Kevin Drum’s analysis of OPEC production seems to be spot on, although I have a few quibbles.
Which makes me wonder- if he sees this so clearly,why is he so dead-set against increasing domestic production and refining capacity? Increasing CAFE standards and reducing consumption are just part of the equation.
Ricky
Do you really need to ask, John? I think you know the answer.
JKC
Can’t answer for Kevin, but from what I’ve read there isn’t enough oil in ANWR (for example) to justify the expense (both financial and ecological) of drilling there.
Terry
Re the point made by “JKC,” the estimate of recoverable oil reserves for the one tiny portion of ANWR of most interest ranges from some 6 to 16 billion barrels of oil. Until the necessary geophysical and geological work is done, the amount of available oil reserves cannot be known for certain; however, if you take the mid-point of the generally accepted range estimate noted above, you are looking at TWICE all of the oil in Texas and almost half of all the total proven oil reserves in the US today!
Given the magnitude of the potential prize, as well as the demonstrated ability on Alaska’s Prudhoe Bay to produce large volumes in an environmentally safe manner, this seems like a worthwhile objective to pursue if we are serious about trying to reduce our dependence on oil from unstable locations, such as much of the Middle East.
Ricky
Which is why the oil companies have been lining up for years, salivating over the concept of getting the okay to drill there —- so they can lose money?
Slightly off topic….does anyone know of someone who does NOT support larger gasoline taxes (you know, the “we’re not sacrificing enough” crowd) who supports drilling in ANWR?
BTW, a personal rule…..Kevin Drum is better left to topics other than anything dealing with economics. Not his strong suit.
poormedicalstudent
this chicken little crap annoys me. capacity to pump oil can still be increased in most oil-producing countries. what cannot be increased in the refining ability of countries (such as the US). therefore, while we can get more oil out of the ground, we can’t turn it into anything useful any more quickly (thanks to jackasses not building any new refineries in the states for a few decades).
hence, oil prices remain high as demand stays high (not to mention the risk premium due to the middle east fiasco). oh yea, speculators have something to do with the prices as well.
like someone said above, economics and oil is not exactly the strong suit of drum, but then again, what is?
JKC
“poormedicalstudent” might want to stick to his studies.
Oil prices aren’t likely to come down much as growing economies in China and India increase their demand for oil.
Try doing some reading before you spout off.
poormedicalstudent
tell me JKC, are oil prices high now because of an unbelievable demand that outweighs supply, or because of what is going on in the Middle East? a little of both of course, but the main factor is what is going on in the Middle East.
check here, notice where the prices suddenly trend upwards. damn, china and india certainly spiked with regards to demand rather quickly. hm..no, maybe it had something to do with a little country in the middle east that had just been decimated, and the ongoing concern for stability in that region.
of course demand has increased, and will continue to increase. but, if supply is brought back into line, the prices will fall. and all it takes for supply to get back in line is for non-OPEC countries to get back into line.
be sure to read:
“The IEA said non-OPEC producers, other than Russia, are failing to pump as much as expected this year. The net result is an increased reliance on OPEC for extra crude.
The agency cut its 2004 forecast for non-OPEC growth by 100,000 barrels per day to 1.2 million barrels per day, a deficit of nearly 800,000 barrels per day compared to its forecast for extra world demand this year.
It said Brazil, Oman and Angola and the U.S. Gulf were pumping less then expected.
The result is a 500,000 barrels per day increase in the IEA’s forecast from the average call on OPEC crude this year, lifting the projection to 26.4 million barrels per day. “
as per ‘reading before i spout off’, heed your own advice. in fact, i’m surprised you were able to remove your foot so quickly from your above comment regarding ANWR providing no economic justifcation for drilling. let’s see, back in the fall of 2003 (before prices really shot up), there was this little analysis done @ MIT. the conclusions might not be to your liking, but i’ll go ahead and post:
“The data from the cost benefit analysis, therefore, indicates that insofar as this model can measure, it is in the interest of American society to open the undeformed region of 1002 in ANWR to hydrocarbon extraction as specified in the strategy summarized above”
even without the above, as someone previously pointed out, the fact that so many companies are chomping @ the bit for a chance to drill that region should give you a good indication of the economic return that can be had.