If 25% of a commodity is removed, will the consumers' cost go up?

[healthmyths]

That’s not accurate, they produce when market prices make it economically viable to produce, otherwise they leave the oil in the ground.

Not really. Given most of our energy comes from private land, it's private land owners that hold off. They'll sit on it until the price increases which is why it's important to have fuel come from public lands.

Where are you getting this information Ray?

BTW 90% of our domestic oil production comes from private and STATE OWNED land and private land lease holders have no incentive to “hold off” since they don’t bear any of the costs for production and get paid on the basis of up front fees and royalties thus “holding off” would gain them nothing.

Producers on the other hand aren’t going to pump oil out of the ground when the costs of pumping, storage and transport are greater than what the market is paying for oil, after they’d be losing money if they did.

BTW...what is your source for "90% of our domestic oil production comes from private and STATE OWNED"?
Now here are the facts:
About a quarter (25%) of U.S. oil and an eighth of the nation's natural gas is produced on federal lands.
Supporting link:

Oil from federal lands tops 1B barrels as Trump eases rules

Oil production from federally-managed lands and waters topped a record 1 billion barrels last year

abcnews.go.com

The federal share of total U.S. crude oil production fell from its peak at nearly 36% in 2009 to less than 24% in 2017 at the same time overall production increased
Supporting link:

https://crsreports.congress.gov/product/pdf/R/R42432

And the primary cause for the decline form 36% when Biden took office to less 24% when he left...
This chart should educate you!

 

[danielpalos]

Upgrading infrastructure should include increasing mass storage capacity.

 

[Ray From Cleveland]

Where are you getting this information Ray?

BTW 90% of our domestic oil production comes from private and STATE OWNED land and private land lease holders have no incentive to “hold off” since they don’t bear any of the costs for production and get paid on the basis of up front fees and royalties thus “holding off” would gain them nothing.

Producers on the other hand aren’t going to pump oil out of the ground when the costs of pumping, storage and transport are greater than what the market is paying for oil, after they’d be losing money if they did.

That depends on the contract you entered in. It's like if your home was in residential/ commercial zoning and a business wanted your land. Yes, you could sell it to them for a very handsome price, or you can agree to a land lease contract for 20 or so years where you get annual payments and keep the land, which are also usually pretty generous offers.

I've read stories on this when the price of fuel was low. It was the land owners that stopped the production. Believe it or not, oil companies could care less what the price is. That's why it's a commodity. The commodities market was designed to stabilize prices for both seller and buyer. It's a bit lengthy to get into right now, but that's how many of our products are bought and sold.

 

[Ray From Cleveland]

And if you read any of my posts you would know I am not a 'leftist' but when you have to resort to asinine labels it means you are reaching.

Sure, we should be using nuclear and natural gas as well, we should be using EVERYTHING because you do not simply ignore something that is economically viable without cause. There are places where wind is economically viable and whining about the carbon used to create them is nothing more than a distraction. Particularly when you are operating under the premise that AGW is a hoax - if you think that then pointing out the carbon footprint is beyond pointless.

Windmills DO reduce overall carbon, that is blatantly obvious and here you are again denying that basic fact. No one anywhere with half a brain is stating that we need to rely on wind power as a backbone for our power production, that is clearly asinine because we all know the wind is simply not as reliable as other methods and power supply must be absolutely reliable. However, that says nothing about augmenting our current power needs with some wind. It will never be one of the primary power generation methods in this nation but it does not have to be to be useful.

It's very windy here in the northeast Ohio area. I used to deliver to a company owned by one of these global warming nuts. He had a windmill to operate his small business.

One day the guy unloading me said the boss was throwing a party at the end of the day. The windmill finally paid itself off, and all his electricity from that point on will be free.

I went there a month later, and the windmill was gone. The owner was by the docks and I asked him what happened to the windmill? He just put his arms up as if he was getting robbed, swished them down towards the ground and said "Aaaah."

 

[NightFox]

That’s not accurate, they produce when market prices make it economically viable to produce, otherwise they leave the oil in the ground.

Not really. Given most of our energy comes from private land, it's private land owners that hold off. They'll sit on it until the price increases which is why it's important to have fuel come from public lands.

Where are you getting this information Ray?

BTW 90% of our domestic oil production comes from private and STATE OWNED land and private land lease holders have no incentive to “hold off” since they don’t bear any of the costs for production and get paid on the basis of up front fees and royalties thus “holding off” would gain them nothing.

