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Energy Myths
INVESTOR'S BUSINESS DAILY ^ | 7/3/2008 | IBD Editorial

Posted on 07/06/2008 12:13:17 PM PDT by Donald Rumsfeld Fan

• "Even if drilling works, it'll take a decade or more for the oil to flow."

This is quite an argument coming from the Democratic Party, which has made keeping oil off the market a linchpin of its energy policy for decades.

If President Clinton hadn't vetoed the idea of drilling in ANWR back in 1995, we'd have that oil on the market today. Ditto if Congress had approved ANWR drilling in 2002, when President Bush requested it.

Even so, the larger point is false anyway. New oil will be flowing in some cases within three to four years, according to industry estimates. But the impact on prices will be immediate. Why? Because markets would suddenly have to discount future oil prices for the expected gain in oil supply. That would cause oil prices, especially in futures markets, to drop.

By the way, this isn't just conjecture. President Reagan, within a week of his inaugural in 1981, removed domestic controls on oil. Energy prices began tumbling almost immediately, with oil falling from $34 a barrel in early 1981 to just $11 by 1986.

It worked before, and it'll work again

(Excerpt) Read more at investors.com ...


TOPICS: Business/Economy; Government
KEYWORDS: anwr; congress; drilling; energy; energyoil; myths
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Drill now and prices will start to fall immediately .


1 posted on 07/06/2008 12:13:17 PM PDT by Donald Rumsfeld Fan
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To: Donald Rumsfeld Fan

If it is going to take 10 years,
shouldn't we get started?

Drill here, drill now, pay less


2 posted on 07/06/2008 12:22:04 PM PDT by NonValueAdded (If it is going to take 10 years, shouldn't we get started? Drill here, drill now, pay less.)
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To: Donald Rumsfeld Fan
Drill now and prices will start to fall immediately .

Order the uncapping of existing wells that were capped 20 - 30 years ago that were pumping just fine back then, it only takes a few weeks to get them back into production.

If a general directive to uncap the existing wells were to come from the White House today, prices would start to fall by Tuesday.

3 posted on 07/06/2008 12:25:51 PM PDT by TLI ( ITINERIS IMPENDEO VALHALLA)
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To: Donald Rumsfeld Fan
The average profit, as we've noted before, is around 8 to 9 cents to the dollar. That compares with about 7 cents to the dollar for manufacturers and more than 15 cents to the dollar for computer makers. In short, oil profits aren't out of whack with the rest of industry. What doesn't get said is that while oil companies have profit margins of about 8%, about 12% of the price of a gallon of gas goes to the government in the form of taxes. When indirect taxes are included, the share is even higher. So who are the real price-gougers? From 1981 to 2006, the oil industry made $867 billion in profits. Yes, that's a lot. But over that same time, they paid total taxes of $1.2 trillion, Energy Department data show. And that doesn't include taxes of $519 billion paid to foreign countries. Please remember that the next time a politician vows to hit "Big Oil" with a windfall profits tax or some other idea. The tax won't be paid by the oil company; it will be paid by you, the consumer.
4 posted on 07/06/2008 12:27:01 PM PDT by SandRat (Duty, Honor, Country! What else needs said?)
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To: TLI
Order the uncapping of existing wells that were capped 20 - 30 years ago that were pumping just fine back then, it only takes a few weeks to get them back into production. If a general directive to uncap the existing wells were to come from the White House today, prices would start to fall by Tuesday.

That makes no sense whatsoever. Old wells get uncapped all the time if they are economically viable. Why would you have the president order unprofitable wells be uncapped? Would you have him order other businesses to engage in unprofitable production?

5 posted on 07/06/2008 12:28:27 PM PDT by Ron Jeremy (sonic)
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To: Donald Rumsfeld Fan; All
What has become apparent to me from the years I've been reading about the oil/energy problem is that the Democratic Party has been obstructionist to the nth degree. They do not want to explore for oil. They do not want to drill. They do not want nuclear power. They do not want natural gas. It's almost like they want a calamity! Then it occurred to me, yes they want a calamity! They believe it will be to their advantage to create a catastrophe. They can blame it on the market, evil corporations, capitalism, etc. They will then go in with government programs to fix the problems that they are mostly responsible for creating. That has been the plan all along. More government! That is what the Democrats are all about.
6 posted on 07/06/2008 12:41:16 PM PDT by truthguy (Good intentions are not enough!)
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To: TLI

“Order the uncapping of existing wells that were capped 20 - 30 years ago that were pumping just fine back then, it only takes a few weeks to get them back into production”

Tell us all about these mythical “capped” wells. Include some sources too


7 posted on 07/06/2008 12:41:54 PM PDT by Figment ("A communist is someone who reads Marx.An anti-communist is someone who understands Marx" R Reagan)
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To: TLI

Good point. I’ve wondered about old oil wells that have been capped. I thought many were capped because their production tapers off as time goes on. But if there is still recoverable oil in these wells, let’s get started. In the supply/demand equation, this can only help because then supply is increased.

Are Democrats/liberals/radicals in favor of this? They should be because Democrats got p.o.ed because oil companies aren’t drilling enough on land already leased for that purpose, and they want to see that happen before considering new leases for oil drilling.


