arabia, Russia, the North Sea, Nigeria, Venezuela, etc. could all increase supply if they wanted to.  But the law of supply and demand is working, so the price goes up until people stop paying it.  Growing economies in China, India, Eastern Europe, and elsewhere in Asia are increasing their demand for oil, and those countries are increasingly able to pay for it because of their rapid economic growth.  So the price trend is continuously upward because the demand and the willingness to pay is increasing much faster than the producers are willing to increase the supply.  Increasing the supply by 3.25% will shave perhaps a few pennies off the price at the gas pump, but only after the wells in ANWR and offshore are fully developed and producing at full capacity.  That takes many years because of permitting, geological surveys, test drilling, drilling rig construction, and pipeline building.  As Obama pointed out in a June 24 speech in Nevada, oil companies currently hold leases on 68 million acres offshore where drilling is permitted.  This 68 million acres has enough technically recoverable oil to double the domestic output.  This info comes from a Bureau of Land Management report, so it is not bogus.  And yet there are no producing wells in any of these leases because the process to develop wells takes years, and because oil companies naturally take oil from the lowest cost wells first.  So drilling restrictions are not stopping oil companies from increasing the supply of domestic oil today.  

I have no objections to opening more offshore leases or opening ANWR.  Do it.  Every little bit helps a little bit.  But tor the U.S. to hang its hat on new offshore leases and ANWR as a way to reduce gas prices is unrealistic at best, and a lie at worst if it slows us from developing alternatives (coal, natural gas, nuclear, solar, wind, biofuels, everything), or implementing conservation that really would reduce our dependence on foreign oil, and even oil in general.

And there is another problem.  It took me a lot of words to explain Obama's position.  McCain explains his position in 6 words:  "Drill here, drill now, pay less."  Which message do you thing voters want to hear?  As one answerer here said, McCain's position is just "common frickin' sense."  It is also common frickin' sense that the sun revolves around the Earth.  My own two eyes tell me that every frickin' day.  So what?

Answer 9

Unless the oil companies are nationalized there is simply no reason to assume that oil recovered from American waters will ever wind up in American gas tanks

Yes having more supply available on the world market will probably drop the price a bit But ultimately  the oil belongs to the oil companies who paid to find it and recover it  and as such they have the right to sell it to the highest bidder

Answer 10

It may not lower gas prices in the short run,but it is a step in the right direction. By drilling for our own resources it will send a message to the opec nations that we no longer need them.

Answer 11

If the democratic senate would get back from vacation (or holiday as they say in europe) I say europe because obama fans think socialism is so great we should elect King Obama.

We really need oil refineries, we haven't build one for 30 years!

Answer 12

The environment has nothing to do with it.

If we doubled our output, OPEC would cut theirs to keep the price of oil high. Remember they are running out too, and that is ALL they have except sand.

The drilling folks are under the impression that we are going to keep the oil that we drill here. We won't. It will be bid on the international market and sold to the highest bidder.

Try posting a question and suggest that we drill in the U.S. and keep all of the oil in the U.S.. Come on. I dare you.

Answer 13

Even Palin acknowledged that opening these areas to drilling today would require time to actually put such a ramp up of the actual development in place that the product would not see the market for years.  There is a shortage of offshore rigs at the moment for instance, and it would take time to build more, after we've completed repairing those affected by Gustav.  First the exploration would have to be done as well, the test wells, the seismic research, etc.  This has already been done for a good 80% of lease areas currently allowed and even then, the oil corporations have dragged their heels on production.

Then, as the oil hit the market, what would stop it from going to China or to Europe where prices are at a much greater premium and profits more attractive??

Finally, how would this ameliorate climate change?  Drilling for more oil means burning more oil, not the direction we should be heading.

Let's stop making excuses for our 30 years of nosepicking where renewable alternatives and conservation/efficiency are concerned, and get going!!

After all, we've put men on the moon, shrunk computers from room-sized to iPod size, now have either a man of color or woman heading to the WH,  and STILL, we have yet to get past the internal combustion engine????

More drilling equals a Model T energy policy.  Let's join the 21st century, for heaven's sake!!

Answer 14

I understand the argument about how it would take years to get the oil going but i think its a step in the right direction, while we are waiting we can get our oil from Alaska( the moose will have to cope for a while), the fact is we dont just use oil to power are cars people! of course we need to invest in alternate resources but any step the separates us and the stranglehold the middle east has on us is a step in the right direction. plus   some of the people who make these "estimations" may have political or finance motives

Answer 15

Just the threat of drilling by Bush dropped the price immediately. Speculators bid lower on futures.

Answer 16

Obama is another liberal elitist who thinks he knows everything.  First Al Gore invents the internet, then he's my weatherman, and now Obama has become a petrologist.  Amazing.

Answer 17

Because it will take yrs to get drop one of that oil onto the market. Most people say 8yrs. There are no drilling platform available to drill anyway. In addition he said that it would not have a immediate effect on oil prices. It is also extremely expensive to drill there so they only pump oil when the price is high. If the price drops they will stop pumping. N Dakota has huge reserves they just started pumping because the market price makes it profitable there is no shortage it costs more dollars to buy oil because the dollar is not worth **** because we have borrowed 14 billion dollars form china and our economy is in the **** hole. Didi you notice that when the dollar went up the last couple of weeks oil fell????? not just a coincidencee.  

Answer 18

Our life is frittered away by detail. Simplify, simplify.- Henry David Thoreau

Supply and Demand.  Increased supply decreases the price.

Answer 19

exactly he isn't ready to lead  

Answer 20

First of all drilling would take ten or more years to bring additional oil to market, while alternative fuels could be made in greater quantity much faster. EIA analysis follows

From Wikipedia:

Projected impact on global price

The total production from ANWR would be between 0.4 and 1.2 percent of total world oil consumption in 2030. Consequently, ANWR oil production is not projected to have a large impact on world oil prices.[22] Furthermore, the Energy Information Administration does not feel ANWR will affect the global price of oil when past behaviors of the oil market are considered. "The opening of ANWR is projected to have its largest oil price reduction impacts as follows: a reduction in low-sulfur, light crude oil prices of $0.41 per barrel (2006 dollars) in 2026 for the low oil resource case, $0.75 per barrel in 2025 for the mean oil resource case, and $1.44 per barrel in 2027 for the high oil resource case, relative to the reference case."[22] "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."[22]

Answer 21

He said drilling won't affect the price of gas in the short term (that's the part you're missing -- the "short term") because it will take 10-20 years for us to actually start using that oil. Drilling is a gimmick -- we need to focus on alternative energy sources.

Answer 22

People want immediate relief and drilling will not do that.

Suppose we did get a lot of oil from new areas.  Then IF the price went down, people would start consuming more (buying SUV's again?) and the price, by the law of supply and demand, would go back up.