Oil Apocalypse . . . . Putin said, "Nyet" to Mohammed bin Salman

[Toranaga + 49]

2 hours ago, wrs said:

Well one thing Trump could do but won't.  He could put tariffs on all ME oil.  But Trump doesn't care about the oil business so he won't.

He put sanctions on Venezuela and Iran, which pushed up the price of oil big time.  He just didn't want oil at $80 which was why he was tweeting when it got that high. 

[surrept33 + 609]

3 hours ago, D Coyne said:

Doug,

Do you remember RRC "allowables" from 1945 to 1970?  

I agree RRC would be unlikely to return to those days, but my understanding is the the US was considered a free market capitalist economy from 1945 to 1970.

Exactly. Though much less than most developed countries, the US (and the states) has a had a long history of industrial policy of various forms, some of which had the effect of putting floors or caps on market prices for various things & services.

Not that I think it is what should be done here.

Edited March 9, 2020 by surrept33

[D Coyne + 305]

33 minutes ago, surrept33 said:

Exactly. Though much less than most developed countries, the US (and the states) has a had a long history of industrial policy of various forms, some of which had the effect of putting floors or caps on market prices for various things & services.

Not that I think it is what should be done here.

Might not be a bad idea for RRC to enforce spacing and flaring rules as it would be good for the oil industry.  The RRC commissioners have been shirking their duties.

[BLA + 1,666]

8 hours ago, 0R0 said:

Their concern with US shale is obsessive. I don't see why it bothers Rossneft's Leontiev so much. 

Putin seems to think oil and NG are geopolitical tools rather than a business. So that would be Leontiev''s take on Putin as well?

They blame all their problems on U.S. shale.

They don't want to admit the industry is changing. They're in denile. 

They believe if not for shale they would be receiving  $90 bbl .

Edited March 9, 2020 by BLA

[BLA + 1,666]

12 minutes ago, D Coyne said:

Might not be a bad idea for RRC to enforce spacing and flaring rules as it would be good for the oil industry.  The RRC commissioners have been shirking their duties.

Current price action will induce major capital spending decrease.  Probably cut 2 mm bbls/day of U.S. production short term.

That's more than the 1.5 mm bbls OPEC + wanted to cut. 

[BLA + 1,666]

50 minutes ago, surrept33 said:

Exactly. Though much less than most developed countries, the US (and the states) has a had a long history of industrial policy of various forms, some of which had the effect of putting floors or caps on market prices for various things & services.

Not that I think it is what should be done here.

Yes they have a history of never working.

[Ward Smith + 6,615]

Looks like Obama finally threw in the towel

[Enthalpic + 1,496]

36 minutes ago, Ward Smith said:

Looks like Obama finally threw in the towel

Fake news.

[Gerry Maddoux + 3,627]

2 hours ago, D Coyne said:

Might not be a bad idea for RRC to enforce spacing and flaring rules as it would be good for the oil industry.  The RRC commissioners have been shirking their duties.

Well, good luck with this--I've been harping on this for two years--all they have to do is enforce Statewide Rule 32 and we wouldn't even be in this mess. 

[notsonice + 1,259]

Trump needs to step up and place anti-dumping tariffs on foreign crude. Oil and Nat gas production in the US is a national security concern same as steel and he should protect American Producers. He is letting foreign powers (Putin and MBS) take over a large part of the American economy.

[wrs + 893]

1 hour ago, Gerry Maddoux said:

Well, good luck with this--I've been harping on this for two years--all they have to do is enforce Statewide Rule 32 and we wouldn't even be in this mess. 

How do you figure?

[wrs + 893]

1 hour ago, notsonice said:

Trump needs to step up and place anti-dumping tariffs on foreign crude. Oil and Nat gas production in the US is a national security concern same as steel and he should protect American Producers. He is letting foreign powers (Putin and MBS) take over a large part of the American economy.

Trump has a tin ear when it comes to oil.  Here is what he thinks of the situation.

 

[notsonice + 1,259]

3 minutes ago, wrs said:

Trump has a tin ear when it comes to oil.  Here is what he thinks of the situation.

