If We Drill in the US, We Don't Get the Oil

Email Print posted by Cenk 07/25/2008 11:09:31 AM EST

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One thing has been driving me crazy about this drilling debate - everyone seems to assume that if we drill for oil in the US, that we will get the oil. And hence, we won't be dependent on foreign oil anymore. But we won't get anything, Exxon-Mobil will.

The oil that comes from that drilling will not be United States property (Republicans aren't suggesting we nationalize the oil companies, are they?). It will be the property of whichever oil company got the rights to that contract. They can then sell it to whoever they like - and they will. They will sell it on the world market, so the Chinese will have just as much access to the oil that comes out of the coast of Florida as we will.

The Democrats have done a decent job of beating back the argument that this will effect prices in the short run, or even in the long run. But no one has addressed the point above. The Republicans make it seem like we won't be dependent on foreign oil - and that prices will go down in the US - if we have our own oil. But it won't be ours. And it will be sold on the world market, so its effect on global oil prices will be even smaller.

When we ask the question of whether there should be drilling off the coast of Florida or in the Arctic National Wildlife Refuge, we should ask the question this way - would you be comfortable with the Chinese or the Germans or Russians or the Saudis drilling on American land? Because for all intents and purposes, they will be.

Large multi-national firms like Exxon-Mobil are not US property. They sell to the world and their allegiance is to corporate profits. So, when they drill, they drill for the whole world, not just us. Some might find that heart-warming, but it certainly has nothing to do with the US having more oil or lower prices.

Young Turks on You Tube

I will be hosting a discussion about this issue on this week's Meet the Bloggers on Friday at 1PM ET. Our guest will be Senator Harry Reid. You don't want to miss it.

< Fox News' bias for McCain | Cenk and Young Turks Mentioned on MSNBC >
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If We Drill in the US, We Don't Get the Oil | 32 comments (32 topical, 0 hidden)
I agree (none / 0)

In other words oil and all commodities are "Fungible resources" bought and sold on the global market.

I modest or even fairly substantial increase in supply won't change the global price.

The Dollar has lost 60% off the Euro since 2001. The Pound a few years ago was on parity with the dollar and now the British Pound trades 2:1 to the dollar.

 So maybe some short term speculation is driving it in the immediate but the long-term view is the supply of dollars that is increasing.

 Most commodities are bough in U.S. dollars on the global market. People buy 100 barrels of crude oil for a certain amount of dollars. But as the dollar devalues, it buys less and less crude (that's why commodities are seen as a protection against inflation provided their isn't some sort of bubble- aka you can still lose money of course.)

by acroso on 07/23/2008 01:07:21 PM EST

there (none / 0)
"there"

by acroso on 07/23/2008 01:08:18 PM EST

[ Parent ]
Here (none / 0)

by MRFred on 07/23/2008 03:02:55 PM EST

[ Parent ]
not quite (none / 0)
The dollar has alwasy been around 2:1 against the pound give or take a few cents.  Since 2004 the exchange rate has been at least $1.80/pound.  Yes the dollar is sinking, but it doesn't explain oil prices.

http://finance.yahoo.com/cu rrency/convert?from=GBP& ;to=USD&amt=1&t=5y

The yen exchange rate has changed even less:

http://finance.yahoo.com/cu rrency/convert?from=JPY& ;to=USD&amt=1&t=5y

The Euro/Dollar exchange rate has change a good bit, but I think that more reflects a shift in the global financial markets towards the Euro as equivalent to the dollar as a reserve currency (strengthening of the euro) along with the weakening of the dollar. 

by alphasigmookie on 07/23/2008 02:20:32 PM EST

[ Parent ]
Two things on Cenks post (none / 0)

First, not only will drilling only directly help the big five oil companies but it should be explicitly stated these are the same companies the US used its military and diplomatic resources, along with a hell of a lot of money, to essentially give the oil in Iraq to.  There are a lot of people who are kinda sorta ok with the war in Iraq figuring at least we got the oil.  We didn't get shit but some dead sons and daughter and a giant credit card bill.

