Trumps Oil Industry....

[Douglas Buckland + 6,308]

1 hour ago, Dan Clemmensen said:

But everybody in the industry can do this analysis. If the US government decides that we should not give OPEC another opportunity to dirve the price up past (say) $50/bbl, then impose a tariff. Do this early enough, (now?) and drilling will resume in anticipation of a recovery in consumption, A bunch of companies will have gone bankrupt, but others will be willing to risk it with those tariffs in place and with a stated government policy of keeping the price stable. Done in conjunction with a tax on gasoline to dampen consumption to about last year's level, we would be good to go to 2030 or so.

But doesn’t common sense says that it is foolish to drill additional wells, anywhere, when the world is awash in cheap oil and storage is maxed out?

If everyone continues to pump, the glut will never dry up, and the price of oil will remain in the cellar....isn’t that correct?

[Dan Clemmensen + 1,011]

1 minute ago, Douglas Buckland said:

But doesn’t common sense says that it is foolish to drill additional wells, anywhere, when the world is awash in cheap oil and storage is maxed out?

If everyone continues to pump, the glut will never dry up, and the price of oil will remain in the cellar....isn’t that correct?

Absolutely. No new well should be completed until consumption exceeds production for long enough to bring storage down into the normal range. We are currently seeing a fairly abrupt drop in production. Once production nears balance with consumption, investors will run the numbers and invest in new completions. Getting this right will be non-trivial, mostly because  it will require guessing about the resumption curve for consumption. But if we are behind a tariff wall, at least we won't be getting screwed over by OPEC. The short-term problem for the industry will be like the short-term problem for the whole economy: how to keep it all on life support until we can come out of lockdown and start working again.

[Enthalpic + 1,496]

On 4/21/2020 at 5:02 AM, Douglas Buckland said:

“I guess people don't want to move. Hey, you know what? That's their problem. “

Yeah, when you have a real job out in the world, as opposed to trading online in you mother’s basement, moving is a more traumatic, complex operation.

I hope you choke on your money you sorry excuse for a human being!

Let your socialist inside out!  You have nothing to lose but your chains!

 

I only hope that people who voted wrongly suffer.  After all, they voted against the very same social programs they might like right about now.

 

USA, the land of the self-sufficient entrepreneur; let the weak fail; no bail-outs from government.

Edited April 23, 2020 by Enthalpic

[James Regan + 1,776]

Interesting read, some of it makes sense especially the caveat.

https://www.capriole-llc.com/news/2020/3/25/five-brutal-facts-the-us-oil-industry-must-confront-to-get-ready-for-the-post-coronavirus-world

[James Regan + 1,776]

2 hours ago, Douglas Buckland said:

But doesn’t common sense says that it is foolish to drill additional wells, anywhere, when the world is awash in cheap oil and storage is maxed out?

If everyone continues to pump, the glut will never dry up, and the price of oil will remain in the cellar....isn’t that correct?

Bathtub economics its not a hard concept to understand, or we could continue the cycle now that cheap rigs are available and manpower is chewing at the bit, (ring any bells) we could restart drilling lame DUCs, looks like a good model.

[D Coyne + 305]

On 4/17/2020 at 12:04 PM, Gerry Maddoux said:

The Saudis have been a very poor "ally" for many decades, and yes, I know all about the history, but no, I wouldn't prefer Russian oil.

In my narrow-minded elderly vision, these various geopolitical misadventures are conjoined. The Chinese has been lobbing killer viruses at the world for two decades. Most of these came from their unusual preoccupation with bats, which are chock full of bad viruses. Having worked with viruses for a long period of time, I strongly suspect this virus came out of the Wuhan lab. But even if it didn't, when the Chinese refused to share pertinent data with the world, they committed--on the spot--a bioterrorist act that cost thousands of lives and trillions of dollars. 

What does that have to do with the Saudis, and more germanely, the price of oil? The Saudis grossly discounting oil to this bioterrorist country is disgusting to me--and certainly not something any "ally" would do. Just business, you might say, and again I would admonish you that aiding and abetting the enemy is not within the usual scope of a well-intentioned "ally's" range. And make no mistake: the Chinese Communist Party is an enemy of the United States. 

As I said, we have precious few ways of tsk-tsking a rogue country. China will be dealt with harshly, because by now the whole world knows what they did. The Saudis launched this Russian gambit knowing full well that they would wreck the US shale basins--even if only temporarily--and then capitalized on a propitious worldwide disaster. Suddenly, the US lost 25 million (MILLION!) jobs. In the last two weeks, with either a ban or a 25-50% tariff on Saudi oil, the price of WTI would have jumped to about $40 and many of the US oil industry jobs could have been saved. As an American, I like that. 

