"Saudi Armada heading to U.S.", "Dumping" is a WTO VIOLATION.

[Gerry Maddoux + 3,627]

Okay, drop it to $40,000. Still $70 oil. 

Not to belabor the point but it was a decked-out Super Sport. 

Edited April 8, 2020 by Gerry Maddoux

[James Regan + 1,776]

YOU GUYS WILL BE FINE - MY PEACE OFFERING @BLA

[wrs + 893]

28 minutes ago, butasha said:

Someone sure thinks the price of oil will rebound. I own a few thousand acres of minerals leased to 5 different companies here in  South Texas. We get quite a few inquiries throughout the year looking to outright purchase our interest. But for some reason this week I have received a much higher than normal number of calls looking to purchase our minerals interest.

did you ask them what they want to pay?  probably flippers and bottom feeders.

[Dan Clemmensen + 1,011]

Newbie outsider here, with a question.  Who in the US is buying Saudi crude? I would guess it's the big Saudi-owned refineries on the Gulf coast. If so, then they are "merely" trying to get their supplies in before the tariffs/quotas/bans are imposed, right?

[Vinnie Moore + 11]

Not true. Trump is a genius, a great businessman. OBAMA depleted our national reserves so Trump has decided this is the best time to increase our national reserves with cheap Arab oil. As soon as he does that he will tighten the screws and get the oil markets back to normal. If Trump is unable to do so, the Saudis will lose more market share. You can bankrupt some US shale companies but you can't bankrupt the process of extraction nor the oil that sits in the Permian, Bakken, Eagleford etc etc. The US will come out stronger and Russia will capitalize on the Saudis loss of market share.

[James Regan + 1,776]

2 hours ago, Vinnie Moore said:

Not true. Trump is a genius, a great businessman. OBAMA depleted our national reserves so Trump has decided this is the best time to increase our national reserves with cheap Arab oil. As soon as he does that he will tighten the screws and get the oil markets back to normal. If Trump is unable to do so, the Saudis will lose more market share. You can bankrupt some US shale companies but you can't bankrupt the process of extraction nor the oil that sits in the Permian, Bakken, Eagleford etc etc. The US will come out stronger and Russia will capitalize on the Saudis loss of market share.

The idea is not to bankrupt the Shale Industry, you quote "Market Share" this is what's happening now, they are making a fair market share, 10% cut each should put us in good position globally. The oil Industry is not just LTO, in here lies the dilemma you find yourself in. Tariffs and over production tends to get old for other countries.

Trump is undoubtably a businessman but he's not an oilman......

Edited April 8, 2020 by James Regan

[Hassan Abdullahi + 7]

So what exactly are we looking at is the US going to make major cuts in Production as part of the deal? and I'm not talking about Trump's "Automatic Cuts" I'm talking about  "Actual Production cuts". Cause if not I don't think a solution would come out of the meeting tomorrow. 

 

Edited April 8, 2020 by Hassan Abdullahi

[wrs + 893]

41 minutes ago, Dan Clemmensen said:

Newbie outsider here, with a question.  Who in the US is buying Saudi crude? I would guess it's the big Saudi-owned refineries on the Gulf coast. If so, then they are "merely" trying to get their supplies in before the tariffs/quotas/bans are imposed, right?

Motiva refinery in Port Arthur owned 100% by KSA is a 650kbbl/day operation that probably takes all the KSA crude shipped to the US.  

[Dan Clemmensen + 1,011]

7 minutes ago, wrs said:

Motiva refinery in Port Arthur owned 100% by KSA is a 650kbbl/day operation that probably takes all the KSA crude shipped to the US.  

Thanks. How much crude can they store now to avoid tariffs/bans/quotas later?  If a VLCC arrives in US waters prior to a rule change, can it offload under the old rules or not? Looks like a 3 million bbl VLCC can supply that refinery for 4.5 days, so an "armada" of 10 VLCCs will last for 45 days before they need to start buying US+Canadian crude. Of course, like everybody else they will need to cut back operations when gasoline storage fills up. Do they mostly supply the US gasoline market or foreign markets? If US, storage will fill quickly. If  foreign, I guess they will need another armada of gasoline tankers. Can VLCCs carry gasoline?

