Yeah Don, it will take a while to take down the whole report...Let me know what you think. As for your "Perhaps you can tell me how to work that as a futures trade?" -- good luck with that. My luck, I'll tell you to go long, and lose you a ton of money...Now, it we talk bonds, then maybe I would be of better assistance...

It will take some time to digest the whole thing, but I note that the projected price for right now would be Just under $70 and the high end by 2030 is $101,so I lack confidence in their estimates.

In the section you refer to on the changes in policy, the assumption is that the moratorium will expire in 2012 rather than be lifted now, and that a 5 year lag will occur before production begins, wasting 9 years. They make no provision for reassignment of existing equipment from less productive locations nor for any buyback of equipment sold overseas. Those assumptions may make sense in the bureaucratic world but businesses that reacted like that would be left in the dust.

I'll read the rest later, but for now, my confidence remains with my friends in Louisiana. Perhaps you can tell me how to work that as a futures trade?

I got this iformation from the EIA's website, from it's Annual Energy Outlook 2007 with Projections to 2030 report -- look under the section "Impacts of Increased Access to Oil and Natural Gas Resources in the Lower 48 Federal Outer Continental Shelf". Let me know what you think. Here is the link:

http://www.eia.doe.gov/oiaf/archive/aeo07/issues.html

Am, I have tried to find the statements from the EIA you refer to in order to see the context, but I have not found them. Can you point to the source?

In any case, it is contrary to the information I have from friends from home who are in the offshore industry. They tell me that in the Western Gulf, the "easy oil" is gone and they are using the available equipment drilling deep (15,000ft+) wells far offshore for small pockets of oil. There is still "easy oil" (larger deposits, closer to the surface) off the Florida coast. By reassigning the rigs they have to those areas, they can produce a lot more oil in the same time without having to wait for more equipment to be built. Perhaps the EIA is assuming that the rigs, which are booked years in advance, won't be reassigned if better leases are made available. That would be a bad assumption. Business is flexible, bureaucracies are not.

It's not Gilmore's plan to drill for oil that bothers me, It's his no car tax notions that wrecked the Commonwealth finances when he was in office that concerns me. He still seems to believe we can do anything with nothing by robbing Peter to pay Paul. Not quite what we need to fix our transportation problems in these tight times.

Please back up your assertion "US oil companies are spending less on exploration because they have already explored most of the area available to them" with fact. The fact is, they are spending less money on exporation and production because they are spending more on stock repos and dividends. And the fact remains that oil companies have not exhausted the areas already leased. Additionally, what you say "That "ten years to make a difference" spiel is nothing more than one of those lies that has been repeated so often people believe it" comes straight from the EIA. That is fact -- look it up yourself sir. In fact I am being generous, since I am using their ANWR estimates. As for the OCS, the EIA is on record of stating, "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."

Why limit IMO's house drilling plan by putting a water restriction on it. Just think, drilling near the kitchen water supply could be rewarded with a great BIO fuel source being discovered within the garbage disposal, whereby, drilling near the bathroom water source could result in the biggest mother load of natural gas!! Just a thought.

I have no problem w/ drilling in the center of IMO's home. As long as it is not too close to any water. Thank you for stepping up.

I do believe it was your candidate that said we would save as much oil as there is off the coast if we all would just go out and check the inflation of our tires. I checked and all I found was the Media generated over-inflated ego of the Messiah barrack Hussien Obama. This man is not being confidant about being the next persident he feels he deserves to be corinated like hillary to the position. He displays the attitude of arragance and will not debate when his handlers can't dictate the terms and control the sitution. Yes Obama can give written speaches and pull them off with effect a good speaker he is, the only problem is when it gets off message and he has to really speak how he feels he gets into trouble with comments lik the guns and religion message. This man shows nothing but the elist background he has and his socilist views programmed by his pastor of 20 plus yrs. Remember he attended services but never heard anything wrong being said.

US oil companies are spending less on exploration because they have already explored most of the area available to them. Most of the world's oil reserves overseas are held by state owned oil companies. We keep most of our available reserves off limits. Only 7% of estimated reserves are available to US oil companies.