When a rogue nation--even an alleged "ally"--thinks it is winning, it keeps pushing. My strong suspicion is that we will still wind up with either a tariff or a ban, but at this point the damage has already been done. Maybe as a renewables advocate, you like this. I don't. 

Over and out. 

Gerry,

Main point is we import very little Saudi oil, so tariffs won't work.

Data at

https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=W_EPC0_IM0_NUS-NSA_MBBLD&f=W

The most recent 4 week average for Saudi crude oil imports for 4 weeks ending April 17, 2020 was 354 kb/d.

A picture for you is attached.

Total US crude oil imports from all nations for 4 weeks ending April 17, 2020 was 5625 kb/d see

https://www.eia.gov/dnav/pet/pet_move_wkly_dc_NUS-Z00_mbblpd_4.htm

so Saudi crude imports was 6.3% of the total.

If you think tariffs on 350 kb/d of imports will make a big difference to the current drop in demand (about 4500 kb/d lower crude input to refineries in the most recent 3 weeks compared to one year ago), then write to your representative.

A better option would be for the Texas RRC to do its job, maybe write to them instead.  Note in Texas many believe in free markets, that is the excuse for the RRC not acting, the same reasoning is usually advocated by Republicans for avoiding tariffs.

 

Edited April 23, 2020 by D Coyne

[D Coyne + 305]

10 hours ago, Dan Clemmensen said:

But everybody in the industry can do this analysis. If the US government decides that we should not give OPEC another opportunity to dirve the price up past (say) $50/bbl, then impose a tariff. Do this early enough, (now?) and drilling will resume in anticipation of a recovery in consumption, A bunch of companies will have gone bankrupt, but others will be willing to risk it with those tariffs in place and with a stated government policy of keeping the price stable. Done in conjunction with a tax on gasoline to dampen consumption to about last year's level, we would be good to go to 2030 or so.

Dan,

Note that the US still imports 5600 kb/d of crude oil, so we will continue to be affected by World oil prices.  Also note that the tight oil producers need at least $75/bo to make a profit and be in a position to pay back debt. 

Perhaps the US government should subsidize the oil producers at $25/b so that prices remain at $50/bo?

It does not seem a very Republican thing to do.

Of course hand outs for big business has become a way of life in the US, unfortunately.

[Valerie Williams + 129]

5 hours ago, D Coyne said:

Of course hand outs for big business has become a way of life in the US, unfortunately.

Yeah, this is bad policy, IMO. I'm against it, even though I will probably lose my job.

Risk and creative destruction is part of the free market ethos. Artificially controlled or government-imposed market control is a losing strategy in that stifles the market and leads to corruption and obfuscation in the long term. In fact, government intervention in the health insurance and medical industries is precisely the reason why we are having such a bad time with that segment of the economy, and of course, everyone finds it all so confusing that the free market is what gets blamed, when the reestablishment of the free market is precisely what could improve that problem.

You can't turn off your principles when the going gets rough, or they're not really principles that are grounded in truth.

Edited April 23, 2020 by Valerie Williams

[Valerie Williams + 129]

5 hours ago, D Coyne said:

A better option would be for the Texas RRC to do its job

Please pardon my ignorance. What should the RRC be doing?

 

Addendum:====================================================

That question is going to sound sarcastic. I'm truly asking. I'm wondering what type of action I should be looking for from the RRC so I can get better at holding them accountable.

Edited April 23, 2020 by Valerie Williams

[Gerry Maddoux + 3,627]

1 minute ago, Valerie Williams said:

Please pardon my ignorance. What should the RRC be doing?

I'm not Dennis but I can answer: The RRC has had Statewide Rule 32 on its books forever, and that says a new well can vent gas for 24 hours or flare it for ten days. The RRC overlooked venting and flaring for months on end. On the face of it you'd think that would shunt off unwanted gas and it does, but it also puts more oil into the system from the next well, and the next, and the next. I can understand the RRC turning a blind eye to the marginal producer, but for the last several months Exxon has been by far the worst culprit. If the TRRC had "done its job," there would be 10-20% less oil in the pipelines, and in the hub too. 

[Tim mckinney + 1]

There is not a free market right now. That is the issue I think most are not taking into. When the economy is shut down by government decree, there is not a free economy. Basic economics I learned in college in 1979. We called it communism. 

[BradleyPNW + 282]

22 hours ago, Valerie Williams said:

Please stop saying you're an American. You're a disgrace.

Low income Eastern European background. Lesbian porn. Coke fueled nights in NYC clubs. Parties with Jeffrey Epstein. Bogus EB-1 residency application based on "modeling." Lied about her education. Pumped out an anchor baby with Donald. Oh, and she also showed her hand by suing a blogger for talking about her history of whoring. Did Obama sue Donald Trump et al for falsely claiming he was born in Kenya? No? Yeah, that's because Obama was not born in Kenya. Melania, in contrast, got real sensitive about the accusations against her. 

