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But thanks -- -- industry is still reeling from news of Exxon's billion barrel find in the Gulf of Mexico which could be the biggest discovery ever in the gulf.
But the first that -- but first read the oil giant and the government have to hash it out and -- -- releases.
For offshore drilling rights John Kingston the director of news of -- joins us now.
To weigh in on the impact of this -- really the size of the discovery that kind of caught everybody off guard isn't.
Well little point of comparison there's a nearby discover that Chevron had a few years ago called Jack.
And when Chevron first announced Jack they said it was fifteen billion barrels estimate obviously it's very rough.
In the court in the court documents had ExxonMobil filed -- connection with this they described it as billions and billions of barrels you know back to be 3415.
More we dollar health.
But of course this is not a traditional announcement of a find effective a great irony about what's going on down there is that we've had to finds over the last year or so that we found out about the rather -- mean first of all.
It became obvious that BP did find oil aware macondo was through.
Rather unique way.
And secondly of course this one which was -- just just released to the court and court document so that have not been any traditional announcements because of course there have been -- moratorium.
So why is this now all fire fighting its way through the courts what why is next on to say look this is ours we had released before Willis is renewal let me do all of our leases and then we'll start exploring ways the political.
That essentially is what ExxonMobil and some of their partners are saying that that they have a legitimate least.
That they have met all the provisions of the lease and that day and went to renew it and they've followed procedure -- denied.
There is a political point of view a political side to this that these are leases that are covered under this sort of mistake.
That the mental Minerals Management Service made a few years ago which essentially exempt of a lot of companies from paying royalties.
This was just to cool.
On the part of the government they didn't mean to but you know that's it's in -- it's in the -- And so there's a feeling on the part of that ExxonMobil some of the observers of this.
That -- the federal government is doing is they want to get them out.
Because anybody who comes in a new to these prospects would not be under that exemption and they would in fact need to pay full royalties.
Because the administration's -- between a rock and a hard place here they want they want the regulators to be tough on these companies make sure you jump to all the -- and whistles.
-- because you -- wonder what happened with BP to happen again if it does happen again we wanna have ourselves covered.
But at the same time two point they want royalties they want these lease royalties to -- because of the deficit.
I've decided they're not gonna get as many royalties as they want as long as such some moments partners of their at the -- and another a new partner in new operator.
-- that's I would provide a lot more royalties.
OK -- before -- -- and so the whole dynamics of oil specifically I do wanna ask you about politics with offshore drilling deep sea drilling.
Does this again -- America's call Rick there's lots although there in the gulf let's start drilling and pull it up because we want to reduce our reliance on foreign oil.
Well there's a -- -- it's a half -- half full debate right now the fact is that there have been.
There have been permits that have been issued in the wake of the enemy territory -- in fact upon our blog the other day we just put a map that one of our staff numbers to it.
I you can look at that and say there's actually been quite a few leases.
That have been like that a few leases that have been approved a few drawing plans have been approved you could say it isn't enough.
So obviously there's oil there the the news came out in the Exxon filing -- yet one more confirmation that there's still a lot of oil to be discover there.
-- there are permits that are being granted.
Do you -- people down on the Gulf Coast politicians in the Gulf Coast Hussein that it's not going out of fast enough pace and of course the deal we have which is a success of the MMS house and it is so this this is a raging debate.
All I WTI crude has as -- -- about 83 dollars a -- thousand move in lock -- with the markets -- think in that wealth that the markets are coming down we're gonna have slowdown in global economy demand go down let's not bring oil down.
You're telling me -- and in media notes that just because WCI is coming down doesn't necessarily mean we're going to be paying less of the gas -- -- what well couple things first of all you today WTI is up nowhere near as much as branches.
WTI is sort of a good news story for the United States in the sense that there's a lot of crude at the delivery point of Cushing Oklahoma.
Because -- reducing so much of the North Dakota and so much of from the oil sands of Canada the promise that it doesn't have easy access to the gulf of next -- -- -- has no access to the Gulf of Mexico.
So it is somewhat disconnected from the world market.
The gasoline market is not disconnected from the world gasoline market.
So the gasoline prices in the midwest or really anywhere are gonna reflect that world market where WTI is a sort of anomaly that's not going to reflect that so.
The the profits on that spread are gonna go to the refiners they're not gonna go.
In the and then price and then there's the tanks and of the purchase price -- you're gonna pay at the pump it's a very great situation for refiners who have the midwest refinery right now it's a great situation for of.
I -- -- -- for drivers out there have been looking for gas prices to drop along with the BTI you're gonna tell them look good but Brent crude as a better gauge for -- are gas prices are going look.
-- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- They may see declines in the price -- WTI relative to the broader market they're -- -- go why why is that not affecting my retail gasoline price well it's not going to ones connected to the world market the other is not John thank you so much great stuff junkies and.
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