Oil

[GMDino]

Some things I did not know about the US oil business as the news tells us how Biden isn't doing enough to keep gas prices low while Ukrainians are literally fighting for their lives.

2) As a direct result, Oil prices went up, US oil production increased, and us exports ramped SIGNIFCANTLY pic.twitter.com/RAsOONf8rh

— Listen occasionally, you may learn something... (@LotaInsLotaOuts) October 13, 2021

 

4) So as we head towards midterms and oil prices become a pressing economic issue, its important to remember how we got here:

GOP lawmakers took money from the oil lobby to allow Oil Companies to sell US natural resources, tax free, right out from under Americans feet

— Listen occasionally, you may learn something... (@LotaInsLotaOuts) October 13, 2021

6) In 2020, that production number hit 19M barrels/day, which is salient, because:

#2 -- US oil demand is 18.5M barrels/day, meaning as of 2020, the US produces enough oil domestically to meet our entire demand.

We could be energy independent....if we did ship out our oil...

— Listen occasionally, you may learn something... (@LotaInsLotaOuts) October 13, 2021

 

[StrictlyBiz]

Quote:GOP lawmakers took money from the oil lobby to allow Oil Companies to sell US natural resources, tax free, right out from under Americans feet

Good information, but let's be honest and not pin it on one party. I find it amusing when people only tell half of the story, conveniently leaving out the obvious second 1/2. Dead give-away that you're dealing with a partisan political hack.

Quote:President Obama signed the 2016 spending bill Friday, including a provision that would allow the export of U.S. crude for the first time in more than 40 years.

https://www.investors.com/news/oil-export-ban-lift-needs-obama-ok/

[basballguy]

Stricklybiz touched on Obama approving the legislation so I'll leave that alone....


But really....

Quote:2) As a direct result, Oil prices went up, US oil production increased, and us exports ramped SIGNIFCANTLY

Are you really trying to suggest increasing the supply of oil caused an INCREASE in the price of oil?  

[GMDino]

(03-03-2022, 11:03 AM)StrictlyBiz Wrote: Good information, but let's be honest and not pin it on one party. I find it amusing when people only tell half of the story, conveniently leaving out the obvious second 1/2. Dead give-away that you're dealing with a partisan political hack.


https://www.investors.com/news/oil-export-ban-lift-needs-obama-ok/

Oh yeah.  I wasn't blaming one party or another.  This is a capitalism/anything for a profit thing.

It just directly relates to those blaming Biden for gas prices and saying we should keep our oil here.  We used to.

[StrictlyBiz]

(03-03-2022, 11:38 AM)GMDino Wrote: Oh yeah.  I wasn't blaming one party or another.  This is a capitalism/anything for a profit thing.

It just directly relates to those blaming Biden for gas prices and saying we should keep our oil here.  We used to.

You're not, but the guy you are quoting is. I tend immediately not trust people who do that. That's not to say that in this case his tweets are untrue, but anything from him will be taken with extreme skepticism. 

[KillerGoose]

Regarding energy independence, the U.S. was classified as energy independent in 2019 and 2020. This is normally just attributed to Trump but like most things, it's complicated and there is more to it. It was a long journey that culminated in success under the Trump administration, but it wasn't necessarily BECAUSE of him. The march started back in the Bush administration and was continued throughout the Obama and Trump admin. The bill that Obama signed allowing exports of oil allowed oil producers to enter new markets. It was ultimately a move that assisted in the U.S. achieving that independence in 2019 and 2020.

The independence was taken away primarily due to COVID as supply tanked. Once demand recovered, the supply has still been behind, so we are no longer independent. Biden has also implemented bills that could impact oil supplies down the road.

[GMDino]

(03-03-2022, 11:50 AM)KillerGoose Wrote: Regarding energy independence, the U.S. was classified as energy independent in 2019 and 2020. This is normally just attributed to Trump but like most things, it's complicated and there is more to it. It was a long journey that culminated in success under the Trump administration, but it wasn't necessarily BECAUSE of him. The march started back in the Bush administration and was continued throughout the Obama and Trump admin. The bill that Obama signed allowing exports of oil allowed oil producers to enter new markets. It was ultimately a move that assisted in the U.S. achieving that independence in 2019 and 2020.

The independence was taken away primarily due to COVID as supply tanked. Once demand recovered, the supply has still been behind, so we are no longer independent. Biden has also implemented bills that could impact oil supplies down the road.

Our natural gas production alone is amazing.  

