Conservative Republicans and Gas Prices - A Political Movement That Lies Constantly is a Movement That Hates Their Country. Conservatives hate freedom so it logically follows they hate the USA. They're good at waving flags, they suck at living up to the ideals that flag represents. We don't need flag waving fake patriots, we need good Americans capable of rational thinking about the future of the nation.
The oil industry isn't drilling on leases for millions of acres of land that could be producing energy.
Yet despite claims from several lawmakers, it doesn't appear this is part of a nefarious plan to drive up gas prices or reap huge profits by companies like Exxon Mobil (XOM, Fortune 500), BP (BP), Chevron (CVX, Fortune 500) or Royal Dutch Shell (RDSA).
Experts say oil companies aren't drilling on the land because it doesn't make economic sense to do it.
During recent congressional hearings many Democrats cited a recent report from the Interior Department showing that over 70% of the offshore acres the industry has leased from the federal government are sitting idle.
Onshore, nearly 60%, or 22 million acres in total, aren't producing any oil or gas.
They were responding to calls for more acres of the country to be opened up for oil and gas drilling.
"They have the drilling rights to an area of public land the size of Minnesota where they could and should be drilling," Massachusetts Representative Ed Markey, a Democrat, said in a statement to CNNMoney. "But instead [they] are coming back and asking Congress to allow drill rigs off our beaches up and down the East Coast."
Drill baby drill won't lower gas prices
How the leases work: The oil industry routinely leases blocks of land from the federal government to explore for oil and gas. The leases typically last for 5 to 10 years and cost anywhere from $75,000 to $2 million to get. Then the companies have to pay an additional fee each year for the duration of the lease.
If oil is found, the company get's to keep the lease for the life of the well, which could be 40 years. They would also have to pay the government a royalty on the production, usually ranging from 12% to 18%. If no oil is found, the land reverts to the government.
Markey and other lawmakers say the industry is purposefully idling production so they can book the oil and gas reserves on their balance sheet as an asset -- a move that might drive up their stock price.
Critics also say they might be saving the oil for a future date, when prices might be higher.
The Interior Department, which supports efforts to put more of these leases into production, says over half the nation's 20 billion barrels of recoverable oil reserves lie untapped in the Gulf of Mexico.
To prod the industry into more rapidly exploring and drilling on these acres, the administration and members of Congress have proposed shortening the period for which leases are awarded -- a so-called "use it or lose it" provision.
They have also proposed increasing the amount of money companies have to pay each year for their leases, which can range from $40,000 to $200,000.
Drilling for oil isn't so simple: But the oil industry and independent experts say it's ridiculous to believe that companies wouldn't be trying to produce all they can from the land they have leased if it made financial sense.
The huge amount of untapped land being leased is accurate, said Erik Milito, director of exploration and production at the American Petroleum Institute. But to just look at that number and say the industry is sitting on its hands is too simplistic, "it doesn't explain the oil and gas businesses at all."
...By forcing the industry to produce on its idle leases, lawmakers hope to raise domestic oil production, which would tend to increase U.S. jobs and add to federal tax rolls without having to open up additional lands for drilling.Conservatives keep say the answer is simple - drill baby drill. Oil companies have plenty of leases they are not using, even if the Obama administration was slow to approve new leases. Oil companies like to keep oil production in sync with refinery production, keeping gas prices high is an incentive for them to continue business as usual. No president of either party is to blame for gas prices. gas prices are do to oil company behavior and that of speculators that hope prices go up.
Some hope it would also lower gas prices. But it's questionable if forcing production would have the desired effect.