Does oil find mean relief at the pump is in sight?

The News & Observer
September 6, 2006
Matt Kempner, Cox News Service

ATLANTA - Is now the time to buy a big SUV or shift smaller? Go hybrid or stick with a regular car? Take the job with more money but a longer commute or hang with a shorter route?

The future of gasoline prices is a nagging uncertainty. Now comes news of something else to wonder about. Chevron Corp. says it and its partners have tapped an apparently giant oil find deep in the Gulf of Mexico.

How should you plug the news into your energy consumption decisions?

Don't expect much, experts say. At least not in the short term.

Chevron has only a test well in place, and it could be at least 2010 before the real pumping starts.

Here's what some petroleum watchers have to say about the discovery's impact.

Q: How will it affect oil and gasoline prices in the near future?

A: "I don't think ... it's going to have that much bearing on what the price of gasoline is going to be over the next several years," said Neil Gamson, an economist for the U.S. Energy Information Administration. "This stuff is so preliminary, you are not going to see any effect for several years."

Prices for light, sweet crude oil dipped Tuesday in futures trading for a number of reasons -- including the Chevron find -- but that may be a temporary blip.

While oil watchers doubt the new find will significantly cut prices soon, they say expectations for the new domestic pool of oil may ease a little of the fear that has helped to keep oil prices high.

Q: Will the Chevron find push oil prices down years from now when the field is producing?

A: "This find alone isn't going to make any difference to prices," said Adam Sieminski, chief energy economist at Deutsche Bank. But once the oil comes on line and is combined with other expected finds in the Gulf and elsewhere, the pool of new oil will affect markets, he said.

Q: How much will this find help reduce U.S. dependence on foreign oil, which feeds more than half the U.S. consumption?

A: "This find in the Gulf of Mexico is not going to make that much difference to our import position, our import bill," Sieminski said. "But as a pattern it's important to our economy and consumers and industry that we develop those things that it makes sense economically to do."