We still need to invest in alternative energy like wind and solar but there just doesn't seem to be the desire to do that, just to keep complaining that gas is too high.

[*michaelsean*]

(03-03-2022, 11:03 AM)StrictlyBiz Wrote: Good information, but let's be honest and not pin it on one party. I find it amusing when people only tell half of the story, conveniently leaving out the obvious second 1/2. Dead give-away that you're dealing with a partisan political hack.


https://www.investors.com/news/oil-export-ban-lift-needs-obama-ok/

Yes he obviously and intentionally left out that the President had to sign the bill and who the President was.  It seems very few people are capable of discussing a topic without throwing stones one way or the other.

[basballguy]

(03-03-2022, 11:38 AM)GMDino Wrote: Oh yeah.  I wasn't blaming one party or another.  This is a capitalism/anything for a profit thing.

It just directly relates to those blaming Biden for gas prices and saying we should keep our oil here.  We used to.

who is saying this?  This is the first time i've seen this take.  

That aside, what do you expect the oil companies to do with all the oil?  The US oil production levels over the last 20 years obliterate what they were back when this export ban was put in place.  Hell, the reason they lifted the ban was because they didn't need it anymore with all the oil the US was producing.  

Normally when you have excess supply, you look for more places to sell it.  I'm not sure why anyone would consider that a bad thing.  

[GMDino]

(03-03-2022, 11:59 AM)basballguy Wrote: who is saying this?  This is the first time i've seen this take.  

That aside, what do you expect the oil companies to do with all the oil?  The US oil production levels over the last 20 years obliterate what they were back when this export ban was put in place.  Hell, the reason they lifted the ban was because they didn't need it anymore with all the oil the US was producing.  

Normally when you have excess supply, you look for more places to sell it.  I'm not sure why anyone would consider that a bad thing.  

It's a pretty popular sentiment.  For example:

http://thebengalsboard.com/Thread-Political-Comics-Memes-Jokes-etc?pid=1184162#pid1184162

But more to the point any time the price of gas goes up people push the "drill baby drill" narrative too and that ignores that what they drill doesn't  stay here.

Just like the oil that would have gone through the new XL pipeline would not have stayed in the US.

People aren't always informed when they start chanting catch phrases or wearing them at the SOTU.

[GMDino]

(03-03-2022, 11:56 AM)michaelsean Wrote: Yes he obviously and intentionally left out that the President had to sign the bill and who the President was.  It seems very few people are capable of discussing a topic without throwing stones one way or the other.

Did no one know who was PTOUS in 2014?

He didn't exactly hide the date...lol.

It's just funny that that would seem to be a bigger deal than that it happened at all. Maybe they just want to "throw stones"?

[*michaelsean*]

(03-03-2022, 12:25 PM)GMDino Wrote: Did no one know who was PTOUS in 2014?

He didn't exactly hide the date...lol.

It's just funny that that would seem to be a bigger deal than that it happened at all.  Maybe they just want to "throw stones"?

Why did he only mention the oil bribed GOP congress?  Who bribed Obama?

[GMDino]

(03-03-2022, 12:30 PM)michaelsean Wrote: Why did he only mention the oil bribed GOP congress?  Who bribed Obama?

I'd assume the oil companies?

BBg thought it was just a good policy to sell excess oil...maybe Obama thought the same?  

My point being that the author didn't hide the timeline even if he didn't mention Obama by name and made a dig at the gop.  None of that changes the truth that we don't keep our own oil and probably won't even when gas reaches $5.00 a gallon.

[GMDino]

So coincidentally I just had the following exchange with a couple of the guys in our shop:

Employee 1) Gas is $4.00 a gallon!

Employee 2) Who did that?

E1) Biden!

Me) Did Biden invade Ukraine?

E1) No!  Putin did!

Me- Explains what I said in this thread about the XL pipeline not bringing oil here and the gop and Obama allowing the sale of US oil overseas in 2014.

E1) Biden is president right now.  It's all his fault.

Employee 1 then leaves for lunch.

Some guys just can't be reasoned with.

[Rotobeast]

For what it's worth... in the end of December I was in New Orleans and spoke with a couple of different people who worked at refineries that told me that the market was being manipulated by their companies to recoup profits that were lost during the pandemic. Take it as hearsay, but that is what was relayed to me. I do criticize Biden for not opening up reserves sooner. I think doing so would have stimulated the economy and slowed the price increase of many good/services.