[William Sol + 9]

5 hours ago, Jan van Eck said:

Readers might note that "Dumping" is a specific set of events in which surplus product is sold at prices below that commanded in the home country for the same product.   Occasionally, Dumping is taken to mean selling at below the cost of production.  There is no hard evidence - yet - that the KSA is selling that crude for less than equal-quality crude is internally sold.  It is a bit of an abstract, as I assume that the production of petroleum goods inside KSA is all controlled by the State, and thus pricing ladders are artificial.  That said, is there evidence that the oil itself has not already been sold to oil traders?  Can traders "dump"?  Probably not.

I do not see any plausible way for anti-dumping laws to apply to the sale of Saudi oil at fire-sale pricing.  Yo9u have this cheap oil everywhere, the world is awash in it.  I would not put much stock into anything that Rick Perry says, he is a notorious dimwit.  Can the Trump Administration impose import quotas?  Yes, it can, and there is precedent for this.  Readers are invited to review the combination of tariffs and quotas on construction lumber from Canada into the USA  (a perennial sore point, for many decades, between them).  Will Trump do that?  My guess: no. 

The US economy benefits immensely from ultra-cheap oil.  The users of oil  products pay less, thus having more funds to spend on "something else."  Or, as in the case of the air carriers, they can offer lower fares, once the hedging contracts run out.  All that, cumulatively, puts more cash into individual pockets, be that corporations or individuals.  More cash ultimately results in more spending, and greater levels of economic activity.  OK, that is not so pleasant for the domestic oil industry, but it is what it is. 

Rick Perry is no longer Sec of Energy.  Be glad he is gone.  He's the same guy who said the BP blowout from several years ago was an act of God.  

[Dan Clemmensen + 1,011]

24 minutes ago, Hassan Abdullahi said:

So what exactly are we looking at is the US going to make major cuts in Production as part of the deal? and I'm not talking about Trump's "Automatic Cuts" I'm talking about  "Actual Production cuts". Cause if not I don't think a solution would come out of the meeting tomorrow. 

 

I'm not clear on the legal mechanism "the US" can use to make major cuts by fiat. I'm fairly sure President Trump does not have the authority to do this. However, the market will do it for him when lifting cost exceeds price, or the laws of physics will do it as production exceeds consumption and storage fills up. The regulators in each state (notably Texas) can do it state-by-state, but what about transnationals that pump all over the world? should the Permian bear the entire brunt of a cut by itself?

[Jan van Eck + 7,558]

Just now, Dan Clemmensen said:

should the Permian bear the entire brunt of a cut by itself?

Nope. The Canadians will be right there with you.  Zero production, out of vast fields with enough oil in those sands for the next thousand years.  Oh, well. 

[William Sol + 9]

1 hour ago, Vinnie Moore said:

Not true. Trump is a genius, a great businessman. OBAMA depleted our national reserves so Trump has decided this is the best time to increase our national reserves with cheap Arab oil. As soon as he does that he will tighten the screws and get the oil markets back to normal. If Trump is unable to do so, the Saudis will lose more market share. You can bankrupt some US shale companies but you can't bankrupt the process of extraction nor the oil that sits in the Permian, Bakken, Eagleford etc etc. The US will come out stronger and Russia will capitalize on the Saudis loss of market share.

Quote

 

The budget deal that the U.S. Congress passed and President Donald Trump signed into law last Friday calls for selling 100 million barrels of the Strategic Petroleum Reserve (SPR) by 2027 to help fund the government.

The sale of 100 million barrels of crude oil in the next decade would represent the largest non-emergency sell-off of strategic oil reserves and would equate to some 15% of the current stockpiles in the SPR.

 

SPR is becoming a source of investment instead of an emergency reserve.  Buy low, sell high (whenever that happens)

Quote

The Bipartisan Budget Act of 2018 mandates the Secretary of Energy to draw down and sell from the SPR a total of 30 million barrels of crude oil between fiscal years 2022 and 2025; another 35 million barrels during fiscal year 2026; and an additional 35 million barrels in fiscal year 2027. In addition, under a budget deal from 2015, the Secretary of Energy is authorized to draw down up to $350 million worth of crude oil from the SPR in the 2018 fiscal year to use for modernization of the reserve

https://www.usatoday.com/story/money/energy/2018/02/13/us-mandates-biggest-non-emergency-strategic-oil-sell-off/332885002/

 

[the_phoenix612 + 9]

1 hour ago, Dan Clemmensen said:

I'm not clear on the legal mechanism "the US" can use to make major cuts by fiat. I'm fairly sure President Trump does not have the authority to do this. However, the market will do it for him when lifting cost exceeds price, or the laws of physics will do it as production exceeds consumption and storage fills up. The regulators in each state (notably Texas) can do it state-by-state, but what about transnationals that pump all over the world? should the Permian bear the entire brunt of a cut by itself?

