Why Drillers Love the DRILL, DRILL, DRILL Mantra

An interesting fact I discovered online somewhere (I don’t remember just where) is that in the breakdown of gasoline at a retail price of less than $3 gallon, the producer (driller) keeps 95 cents. No wonder exploration and drilling companies want to open up as many new fields and grab as many leases as they can. It probably makes good economic sense to them to get the leases first (as well as any controversial area leases they can obtain due to a temporary panic in the economy due to either oil shortages or price spikes), then sit on most of them and not drill until (1) they extract the oil from the easiest, most economical, and most profitable fields first, and (2) then in the future when new technologies emerge for extracting the more challenging oil fields, like oil shale, where they are betting that oil will rise to such a high price that drilling for oil almost anywhere will be profitable–and they will already hold the leases. (Gary, one of the commenters on one of my blogs points out that it still takes more energy to extract oil from shale than the energy they derive from it.)

So would oil companies want to encourage or even invest in alternative energy development since as the new sources of energy reach markets and prices come down it will result in a lowered demand for oil, falling oil prices, and a continually reducing oil market? I don’t have to be a petroleum engineer to figure that one out.

Even if the price of oil decreases–for whatever reason: new discoveries, international decreased oil usage through conservation, increased oil releases from OPEC–the temptation to drop the continued development of alternative energy solutions now that fuel was cheap again–would be a destructive mistake to the environment, causing another spike in CO2 releases, faster paced global warming, reduced air quality, etc.

The search for Alternative energy solutions cannot slow down, no matter what the price of oil, and in fact, need to be ramped up even more, if we are to prevent even worse relationships with oil producing nations that hold us hostage to their black gold and climate change conditions that scientists warn us are probable.

A final note. I am currently and happily visiting my four home-schooled granddaughters (ages 4 to 11) in Lebanon, Connecticut. My wife, Lynn, and I will be here for ten days for a visit that we are, unfortunately, not able to make often enough. I will be spending my time reading about red barns and green trees, talking spiders and pretty princesses, correcting math papers and playing horsy, and attending numerous soccer games–all those great services that grandpas are so fortunate to be able to provide. Grandchildren do have a tendency to consume all one’s time—and energy. Whew! Though I will be unable to answer all your comments as I have in the past, I will read them all and return to my usual response time following granddaughter time.