05/17/10 Beijing, China – Deep Do-Do Horizon
“Following the Gulf disaster…it will be a long time before any new permits are issued for drilling for oil in the Gulf…” said Rick Rule, at the Family Office get-together this weekend.
And this from Bloomberg:
Senators from California, Oregon and Washington introduced legislation to ban oil drilling off the West Coast amid mounting concern about the spill in the Gulf of Mexico.
“We believe that offshore oil drilling is simply not worth the risk,” Senator Dianne Feinstein, a Democrat of California, told reporters today in Washington.
The measure would amend the Outer Continental Shelf Lands Act to impose a permanent ban on drilling off the three states.
Offshore drilling was banned for decades after a 1969 spill about five miles off the Santa Barbara coast soaked California beaches in a 35-mile long oil slick. In July 2008, then-President George W. Bush lifted the presidential moratorium. Congress allowed its own drilling ban to expire three months later.
“This oil spill could destroy the future of offshore drilling,” adds our Family Office researcher, Charles Delvalle. “More states will be allowed to decide whether they want drilling offshore or not. And Senators are trying to allow neighboring states to have a ‘veto’ over any one state’s offshore drilling decision.
“So let’s say Florida wanted to put some offshore rigs up close to Georgia. If Georgia doesn’t want that rig up, it can ‘veto’ Florida’s decision.”
Daily Reckoning readers can see where this is going. Even if the oil were available beneath the sea, the oil industry is going to have more and more trouble bringing it to market.
Rick notes that even on dry land, the oil industry is facing disasters. A number of major exporters – Mexico, Iran, Venezuela and Peru – could take themselves out of the export business in the next few years, he says, thanks to their habit of using oil revenues for social/political purposes and failing to invest in additional capacity.
This is occurring as the number of cars – and the demand for energy – is exploding.
Implication: a higher oil price.
“There’s plenty of $200 oil,” said Rick.
Trouble is, there isn’t that much $70 oil.
Regards,
Bill Bonner
for The Daily Reckoning
Bill Bonner
Since founding Agora Inc. in 1979, Bill Bonner has found success and garnered camaraderie in numerous communities and industries. A man of many talents, his entrepreneurial savvy, unique writings, philanthropic undertakings, and preservationist activities have all been recognized and awarded by some of America's most respected authorities. Along with Addison Wiggin, his friend and colleague, Bill has written two New York Times best-selling books, Financial Reckoning Day and Empire of Debt. Both works have been critically acclaimed internationally. With political journalist Lila Rajiva, he wrote his third New York Times best-selling book, Mobs, Messiahs and Markets, which offers concrete advice on how to avoid the public spectacle of modern finance. Since 1999, Bill has been a daily contributor and the driving force behind The Daily Reckoning. Dice Have No Memory: Big Bets & Bad Economics from Paris to the Pampas, the newest book from Bill Bonner, is the definitive compendium of Bill’s daily reckonings from more than a decade: 1999-2010.
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The trouble is…you cannot eat oil…and even with 5 cent oil, the Fraudevillian-1984-Matrix world we ‘live’ in is going to come crashing down — hard and soon.
got toast?
Cheap and abundant oil is the lifeblood that sustains our global population. As it becomes harder and more expensive to produce, it will be taxing to our society. The switch to alternative energy will be not be a smooth one. I am in oil and gold as a safe haven.
What’s the chance that the industry with the most to lose from expanded offshore oil production would be at the every center of a crisis that permanently closed that business?
Dianne says ‘Hoorah!’ while the Green crowd goes wild with enthusiasm and BP laughs all the way to the bank. What complete patsies we are.
how much money did you make today harry??
Does anyone know why the BP well didn’t have a “cap” on it? No Ball valve or anti blow out valve ( usually on the ocean floor )???
Its almost “convenient” that this BP accident happened… if you catch my drift…
I think everybody who says this is “rigged” is right. The best way to keep prices up is to create an artificial shortage. I’m happy to see more people putting up the BS shield.
The people who run this world are completely evil.
Yup, and the moon landing was faked. And aliens are kept in a laboratory at Area 51. And the oil companies bought the patent to the 100 MPG carburetor.
I am the Walrus.
Goo Goo g’Joob.
You can keep oil contained in storage…ie …the US reserves.
So, don’t you think these oil companies store oil that is over produced? Once the price is higher, look at all the oil available.
An oil spill now and again is acceptable. Only the prudish left is so dainty as to feel we must ban offshore drilling.
We’ll drill when things get tough enough. That is to say very shortly.
I am not buying it. Peak oil? Well first one was predicted to happen in ’40, since then mankind keeps +-40 year oil buffer. High prices? Relative price of oil (compared to wages) is more than comparable with let’s say the price in ’50. And offshore drilling? Yeah, I want to hear senator Feinstein when people start losing jobs. When Exxon Valdez accident happened it was a shock – but we forgot quickly.
Sorry, maybe I sound too cynic, but that’s how it is…
Oil nuts. Yep, BP made an executive decision to have a disaster … and pigs fly so wear hats — lined with tinfoil just to be sure.
They were cutting costs and rushing a drill job that was costing them $1M a day. What you haven’t heard is they did this 10 times before and there wasn’t an accident. Now there was. Oops. People make mistakes and can be really stupid … even if they work high up in powerful mysterious corporations.
Also, for the doom and gloomsters: When oil runs out, that’s it, end of humanity. Population crash, war, no food, all cheap resources used up. We will never recover and eventually go extinct after some brutal cannibalistic times. Horsefeathers. If batteries achieve 10x more energy density, that is the end of oil. Actually, some batteries are already there (metal-air), they just are not rechargeable. Thorium or even conventional breeder reactors give us 1000 years of easy energy by which time we can invent fusion. This energy transition will be a minor ripple in history though perhaps nasty for 10-20 years.
Peak water is the more immediate problem. For the working class that is. The rich will always have plenty of everything.
@garyb
your comment has a lot of if’s, and whens. there are lots of gaps between where current “research”, and actual implementation. i’m not saying that humanity is facing catastrophic collapse, but you have overly simplified the complex system in which we live. what you are missing is the fact that the world economy has been built on cheap, easily accessible oil. how do you expect the world economy to grow using non-existent infrastructures for thorium, and breeder based reactors? the whole system will seize up just like an engine without oil? when you look at the myriad uses of oil, in addition to the hundreds of trillions of dollars needed to re-invent the system, i don’t see how you think that all we are facing is a nasty 10-20 years.
I hope oil prices ‘shoot through the roof’.