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What Does the Oil Spill Say About the Future of Oil Prices?

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There's been a good deal of talk about the future of the environment, BP, and energy regulations as a result of the oil spill.

However, very little has been discussed about the future of oil economics. If this moratorium on offshore drilling goes longer than 6 months, does this cause oil prices to rise dramatically?

What does this do for future oil supply (considering new offshore drilling is going to be delayed).

But most of all, will this contribute to the price of oil in the future?
 

donsutherland1

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There's been a good deal of talk about the future of the environment, BP, and energy regulations as a result of the oil spill.

However, very little has been discussed about the future of oil economics. If this moratorium on offshore drilling goes longer than 6 months, does this cause oil prices to rise dramatically?

What does this do for future oil supply (considering new offshore drilling is going to be delayed).

But most of all, will this contribute to the price of oil in the future?

The price impact would very likely be negligible. Macroeconomic trends and the growth in production relative to demand will play a much larger role. Even if all U.S. deepwater production were permanently ended (very unlikely), that would represent a 0.3% decrease in global oil production. Moreover, all of the world's known deepwater reserves account for under 2% of the world's proved reserves. In the end, whether oil production can keep up with demand will be the overriding long-term price determinant.
 

washunut

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There's been a good deal of talk about the future of the environment, BP, and energy regulations as a result of the oil spill.

However, very little has been discussed about the future of oil economics. If this moratorium on offshore drilling goes longer than 6 months, does this cause oil prices to rise dramatically?

What does this do for future oil supply (considering new offshore drilling is going to be delayed).

But most of all, will this contribute to the price of oil in the future?

Perhaps a bigger short term issue for the U.S. is that it will make us more reliant on foreign oil. So countries like Iran and Venezuela pull our chain. So this could have not only economic issues but political as well. Let's remember that the federal government debt is not the only debt the U.S. incurs. We also have a trade deficit, largely caused by oil imports. This puts more pressure on the dollar over time.
 

obvious Child

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Perhaps a bigger short term issue for the U.S. is that it will make us more reliant on foreign oil. So countries like Iran and Venezuela pull our chain. So this could have not only economic issues but political as well. Let's remember that the federal government debt is not the only debt the U.S. incurs. We also have a trade deficit, largely caused by oil imports. This puts more pressure on the dollar over time.

Perhaps so, but that's largely immaterial. An increase in summer driving would likely cause a larger impact then the oil spill. The fact that oil prices haven't changed due to the oil spill suggest that its effects, if it has any at all, will be minor at best.
 
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