Why do you want to pay 150 dollars/barrel, when it only costs $5 dollars/barrel to get it out of ground?
Oil can be found for, typically, $2.00 per barrel exploration cost, and produced for $4.00 development cost. With the international price of oil around $20.00 per barrel, that's $14.00 "profit" i.e. an apparent 14/6 = 233% return on investment. Sounds nice, but there are a few snags. Not all oil is equally cheap to find and produce. Saudi Arabia produces oil at an incremental cost of $0.40 per barrel! Many wells in the USA, the North Sea, and other parts of the world become uneconomic if the oil price falls below $12 to $13 per barrel, so some companies and governments make money at low oil prices, some don't. http://www.madsci.org/posts/archives/1997-05/861626868.Ch.r.html
Other - Politics & Government - 5 Answers
Random Answers, Critics, Comments, Opinions :
1 :
It takes more pressure to get oil out of the ground here in the states then it does in the middle east. Most energy to pump it out means more costs to pump it out. Now, you aren't counting the value of the oil itself. I could make the same arguement about gold since the gold is more valuable then the costs associated with getting it out of the ground.
2 :
"Oil" and "gasoline" are different. You are overlooking the fact that the Main reason gas prices are so high is that the US oil companies have not built a single refinery in over 10 years. That would cut into their profits and cut prices in half.
3 :
Unregulated oil markets are what have driven up the price. Even if we drill more here, you don't think speculators would do everything they could to drive the price of crude up and continue to rape us? Oil should be protected and taken out of the futures trading market.. Speculators should not have this kind of power over the American economy.
4 :
It's not a matter of want because I want it for free but it's a matter of the greedy oil companies after the most greedy oil producers.
5 :
mudbug is mostly correct.the lack of refining capabilities + the price of oil per gallon = price at pump. more oil will lower gas per gallon ,or more refining. but both will double the speed at which price drops. conservation is not the answer. we[USA] conserved 5% this last month.did it help ?no! china incressed by 18% in the same time.net loss 13%.Frankly china doesn't give a fermented beancurd .all the us conservation for global warming or any type of conservation is more than offset by chinese polution and demand
