If increased permits for drilling were to be issued in the United States, but oil and gas refiners decided it?

was not profitable to invest in additional infrastructure (given that current refinery capacity utilization rarely exceeds 85%) and gas prices remained at current levels, what steps would you take at that point to reduce gas prices?
First two answers both fail. Oil futures prices are set to decline. If you’d read the EIA Petrol status report this week you’d know that. Refinery capacity utilization for the week of the 18th peaked at 84.1% and is likely to decline.
And are you content with the 18 billion dollars of subsidies the government has to shell out to a utility company every time a nuclear plant is built? Along with ongoing expenses of several million dollars a year for security inspections and disaster management training?
@ Spock – you clearly have very little knowledge of economics as a subject and no understanding of oil markets at all.

10 Responses to “If increased permits for drilling were to be issued in the United States, but oil and gas refiners decided it?”

  1. Top Source Says:

    Much easier to reduce consumption than try to reduce prices which Big Energy mostly controls in the US.

    Big Energy plotted years ago to drive up and keep up prices and now that policy is paying off for the major stockholders to the detriment of the nation.


    Big Oil is set to evade $9 billion in royalites over 5 years due to an old known “error” by Interior dept.
    http://query. http://www.nytimes.com/2011/03/04/us/04exxon.html?ref=oilspills Since 2006, the fed govt has failed to collect $92 million owed by Exxon since 2006 for the Valdez spill in Alaska.

    Big Oil is permanently closing many refineries, hoping to drive up oil & gas prices permanently. Big Oil lost profits due to conservation & the recession.
    . .

    “…a fraudulent, anti-science campaign funded largely by Big Oil and Big Coal has blocked Congress from passing any clean energy or climate bill” — but “the Navy and Marine Corps just didn’t get the word,” they’re going green. —Tom Friedman
    . .

    “A nation using one-quarter of the world’s oil while controlling only 3 percent of the world’s known reserves cannot drill its way to independence.

    “The estimated 7.5 billion barrels the eastern gulf and Atlantic coast are thought to contain are just about what this country consumes in a year.”
    . . http://www.nytimes.com/2010/12/13/opinion/13mon1.html?adxnnl=1&ref=todayspaper&adxnnlx=1292248915-pp7vC6PxZq1LtRICAasslQ

  2. Ollicopter Says:

    Ask Obama. I think he comes up with Cap and Trade.

  3. Tom Says:

    With $5/gal gas on the way – it would be profitable to drill in this country.

    If prices were plummeting from "Green Energy" I could see your point but that isn’t the case.

  4. Vladimir Says:

    >what steps would you take at that point to reduce gas prices?

    Invest in nuclear and green energy.

  5. Progressives are Thieves Says:

    Oil has one big competitor. Electricity. Want to drop oil prices in the US. Start issuing permits for nuclear power.

  6. Spock (rhp) Says:

    none would be necessary. drilling permits would be added to the queue for drilling as rigs become available. private enterprise already does a fine job of moving rigs to the most promising locations.

    more permits would only increase the number of high quality locations — more oil and gas would flow soon after and the resulting effect on world markets [lower demand] would lower the price of oil and thus gasoline.

    this i what always happens in markets with fungible inputs.

  7. Wrenched Says:

    Use alcohol. Bio-mass alcohol costs less than a dollar per gallon to produce.

    With alcohol fuel, you can become energy independent, reverse global warming, and survive Peak Oil in style. Alcohol fuel is "liquid sunshine" and can’t be controlled by transnational corporations. You can produce alcohol for less than $1 a gallon, using a wide variety of plants and waste products, from algae to stale donuts. It’s a much better fuel than gasoline, and you can use it in your car, right now. You can even use alcohol to generate electricity. Alcohol fuel production is ecologically sustainable, revitalizes farms and communities, and creates huge new opportunities for small-scale businesses. Its byproducts are clean and valuable. Alcohol has a proud history and a vital future. To learn more, watch the 5-minute "Alcohol Fuel Overview" video below (first video in the list), read the Two-Minute Summary, and check out our Alcohol Can Be a Gas!