[GMDino]

(03-03-2022, 11:03 AM)StrictlyBiz Wrote: Good information, but let's be honest and not pin it on one party. I find it amusing when people only tell half of the story, conveniently leaving out the obvious second 1/2. Dead give-away that you're dealing with a partisan political hack.


https://www.investors.com/news/oil-export-ban-lift-needs-obama-ok/

(03-03-2022, 12:30 PM)michaelsean Wrote: Why did he only mention the oil bribed GOP congress?  Who bribed Obama?

Sorry I wanted to come back to this after getting time to read the entire article:

Quote:President Obama signed the 2016 spending bill Friday, including a provision that would allow the export of U.S. crude for the first time in more than 40 years.


The bill passed through Congress quickly, with politicians eager to start their holiday vacations, even though some Democrats were upset it included the provision to lift the crude export ban and didn't allow Puerto Rico to declare bankruptcy. But the legislation, which included a tax credit for wind and solar energy, included enough for Democrats to push it through.


First Solar (FSLR) shares fell 1.7% to close at 63.41 in the stock market today. SunPower (SPWR) shares closed up 3.5%. SunEdison (SUNE) share jumped 4.2% after making large gains earlier this week.


The $1.1 trillion omnibus budget got President Obama's signature late afternoon Friday, even though he threatened to threatened to veto legislation lifting the ban.


Now Continental Resources (CLR), EOG Resources (EOG) and other shale players, along with oil majors like Exxon Mobil (XOM) and Chevron (CVX), can start exporting crude extracted from U.S. oilfields.

The ban started in the 1970s as an attempt to protect Americans from price spikes, some of which were caused by Middle Eastern countries using oil as a political weapon.


But shale producers have long argued the ban is outdated, and since oil prices have plunged, they have also said allowing exports would help support continued drilling activity.


The Energy Department also has said lifting the ban would boost the U.S. economy and could help lower gasoline prices, echoing what economists have being saying for years.


Oil prices have been falling on worries over a supply glut, and U.S. crude futures settled down Friday.


Continental shares plunged 6% to 22.71. EOG shares were down 2.6%. Cabot Oil & Gas (COG) shares climbed 0.9%. Exxon shares fell 0.9%. Chevron shares were down 0.8%.

So it looks like a little "bipartisanship" got that through with the tax breaks for alternative energies too.

Still not saying I agree with it.  And my main point remains that when gas prices go up there is something we could do...but that might cut into profits.

[GMDino]

(03-03-2022, 01:18 PM)Rotobeast Wrote: For what it's worth... in the end of December I was in New Orleans and spoke with a couple of different people who worked at refineries that told me that the market was being manipulated by their companies to recoup profits that were lost during the pandemic. Take it as hearsay, but that is what was relayed to me. I do criticize Biden for not opening up reserves sooner. I think doing so would have stimulated the economy and slowed the price increase of many good/services.

And the price of oil is manipulated daily by speculators.  That's why I want more investment into wind and solar. 

[SunsetBengal]

(03-03-2022, 01:02 PM)GMDino Wrote: So coincidentally I just had the following exchange with a couple of the guys in our shop:

Employee 1) Gas is $4.00 a gallon!

Employee 2) Who did that?

E1) Biden!

Me) Did Biden invade Ukraine?

E1) No!  Putin did!

Me- Explains what I said in this thread about the XL pipeline not bringing oil here and the gop and Obama allowing the sale of US oil overseas in 2014.

E1) Biden is president right now.  It's all his fault.

Employee 1 then leaves for lunch.

Some guys just can't be reasoned with.

Fuel prices have been increasing steadily for the past 2 years.  Can't really blame it on the Russians invading Urkraine when we could have finished the pipeline, and cut dependence upon Russian oil out of the loop completely.

[Stewy]

As most of you know I am a 31 year veteran of the O&G industry, as a Prospect Generator and Senior Petroleum Geoscientist.....basically I find oil and gas.  However, I am also a student of the industry watching trends, and have been following fluctuations in Oil prices and gas prices and the ups and downs for my entire time in the industry.  I basically have forgotten more about oil and gas trends than the writer of these tweets thinks he knows.  But I post this not to share a resume but to refute one of his points.

Quote:2) As a direct result, Oil prices went up, US oil production increased, and us exports ramped SIGNIFCANTLY

The correlation he makes in this point is a complete mis-interpretation of facts.  He's making a correlation to fit his narrative, when if he really understand the industry, he would understand that what he posted is a complete over simplification  of oil price responses.  He points to a spike to establish a trend and calls upon a factor that has no control on long term prices to fit his narrative.