Second,  the Republicans won't but I will call for the nationalization of oil.  We have nationalized other industries for less in our past.  Hell, Bush nationalized airport security six years ago.  We have also nationalized the railroads (three times) and the Tennesse Electric Power Company.  I know there will be a lot of philosphical conservative uproar but I can't figure out how it hurts you and I.  The idea is that market forces will ensure that the oil companies will work in a way that is best for the consumers due to perfect competition.  Does anyone believe that is happening in the oil industry?  So don't buy into thier theorhetical capitalism arguments here.  They don't actually apply in this case.

by ProfRich on 07/23/2008 01:18:20 PM EST

Holy cow (none / 0)

"There are a lot of people who are kinda sorta ok with the war in Iraq figuring at least we got the oil.  We didn't get shit but some dead sons and daughter and a giant credit card bill."

This had not occurred to me.  This is a stunning thing to contemplate.  Iraqi oil goes into the world market to the highest bidder, Exxon/Mobil profits, the US taxpayers pick up the tab, in the process being reamed and overcharged by Halliburton and Blackwater and the other contracting firms.  In the case of Halliburton, they move their corporate headquarters to Dubai to avoid paying anything back to the US taxpayer.  The whole thing is kept afloat by stop-lossing our volunteer army and forcing them to serve three and four hitches.  They play, we pay.  The public always gets the shitty end of the stick.  Every goddamned time.

Fuck! 

by bfaul on 07/23/2008 02:57:43 PM EST

[ Parent ]
This is a great campaign issue! (none / 0)
"Republicans won't but I will call for the nationalization of oil." 
Somebody already beat you to it.

Here's a recent exchange between Maxine Waters (D, CA) and the CEO of Shell Oil.

Maurice Hinchey (D, NY) says we should nationalize the refineries.


"I know there will be a lot of philosphical conservative uproar but I can't figure out how it hurts you and I." 
Rich, I think you've developed a great idea. Democrats should demand that Obama makes this the central issue of his campaign.

by KenTX on 07/23/2008 03:46:58 PM EST

[ Parent ]
Well, we agree on that. (none / 0)
This would not help with the election.  I'm just saying...

by ProfRich on 07/23/2008 04:41:41 PM EST

[ Parent ]
Hey TYT Fans (none / 0)
If you have a DailyKos account, be sure to click here and recommend Cenk's article and leave a comment.

by ihavenobias on 07/23/2008 01:23:27 PM EST

help (none / 0)
I signed up but I couldn't figure out how to recommend. Damn they get lots of comments there. Our little community is puny.

by hazmat on 07/23/2008 05:05:41 PM EST

[ Parent ]
There is a button (none / 0)
on the right side of the page that says "Recommend". Kind of like our blogs here actually.

Let me know if you still can't figure it out.

by ihavenobias on 07/23/2008 05:10:08 PM EST

[ Parent ]
Dang (none / 0)
I just don't see it. I have a menu bar, a tool bar, and there's a button next to the post to add to my hotlist, but I don't see anything that says "recommend". I'm running FF3.

by hazmat on 07/23/2008 05:55:22 PM EST

[ Parent ]
Look, Right Side Of the Dkos screen (none / 0)
You'll see these categories (orange letters I think):

Menu

Tools

Diary Drafts

Diary Recommend

(Under Diary Recommend or whatever it's called is the gray button to click to recommend)

by ihavenobias on 07/23/2008 05:59:52 PM EST

[ Parent ]
my categories (none / 0)

When I click your link I see on the right:

 

Menu

Tools

Advertising

 

Yes, I am logged in. But I don't see the things you list even on the home page. I really want to recommend.

 

by hazmat on 07/23/2008 06:11:11 PM EST

[ Parent ]
Advertising (none / 0)
The advertising button comes AFTER the Diary Recommend button, right after it.