Secretary of Interior (through BOEM/BSEE) can order suspension of any/all leases on federal land during a state of war or national emergency.  Since a national emergency has been declared, the federal government absolutely could shut in ~25% of US crude production overnight, if it wanted. 

[wrs + 893]

2 hours ago, Dan Clemmensen said:

Thanks. How much crude can they store now to avoid tariffs/bans/quotas later?  If a VLCC arrives in US waters prior to a rule change, can it offload under the old rules or not? Looks like a 3 million bbl VLCC can supply that refinery for 4.5 days, so an "armada" of 10 VLCCs will last for 45 days before they need to start buying US+Canadian crude. Of course, like everybody else they will need to cut back operations when gasoline storage fills up. Do they mostly supply the US gasoline market or foreign markets? If US, storage will fill quickly. If  foreign, I guess they will need another armada of gasoline tankers. Can VLCCs carry gasoline?

I don't know what amount of storage they have at the refinery but it was originally owned by Shell and Aramco so I imagine the gasoline products still go to Shell stations.  However, I am sure that they sell it to a lot of independents.  I don't believe they have any branded gasoline outlets.

Here is a description of the type of tankers and what they carry.

https://www.eia.gov/todayinenergy/detail.php?id=17991

[Eyes Wide Open + 3,555]

1 hour ago, the_phoenix612 said:

Secretary of Interior (through BOEM/BSEE) can order suspension of any/all leases on federal land during a state of war or national emergency.  Since a national emergency has been declared, the federal government absolutely could shut in ~25% of US crude production overnight, if it wanted. 

Yes was that not something to see, the left side of the almost demanding that....and this guy Trump says ok ok calm down. 

Does anyone think Trump might just on cue and simply state...My pen is much more biggley than Obama's now..

It's Yugley bigger..Epic I tell ya and were going to undo some nasty stuff...Real Nasty....

Oh he will and that will be a day of days..

 

 

 

 

 

 

[Dan Warnick + 6,100]

6 hours ago, BLA said:

You can argue the definition of dumping all day long.

I don't know the legal definition of dumping.  Doesn't matter.  The Saudi action is an deliberate attempt to put U.S. shale out of business.  

Trump can impose Rick Perry's request to put a 90 day ban on Oil Imports.

The Shale industry will make a point of Trump's inaction if he fails to protect U.S. industry. The industry will scream dumping, harassment, predatory pricing, deliberate attempt to destroy U.S. industry.  AND THEY WILL HAVE THE BACKING OF MANY CITIZENS. 

It will have ramifications for Trump far beyond Texas.  

Trump should take notice.  

This would hurt his reelection chances.

It's in Trump's court now. Trump's move.

Remember a time, not so long ago, when the President was seen as someone who didn't understand oil?  Didn't understand tariffs or how to impose them properly?  The same for sanctions?  Nowadays, people think (not saying you, BLA) they need to tell the President to impose such actions, as if it were their idea and that he needs to learn.  Fact is, President Trump fooled the world not that long ago, and duped the Saudis big time.  Iran, India, China, OPEC, everyone.  My guess is that POTUS will get it right this time; hell, he might have a strategy that will accomplish far more than anyone could normally hope for.  Time will tell.

[BLA + 1,666]

30 minutes ago, Dan Warnick said:

Remember a time, not so long ago, when the President was seen as someone who didn't understand oil?  Didn't understand tariffs or how to impose them properly?  The same for sanctions?  Nowadays, people think (not saying you, BLA) they need to tell the President to impose such actions, as if it were their idea and that he needs to learn.  Fact is, President Trump fooled the world not that long ago, and duped the Saudis big time.  Iran, India, China, OPEC, everyone.  My guess is that POTUS will get it right this time; hell, he might have a strategy that will accomplish far more than anyone could normally hope for.  Time will tell.