Here's how oil prices work.  There are long term trends and there are short term trends.  But first let's talk about volatility due to unknowns.  One of the key factors in short term oil prices is volatility.  Most of the oil that is produced around the world outside of OPEC and OPEC+ is highly monitored and regulated.  However, OPEC, not only reports to no one but themselves, but mostly sells in bulk and has no responsibility to report their production numbers to anyone.  In other words they can lie about how much oil they produce and all we really know is how much oil they SAY they sell.  Commodities markets don't like this.  To compensate Wall Street looks to US and North Sea (European) refinery stocks (levels of reserves in above ground tanks) to determine how full their reserves are and thus how much excess oil could be on the market.  The IEA (https://www.iea.org/) is an international watchdog organization, which watches refinery stocks across the world, listens to what everyone SAYS they are doing, and based upon registered and reported US and European production along with what OPEC and OPEC+ SAYS they are going to do, makes long term predictions about whether the world is in a surplus or deficit in terms of global needs vs. supply.  Basically the whole oil and gas world listens to IEA.  The problem with this is OPEC lies and OPEC+ lies.  Example:  OEPC will say it is going to add 400,000 barrels/day to global production, which will be spread among it's member countries.  OPEC will then speak with OPEC+ (Russia and the like) and give them a piece of it if they want it.  The problem is that it is becoming increasingly clear that most of the OPEC members don't have spare capacity, and the two that do (Saudi and Qatar) refuse to make up the slack for the rest of the member companies.  So OPEC lies, IEA, reacts to what they say they are going to do and for MONTHS (like from September through January), IEA is reporting oil prices will fall because in January we should be in a surplus situation associated with the extra oil OPEC said it would put on the market.  It wasn't until this month that IEA saw enough evidence that OPEC hasn't delivered to report as such and called upon OPEC to meet their quotas.  IEA's report of OPEC's failures makes prices go up.....OPEC's refusal to act keeps prices up, and the daily refinery levels stay historically low due to lack of supply instead of the surplus that was expected.  See how complicated this is? Anyway, enough about volatility...

Short term trends show the volatility in the market and results from speculation, unknowns and the importance of energy and specifically O&G to our daily lives.  Short term trends are emotional.  Weather events, political situations, wars, daily refinery stock reports, etc are all short term events.  

Example of a failed measure that attempts to be a long term control and doesn't even affect short term prices:  The Biden admiration's release of oil from the national reserves are worthless, emotional and irrelevant.  They affects prices not at all (evidence - look back at prices each time he's done it) and because they give refiners a discount on the oil to use it, which only results in padding refiners bank accounts, it affects oil prices not at all.  Why does it not affect prices?  Because refiners use it immediately and don't put it in their tanks, so refinery stocks do not go up, IEA reports no stock builds and wall street doesn't care.  Why do they not put it in their tanks?  because they're getting a discount.  Refine 80$ gift oil when prices are 100+$ and you're making big money.  Why put that in your tanks, when you can refine it and sell it?  It's simple economics.  Also the amount of oil released is miniscule.  The US produces 17 mil barrel/day.  Release 40 mil barrel and that's two days production spread across the entire countries refiners.  Let's put his in perspective...OPEC has a 50-200,000 BPD shortfall in their reported production number.  A release of our strategic reserves gets swallowed up in 20 days of OPEC shortfall, thus why it is a joke that releasing that oil will affect long term oil prices.

Long term trends - I already spoke of this in volatility, so I don't need to belabor it.  But basically these are trends associated with long term oil and gas production and refining short falls and build trends.  Though the IEA reports daily on builds and reductions at US refineries, and this affects short term volatility (damn speculators), it is the patterns over several days and months that matter to long term prices.

Another note on Refinery Stocks:  One might ask why the refineries aren't refilling their stocks and here's the problem.  When oil prices crashed to below 40$ in 2014-2015, the refiners replaced their stocks with cheap oil.  This established a long term trend.....as prices stayed low, refiners kept putting more and more in storage, thus keeping the prices low.  It's a viscous circle, and it takes months if not years of refinery stock draws (reductions) to reverse the trend.  As prices go up for various reasons (short term or long term), refiners will keep the cheap oil in their tanks and buy off the market.  If oil prices rise enough the refiners will pull from their tanks to refine the 2014 30$ oil instead of buying 60$ oil on the market.  They don't do it all at once, because what if prices go up more, and they need to keep a steady purchasing flow coming in and MOST oil is bought on a month to month contract basis, so they buy their May oil in March or something like that.  This is also why they do not put the oil from the Strategic reserves in their tanks.  They are getting it at a discount, but even heavily discounted they are not going to mix 70-80$ oil with the 30$ oil in their tanks.  Bottom line is this:  Unless there ends up being a worldwide long term supply glut that FORCES refiners to mix cheap and expensive oil, they aren't going to do it for simply economic reasons and oil prices will stay high, armored from short term volatility, but continuously low stocks.

