[acropolis]

Originally Posted by Dace

Acroplis wihtout having access to any linked articles and just going by what i remember off the top of my head:

Oil prices aren't really that high (in historical terms) atm.

The peak that hit last week was due to a natural event (i dont wanna say disaster) and as such the prices are stabilising and by the time any lease arrangement was worked out they prices will be back to $56/barrel or so (i suspect) which is about mean oil price etc.

OPEC pumping capacity 20 years or so ago was about 75 million barrels a day (or something) when they only needed to pump 50 odd (i might be slightly off with that number).

OPEC pumping capacity now is 82 million barrels a day (or something) and they normally need to pump 78 or so (again numbers might be *slightly* off).

Despite the factthat you are probably partly pulling numbers out of your arse, I will be committing these to memory and using them from now on.

I do have a response to this, but it appears it will be spread down among the next couple responses.

Originally Posted by wu_trax

but consider this: the OPEC stops its oil production. from one moment to the other some 30% of the oil supply are gone. thats an oil crisis, economies collapse, people lose their jobs, etc. in short, suddenly their entire market is gone and they have noone to sell their oil to and prices fall instead of rising. other than that it puts pressure on governments / companies / whoever to either find alternatives to oil or at least use the oil more efficently.

And so, in such a situation, we would be better off if we had already sold all of our oil?

Originally Posted by wu_trax

on the topic: there is a difference between money today and money in x years. you dont know what happens to the prices, although with a few billion asians who all want their own cars its a fair guess that they will rise.

In the short run we have no idea what prices will do. At present, prices are dependent on the amount of oil that can be produced vs. demand. And with new discoveries of oil fields or new technology that makes pumping easier, oil prices could easily drop over the next few years or even next few decades. However, in the long run we do know what prices will do. There is a finite amount of oil on the planet, and eventually the supply side will transform from "supply that can be produced (Dace's 82 million a day)" to "Supply left." And where the first one can go up and down, the second can only go down.

It's possible that the demand side could drop in a big way, either from a new energy source (in which case all of our worries are allayed) or from aliens landing on earth and eating all of our faces. In neither case do I see a big "gee, if only we'd sold our oil..." scenario.

Originally Posted by Nodrog

and just wrong to say that the citizens collectively own it (otherwise I could take my share and sell it). So youre left with the choice of it either being unowned, or the government owning it via some claim that seems ultimately groundless.

This needs more explaining. To me, the USA is a nation, and comprised of a set of land, resources, people, and capital (much of it military). I would consider the citizens of the USA the 'owners' in a way, but in a different way than, say, I own my pants. Does the US government not own any tanks either? Or does it own the tanks, but there is some way in which I can sell my shares of US tank?

Originally Posted by queball

Firstly, everyone already stockpiles massive amounts of oil. Oil might go up faster than interest rates; if you think it's likely then maybe you should stockpile some yourself.

If I had money, which I don't, oil futures would certainly be intriguing.

But not a certainty. As I said, in the short run, oil prices could go anywhere. And by short run I mean as much as 50 or even 100 years. As a human, that's a little too long for me. But as a government, that should be considered almost short-term.

Originally Posted by queball

Also, as a country we need to sell some of our current reserves to buy guns. Say Mad Max was reality. After the nuclear apocalypse, your undefended bunkers of oil will look a bit silly when you've been miserly with your guns..

If we had no guns, and we had no money or no credit with which to buy them, I would certainly endorse the sale to buy them, else someone might take our fields anyway (even without the Mad Max scenario).

I would definitely always choose the sale of oil as necessary to maintain a subsistence existence.

Originally Posted by queball

If it really is the case that governments are massively subsidising oil by drilling land imprudently then they should really just stop. It might make all those roads they built look a bit silly though.

The trick here is that the majority of Earth's oil supply is in the hands of governments in which
A) the leaders put the sale money in their personal bank accounts
B) the leaders might be overthrown at any time
for people in that situation, the obvious direction is to make as much money as possible on a daily basis, not to get as much money out of the fields as possible in the long run.

So clearly they have no reason to stop. We do.

Originally Posted by Tactitus

If I recall correctly, the US government leases drilling rights on federal land to the highest bidder. Of course, winning bidders have to pay all exploration, drilling, pumping, and transportation costs--plus the costs of meeting all state and federal environmental regulations; and I'm guessing there's no refunds if the quantity or quality of the reserves don't meet predictions. However, if you think leases are going too cheaply then you are free to submit your own bid(s). The one 'gotcha' is that you have start substantial extraction of the oil/gas within 10 years or you can't renew the lease (meaning you can't lease it and then sit on it for 50 years waiting for it to appreciate--only the government is allowed to do that).

More germane is the fact that the oil and gas will be 'generously' taxed as it's pumped out, so the (state and federal) government will get far more money than simply the cost of the lease.

Purely from the standpoint of maximizing government revenues, it's probably better to have all leases sold and to tax production than to try to increase the lease price beyond what the market will bear (which will only scare off some potential bidders due to the numerous risks associated with oil and gas exploration and may result in some leases not being sold at all).

The idea of the government leaving the oil and gas in the ground and letting it (hopefullly) appreciate in value has to be weighed against the cost(s) of not pumping it out now; namely, lower government revenues and more of the country's wealth being spent in foreign countries to buy oil/gas that could have been spent domestically, as well as the risk that the oil/gas will be worth less, as mentioned. I don't believe that this kind of commodity speculation is either a necessary or prudent function of government.

A necessary and prudent function of government is making and executing plans for the long term welfare of its people. Neither do individuals, mortal as they are, nor corporations, owned by sets of individuals, have any serious push to make such long term plans.

At present, energy prices for the reasons described above are artificially low. Government acting to make them artificially lower while removing our future options doesn't appear to be beneficial to me.