I hope you are correct

But. .  .   .   .   .   

He wants to bring the troops home from Syria, Iraq, Afghanistan then sends them all to Saudi Arabia

He makes excuses for MBS.  When asked why he thinks MBS did not kill Kashoggi he replies , "because he told me he didn't "  He believes that murderer over the U.S. intelligent agencies.

I think MBS is playing Trump.  He knows how to push his buttons.  Trump believes MBS when he tells him he can deliver Israeli peace accord.  

It's a waste of time.  The whole region is a snake pit.  Get out. 

Edited April 8, 2020 by BLA

[John Foote + 1,135]

It's been a bit since I was in class specifically concerning anti-trust in oil and gas, but I thought National OIl Companies are basically immune from basic anti-trust/anti-competition regulations. 

Yet another reason the IPO was foolish, exposing them to anti-trust rules. 

It's been a few years but a Saudi seamless pipe maker was found guilty of dumping in the US market. Didn't get much press, their overall footprint is too small to really matter. They settled, paid some fines, and mostly consume their pipes locally. The Chinese do dump line pipe of them likes it's going out of style, while the KSA government seems obviously to the fact the kills their domestic efforts. 

[Dan Warnick + 6,100]

54 minutes ago, BLA said:

I hope you are correct

But. .  .   .   .   .   

He wants to bring the troops home from Syria, Iraq, Afghanistan then sends them all to Saudi Arabia

He makes excuses for MBS.  When asked why he thinks MBS did not kill Kashoggi he replies , "because he told me he didn't "  He believes that murderer over the U.S. intelligent agencies.

I think MBS is playing Trump.  He knows how to push his buttons.  Trump believes MBS when he tells him he can deliver Israeli peace accord.  

It's a waste of time.  The whole region is a snake pit.  Get out. 

Yes, Trump is pretty good at "look at this shiny thing over here".  Both when it's being played against him, and when it's useful to play it.

Those screaming the loudest about Kashogi were also, coincidentally, those most opposed to Trump.  The fact was, and is, no minor sideshow like Kashogi was going to nor should be allowed to distract from the trade and politics of oil and gas.  Sorry if that goes against the sensibilities, but it is true nonetheless.

Trump and MBS and Israeli peace?  I think that NOT ONE PERSON ON THIS GLOBE believes that will happen; and most assuredly Donald Trump does not think one dead "journalist" that worked for Mr. Bezos and was played on the stage is going to make any difference, at all.  Who's playing whom?

No POTUS that I can remember has gotten us further from the KSA and our dependance on them.

[Gerry Maddoux + 3,627]

13 minutes ago, Dan Warnick said:

No POTUS that I can remember has gotten us further from the KSA and our dependance on them.

Just a sec, how did he do this, and what exactly did he do?

[Jay McKinsey + 1,490]

6 hours ago, Vinnie Moore said:

Not true. Trump is a genius, a great businessman. OBAMA depleted our national reserves so Trump has decided this is the best time to increase our national reserves with cheap Arab oil. As soon as he does that he will tighten the screws and get the oil markets back to normal. If Trump is unable to do so, the Saudis will lose more market share. You can bankrupt some US shale companies but you can't bankrupt the process of extraction nor the oil that sits in the Permian, Bakken, Eagleford etc etc. The US will come out stronger and Russia will capitalize on the Saudis loss of market share.

Actually when Obama took office the SPR was at 702 million barrels and 695 million barrels when he left. It is now at 635 million barrels. https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=WCSSTUS1&f=W

[BLA + 1,666]

56 minutes ago, Dan Warnick said:

Yes, Trump is pretty good at "look at this shiny thing over here".  Both when it's being played against him, and when it's useful to play it.

Those screaming the loudest about Kashogi were also, coincidentally, those most opposed to Trump.  The fact was, and is, no minor sideshow like Kashogi was going to nor should be allowed to distract from the trade and politics of oil and gas.  Sorry if that goes against the sensibilities, but it is true nonetheless.

