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I am in the camp that says higher oil prices are good for the US.  It's a good chunk of the economy.  We would do better with lower health care prices and cheaper insurance at all levels.

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On 4/2/2019 at 10:24 AM, wrs said:

I am in the camp that says higher oil prices are good for the US.  It's a good chunk of the economy.  We would do better with lower health care prices and cheaper insurance at all levels.

In the name of full disclosure please list your long oil positions.  

I say buy the shale consolidators.

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26 minutes ago, JJCar said:

In the name of full disclosure please list your long oil positions.  

I say buy the shale consolidators.

LOL!  I have royalty interests in 10 Permian shale wells and one EagleFord so I do admit some bias to be fair!  However, I am busy stimulating the economy with my royalties and bonuses.  

 

 

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On 4/2/2019 at 11:01 AM, wrs said:

LOL!  I have royalty interests in 10 Permian shale wells and one EagleFord so I do admit some bias to be fair!  However, I am busy stimulating the economy with my royalties and bonuses.  

 

 

LoL . . Fair enough.  That's Great. Good for you.

But don't you think it would be nice if hundred million people who work for a living could stimulate the economy with the $50 they could save each week on gasoline.  

Or the $ hundreds millions US business large and small would save that can be reinvested or used to expand. 

I'd be interested in knowing how you felt in 2016 when OPEC knocked the price of oil down to $26 bbl ?

If oil traded at $55 / bbl would your royalties change.  Are you compensated based on the market price or profit.  Don't need to answer if don't want to, that is personal info 

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50 minutes ago, JJCar said:

LoL . . Fair enough.  That's Great. Good for you.

But don't you think it would be nice if hundred million people who work for a living could stimulate the economy with the $50 they save a week on gasoline.  

Or the $ hundreds millions US business large and small would save that can be reinvested or used to expand.

If oil traded at $55 / bbl would your royalties change.  Are you compensated based on the market price or profit.  Don't need to answer, that is personal. 

Royalties are a great deal, you get paid off the gross but are subject to ad-valorem tax on your royalties at the same rate as the oil company.  So when people add royalty and ad-valorem they are double counting on the royalty because the royalty owner is responsible for their own ad-valorem.  

Definitely the royalty checks are directly proportional to the posted price for oil but the oil doesn't sell for the futures and spot market price.  Normally there are discounts based on API and other factors.  The wellhead price is usually lower than the market posted price for WTI.  Similar situation for the associated gas but this gas is rated about 1.31 BTU factor and so when it's stripped, you end up getting more than the hub posted prices.

As far as the increase in gasoline prices and it being a tax.  The increase in health care insurance is way more than what people pay for gasoline in a month.  There is always some adjustment that is made in budgets and a gallon of gas goes a lot further today than even 5 years ago.  The money made from exporting oil is reducing the trade deficit and funding more domestic spending by the energy sector through increased hiring and expansion.  That is a big factor that we haven't had in the past.  This old tax meme on the price of gasoline is just voodoo economics to quote a now dead president. 

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1 hour ago, JJCar said:

 

But don't you think it would be nice if hundred million people who work for a living could stimulate the economy with the $50 they save a week on gasoline.  

Or the $ hundreds millions US business large and small would save that can be reinvested or used to expand. 

Beyond the points WRS makes about the stimulative effects of nice fat royalty checks, the many studies I've read indicate that the "wealth effect" of, for instance, watching the value of your stock positions go up, vastly exceeds the bang you get from reduced prices. In other words, the psychology of observing your net worth increasing outweighs the (minor) psychological effect of paying less for something, especially a staple.

I for one spend more on auto insurance annually then I ever spend on gasoline in the same year. Admittedly I'm not driving that much anymore and have a lot of vehicles. People don't typically drive less just because the fuel is more expensive. They may or may not have to cut back somewhere else (movies? ) when gas goes up. Frankly fuel is a tremendous bargain and you'll spend as much for one meal in a sit down restaurant as filling your tank. On a BTU basis, the fuel is infinitely greater than the food calories. ;)

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On 4/2/2019 at 1:16 PM, Ward Smith said:

Beyond the points WRS makes about the stimulative effects of nice fat royalty checks, the many studies I've read indicate that the "wealth effect" of, for instance, watching the value of your stock positions go up, vastly exceeds the bang you get from reduced prices. In other words, the psychology of observing your net worth increasing outweighs the (minor) psychological effect of paying less for something, especially a staple.

I for one spend more on auto insurance annually then I ever spend on gasoline in the same year. Admittedly I'm not driving that much anymore and have a lot of vehicles. People don't typically drive less just because the fuel is more expensive. They may or may not have to cut back somewhere else (movies? ) when gas goes up. Frankly fuel is a tremendous bargain and you'll spend as much for one meal in a sit down restaurant as filling your tank. On a BTU basis, the fuel is infinitely greater than the food calories. ;)

Yes, $55 bbl Oil would greatly increase economy and stock market and ALL WOULD BENIFIT.  

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If you're correct that the economy is tied to the price of oil directly, we should be able to superimpose a GDP graph onto an oil price graph and see them move in lock step. I don't believe I've ever seen a graph like that however. Quite the reverse in fact

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9 hours ago, wrs said:

I am in the camp that says higher oil prices are good for the US.  It's a good chunk of the economy.  We would do better with lower health care prices and cheaper insurance at all levels.

High oil prices would lead to better fuel choices such as natural gas, biomethane, ethanol, electric vehicles etc. 

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The debt-ridden shale oil fiasco in the States has put thousands, if not hundreds of thousands, out of work internationally due to the uncertainty regarding a stable price of oil. The ebb and flo of the oil price  caused by production/drilling surges in the shale industry responding to higher prices then driving the price down again has essentially killed off drilling internationally, with the resulting loss of jobs (mine included).

Eventually the shale oil house of cards will fail. I just hope I am around to pick up a few more years worth of work.

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Shale is a contributing factor but so was lower for longer in 2015 by KSA.  Another factor has been the Canadian oil sands.  Lately though it was political, i.e. the drop this fall.  There were some serious geopolitical machinations on both sides.  Sorry you lost your job because of unstable oil prices but that is the history of the industry.  I grew up in Houston and I have watched oil booms and busts all my life, 63 years.

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4 hours ago, ronwagn said:

High oil prices would lead to better fuel choices such as natural gas, biomethane, ethanol, electric vehicles etc. 

I am OK up to $70. 

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KSA behaved just like any American Company would have. Was it effective? Alberta's economy is still in ruins. 

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(edited)

15 hours ago, Marc Savoie said:

KSA behaved just like any American Company would have. Was it effective? Alberta's economy is still in ruins. 

Do we blame that on KSA or politicians? I'm going with Canadian and US liberal politicians. Or do you feel a carbon tax and royalty increase in the middle of a downtown was a great idea? Do you think pipelines are a bad idea? Because Canadians Not from Alberta most surely have made their negative feelings known. 

Edited by Ward Smith

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