If the election was held today

[Schneed10]

Originally Posted by 12thMan

Angry, are you kidding with this stuff?

Drilling isn't a yes or no proposition. And for record, Obama is for drilling -- which he always has been -- but not as the primary and sole solution to our energy dependence. His first and foremost concern with drilling is that we first explore the land leases that have been granted but haven't been tapped.

I guess I could go down the list and tick off each one, but what's the point? Then is becomes just another talking point.

I need some education on that. I keep hearing that there are land leases in place which oil companies are not taking advantage of.

Knowing what I know about business and how a finance department of a major company would allocate its investment dollars, I'd imagine the CFO of ConocoPhillips has a list of all his existing land leases and an expected financial return calculated by his analysts for each one of them. That financial return, I'd imagine, is largely based on how much oil they think they could get from that space, and how efficiently they could deliver it from the oil field to the refinery to the market. He knows he has X number of dollars to invest in exploring all of his leases, so he goes down the list and picks the ones that offer the greatest potential for financial return. Inevitably he's going to run out of budgeted investment dollars before he explores every land lease, and naturally some will go unexplored for a period of time.

I'm guessing this is essentially how the process works, but I'm not sure. Do you know why companies are not exploring their existing land leases?

The potential financial return on exploring them is an important piece of the puzzle. If the land lease won't yield enough oil to offset the cost of setting up drilling operations, or if the land lease won't yield enough oil to offset the cost of needing to build an oil pipeline or build more refinery capacity, then Obama's position insisting that companies explore these existing leases will only serve to drive gas prices higher, not lower them.

If Obama forces oil companies to drill on land leases that cost more than the revenue they generate, then the oil companies will pass along those costs to the consumer.

I'm admitting up front that I don't know if this is the reason or not, but Obama needs to give this some serious thought.