I'm using Explorer. Check your pop-up blockers or internet settings. I'm no tech-nerd so I'm not sure what else to suggest.

by ihavenobias on 07/23/2008 06:22:20 PM EST

[ Parent ]
I love it puny. (none / 0)
I'm an e-hermit, so the big crowds on Kos are a little much.  Plus it feels like all of the comments get lost in the ether.  Who has time to read all that shite?  It's at least better than the right wing blogs though.  On those you get a lot of comments and they all say the same thing (some variation of "ditto" with occasional personal attacks mixed in).

by Spencer on 07/23/2008 05:26:27 PM EST

[ Parent ]
totally agree (none / 0)
enjoy it while it lasts...

by hazmat on 07/23/2008 05:53:12 PM EST

[ Parent ]
What do you mean? (none / 0)
Are you thinking the forums will eventually blow-up with increased exposure from XM, Meet The Bloggers, streaming on Air America and that other new site?

Ben just needs to find a way to name-drop TYT once a month on At The Movies and *then* maybe it'll happen.

;)

by ihavenobias on 07/23/2008 06:01:06 PM EST

[ Parent ]
I think they probably will blow up at some point. (none / 0)
But how awesome would it be if Ben just dropped in an "OF COURSE!" or another Cenkism into a review.  For example, he could be like "I don't know, I can really go either way on Juno.  It's pretty much a toin coss."

by Spencer on 07/23/2008 06:09:11 PM EST

[ Parent ]
Or is it aether? (none / 0)

by Spencer on 07/23/2008 05:53:33 PM EST

[ Parent ]
Missing the point (none / 0)
Cenk, this is of course all true.  However it completely misses the entire point.  As long as oil markets are ruled by supply and demand (and the CFTC just confirmed that they are), and the Republicans can paint the Democrats as restricting supply (no matter how small the supply), they will win the issue...Period.  Remember the Republicans are masters of taking simple (and usually false) arguments and turning them into winning issues.  They are doing it again right now and kicking the Democrats ass with it. 

Here would be my strategy.  Introduce a bill that authorized drilling offshore, forces competitive bidding for leases, sends all royalties to renewable energy research and re-authorizes the renewable energy tax credits for at least 10 years.  The Republicans have to vote for it or they'll look like hypocrites and it will eliminate all ammunition to blame Democrat s for energy prices.   

by alphasigmookie on 07/23/2008 02:35:36 PM EST

absolutely right (none / 0)
That last paragraph is an excellent idea.  With our current crop of representatives and senators that means it doesn't have a prayer, but it's exactly what we need.

by bfaul on 07/23/2008 02:47:23 PM EST

[ Parent ]
McCain bloggers are way ahead of you. (none / 0)
This subject is old news in GOP circles.

The federal government will enter into contracts with Exxon Mobil. The contracts will specify that oil produced in U.S. tracts be refined in U.S. refineries.

Furthermore, the U.S Treasury will receive a royalty for 25% of the market value of the oil produced.

The drilling, transportation, refining, marketing will produce hundreds of thousands of new, good paying, American jobs.

The Democrat alternative is to keep sending $700 billion per year to Saudi Arabia.

by KenTX on 07/23/2008 04:00:48 PM EST

Were do we get most of our oil from. (none / 0)

The Democrat Democratic Party's alternative is to keep sending $700 billion per year to Saudi Arabia.

It will be more like 2 trillion a year after McLame invades Iran. 

There are tens of thousands of acres the oil companies already have access to but refuse to exploit because they do not want to bring the price of oil and gas down.

Could you provide links showing were hundreds of thousands will be created.

by kylewis on 07/23/2008 04:44:09 PM EST

[ Parent ]
Did you just ask Ken to post links? (none / 0)

To prove his offshore drilling=job creation hypothesis?

You need to apologize to Tim and Fred right now.

by ProfRich on 07/23/2008 05:05:13 PM EST

[ Parent ]
Winer of the huckleberry of the year award. (none / 0)

"Could you provide links showing were hundreds of thousands will be created."
I’ll answer you with this link

"There are tens of thousands of acres the oil companies already have access to but refuse to exploit because they do not want to bring the price of oil and gas down."
Then you won't mind if we open up the entire continent to drilling, since you seem convinced that oil companies have no intention to drill.

