world market - oil

I have a question and I hope someone knows the answer. Is it true any oil drilled in the US would still go on sale on the world market. I think this might be the case as I believe our fluctuating oil prices over the last year or so is because oil is on the commodity market and is driving by commodity traders. If this is the case then drilling on our public lands will not bring down prices at all.

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Permalink Reply by SJC on September 24, 2008 at 2:07pm

Oil produced in Alaska used to have to come to the U.S. The Gingrich Congress of 1995 repealed that provision at the urging of the oil companies. Now they can take Alaskan oil where ever they want. For the most part U.S. produced oil is refined and sold in the U.S. There is a bit of oil that is sold to Canada and they sell some back to us for logistical and shipping reasons, but not much as I understand it.

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Permalink Reply by Ken Goss on September 25, 2008 at 7:25am

Mary,

You have to remember that oil is pretty much a global commodity. There is some difference in the quality of crude oil from different regions, but that quality differnce is adjusted for in the price. You also have to remember that very little oil is produced exactly where it is needed. If you are producing oil in Alaska and Venezuela and you need oil in Florida and Japan, it is probably cheaper to ship oil from alska to Japan and from Venezuela to Florida instead of shipping Alaska crude to Florida just because it is "our" oil.

As for drilling on our public lands not affecting prices, since oil is a global commodity, any increase (or decrease) in the quantity of oil produced anywhere on the globe will affect the price everywhere on the globe. The flip side of this is that any increase or decrease in the demand for oil anywhere on the globe will affect the price everywhere on the globe.

Ken Goss

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Permalink Reply by SJC on September 25, 2008 at 11:48pm

I find it interesting that a one time bailout of $700b for the banks gets people angry, but they put out $700b EVERY year to foreign countries for oil. At least they get homes for the bank deal, they get smog and terrorism for the oil.