Trump and MBS and Israeli peace?  I think that NOT ONE PERSON ON THIS GLOBE believes that will happen; and most assuredly Donald Trump does not think one dead "journalist" that worked for Mr. Bezos and was played on the stage is going to make any difference, at all.  Who's playing whom?

No POTUS that I can remember has gotten us further from the KSA and our dependance on them.

Yea right.

You don't have to cut off relations with Saudi Arabia, but you should not allow a murderer continue as head of state. 

Sure what does the murder of a journalist matter.  Butcher him with bone saws , this the parts in a trash bag and dispose of them.  

Hey, he worked for Bezo so should have burnt him alive too. 

Let me ask you a question. Would you care if it was your mother that MbS cut up with bone saws ?  

Hey, mom don't get in the way of oil and politics.  I'll have to use my Black & Decker on you.  Sorry if that's against your sensibilities. 

Mother's day is right around the corner.  Don't forget to get her a card. 

 

Edited April 9, 2020 by BLA

[ronwagn + 6,290]

11 hours ago, Jan van Eck said:

Readers might note that "Dumping" is a specific set of events in which surplus product is sold at prices below that commanded in the home country for the same product.   Occasionally, Dumping is taken to mean selling at below the cost of production.  There is no hard evidence - yet - that the KSA is selling that crude for less than equal-quality crude is internally sold.  It is a bit of an abstract, as I assume that the production of petroleum goods inside KSA is all controlled by the State, and thus pricing ladders are artificial.  That said, is there evidence that the oil itself has not already been sold to oil traders?  Can traders "dump"?  Probably not.

I do not see any plausible way for anti-dumping laws to apply to the sale of Saudi oil at fire-sale pricing.  Yo9u have this cheap oil everywhere, the world is awash in it.  I would not put much stock into anything that Rick Perry says, he is a notorious dimwit.  Can the Trump Administration impose import quotas?  Yes, it can, and there is precedent for this.  Readers are invited to review the combination of tariffs and quotas on construction lumber from Canada into the USA  (a perennial sore point, for many decades, between them).  Will Trump do that?  My guess: no. 

The US economy benefits immensely from ultra-cheap oil.  The users of oil  products pay less, thus having more funds to spend on "something else."  Or, as in the case of the air carriers, they can offer lower fares, once the hedging contracts run out.  All that, cumulatively, puts more cash into individual pockets, be that corporations or individuals.  More cash ultimately results in more spending, and greater levels of economic activity.  OK, that is not so pleasant for the domestic oil industry, but it is what it is. 

So, I would like opinions on what kind of plan the oil industry and the nation would need to get our own oil production up and running fast. How long will our oil storage hold out while we gear back up again? Can we build more storage for a suitable price? Will we be able to get the workers back again? Would we have to pay sky high prices and have outages again? Now is the time to answer these questions.

I still think tariffs are the answer. They can be low enough to allow minimal imports and high enough to keep us producing. I am pretty sure that President Trump will get good advice and take it. 

[Dan Clemmensen + 1,011]

6 minutes ago, ronwagn said:

So, I would like opinions on what kind of plan the oil industry and the nation would need to get our own oil production up and running fast. How long will our oil storage hold out while we gear back up again? Can we build more storage for a suitable price? Will we be able to get the workers back again? Would we have to pay sky high prices and have outages again? Now is the time to answer these questions.

I still think tariffs are the answer. They can be low enough to allow minimal imports and high enough to keep us producing. I am pretty sure that President Trump will get good advice and take it. 

OK, an uneducated opinion. It's not cost-effective to build new storage: this is a short-term problem. Further, every barrel we store is a barrel we must eventually pull back out and sell, so extra storage keeps the market depressed longer. It's better to just leave the oil in the ground. If necessary you can create virtual storage by selling that oil that is in the ground before you actually lift it. Note that "storage includes gasoline in storage, all the way down to the tanks at individual gas stations. Next opinion: production recovery will occur after consumption resumes. There is nothing the industry can do to affect this. The industry can at best plan for an orderly resumption of production to track consumption as quickly as possible. It appears that you assume that consumption will ramp back up very abruptly, faster than production can ramp. I speculate that the consumption ramp will be more gradual than that. The industry may need government help to keep idled workers paid during the slump so that they are available to resume production. That's OK. It's true for the entire economy, not just oil production.