Question:

Oil prices? Do folks realize the sham?

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I am not an environmentalist but i understand basic economics. if the US drill in the restricted portions of Alaska and the gulf of Mexico how will that impact world oil prices? the dirty subject they do not discuss is the oil from Alaska and the Gulf will still be valued at world prices! Unless those reserves have as much as Saudi arabia, there's no short term price benefit.

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  1. Drilling for oil that will cost more to produce will not necessarily raise prices if the cost is still below world prices, and if producers are able to sell a higher prices by restricting production, it would make it practical for them to do so.

    That is, companies producing oil in Alaska would be best served to sell to Americans only at the highest price they can get, and to limit production to get that higher price.

    Maximizing number of barrels produced if it lowers total revenue from the well, over all time, will lower net yield to the company, so why would the owners do so?

    But this is also true for current domestic producers and it is true for producers outside of the USA, particularly with US dollars being so fragile.


  2. "The Greatest Sham of All" -  people using oil.

  3. you are right to a point, the 30% of oil that we are producing now is still selling at the same price as oil imported from other countries.

    but basic economics says that if you increase the supply, and reduce the demand, the price will go down.

    I will say that I am not especially in favor of drilling in Alaska either, and although there are claims of how safe off shore drilling is, the facts are that there have been incidents of oil spills for off shore drilling rigs.

    The only solution is to start moving away from our dependence on oil.

    There are 2 different ways to do this, one is to develop alternative means of transportation.  

    and the other is to change our driving habits.

    but I have to tell you, that I miss to long drives in the country on Sunday afternoons.

  4. ever here the saying, Cheaper by the Dozen

  5. Um, no, if you increase the supply, then all other things being equal, the price comes down.

    http://en.wikipedia.org/wiki/Image:Suppl...

    Where'd you say you got your Economics degree?

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