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Why not open Texas?


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Guest Plastic

Everybody's complaining that we're short on oil supply and the prices are sky high. Why don't we just drill for more oil here? I heard we still got plentiful resources. Not only would it lower prices it would help The Texas economy.

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Guest Marty
Everybody's complaining that we're short on oil supply and the prices are sky high. Why don't we just drill for more oil here? I heard we still got plentiful resources. Not only would it lower prices it would help The Texas economy.

Envioromentalist and Politics is what keep's us from doing what you say. and they have not built a new refinery since 1975 the year i was born!

Edited by Marty
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Envioromentalist and Politics is what keep's us from doing what you say. and they have not built a new refinery since 1975 the year i was born!

Because the 'uplift' factor is so high. For example, the uplift fee (the cost of getting the oil out of the ground and ready to transport and/ or refine) in Saudi Arabia is roughly $2-$3 per barrel still! We can't compete with that (unless you want really expensive gas). However, if you've got half a brain and drive a somewhat economical vehicle you shouldn't worry anyway.

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Everybody's complaining that we're short on oil supply and the prices are sky high. Why don't we just drill for more oil here? I heard we still got plentiful resources. Not only would it lower prices it would help The Texas economy.

We are drilling for more oil here....a friend just signed an oil & gas lease on a property he has up in E. Texas. They haven't looked for oil on that property since the 80s boom and before. There is increased activity anywhere there's oil.

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Everybody's complaining that we're short on oil supply and the prices are sky high. Why don't we just drill for more oil here? I heard we still got plentiful resources. Not only would it lower prices it would help The Texas economy.

Because there is hardly any left that is economic to recover and what there is that's left has already been discovered and is being pumped out.

They're having some success in the Permian Basin with CO2 injection into some of the older fields that were thought to have been expended a while back, but eventually that's going to run out, too.

Edited by cottonmather0
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There's a ton of reasons that we don't drill more in Texas. First a large portion of the major oil companies left Texas in the 90's. When I say they left I mean that if they did not have controlling interest in a well they sold their interest and got out of it. They kept the wells they controlled and put them on basically a operate till uneconomicly feasable status. They are all off elephant hunting around the world these days. For a major oil company to make a significant impact on their balance sheet they have to find big reserves and like it or not the only ones of those left in the US are in deep offshore waters and the ANWR. Most of the infield and small exploritory stuff still happening in the US is being done by small to medium companies without the deep pockets to do it big. Second as others have noted US regulations have become so difficult that to abide by them is either to expensive or just plain prohibitive in nature for them to want to mess with. It's true that we haven't built a new refinery in the US in over 40 years. Thats because its to hard to get the permits, and costs to much money to do it. We have become very environmentally consious in the US and as a result we have driven a lot of industry out of the country including the oil producers. Since they have to protect shareholder value they are going to go where they can get the most bang for their buck and that aint here.

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Because we are saving our oil till the rest of the world runs out. Keep it till we can get top dollar!

Experienced energy economists laugh at statements like that. Although there have always been people claiming that there is a fixed limit on what can be reasonably extracted, that limit has historically been pushed back as there have been new discoveries, advances in technology, improvements in global supply chains, etc., so the real prices tend to fall. This process has had a few hiccups, which are known as contango, but the general trend is called backwardization. The rules haven't changed. Anyone that thinks that they have is about as misguided as the set of people in 2000 that thought that internet and telecom companies had changed all the preconceived rules and become the new financial powerhouses.

But on top of that problem, the long-term price of oil already has any anticipated future price increases (or the risk thereof) built into it, discounted to present value. If it became perceived as a good investment, for whatever reason, to hold back oil from the market at present then a lot of other places would be doing it too, which would increase the supply/demand equilibreum to a price point at which new suppliers would make up whatever shortfall had been incurred. Meanwhile, the State of Texas would be forgoing business activity and tax revenue at present.

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You also have to realize that oil is not oil. Different kinds of oil are best used for different things. Most of the oil that's left in Texas is the kind that's useful for chemicals -- one of the reasons there are so many chemical plants in Houston.

Also, one of the reasons the United States imports so much oil is because it's profitable to do it. For example, oil drilled in Alaska can be consumed domestically. But instead, we sell it to the Japanese for $70/barrel. We then import oil from the Middle East to replace the Alaskan oil for $50/barrel. Elementary math will tell you that there's money to be made. Who loses? No one. The Japanese get oil from the U.S. cheaper than they could from the Middle East. Americans get to drive their big SUVs. And all the middle men get their cuts.

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  • 9 months later...

My company and I took some of our Drilling students to the HMNS Weiss Energy Hall yesterday. It was pretty interesting.

Gathering from what our tour guide said, there's plenty more oil out there. He mentioned that although oil can be drilled for 3 miles off the coast in Cali, they won't let anyone run pipes through their waters. He gave numerous other examples of possibilities of drilling in America, including Alaska, but for ridiculous reasons, those in control won't let the oil companies do it.

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