RWB

Bush's New Drilling Proposal: Fixing a Hole

Mmarrkk: Contract renegotiation doesn't happen? Hell, if we were to open ANWR and the continental shelves to E&P (and I think we should) I, if I were negotiating the leases on behalf of the government, would make renegotiating old leases a pre-condition to bidding on new leases. I guess what I'm saying is that the government should be tough in lease negotiations--just like a private landowner should. Especially now.

I think I was clear that I understand (from direct personal experience) why and E&P company doesn't drill on a lease right away. In fact, there are more reasons than those you state, including inability to marshal enough resources right now (due to capital costs and labor availability) and desire to "tie up" a lease to prevent a competitor from getting it.

Bush's New Drilling Proposal: Fixing a Hole

Mixter--as one who works in E&P, you are right that just because you own a lease doesn't mean you have the capacity to drill right away. It's as true of leases of private land as with government leases.

But since this is true, I don't see any problem with the government getting the best deal possible, and charging for undrilled leases, as opposed to letting E&P companies just park on them for (potentially) the entire lease period. This is not a deal that could have been struck in, say, 1997, when oil was cheap. But now that it's expensive, lease-holders--includi... the U.S. government--have a leverage to negotiate (or re-negotiate) a "put-up-or-shut-up" lease. Certainly I'd do that if I were a private landowner negotiating a lease.

Is Oil a Bubble? Part 3

CLH wrote: "Kahn---Very good analysis. Almost the entire problem is caused by the democrats."

As someone who supports E&P in Anwar and other currently off-limits areas, I find this kind of talk disengenuous. It skips over the fact that Republicans controlled both houses of Congress and the executive branch for six years--if they had really really cared about ANWAR drilling, they could have forced it through. Especially after 9-11.

For whatever reason, it has not been a high priority for Republicans until now--when it can conveniently be used as a talking point to blame Democrats for high gasoline prices. I don't want to turn this into a political debate, but it seems that if you are looking for people to blame for keeping ANWAR undrilled, you have to look at both parties, not just the Democrats.