Hey Kyle, if this isn't enough information, just let me know. There's plenty more where that came from.

 



by KenTX on 07/23/2008 06:23:41 PM EST

[ Parent ]
None too soon (none / 0)

"The drilling, transportation, refining, marketing will produce hundreds of thousands of new, good paying, American jobs. "

The Mexicans will need those "American" jobs now that Cantarell is on the decline. 

by bfaul on 07/23/2008 05:50:09 PM EST

[ Parent ]
I sent a link of this post to a friend....and he (none / 0)

 

 knows bullshit when he sees it.

"The federal government will enter into contracts with Exxon Mobil. The contracts will specify that oil produced in U.S. tracts be refined in U.S. refineries."

Furthermore, the U.S Treasury will receive a royalty for 25% of the market value of the oil produced.

The drilling, transportation, refining, marketing will produce hundreds of thousands of new, good paying, American jobs.
 

 

 

 

 

 

by MRFred on 07/23/2008 06:10:42 PM EST

[ Parent ]
How to spot Republican BS about drilling (none / 0)

 When they say this:

The federal government will enter into contracts with Exxon Mobil. The contracts will specify that oil produced in U.S. tracts be refined in U.S. refineries.

You should know we tried that once before:

As the Trans-Alaska Pipeline was authorized that same year to open Alaska's North Slope oil fields, Congress banned exporting the oil amid concerns that it might wind up being shipped overseas while Americans stood in lines at gas stations.

What will really happen is this:

Soon after, oil companies and Alaskan leaders (R) started lobbying to lift the export ban, arguing it threatened to flood West Coast refineries, artificially depressed the price of Alaskan oil and forced oil shipments to parts of the U.S. that lay much farther from Alaska than Asian ports.

 Guess what the REPUBLICANS did:

The ban was overturned in 1995, an effort led by Alaska's congressional delegation, including Rep. Don Young(R) and Stevens (R).

Stevens (R) at the time hailed the decision as a "great victory for Alaska" that would encourage further oil development and create more jobs.

So when they say this:

The drilling, transportation, refining, marketing will produce hundreds of thousands of new, good paying, American jobs. 

 Its been said before...

"This ban is unconstitutional and unjust. Lifting the ban would mean Alaska could sell its oil on the world market, which would increase state revenues by as much as $700 million," he said in a press release.

No additional jobs were created. And the coffers, sadly for the Alaskans didn't swell with 700M in new revenue. But don think that " restricting new drilling" to US consumption will stop oil companies..

"Sam Van Vactor, a Portland-based energy consultant who studies the West Coast oil market, said oil discoveries in the refuge probably wouldn't be big enough to trigger pressure for exports.

Even with an export ban on refuge oil, Alaskan oil could still be sold overseas. If the refuge oil were to meet all the domestic needs of West Coast markets, producers could put oil extracted from other North Slope oil fields that aren't subject to an export ban on tankers bound for Asia "

 

by MRFred on 07/23/2008 06:46:25 PM EST

its pretty simple (none / 0)
"No additional jobs were created."
How do we get all of that oil out of the ground and into American's gas tanks without creating jobs?

"The contracts will specify that oil produced in U.S. tracts be refined in U.S. refineries."
A Democrat controlled Congress will write the contracts. What do you want the contracts to say? Call Bob Wexler. What do you vant from me? Oy!

by KenTX on 07/23/2008 06:56:34 PM EST

[ Parent ]
Well done (none / 0)
That is what I call a precision butt-kicking.

by bfaul on 07/24/2008 12:27:48 PM EST

[ Parent ]
The Answer is .... Nationalize (none / 0)
Of coooooourse.... the answer is to nationalize the oil fields as national resources that belong to the American People not to the companies that pump the oil.  All oil production within the territorial USA should be joint venture projects with the USA getting the lion's share of the profits as the people are the soverign "owners" of the resources.  

by Gregory Wonderwheel on 07/25/2008 01:42:25 PM EST

If We Drill in the US, We Don't Get the Oil | 32 comments (32 topical, 0 hidden)
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