Producers on the other hand aren’t going to pump oil out of the ground when the costs of pumping, storage and transport are greater than what the market is paying for oil, after they’d be losing money if they did.

BTW...what is your source for "90% of our domestic oil production comes from private and STATE OWNED"?

Already gave one to you, it’s from the Wall Street Journal, did you read it? If so are you implying that the WSJ reporting regarding the make of existing production land operations is inaccurate?

Anyways, your premise is fictitious based on the fact that you’re implying that domestic oil supply to market would drop 25% due to a freeze on new leases which implies that all production stops on existing federal leases (it won’t), there wouldn’t be any expansion of private and State owned leases (there likely will continue to be) and that the federal government wouldn’t replace leases that run dry in the future on a proven reserve for proven reserve basis (likely there will be if the economy needs it). Not to mention the fact that the freeze isn’t even in effect and has been halted by a federal court, a fact you left out of your OP.

As I’ve already pointed out in this thread, the effect COULD compress the U.S. PPC in the future if such an alignment of circumstances were to occur but that isn’t anywhere near a certainty.

 

[AntonToo]

That’s not accurate, they produce when market prices make it economically viable to produce, otherwise they leave the oil in the ground.

Not really. Given most of our energy comes from private land, it's private land owners that hold off. They'll sit on it until the price increases which is why it's important to have fuel come from public lands.

Where are you getting this information Ray?

BTW 90% of our domestic oil production comes from private and STATE OWNED land and private land lease holders have no incentive to “hold off” since they don’t bear any of the costs for production and get paid on the basis of up front fees and royalties thus “holding off” would gain them nothing.

Producers on the other hand aren’t going to pump oil out of the ground when the costs of pumping, storage and transport are greater than what the market is paying for oil, after they’d be losing money if they did.

BTW...what is your source for "90% of our domestic oil production comes from private and STATE OWNED"?

Already gave one to you, it’s from the Wall Street Journal, did you read it? If so are you implying that the WSJ reporting regarding the make of existing production land operations is inaccurate?

Anyways, your premise is fictitious based on the fact that you’re implying that domestic oil supply to market would drop 25% due to a freeze on new leases which implies that all production stops on existing federal leases (it won’t), there wouldn’t be any expansion of private and State owned leases (there likely will continue to be) and that the federal government wouldn’t replace leases that run dry in the future on a proven reserve for proven reserve basis (likely there will be if the economy needs it). Not to mention the fact that the freeze isn’t even in effect and has been halted by a federal court, a fact you left out of your OP.

As I’ve already pointed out in this thread, the effect COULD compress the U.S. PPC in the future if such an alignment of circumstances were to occur but that isn’t anywhere near a certainty.

Isn't it ironic that a guy who has a complaint about "myths" in his screen name spends so much time spreading myths?

 

[NightFox]

Where are you getting this information Ray?

BTW 90% of our domestic oil production comes from private and STATE OWNED land and private land lease holders have no incentive to “hold off” since they don’t bear any of the costs for production and get paid on the basis of up front fees and royalties thus “holding off” would gain them nothing.

Producers on the other hand aren’t going to pump oil out of the ground when the costs of pumping, storage and transport are greater than what the market is paying for oil, after they’d be losing money if they did.

That depends on the contract you entered in. It's like if your home was in residential/ commercial zoning and a business wanted your land. Yes, you could sell it to them for a very handsome price, or you can agree to a land lease contract for 20 or so years where you get annual payments and keep the land, which are also usually pretty generous offers.

I've read stories on this when the price of fuel was low. It was the land owners that stopped the production. Believe it or not, oil companies could care less what the price is. That's why it's a commodity. The commodities market was designed to stabilize prices for both seller and buyer. It's a bit lengthy to get into right now, but that's how many of our products are bought and sold.

You make a good point regarding potential variations in lease contracts, however the evidence appears to be anecdotal regarding the overall effect at scale.

As far as the relationship oil companies have to market price and production capacity, oil companies do in fact care about the price the market is willing to pay for their FINITE commodity (the market BTW IS futures), because producing at a higher cost than what the market is willing to pay (as happened) is a losing proposition, the result is NEGATIVE PRICES for oil which causes producers to rush to halt production (it’s better to leave that FINITE commodity in the ground than to lose money pumping it out.)

You’re correct though that the futures markets are designed to curb this situation but it doesn’t always work, instability in prices occur primarily because the market is global and cartels like OPEC can manipulate prices with the express intent of driving competition under (they did this to great effect against U.S. shale production not too long ago).

Thanks for bringing up points worth considering, much appreciated.

