In article ,
"HeyBub" wrote:


The problem with being self-sufficient in oil is: we can't be. Oil is
fungible. Oil from here is much like oil from there, the only difference
being price. If we drill for oil in ANWAR, it'll probably be more profitable
to ship it to Japan than to the lower 48, one reason being the states of
Washington, Oregon, and California won't allow tankers to dock, so the oil
will have to be off-loaded in Mexico then piped through Texas. But that's
okay, because the oil Japan currently buys from Sri Lanka (or wherever) is
now available to us.
We could (theoretically) be self-sufficient, because that is solely
a function of how much we pump. As long as we pump the same amount (or
more) as we consume we are self-sufficient. The fungibility is beside
the point unless there is some kind of major dislocation and we want to
keep it all at home. In that case, the above is likely the least of our
problems.


Another aspect of this fungibility problem is the malovelence of foreign
suppliers. Suppose a domestic company has to get, oh, $30/bbl delivered to
justify the development of a field. Nigeria or Iran could cut their price to
$25/bbl delivered and put a domestic supplier out of business.

That is largely what happened in the past. HOwever, most experts suggest
that most of the ability of OPEC to open the spigots and play games to
that extent is largely over as their oil fields have peaked. Russia
might be in a position, but they really don't have enough of their oil
fields open and flowing yet to do much damage.


What we COULD do in the short run is develop enough domestic oil supplies to
offset boycotts by mid-east countries. We currently get about 15% of our oil
from Saudi Arabia and its neighbors, so we could remove them as a threat by
relying on domestic production (if we had to). We get most of our
foreign-supplied oil from Canada, Mexico, and Nigeria.

But the fungibility issue also works to our favor. Oil prices are
based on a WORLD market. So, to the extent that additional pumping from
US sources messes with the supply/price equilibrium point, oil prices
could come down. Which could impact on another kind of threat.