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is pure NONSENSE and completely FALSE. That idea shows a complete lack of understanding of the oil industry and the oil market. There is no big tub of oil where everyone pays the same price.
First of all the current price today of West Texas Intermediate is: $98.07 per barrel.
The current price today of Brent Crude, produced in the North Sea and used as the price guideline for most Middle East oils is: $117.79 per barrel.
That means that oil produced in the US is ACTUALLY CHEAPER. Saying that oil goes into the “world market” is a myth because oil prices vary considerably based on the location of the production and the type of oil. For example, Williston Basin Sour (in North Dakota) sells for $68.25 per barrel right now, and Alaska North Slope oil sells for $113.03 per barrel in California. There can easily be as much as 40% difference in the price per barrel from market to market.
Http://www.bloomberg.com/energy/
Besides the price differences that vary from place to place, there are other very significant reasons why producing oil in the United States from offshore or onshore drilling is beneficial to the US economy. First of all, the US Government gets paid 12.5% royalties on all oil produced on Federal lands which includes offshore oil. That doesn’t happen if the oil comes from Canada or Saudi Arabia. The US governments second largest source of revenue behind the IRS is actually from oil production.
Oil makes up the largest portion of the US trade deficit. That means that all the oil we buy from outside of the United States is paid for with US assets that are being moved to other countries. That money no longer circulates in our economy, so it tends to depress economic activity in our country. “In 2010, the U.S. Imported $252 billion in petroleum-related products, compared to $188 billion in 2009. ” from http://useconomy.about.com/od/tradepolicy/p/Trade_Deficit.htm
US oil creates thousands, possibly millions of jobs inside the US. Jobs directly within the oil industry are typically high-paying jobs. I know myself I earned more money working as a roustabout than I could have earned working construction, and pay for engineers, geologists, landmen, marketing, and many more are often higher in the oil industry than in comparable jobs in other industry. In total, the oil and gas industry supports nearly 9.2 million jobs and adds more than $1 trillion to our national economy. Not all of those jobs are related to US oil production, but if there was less oil production in the United States many of those jobs would move overseas.
Http://energytomorrow.org/issues/economy/industry-jobs/
The people who work in restaurants, hotels, in retail stores, and many more businesses in the area where oil income is significant all depend on oil income to stay in business. When the production moves, so do the jobs, and the local economy will suffer.
Most states and counties also get tax revenue directly from oil. Offshore drilling income is paid to Louisiana, Texas, Alabama, and Mississippi. “Since 1927, states have received 50 percent of the tax revenues generated from onshore oil and gas production on federal lands. But, until recently, coastal states did not receive similar treatment for their role in hosting offshore energy production. That finally changed in 2006 when Sen. Landrieu worked with then-Energy Committee Chairman Pete Domenici, R-N.M., to pass the Domenici-Landrieu Gulf of Mexico Energy Security Act.” from http://landrieu.senate.gov/priorities/coastal-issues.cfm
There are huge economic benefits from producing oil inside the country as opposed to importing oil. There actually is no “debt” associated with deepwater or offshore drilling other than borrowing by the oil companies who may need money to fund their operations. In that case the cost of borrowing is part of doing business and would not be incurred if they did not expect to make a profit on the oil.
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