    The US uses 87% of its corn crop as animal feed; when alcohol is made from the corn, which removes the starch, the protein, fat, some of the cellulose, vitamins and minerals along with the yeast from fermentation remains. The remaining substance is called distiller’s dried grains with solubles (DDGS) and is about one third of the volume of the original corn after the starch is removed. DDGS is a far superior animal feed that eliminates huge health problems in cattle because they cannot digest the starch in corn. Of course Blume, as an organic farmer, shuns GMO products.

    Blume’s book covers how to convert your car to run on alcohol. If you have a flex fuel car, you’re good to go. You can also purchase a conversion kit from his website for $400 to $700 (depending on the size of your engine). The kits are made in the US and allow you to burn straight gasoline, E85 or 100% ethanol. Alcohol fuel conversion kits have been used successfully in Brazil on over 50,000 cars over the last 20 years with no reports of of engine damage resulting from the kits or running on ethanol. Small 2 stroke engine problems are preventable by using a lubricant and the proper grade of alcohol.

    Rockefeller foisted ‘prohibition’ on the US in order to create a fuel monopoly with gasoline; Ford’s Model T originally ran on alcohol that people could grow and distill themselves.

    America is abundant and is still full of opportunity! We must think for ourselves and stop allowing big corporations tell us that the only source of energy is from that which they derive a profit. If we work with nature, we could feed and fuel the world in addition to massively reducing pollution.

    David Blume’s book, Alcohol Can Be A Gas, may be purchased from his website which contains a wealth of information.


  8. david Says:

    I would increase drilling in our country, and increase the number of refineries. but as for gas prices as they stand it has never been a concern of supply and demand, its foreign politics and what hoops we have to jump through to get the oil. I say screw the oil and we focus on natural gas deposits that we have and try to develop a means of using them to offset oil prices. If more energy options are opened up then we will start to see oil prices fall.

  9. imaxkr Says:

    You are addressing to related but different issues. The supply of crude oil and the supply of refined petroleum products.
    The increased issuance of drilling permits in the United States by itself will really do very little to reduce prices at the pump. Yes, supply worldwide will increase but we know from history the other entities will reduce oil production to maintain price levels. There are also many other things to consider like increasing demand from China and developing nations, regional unrest that may disrupt other supply sources, oil speculation and even a major weather event or natural disaster.
    What it will do is reduce the countries dependence on foreign sources of oil which will ease some of the volatility in price and probably more important it would keep more of the money in this country. It would also give the government some flexibility in imposing tariffs on imported oil with minimal affect on price.
    As for refined petroleum products the main issue is usually logistical. Only so much product can be moved through the current system. A disruption in a pipeline from a Texas City refinery to a distribution point in Missouri will increase pump prices almost immediately. The system is build on "just in time" delivery and there is little room for error. As for refining capacity, it is accurate that somewhere around 85% capacity is in production at any given time, but for the most part that remaining 15% is in some state of maintenance so those numbers can be a little misleading. Just look at the annual retooling for the summer driving season when refiners switch to different blends. That usually adds 5% to the price simply because supply is reduced irrespective of the price of oil. Another issue is government regulation, more specifically environmental regulation. Ever wonder why California fuel prices are always substantially higher than average? There has not been an increase in production capacity in that state in over thirty years because regulations make it cost prohibitive for refiners. It is easier to produce the product in Texas a pipe it to CA thus increased costs. Regulation also has stopped any new refineries from being built nation wide, the only expand existing facilities that have been grandfathered from new regulations. (please note that this references other than safety regulation) This has concentrated production facilities and puts stress on the logistic infrastructure.

  10. jeeper_peeper321 Says:

    1. 18 billion in subsidies each time a nuclear plant is built ??

    There has not been a nuclear plant built in over 30 years.

    2. Gasoline prices are directly tied to the world price of oil

    The more oil in the world supply, the lower the price of oil will be.

    3. Well obama said he would bankrupt coal power plants

    Without nuclear , just where is the electricity gonna come from ?

    please don’t say green energy, because even if used the the maximum capacity, they could not replace 1/2 the power nuclear power plants currently produce.