8 posted on 07/06/2008 12:41:55 PM PDT by Dilbert San Diego
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To: Ron Jeremy
That makes no sense whatsoever. Old wells get uncapped all the time if they are economically viable. Why would you have the president order unprofitable wells be uncapped?

You don't have to order people to make a profit. I have confidence that at $140 per barrel somebodys going to smell the coffee.

9 posted on 07/06/2008 12:44:41 PM PDT by Donald Rumsfeld Fan ("Sincerity is everything. If you can fake that, you’ve got it made." Groucho Marx)
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To: SandRat

Ronald Reagan used to make the point that businesses don’t actually pay taxes, but that the customer who buys whatever goods and services are produced by the business are the ones who pay any business related taxes. The businesses pass along any tax as a cost of doing business.

And Ronald Reagan was attacked for making that point, because he was allegedly in bed with big business and against the “little guy”.

But the laws of economics are as immutable as the laws of physics. No business can stay in business indefinitely if they aren’t making a profit. And they can’t just “eat it” if gov’t comes along and decides to levy new taxes against business. Whether it’s payroll taxes on the hired help, business license fees, property taxes, exise taxes, or any other tax, you the customer, are paying those taxes through higher prices on everything you buy.


10 posted on 07/06/2008 12:45:51 PM PDT by Dilbert San Diego
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To: truthguy
They can blame it on the market, evil corporations, capitalism, etc. They will then go in with government programs to fix the problems that they are mostly responsible for creating. That has been the plan all along. More government! That is what the Democrats are all about.

Makes sense.

11 posted on 07/06/2008 12:47:06 PM PDT by Donald Rumsfeld Fan ("Sincerity is everything. If you can fake that, you’ve got it made." Groucho Marx)
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To: Figment

A valid question. A post last week mentioned that these are small wells of low productivity.


12 posted on 07/06/2008 12:49:37 PM PDT by RightWhale (I will veto each and every beer)
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To: Dilbert San Diego

So true, yet the Dim-O-RATS can’t understand that. They think tax payments comes out of some hidden corporate stash.


13 posted on 07/06/2008 12:54:00 PM PDT by SandRat (Duty, Honor, Country! What else needs said?)
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To: Donald Rumsfeld Fan

DRILL HERE DRILL NOW AND KEEP DRILLING.
SPOIL THE SOCIALIST AGNEDA TO DESTROY AMERICA BY DENYING IT OIL.


14 posted on 07/06/2008 1:00:23 PM PDT by SECURE AMERICA (Got Freedom ? Thank a Veteran...... Want to keep Freedom? Don't vote Obama)
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To: TLI
I just read where there are some 240,000 existing capped wells that are not being tapped right now.
15 posted on 07/06/2008 1:02:06 PM PDT by rodguy911 (Support The New media, Ticket the Drive-bys, --America-The land of the Free because of the Brave-)
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To: Dilbert San Diego

“The businesses pass along any tax as a cost of doing business.”

People say that all the time, but there’s a huge problem with it. A monopoly could sure pass along any tax increase, or any other increase in expenses. But in a competitive economy, what if one producer of a good or service is much more efficient than another producer of the same good or service? The inefficient producer probably can’t pass along tax increases because the increased price would make him less competitive, or non-competitive with his more efficient competitor.

Can a corporation also, automatically pass on all increases in salary and wages, in material or raw material costs, and all the other expense of doing business.

It’s a myth, or a half-truth at best, that any and every increase in business operating expenses can be passed on to the consumer.

And, also, if taxes increases can be passed on, on and on, why all talk about reducing corporate taxes? How would that make corporations more competitive if they can just pass the increases on?

They can’t just pass the increases on automatically.


16 posted on 07/06/2008 1:04:29 PM PDT by Will88
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To: truthguy
Exactly! I have been posting this same concept for weeks now.!
The rats want socialism/Marxism at any cost! Why else would they use enviro lawyers to block every avenue there is for drilling, nukes,refineries, etc.it's not coincidence at all.
17 posted on 07/06/2008 1:05:36 PM PDT by rodguy911 (Support The New media, Ticket the Drive-bys, --America-The land of the Free because of the Brave-)
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To: RightWhale
I read that 10 barrels per day at $140. is enough to break even.
18 posted on 07/06/2008 1:07:19 PM PDT by rodguy911 (Support The New media, Ticket the Drive-bys, --America-The land of the Free because of the Brave-)
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To: Donald Rumsfeld Fan
Gull Island -
 
The big event in that three-year period was in 1977 when an Atlantic Richfield oil executive told him, “We have just drilled into the largest pool of oil in North America—[and] in the world!”

That pool was Gull Island. It was said that there was enough natural gas to supply America for 200 years. But to this day, “not one drop” of that oil has been released to American refineries, Williams said.
 
fact or fiction?
 
 
 
 
 

19 posted on 07/06/2008 1:08:48 PM PDT by LomanBill (A bird flies because the right wing opposes the left.)
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To: rodguy911

10 bpd sounds about right for most of these small wells. It’s probably breakeven, but won’t make a dent in the supply.


20 posted on 07/06/2008 1:10:45 PM PDT by RightWhale (I will veto each and every beer)
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