 

[AntonToo]

And if you read any of my posts you would know I am not a 'leftist' but when you have to resort to asinine labels it means you are reaching.

Sure, we should be using nuclear and natural gas as well, we should be using EVERYTHING because you do not simply ignore something that is economically viable without cause. There are places where wind is economically viable and whining about the carbon used to create them is nothing more than a distraction. Particularly when you are operating under the premise that AGW is a hoax - if you think that then pointing out the carbon footprint is beyond pointless.

Windmills DO reduce overall carbon, that is blatantly obvious and here you are again denying that basic fact. No one anywhere with half a brain is stating that we need to rely on wind power as a backbone for our power production, that is clearly asinine because we all know the wind is simply not as reliable as other methods and power supply must be absolutely reliable. However, that says nothing about augmenting our current power needs with some wind. It will never be one of the primary power generation methods in this nation but it does not have to be to be useful.

It's very windy here in the northeast Ohio area. I used to deliver to a company owned by one of these global warming nuts. He had a windmill to operate his small business.

One day the guy unloading me said the boss was throwing a party at the end of the day. The windmill finally paid itself off, and all his electricity from that point on will be free.

I went there a month later, and the windmill was gone. The owner was by the docks and I asked him what happened to the windmill? He just put his arms up as if he was getting robbed, swished them down towards the ground and said "Aaaah."

And? What happened to the windmill after it paid for itself?

 

[surada]

Upgrading infrastructure should include increasing mass storage capacity.

Storing oil above ground drives the price up exponentially.

 

[NightFox]

That’s not accurate, they produce when market prices make it economically viable to produce, otherwise they leave the oil in the ground.

Not really. Given most of our energy comes from private land, it's private land owners that hold off. They'll sit on it until the price increases which is why it's important to have fuel come from public lands.

Where are you getting this information Ray?

BTW 90% of our domestic oil production comes from private and STATE OWNED land and private land lease holders have no incentive to “hold off” since they don’t bear any of the costs for production and get paid on the basis of up front fees and royalties thus “holding off” would gain them nothing.

Producers on the other hand aren’t going to pump oil out of the ground when the costs of pumping, storage and transport are greater than what the market is paying for oil, after they’d be losing money if they did.

BTW...what is your source for "90% of our domestic oil production comes from private and STATE OWNED"?

Already gave one to you, it’s from the Wall Street Journal, did you read it? If so are you implying that the WSJ reporting regarding the make of existing production land operations is inaccurate?

Anyways, your premise is fictitious based on the fact that you’re implying that domestic oil supply to market would drop 25% due to a freeze on new leases which implies that all production stops on existing federal leases (it won’t), there wouldn’t be any expansion of private and State owned leases (there likely will continue to be) and that the federal government wouldn’t replace leases that run dry in the future on a proven reserve for proven reserve basis (likely there will be if the economy needs it). Not to mention the fact that the freeze isn’t even in effect and has been halted by a federal court, a fact you left out of your OP.

As I’ve already pointed out in this thread, the effect COULD compress the U.S. PPC in the future if such an alignment of circumstances were to occur but that isn’t anywhere near a certainty.

Isn't it ironic that a guy who has a complaint about "myths" in his screen name spends so much time spreading myths?

I don’t see any “myths” being spread here, just a flawed argument being brought up that is worthy of discussion. Hopefully discussing the flaws will iron them out and we can all learn something, still happens occasionally around here.

 

[danielpalos]

Upgrading infrastructure should include increasing mass storage capacity.

Storing oil above ground drives the price up exponentially.

Why is that?

 

[Ray From Cleveland]

And? What happened to the windmill after it paid for itself?

It was gone and never replaced or repaired apparently. It must have cost so much to do it the owner figured it wasn't worth it. Like I said, it's very windy here, yet our electric company doesn't have any windmills to supply power. The upfront costs and maintenance doesn't make it worth it. They did talk about putting a huge windmill out on lake Erie about five miles offshore, but that never transpired. Fossil fuel is just more reliable, more economical, and more powerful than any alternative.

 

[Ray From Cleveland]

You make a good point regarding potential variations in lease contracts, however the evidence appears to be anecdotal regarding the overall effect at scale.

As far as the relationship oil companies have to market price and production capacity, oil companies do in fact care about the price the market is willing to pay for their FINITE commodity (the market BTW IS futures), because producing at a higher cost than what the market is willing to pay (as happened) is a losing proposition, the result is NEGATIVE PRICES for oil which causes producers to rush to halt production (it’s better to leave that FINITE commodity in the ground than to lose money pumping it out.)

