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Originally Posted by dc_dux
....particularly when there are already millions of acres of public land in Utah already under lease.
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Why do you ignore the complexity of the issue? Why do you seem to assume every acre under lease is capable of efficiently producing oil? Why do you seem to assume that leased land without an oil derrick is not being explored?
If you were an oil company and there is land under lease at spot "A" that costs $x dollars to develop but risk/reward ratio is less than land at spot "B" and you have limited capital to invest - where would you put your money?
There are hundreds of issues like this that can be put on the table, yet you don't seem to consider them. In addition the foot print of modern drilling is very different from the days of having what amounted to oil derrick fields. An oil company could drill in areas and people would not give it a second thought with the pristine character of natural areas maintained.
-----Added 13/11/2008 at 12 : 13 : 39-----
Quote:
Originally Posted by ASU2003
But, I see no real fluctuation in demand to warrant the price swing over the last few months and the profits the oil companies made because of it.
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Perhaps some one is going to issue a formal study on the price fluctuations over the past 2 years to give us a more detailed understanding of what happened. It seems Congress's primary concern were financial speculator (They were not the cause of the spike in price) and oil company profits and CEO salaries. However, there is a fundamental price for oil (cost of production, plus reasonable profit), and then there are risk premiums built into the price. Secondarily, there is demand, which also affects price. Perhaps, there was a "perfect storm" in these factors that drove prices up and now there is a near "perfect storm" driving prices down.
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I'm sure all the free market people will get upset, but if oil was a product sold at a set price that rarely changed, but attempted to match real world demand and actual supply, it would work out better for consumers. You would cut out the middle man who doesn't do anything but wants the price to go up, and if they buy up most of the oil and aren't willing to sell unless the price goes up higher, it's not a good deal for the consumer or other businesses. The thing is that there may be gas shortages if the gas companies set the price instead of the market and the people who are willing to pay 5, 6, 7 dollars a gallon might not be able to get it.
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We have been living with OPEC for decades as they try to set the price for oil. they have an impact but can not set the price. No entity or government can do it. Also, when we look at the actions of OPEC, they don't always want the prices to go up, in many circumstances they try to balance maximizing their income over the long-run, while keeping a lock on the market. If prices are too high, alternatives become more cost effective - that is bad for their business.