Anyone know how this would work

#1
DAVOL

DAVOL

Native SoKno
Joined
Aug 3, 2005
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#1
I saw on the news today how the price of wheat has gone up 30+% in the last year. Part of it is due to more farmers growing corn for ethanol instead of wheat but part of it is because of the devaluation of the dollar it is more affordable for other countries burgeoning middle class esp. china to buy. I know alot of you all are totally free market and I guess that is fine for farmers growing on their land.My question is I know alot of you all are for drilling in the arctic and the gulf for oil what would if anything keep the oil companies from selling to the highest world bidder and if they did how much would that really help us .I don't know I thought one of you might have an answer. Those spots belong to all of us right.
 
#2
#2
DAVOL said:
I saw on the news today how the price of wheat has gone up 30+% in the last year. Part of it is due to more farmers growing corn for ethanol instead of wheat but part of it is because of the devaluation of the dollar it is more affordable for other countries burgeoning middle class esp. china to buy. I know alot of you all are totally free market and I guess that is fine for farmers growing on their land.My question is I know alot of you all are for drilling in the arctic and the gulf for oil what would if anything keep the oil companies from selling to the highest world bidder and if they did how much would that really help us .I don't know I thought one of you might have an answer. Those spots belong to all of us right.
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In all seriousness, I am not being silly, what are you asking for?
 
#4
#4
OrangeEmpire said:
In all seriousness, I am not being silly, what are you asking for?
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I guess would the oil companies or whoever drills it be able to put it on the world market or would they somehow make it exclusively for U.S. use only I'm not being silly I was just wondering how that would work I do not know.
​
 
#6
#6
DAVOL said:
I guess would the oil companies or whoever drills it be able to put it on the world market or would they somehow make it exclusively for U.S. use only I'm not being silly I was just wondering how that would work I do not know.​
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No, what I meant was, I didn't see what you were asking in your statement.

I wasn't attempting to sound mean or vile or trying to get your goat.

If I would guess the US would receive the majority of the oil but yes we would export some of the oil.
 
#7
#7
DAVOL said:

I guess would the oil companies or whoever drills it be able to put it on the world market or would they somehow make it exclusively for U.S. use only I'm not being silly I was just wondering how that would work I do not know.
​
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An interesting question that I don't know the answer to.
 
#9
#9
I guess it might have been clearer if I just skipped the whole wheat thing but that is what got me thinking about it in the first place.
 
#11
#11
OrangeEmpire said:
Really?

So if "we" drill on our soil, you don't think we would get the majority of the oil?

On a side note, how much oil do we get from Iraq?
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As of last year it was about 3.5 %, thats 6th on our list of importers, with Canada being first at 16+%.
 
#12
#12
OrangeEmpire said:
Really?

So if "we" drill on our soil, you don't think we would get the majority of the oil?

On a side note, how much oil do we get from Iraq?
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I would assume the oil is sold on the market. There are likely revenues (royalties) from the oil going to the government (either state or federal). For example current oil production in the US isn't bound to US use.

Basically I would see it working in a few ways:

1. Royalty stream to government
2. Easing of supply constraints putting downward pressure on price.
3. Having an alternative source for some oil that is less subject to foreign troubles may reduce the uncertainty premium built into oil prices.

Oil prices are set by commodity traders and are largely driven by supply/demand and risk premiums for uncertainty of supply.

Additionally, the weak dollar is driving up oil prices.
 
#13
#13
volinbham said:
I would assume the oil is sold on the market. There are likely revenues (royalties) from the oil going to the government (either state or federal). For example current oil production in the US isn't bound to US use.

Basically I would see it working in a few ways:

1. Royalty stream to government
2. Easing of supply constraints putting downward pressure on price.
3. Having an alternative source for some oil that is less subject to foreign troubles may reduce the uncertainty premium built into oil prices.

Oil prices are set by commodity traders and are largely driven by supply/demand and risk premiums for uncertainty of supply.

Additionally, the weak dollar is driving up oil prices.
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If there was some way to make sure the oil stayed in the states would that not put more pressure on other oil producing countries to play a little nicer with us since it would appear we did not need them as much not stating anything just wondering.I'm not even sure how you could do that
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#14
#14
DAVOL said:

If there was some way to make sure the oil stayed in the states would that not put more pressure on other oil producing countries to play a little nicer with us since it would appear we did not need them as much not stating anything just wondering.I'm not even sure how you could do that
​
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It has the same effect either way. It both adds to and diversifies supply.

It may also depend on the type of crude that is there. There are multiple types on the market. It can in effect have an increased impact on supply of the specific type that it is.
 
#15
#15
Anyone else want to chime in on how this would work?

I'm just going on what I would think happens. I know that states currently lease land or drilling rights and receive royalty payments. I assume that production goes into the market just like any other source.
 
#16
#16
volinbham said:
Anyone else want to chime in on how this would work?

I'm just going on what I would think happens. I know that states currently lease land or drilling rights and receive royalty payments. I assume that production goes into the market just like any other source.
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Hey I remember OE posting something about you teaching or so in another thread and he really wanted to know what you thought about this are you a economics professor or teacher maybe geologist?
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#17
#17
DAVOL said:
Hey I remember OE posting something about you teaching or so in another thread and he really wanted to know what you thought about this are you a economics professor or teacher maybe geologist?​
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Neither - Marketing. Alot of marketing is based on economics though.
 
#20
#20
It's oil, screw them, we are America, we take what we want and do not apologize! Don't mess with us! And if it's on our land, then I say we all start doing what everyone says everyone wants and just sustain ourselves and stop sticking up for those that can't defend themselves, can you imagine? OMG, we'd all be paying like 25 cents a gallon and blowing our money on Disney World or time shares, I think that'd be freaking SWEET!
 
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