So why this quote is ignorance or falacy.

Quote:2) As a direct result, Oil prices went up, US oil production increased, and us exports ramped SIGNIFCANTLY

#1 - He's saying that production and oil prices went up due to US exporting it's crude.  This is a complete fallacy for the reasons I've stated but also specifically because:
a)  US production didn't increase significantly because of this....this is an out right fabrication or mis-use of data.  The fact is US production was already going up at the time because oil and gas project take YEARS to bring online.  Not days weeks or months, but years.  And the larger the project, the longer it takes.  Production is NEVER ever ever linked to short term oil price fluctuations.  They are on completely different time scales.
b) because US production didn't increase because of this, there therefore was no short term affect on oil prices.  There could and likely was a long term affect on oil prices, but giving the US producers more customers for their oil, but that wasn't and isn't seen on this graph.
c)  He misinterprets the graph (purposefully or ignorantly), by taking a short term price drop spike and drawing an arbitrary line.  Longer term price movement is longer term than a year and you NEVER extrapolate trends in price by using spikes.
The real trends are in purple in the attachment:
   
You see here some interesting trends.  You never use the bottom or top of a spike to establish a baseline.  Long term events create spikes and RE-ESTABLISH a baseline.  With baseline changes come short term emotional impact and speculation, thus one gets spikes with baseline changes, but the spikes should never be used to re-establish the new trend.  The guy in the tweet mis-interprets the trend by using a spike to establish a false trend.  Either because he's ignorant or just trying to sell his narrative.

To re-enforce this please see the trends for WTI crude over the last 5 years.  What you see here are several long term low slope trends (purple lines up and down).  Several baseline changes associated with specific and easily established long term events (red arrows) and a very recent spike to over 100$ (blue arrow) which is likely, and hopefully only a temporary spike (Russia invasion of Ukraine).  However prior to Russia invading Ukraine, the first part of this year has seen oil on a very steep and consist high angle slope change, which I believe is a long term re-establishment of a trend higher (last red arrow on the right).  This is associated with the event I mentioned above of the IEA predicting lower prices for 6 months based upon OPEC projected output increases and it coming clear that OPEC has been in a major shortfall with that agreed upon build AND growing speculation that neither OPEC nor Russia has the spare capacity they say they have.  
   
Moreover, while I believe the Rus/Uk spike is temporary, there are older examples of spikes occurring during steep slope changes that re-established a higher trend than what is normally expected.  The example is from 2005 there was a slope change and re-establishment of a higher oil price trend happening during 2005.  This was associated with several large military conflicts and revolutions happening at the same time in major OPEC nations.  Conflicts in the Niger delta started in 2004; conflicts in Pakistan (affecting relations with Iran); but the big one was the ongoing conflict in Iraq (2003), which affected Kuwait as well.  All of these caused major concerns in terms of short term volatility, but the continued conflicts caused concerns of major long term supply disruption, and a re-establishment of a higher trend started in mid 2005.  Right in the middle of these events the 2005 hurricane season with SIX Cat 3 or higher hurricanes hitting the Gulf Cost from Brownsville to New Orleans, with Rita and Katrina being the biggest disruptors. These hurricanes damaged or closed some Gulf Coast refineries for months causing a spike during a steep trend change.   This slope with a spike did not relax and sent us toward 80-100$ oil which maintained until the 2014 oil crash.  And we are in the same spot again with a spike during a steep upward trend adjustment.  The question is will the trend relax from the spike or establish an even higher trend.

Lastly, for those interested, the website I use for watching daily oil price and industry trends is https://oilprice.com/ - this is a great site for watching to the minute oil price oil fluctuations if you're interested in such things, but why I really like the site is the "LATEST ENERGY NEWS" because the articles really show multiple sides of what's going on not just in the  O&G industry but in the entire energy industry. In another thread talking about Nuclear Power I shared an article talking about FUSION, that came from this website.

Happy to discuss further.

[basballguy]

Stewy What’s the ISBN for the novel you just wrote?