You’re correct though that the futures markets are designed to curb this situation but it doesn’t always work, instability in prices occur primarily because the market is global and cartels like OPEC can manipulate prices with the express intent of driving competition under (they did this to great effect against U.S. shale production not too long ago).

Thanks for bringing up points worth considering, much appreciated.

As a commodity trader for a couple of years, I just figured I'd throw in my two-cents since I studied it so much. But again, it's kind of complicated on how stabilization works in the market, but it does work. Sure, oil (or any commodity) company will make more or less money based on the availability of the commodity, but not nearly the price fluctuation that would take place without it. It's a strategy called Hedging.

It's actually against the law for any company to deliberately manipulate the supply process to increase prices, and that's why your product being a commodity is an advantage to you. it virtually doesn't matter what happens to supply. You still make money either way.

 

[NightFox]

You make a good point regarding potential variations in lease contracts, however the evidence appears to be anecdotal regarding the overall effect at scale.

As far as the relationship oil companies have to market price and production capacity, oil companies do in fact care about the price the market is willing to pay for their FINITE commodity (the market BTW IS futures), because producing at a higher cost than what the market is willing to pay (as happened) is a losing proposition, the result is NEGATIVE PRICES for oil which causes producers to rush to halt production (it’s better to leave that FINITE commodity in the ground than to lose money pumping it out.)

You’re correct though that the futures markets are designed to curb this situation but it doesn’t always work, instability in prices occur primarily because the market is global and cartels like OPEC can manipulate prices with the express intent of driving competition under (they did this to great effect against U.S. shale production not too long ago).

Thanks for bringing up points worth considering, much appreciated.

As a commodity trader for a couple of years, I just figured I'd throw in my two-cents since I studied it so much. But again, it's kind of complicated on how stabilization works in the market, but it does work. Sure, oil (or any commodity) company will make more or less money based on the availability of the commodity, but not nearly the price fluctuation that would take place without it. It's a strategy called Hedging.

It's actually against the law for any company to deliberately manipulate the supply process to increase prices, and that's why your product being a commodity is an advantage to you. it virtually doesn't matter what happens to supply. You still make money either way.

Your prospective is quite interesting and I agree with much of it.

However when you say, price manipulation is “against the law”, that law doesn’t apply to foreign cartels such as OPEC, it can (and does) manipulate prices by increasing or reducing global supply with the express intent
Of manipulating prices to its own benefit and to the detriment of its competition. They did it to U.S. shale producers that leveraged heavily to build capacity and thus left themselves exposed to sharp price declines brought on by oversupply, fortunately they didn’t get wiped off the map as the OPEC countries had hoped.

 

[Ray From Cleveland]

Your prospective is quite interesting and I agree with much of it.

However when you say, price manipulation is “against the law”, that law doesn’t apply to foreign cartels such as OPEC, it can (and does) manipulate prices by increasing or reducing global supply with the express intent
Of manipulating prices to its own benefit and to the detriment of its competition. They did it to U.S. shale producers that leveraged heavily to build capacity and thus left themselves exposed to sharp price declines brought on by oversupply, fortunately they didn’t get wiped off the map as the OPEC countries had hoped.

What I meant by manipulation is that companies can't actually do that in the US. However if you are a private land owner, and as long as your contract allows, you can stop energy production on your land if you are not getting X price for the product. You are not trying to manipulate the market, you just want to hold on to your resources until the price becomes more acceptable. The laws are such so that the big guys can't be rigging the game.

 

[NightFox]

Your prospective is quite interesting and I agree with much of it.

However when you say, price manipulation is “against the law”, that law doesn’t apply to foreign cartels such as OPEC, it can (and does) manipulate prices by increasing or reducing global supply with the express intent
Of manipulating prices to its own benefit and to the detriment of its competition. They did it to U.S. shale producers that leveraged heavily to build capacity and thus left themselves exposed to sharp price declines brought on by oversupply, fortunately they didn’t get wiped off the map as the OPEC countries had hoped.

What I meant by manipulation is that companies can't actually do that in the US. However if you are a private land owner, and as long as your contract allows, you can stop energy production on your land if you are not getting X price for the product. You are not trying to manipulate the market, you just want to hold on to your resources until the price becomes more acceptable. The laws are such so that the big guys can't be rigging the game.

Gotcha, thanks for clarifying that Ray.

 

[healthmyths]

That’s not accurate, they produce when market prices make it economically viable to produce, otherwise they leave the oil in the ground.

