since this has political under tones.
 

http://money.cnn.com/2008/10/14/news...ion=2008101516

Lord..what is wrong with people and the media? I just don't get it. Maybe I missed my ECON course in college where we were told "if you have the chance to get ahead, don't".

Quick summary:

With oil dropping to $75/bbl it is looking less and less convincing to drill for oil to relieve prices.


WTF?? Do they not comprehend that if you get ahead of the game you do not have to be in the position again? This is not a zero sum event. You don't just do ONE thing, you shotgun multiple areas of interest. I guess the old line "if you don't learn from history you are doomed to repeat it" still rings very true. In the 1980's this was the cry "why develop synthetic fuels when oil is so cheap??"

D U M B @ S S E S

:)

I don't claim to have all the facts but to get ahead of the game at least in this case one must consider the following.....

"The credit crunch has hampered oil company's ability to fund big-ticket drilling projects. Meanwhile, the prices that producers pay for raw materials and labor remain high."

Looking at it from that perspective might make some of the info from your econ course make sense,

Not quite. Why would you stop the chance to generate more of a product simply because the costs fell??? :dunno:

On a true econ grid that would make sense, however, since we left capitalism as of two weeks ago...this doesn't work IMO.

How about not having the money?

Um oil companies have more then enough reserves to drill from what I've read. Hopefully since areas are now open, this will be capitalized on.

I guess what they may be alluding to is the profitability margin.
I know the lifting cost has gone from $11/bbl to about $45-60/bbl. Service setor cost has quadrupled, cost of basic well construction material has gone from $5/ft to $30/ft for the case of steel.
So this is the problem, if it drops below a given margin, the oil companies will not be compelled to drill for new reserves.

Again, we are socialist now..not capitalist :)

I guess the $100+ billion dollars of profit the oil companies made last year isn't enough to fund their drilling projects? :rolleyes:

Domestic Oil Drilling
 

It is nice to hear your quantitative analysis Chonko. I receive royalties from a number of oil and natural gas wells in the mid-west and have dealt with leases for these wells with multiple energy companies for over 23 years. I agree with your assertion that unless the current sale price for crude oil then some wells are just not worth drilling since the TOTAL cost of drilling and recovering the oil does not justify the expense. This fact is independent of the vast profits that most oil companies have made in the past several years.

Also, I believe that the major US oil companies should spend some of their huge profits from the past several years to purchase some of the fledging alternative fuel companies and then sufficiently fund their R&D costs to expedite the perfection of those technologies to make them more affordable and efficient to all of us. This will then further expand and diversify the major oil companies energy holdings to become true multi-energy companies that will be be so vilified by people and the media for focusing just on oil and/or natural gas.

BTW, most people do not realize that in the case of most off-shore drilling for oil on the east and west coasts of the continental US, that once the oil is extracted, there is nothing (no laws or governmental regulations), that require the oil companies to sell that oil to US domestic end users. The oil companies are free to sell that US procured oil to anyone they please around the world in order to get the best price at the time. Most naive Americans just assume that all of that oil will remain in the USA. Not true, (unless we insist that Congress enacts legislation to require it as part of the deal to allow off-shore drilling to begin).

AVB-AMG