So sure, Val. I'm the disgrace for pointing out Melania was a prostitute before she transitioned to trophy wife. 

[El Nikko + 2,145]

Well that escalated quickly

[Gerry Maddoux + 3,627]

6 hours ago, D Coyne said:

Gerry,

Main point is we import very little Saudi oil, so tariffs won't work.

Direct quote from today's WSJ: "'We pulled the plug,' Mr. Kirkland said. Cantium's fields (US offshore) which were producing 20,000 barrels a day, will be shut for at least two months, possibly four. Gulf Coast refiners told Mr. Kirkland they would substitute Gulf crude with Saudi barrels from two tankers sitting offshore."

It looks to me like "we import very little Saudi oil" until they detect a storage problem and by selling as spot merchants off the coast are able to block all ingress into, and egress from the Cushing Hub. Left to their devices, the Saudis will literally choke off US oil production.

Edited April 23, 2020 by Gerry Maddoux
Said something stupid.

[Gerry Maddoux + 3,627]

34 minutes ago, BradleyPNW said:

Low income Eastern European background. Lesbian porn. Coke fueled nights in NYC clubs. Parties with Jeffrey Epstein. Bogus EB-1 residency application based on "modeling." Lied about her education. Pumped out an anchor baby with Donald. Oh, and she also showed her hand by suing a blogger for talking about her history of whoring. Did Obama sue Donald Trump et al for falsely claiming he was born in Kenya? No? Yeah, that's because Obama was not born in Kenya. Melania, in contrast, got real sensitive about the accusations against her. 

So sure, Val. I'm the disgrace for pointing out Melania was a prostitute before she transitioned to trophy wife. 

While I'm sure Valerie can handle herself, you're pretty far out of line. The First Lady has conducted herself with grace and dignity. 

Tom, it's up to you, but if you let this . . . gentleman . . . continue, I'm out. I enjoy this place because I learn a lot, but I can't stomach this. 

[Valerie Williams + 129]

Just reading here, together with the very little I know or understand, it seems as if our only recourse against the Saudis, because they overproduced intentionally, without regard for the demand side of the equation nor the ecological consequences, is to refuse to buy their underpriced product. Gerry seems to be making the case that the way to do that is through tariffs, and D Coyne has pointed out that we're not a big enough customer for our tariffs to matter. Do I get the gist?

So is there some leverage besides tariffs? Or can we get the world community to form some sort of leveraged response to OPEC's price-fixing ways?

And one of the reasons I came looking on this forum is to ask if it's reasonable to suspect the Saudis weren't really fighting with the Russians at all, and that the American shale producers were the true target?

[Selva + 252]

25 minutes ago, Gerry Maddoux said:

While I'm sure Valerie can handle herself, you're pretty far out of line. The First Lady has conducted herself with grace and dignity. 

Tom, it's up to you, but if you let this . . . gentleman . . . continue, I'm out. I enjoy this place because I learn a lot, but I can't stomach this. 

While Tom is away, I'll jump in. I agree with you Gerry. This is way out of line. And someone calling a woman all these names, no matter what woman we are talking about,  certainly isn't a gentleman. 

@BradleyPNW lets stop with dirty talk and get back to the topic. 

[BradleyPNW + 282]

38 minutes ago, Gerry Maddoux said:

While I'm sure Valerie can handle herself, you're pretty far out of line. The First Lady has conducted herself with grace and dignity. 

Tom, it's up to you, but if you let this . . . gentleman . . . continue, I'm out. I enjoy this place because I learn a lot, but I can't stomach this. 

If you guys want to keep bringing it up I can keep talking about it. 

[BradleyPNW + 282]

12 minutes ago, Selva said:

While Tom is away, I'll jump in. I agree with you Gerry. This is way out of line. And someone calling a woman all these names, no matter what woman we are talking about,  certainly isn't a gentleman. 

@BradleyPNW lets stop with dirty talk and get back to the topic. 

It's true. Why is truth out of line. Is it because you don't like the truth? 

[Eyes Wide Open + 3,541]

7 minutes ago, Valerie Williams said:

Just reading here, together with the very little I know or understand, it seems as if our only recourse against the Saudis, because they overproduced intentionally, without regard for the demand side of the equation nor the ecological consequences, is to refuse to buy their underpriced product. Gerry seems to be making the case that the way to do that is through tariffs, and D Coyne has pointed out that we're not a big enough customer for our tariffs to matter. Do I get the gist?

So is there some leverage besides tariffs? Or can we get the world community to form some sort of leveraged response to OPEC's price-fixing ways?

And one of the reasons I came looking on this forum is to ask if it's reasonable to suspect the Saudis weren't really fighting with the Russians at all, and that the American shale producers were the true target?