Not really. Given most of our energy comes from private land, it's private land owners that hold off. They'll sit on it until the price increases which is why it's important to have fuel come from public lands.

Where are you getting this information Ray?

BTW 90% of our domestic oil production comes from private and STATE OWNED land and private land lease holders have no incentive to “hold off” since they don’t bear any of the costs for production and get paid on the basis of up front fees and royalties thus “holding off” would gain them nothing.

Producers on the other hand aren’t going to pump oil out of the ground when the costs of pumping, storage and transport are greater than what the market is paying for oil, after they’d be losing money if they did.

BTW...what is your source for "90% of our domestic oil production comes from private and STATE OWNED"?

Already gave one to you, it’s from the Wall Street Journal, did you read it? If so are you implying that the WSJ reporting regarding the make of existing production land operations is inaccurate?

Anyways, your premise is fictitious based on the fact that you’re implying that domestic oil supply to market would drop 25% due to a freeze on new leases which implies that all production stops on existing federal leases (it won’t), there wouldn’t be any expansion of private and State owned leases (there likely will continue to be) and that the federal government wouldn’t replace leases that run dry in the future on a proven reserve for proven reserve basis (likely there will be if the economy needs it). Not to mention the fact that the freeze isn’t even in effect and has been halted by a federal court, a fact you left out of your OP.

As I’ve already pointed out in this thread, the effect COULD compress the U.S. PPC in the future if such an alignment of circumstances were to occur but that isn’t anywhere near a certainty.

And I never implied that gas prices would increase over night...(which by the way they have by nearly 40% in one year!!!...see attached.).
What I was pointing out was under Obama 7 of 8 years he reduced the number of leases... and Biden is doing the same whether the courts uphold or not the ban. Remember bureaucracies by definition take time. Biden if obeying the court order CAN drag out oil leases again. as the attached shows which you never addressed.
Either the production increases on private lands... costs go up... gas prices go up..
Or as Obama/Biden want... the USA imports more oil... prices go up.
If the President was Trump and he stopped Keystone, and moratorium on federal leases would you support that?

 

[danielpalos]

Upgrading energy infrastructure can increase efficiency and supply.

 

[kaz]

I wasn't talking about the cost of operating the windmill after it's built, I was talking about the carbon footprint of building it.

You didn't know it takes carbon to build a windmill? Seriously?

And I said "during the manufacturing process," moron. READ what you are responding to

You didn't think to READ the link where those figures came from, here you go:

"Of course the wind blows without carbon emissions, but catching it isn’t easy. Building and erecting wind turbines requires hundreds of tons of materials — steel, concrete, fiberglass, copper, and more exotic stuff like neodymium and dysprosium used in permanent magnets.

All of it has a carbon footprint. Making steel requires the combustion of metallurgical coal in blast furnaces. Mining metals and rare earths is energy intensive. And the manufacture of concrete emits lots of carbon dioxide.

In the case of wind and solar power, those emissions are nearly all front-loaded. That contrasts with fossil-fueled electric power plants, where emissions occur continuouisly as coal and natural gas are combusted."

But then again you hardly ever provide links to the numbers you throw out there.

Windmills generate tiny energy compared to natural gas and nuclear. It doesn't take one windmill to replace a power plant, it takes thousands of them. They can't do it, it's not feasible. You're just playing games on the fringes, not solving anything

Success is found in a can.

"There is no break even point."

Of course there is

Not with burning fossil fuels. You keep harping on windmills not being carbon neutral. Why is carbon neutral the requirement for windmills when comparing it to fossil fuels which can never be carbon neutral?

Pointing at the fact windmills have a carbon footprint is rather silly tbh considering that ignores the fact there is a massive difference in that carbon footprint over those ten years and the one that a power source using fossil fuels would produce in that time period.

Strawman. "You keep harping on windmills not being carbon neutral."

Fail. That was never my argument. Not sure if you're not reading, not following or thinking of another poster, but that is NOT my argument anywhere

Actually, much carbon is released during the manufacturing process. Even in the Netherlands, it takes 10 years for a carbon footprint from a windmill to get to zero. The Netherlands is the BEST place for wind energy.

The carbon footprint for electric car batteries rarely exceeds the life of the batteries.

The whole global warming business is a scam

Not your argument?

you keep talking about the carbon footprint of windmills. What are you harping on then? The carbon footprint of windmills is irrelevant as it is a tiny fraction of the carbon footprint of, you know, actually burning carbon.

So that windmills don't do what they are supposed to do (reduce carbon emissions) is irrelevant. