futures contracts that if we restrict offshore drilling in the Gulf or overregulated the price of oil it will go through the roof. Theses sentiments were outlined by an article in Bloomberg News.
According to Bloomberg News, "The oil market is signaling that prices have nowhere to go but up as the biggest spill in U.S. history curbs drilling and makes it more expensive to develop new fields.” Bloomberg point out something we talked about last week and that the spill in Gulf is signaling higher prices in the long run. Bloomberg says that, “Crude’s premium for delivery in eight years rose 86 percent since the April 20 explosion at the BP Plc leased Deepwater Horizon rig in the Gulf of Mexico, based on June 4 prices.
Oil for December 2018 was $22 a barrel more than for next month, compared with $11 before the disaster.” They go on to say, “More regulation may add $5 to the long term contracts, according to Deutsche Bank AG. President Barack Obama extended a ban on new deepwater permits and exploration by Royal Dutch Shell Plc in the Alaskan Arctic for six months, putting off limits as much as 23.2 billion barrels of potential resources, equal to 76 percent of all reserves proven in the U.S.”
The number of rigs drilling in the Gulf of Mexico plunged 50 percent last week to the lowest level in 16 years, Baker Hughes Inc. reported June 4. “The president said stop drilling, and now we are seeing the result. Yet is the president getting the message? The Wall Street Journal reports, “The Obama administration, facing rising anger on the Gulf Coast over the loss of jobs and income from a drilling moratorium, said Monday that it would move quickly to release new safety requirements that would allow the reopening of offshore oil and gas exploration in shallow waters.”
Phil can be reached at firstname.lastname@example.org and don't forget to watch him daily on the Fox Business Network
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