There will come a time when this will be all sorted out. To think Western culture would allow any undeveloped country or countries have such a vital role in their own affairs is now showing to be a disaster of untold proportions.

Let's all look at the power players and long occurred wealth. Iran..Iraq...Saudi Arabia....Russia....Venezuela etc etc.

It's is time to move on..time to end this house of cards.

[Tom Kirkman + 8,860]

1 hour ago, BradleyPNW said:

Low income Eastern European background. Lesbian porn. Coke fueled nights in NYC clubs. Parties with Jeffrey Epstein. Bogus EB-1 residency application based on "modeling." Lied about her education. Pumped out an anchor baby with Donald. Oh, and she also showed her hand by suing a blogger for talking about her history of whoring. Did Obama sue Donald Trump et al for falsely claiming he was born in Kenya? No? Yeah, that's because Obama was not born in Kenya. Melania, in contrast, got real sensitive about the accusations against her. 

So sure, Val. I'm the disgrace for pointing out Melania was a prostitute before she transitioned to trophy wife. 

MDS

Melania Derangement Syndrome

 

[Tom Kirkman + 8,860]

3 hours ago, BradleyPNW said:

Low income Eastern European background. Lesbian porn. Coke fueled nights in NYC clubs. Parties with Jeffrey Epstein. Bogus EB-1 residency application based on "modeling." Lied about her education. Pumped out an anchor baby with Donald. Oh, and she also showed her hand by suing a blogger for talking about her history of whoring. Did Obama sue Donald Trump et al for falsely claiming he was born in Kenya? No? Yeah, that's because Obama was not born in Kenya. Melania, in contrast, got real sensitive about the accusations against her. 

So sure, Val. I'm the disgrace for pointing out Melania was a prostitute before she transitioned to trophy wife. 

 

3 hours ago, El Nikko said:

Well that escalated quickly

 

2 hours ago, Gerry Maddoux said:

While I'm sure Valerie can handle herself, you're pretty far out of line. The First Lady has conducted herself with grace and dignity. 

Tom, it's up to you, but if you let this . . . gentleman . . . continue, I'm out. I enjoy this place because I learn a lot, but I can't stomach this. 

 

2 hours ago, Selva said:

While Tom is away, I'll jump in. I agree with you Gerry. This is way out of line. And someone calling a woman all these names, no matter what woman we are talking about,  certainly isn't a gentleman. 

@BradleyPNW lets stop with dirty talk and get back to the topic. 

 

2 hours ago, BradleyPNW said:

If you guys want to keep bringing it up I can keep talking about it. 

 

2 hours ago, BradleyPNW said:

It's true. Why is truth out of line. Is it because you don't like the truth? 

 

Jeez, I'm out and about for few hours, and walk back into this.

 

Ya know, it's generally not a good idea to repeatedly insult the spouse of a VIP, just because you dislike that VIP.

Clearly, your mileage may vary.

Says a lot about your character, though.

 

[Dan Clemmensen + 1,011]

6 hours ago, D Coyne said:

Dan,

Note that the US still imports 5600 kb/d of crude oil, so we will continue to be affected by World oil prices.  Also note that the tight oil producers need at least $75/bo to make a profit and be in a position to pay back debt. 

Perhaps the US government should subsidize the oil producers at $25/b so that prices remain at $50/bo?

It does not seem a very Republican thing to do.

Of course hand outs for big business has become a way of life in the US, unfortunately.

I think that's the pre-pandemic figure, right? We import(ed) Heavy crude to be processed by refineries that are configured for a mix that must currently include that crude. In the short term, we will indeed need to import heavy crude, but we can adjust the tariff/embargo to require that a company that needs to use heavy crude may do so by exporting US crude on a barrel-for-barrel basis.

[Gerry Maddoux + 3,627]

33 minutes ago, Valerie Williams said:

Gerry seems to be making the case that the way to do that is through tariffs

I was making that case, Valerie, but now I think we're well past that point. Yes, in my opinion, the Saudis targeted US oil production from the beginning. Now, according to the Wall Street Journal article, they're parking in the GOM, willing to undercut any bid from the Cushing Hub to the refineries. In doing that they've effectively blocked our entire infrastructure. So now, again just my opinion, if we are to save our oil industry, we must ban them from offloading their oil, except to supply their own 100% owned refinery at Motiva. 

[Tom Kirkman + 8,860]

1 minute ago, Gerry Maddoux said:

I was making that case, Valerie, but now I think we're well past that point. Yes, in my opinion, the Saudis targeted US oil production from the beginning. Now, according to the Wall Street Journal article, they're parking in the GOM, willing to undercut any bid from the Cushing Hub to the refineries. In doing that they've effectively blocked our entire infrastructure. So now, again just my opinion, if we are to save our oil industry, we must ban them from offloading their oil, except to supply their own 100% owned refinery at Motiva. 

Seconded.