 

thanks for your info. Same thing happened in 1930 as happening now. All commodity prices take hard hits. It was good for the consumers? Just stunk for the banks, farmers, miners and for the oil and gas industries

	Highest weekly quotation September 1928	Lowest weekly quotation March, 1930
Bituminous coal, 3 markets, per short ton	$1.932	$1.793
Coffee, Santos No. 4, at New York, per lb	.238	.145
Copper, ingot, electrolytic, at refineries on the Atlantic seaboard, per 1b	.150	.178
Cotton, raw, middling, 10 markets, per 1b	.186	.139
Cotton cloth, average of 13 quotations, per yd	.130	.111
Gasoline, 4 refining centres, per gal	.107	.069
Hides, cattle, packer, at Chicago, per 1b	.238	.133
Petroleum, crude, 10 fields, per bb1	1.932	1.464
Rubber, ribbed, smoked sheets, at. New York, per lb	.183	.150
Silver bars, at New York, per oz	.581	.406
Steel finished, average of 7 quotations, per cwt	2.348	2.312
Sugar, raw, 96°, at New York, per cwt	4.140	3.490
Tin, ingot, Straits, at New York, per 1b	.490	.360
Wheat, all classes and grades 6 markets, per bu	1.120	.980
Wool, domestic and foreign, 26 quotations, per 1b	1.137	.745

 

[Gerry Maddoux + 3,627]

8 minutes ago, wrs said:

How do you figure?

Marginal producers (for whom I have an affinity) have been venting/flaring for months on end--basically getting rid of trash gas so they could produce oil. Had the TRRC done its job, they would have been forced to slow production. That would have removed about two million barrels a day from the market. Some of those producers would have gone broke, but they're going broke anyway. 

[wrs + 893]

5 minutes ago, Gerry Maddoux said:

Marginal producers (for whom I have an affinity) have been venting/flaring for months on end--basically getting rid of trash gas so they could produce oil. Had the TRRC done its job, they would have been forced to slow production. That would have removed about two million barrels a day from the market. Some of those producers would have gone broke, but they're going broke anyway. 

It's spread across all producers.  When flaring happens it's because either they aren't hooked to a gas pipeline or there isn't space on the pipelines.  Right now gas is so cheap it's a loss to put it in the pipeline.  That's basically a varition on the second reason.  No one wants to flare gas but if the wells were drilled to produce oil then the gas is a by product and if it can't be sold, has to be disposed of and flaring is the most efficient way.  Saudi Arabia flares much more than the shale producers.

Edited March 9, 2020 by wrs

[Gerry Maddoux + 3,627]

1 minute ago, wrs said:

It's spread across all producers.  When flaring happens it's because either they aren't hooked to a gas pipeline or there isn't space on the pipelines.  Right now gas is so cheap it's too expensive to put it in the pipeline.  That's basically a varition on the second reason.  No one wants to flare gas but if the wells were drilled to produce oil then the gas is a by product and if it can't be sold, has to be disposed of and flaring is the most efficient way.  Saudi Arabia flares much more than the shale producers.

I know this, and that Exxon is the biggest offender, however, simply following Statewide Rule 32 (which, by the way, used to be enforced with an iron fist) would have reduced the amount of oil brought to the surface by the simple measure of reducing the gas vented and flared. Look, I fully realize that there are a bunch of people who have part of the pie in the Permian--especially the Delaware sub-basin--and are fully in favor of venting and flaring. I have a vested interest too, but I think it's unrealistic to ask OPEC+ to curtail production when we are venting and flaring NG in order to produce more oil. Just because KSA does it doesn't make it right. If we don't police ourselves, we're just going to see our whole industry sliced and diced into oblivion. After today, for example, I have serious doubts that Occidental can survive the bloodbath. That will put . . . . . Warren Buffett as the beneficiary of the company. I have nothing against Mr. Buffett but I don't think this had to happen. 

[wrs + 893]

5 minutes ago, Gerry Maddoux said:

I know this, and that Exxon is the biggest offender, however, simply following Statewide Rule 32 (which, by the way, used to be enforced with an iron fist) would have reduced the amount of oil brought to the surface by the simple measure of reducing the gas vented and flared. Look, I fully realize that there are a bunch of people who have part of the pie in the Permian--especially the Delaware sub-basin--and are fully in favor of venting and flaring. I have a vested interest too, but I think it's unrealistic to ask OPEC+ to curtail production when we are venting and flaring NG in order to produce more oil. Just because KSA does it doesn't make it right. If we don't police ourselves, we're just going to see our whole industry sliced and diced into oblivion. After today, for example, I have serious doubts that Occidental can survive the bloodbath. That will put . . . . . Warren Buffett as the beneficiary of the company. I have nothing against Mr. Buffett but I don't think this had to happen. 

The point I am making is that whether the RRC enforced the rule or not has nothing to do with what Russia and KSA are doing to the market right now.  This isn't about shale, at least directly.  

[Rasmus Jorgensen + 1,169]

7 minutes ago, wrs said:

It's spread across all producers.  When flaring happens it's because either they aren't hooked to a gas pipeline or there isn't space on the pipelines.  Right now gas is so cheap it's a loss to put it in the pipeline.  That's basically a varition on the second reason.  No one wants to flare gas but if the wells were drilled to produce oil then the gas is a by product and if it can't be sold, has to be disposed of and flaring is the most efficient way.  Saudi Arabia flares much more than the shale producers.

If the RRC enforced the rules LTO would have developed in a slower pace, but more sustainably.

[Gerry Maddoux + 3,627]

3 minutes ago, wrs said:

The point I am making is that whether the RRC enforced the rule or not has nothing to do with what Russia and KSA are doing to the market right now.  This isn't about shale, at least directly.  

 

2 minutes ago, Rasmus Jorgensen said:

If the RRC enforced the rules LTO would have developed in a slower pace, but more sustainably.

Thank you, Rasmus. You are 100% correct. 

[Guillaume Albasini + 851]

This quote from William Edwards is from an old thread (november 2018)  but is a good description of what has just happened now :

 

On 11/30/2018 at 4:08 PM, William Edwards said:

Maybe everyone should be reminded of the bedrock principle -- you cannot put ten gallons of oil in a five gallon bucket. If the production plans for total industry crude output exceeds the total worldwide demand, some producers will be forced to cut production plans. Whether a coordinated decision is implemented to minimize the price drop or not, production expectations will be adjusted down to the demand level. If there is no agreement to spread the pain, the first step will be a price drop. $20/B is not unrealistic when the trading community shifts their attitude from higher prices to lower prices, net long futures contracts are dumped and shorts are added. The second step will be the industry picking up the pieces of a decimated price environment, but at lower prices for less production.

The alternative scenario is for the major players to coordinate their production activities and not try to maintain market share by cutting prices. In that case, if the group stays compliant, the price drop will be only half of the alternative every-man-for-himself scenario.

In both cases, production drops to the level of demand.

 

 

The  thread was already about KSA, Russia as US shale and some comments are interesting to read 16 months later...

 

[wrs + 893]

3 minutes ago, Rasmus Jorgensen said:

If the RRC enforced the rules LTO would have developed in a slower pace, but more sustainably.

Rule 32 doesn't apply in New Mexico or N. Dakota.  The problem in the market right now is that KSA and Russia are both fighting for the same market.  Now that the US is an exporter, they are somewhat of a problem but not nearly to the extent that these guys are to one another.  They are both selling their oil to Europe and China.  The US doesn't need their oil.  We can get heavy oil from Canada and Mexico. 

[footeab@yahoo.com + 2,192]

2 hours ago, Enthalpic said:

Fake news.

Wishing to prove you are an idiot?

IN which case, party on!😜

[Gerry Maddoux + 3,627]

10 minutes ago, wrs said:

Rule 32 doesn't apply in New Mexico or N. Dakota.  The problem in the market right now is that KSA and Russia are both fighting for the same market.  Now that the US is an exporter, they are somewhat of a problem but not nearly to the extent that these guys are to one another.  They are both selling their oil to Europe and China.  The US doesn't need their oil.  We can get heavy oil from Canada and Mexico. 

Right, and that's precisely where we should get it. We should, in my opinion, tell Saudi Arabia to go piss up a rope, slap a 25% tariff on their oil, and buy from Canada and Mexico--even Venezuela if we have to. I can tell you right now that Trump would gain at least a couple million votes if he'd do that. 

[El Nikko + 2,145]

26 minutes ago, footeab@yahoo.com said:

Wishing to prove you are an idiot?

IN which case, party on!😜

In the imortial words of Greta Thunberg...."How dare you!"

Babylon Bee is top quality news reporting! I'd rank it close to CNN or The Young Turks.

[Tomasz + 1,608]

I will only correct a certain thing because several people have claimed that the price of oil extraction in Russia is $ 45. This cost of oil extraction in Russia includes a new NDPS tax, levied on wells, which is the income of the state budget. The real (physical) cost of mining is around $ 15-30, depending on the age, location and location of the deposit. In addition, raw material revenues in Russia account for around 28% of the budget

https://pronpz.ru/neft/sebestoimost.html?fbclid=IwAR33sE858hYAO0kjZxm-KdHDsCXgpoZh95rkndp1LLga_wMmIPNIYcKHVMo

PS

 Such a curiosity that hardly anyone knows. Vladimir Putin has a PhD in economics and the subject of his work was the use of raw materials to improve Russia's economy and geopolitical position. The special secret is not that the work was written by a ghost writer but apparently Putin got to know it very thoroughly.

Edited March 9, 2020 by Tomasz