We do have a shortage of equipment, much of what our companies had has been sold overseas because there was no where to drill here. But much of the drilling equip. we still have is booked to drill in marginal areas that will produce little oil. If better areas currently off limits were made available, those rigs could be reassigned in months and production would increase by the end of the year.

That "ten years to make a difference" spiel is nothing more than one of those lies that has been repeated so often people believe it.

They can drill through the center of my home if they think there is oil beneath it.

It seems that somebody at the pilot did not want my first comment posted, so here it goes. Mr. Jones, you are making a bad argument. The markets are efficient, and news is priced in immediately. Bush made the announcement on Monday, and it was Tuesday when the price went down. Look at the articles recapping the trading day, and you will note that the reasons cited did not mention Bush's declaration, but mainly economic fears. Thanks for the mention Don, btw, but oil companies are not spending profits on exploration and production. Even if every oilwell in the OCS becomes productive, it is a fact that we will not witness said production for at least ten years. Additionally, it will not equate to the cost of gasoline going down as our refineries are already at capacity, and industry leaders are on record stating that they have no intentions of building more refineries. And Don, I do agree with the point you were making about the futures market, but ever since we deregulated (i.e. - the Enron loophole) - we placed ourselves at the mercy of speculators.

No, Sir, I was being a smarta$$.

Proper tire pressure was suggested as a small way to help lower your consumption of fuel. No one claimed that it had recently affected the lower price of oil. You sir, are being disingenuous.
P.S.
Be careful not to over inflate, that's what happened to Bush.

I thought that the big drop in oil prices was because everyone just went out and checked the air in their tires...

"George said Conservation clearly had an impact and Bush's action had no effect. 'Are you seriously dismissing the impact of speculators on the price of gas?'"
The point is being missed. If you remember the actual dates, GB announced on one day, and it wasn't until the following day that the price of oil went down -- therefore, his announcement had nothing to do with the price of oil. It does not take a couple of days for the markets to have news to sink in. Additionally, if one bothers to read the earnings reports for oil companies, you will notice that they are spending less on exploration and production. Bottom line, Mr. Jones, you are making a terrible argument. 1st, lifting the moratorium has nothing to do with production (it will take at least 10 years, that is a fact), and even if we drill, we do not have the refinery capacity to significantly drop the price of gasoline.

The Futures Markets do provide some liquidity and risk reduction that help stabilize prices over time. They also help increase real supply.

For example, if an oil producer knows he can drill a certain structure and produce oil at $125 a barrel, but also knows it will take him six months to book a rig and drill, the possibility that the price might drop below his cost of production in that time might well discourage him from drilling. However, if someone who believes oil will be selling for more than $125 in six months will buy all or part of his future oil production ahead of time at $125, the driller's risks are reduced and he will drill.

Spreading the risk (the driller assuming the risk the oil won't be there or will cost more than he estimates to produce and the 'speculator' assuming the risk of a price drop) makes the increased supply resulting from more drilling possible. (Yes, AM, I know this is oversimplified.)

"The price went down $15 a barrel, and it did not take 10 years to do it.

How much would the price of oil go down if Congress followed ex-Gov. Jim Gilmore's plan to lift the congressional drilling moratorium?"

It looks like someone did not finish their logic courses at TCC.

Conservation created more oil in storage and speculators reacted by selling it off at a lower price. Storage costs money and reduces profit.
Bush's action had no effect on speculation. Drilling off shore will take ten years to effect the market.

George said Conservation clearly had an impact and Bush's action had no effect.

Are you seriously dismissing the impact of speculators on the price of gas?

jmo

The supply of oil increased because of less demand, it costs money to store oil. Gas prices came down as a result of reality not political posturing. Conservation clearly had an impact and Bush's action had no effect. Wake up sheeple.

There were many factors in play to the sudden drop in oil but I agree that the lifting of the executive ban had an effect. BTW, the price of gas in Europe is so high because over half of the price is taxes to support Universal Health rip off. Think about this every time anyone sings the praises of "just tax the rich" NObama. Also, ask any Englander about alien health care holiday. Yep, year round, no one gets turned away at the huge expense of the English.