Peder D4

Discussion of politics and other odious things

Tuesday, September 05, 2006

Change of dynamic?

Interesting news today out of the Gulf of Mexico.
Move over, Alaska. Geoscientists have made what may be the nation's largest oil discovery off the coasts of Louisiana and Texas.
The region may hold 15 billion barrels of oil, enough to increase the US oil reserves by 50%. The article is full of wet blanketry, discussing how long it'll take this oil to make a difference at the pump. It also suggests that this will only reduce US dependence on foreign sources.
Two things here, the process being used to get this oil is revolutionary. Most wells in that area are on the continental shelf, drilling about 1700 feet down. This oil was extracted about 20,000 feet down. That means that entirely new areas of oil exploration are possible. This will almost certainly lead to other larger oil finds.
And the second thing is the effect this will have on world oil markets. In the past, OPEC has lowered the price of oil to discourage this type of exploration. If this find was coupled with sensible drilling in ANWAR (about 10 billion barrels) it would change the pricing dynamic. With luck, new deposits will end up in the hands of friendlier people. The Scots and Norwegians for instance.
One other thing, it's been noted that gas prices track pretty cloesly to Bush's approval ratings. They've been falling lately and this news could push them even lower. Most of the bad polls for Republicans are based on the possibility of the right staying home. This could change that.
(Oh, and one other thing. The oil companies were beat up pretty badly earlier in the year when it was announced that they're enjoying record profits. They answered that the profits were being invested in exploration and new development. Today we saw the exploration part of the equation.)


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