Does the BP spill mean the end of cheap oil?
Deep Do-Do Horizon
鈥淔ollowing the Gulf disaster鈥t will be a long time before any new permits are issued for drilling for oil in the Gulf鈥︹�� said Rick Rule, at the Family Office get-together this weekend.
And this from Bloomberg:
Senators from California, Oregon and Washington introduced legislation to ban oil drilling off the West Coast amid mounting concern about the spill in the Gulf of Mexico.
鈥淲e believe that offshore oil drilling is simply not worth the risk,鈥� Senator Dianne Feinstein, a Democrat of California, told reporters today in Washington.
The measure would amend the Outer Continental Shelf Lands Act to impose a permanent ban on drilling off the three states.
Offshore drilling was banned for decades after a 1969 spill about five miles off the Santa Barbara coast soaked California beaches in a 35-mile long oil slick. In July 2008, then-President George W. Bush lifted the presidential moratorium. Congress allowed its own drilling ban to expire three months later.
鈥淭his oil spill could destroy the future of offshore drilling,鈥� adds our Family Office researcher, Charles Delvalle. 鈥淢ore states will be allowed to decide whether they want drilling offshore or not. And Senators are trying to allow neighboring states to have a 鈥榲eto鈥� over any one state鈥檚 offshore drilling decision.
鈥淪o let鈥檚 say Florida wanted to put some offshore rigs up close to Georgia. If Georgia doesn鈥檛 want that rig up, it can 鈥榲eto鈥� Florida鈥檚 decision.鈥�
Daily Reckoning readers can see where this is going. Even if the oil were available beneath the sea, the oil industry is going to have more and more trouble bringing it to market.
Rick notes that even on dry land, the oil industry is facing disasters. A number of major exporters 鈥� Mexico, Iran, Venezuela and Peru 鈥� could take themselves out of the export business in the next few years, he says, thanks to their habit of using oil revenues for social/political purposes and failing to invest in additional capacity.
This is occurring as the number of cars 鈥� and the demand for energy 鈥� is exploding.
Implication: a higher oil price.
鈥淭here鈥檚 plenty of $200 oil,鈥� said Rick.
Trouble is, there isn鈥檛 that much $70 oil.
------------------------------
海角大神 has assembled a diverse group of the best economy-related bloggers out there. Our guest bloggers are not employed or directed by the Monitor and the views expressed are the bloggers' own, as is responsibility for the content of their blogs. To contact us about a blogger, click here. To add or view a comment on a guest blog, please go to the blogger's own site by clicking on the link above.
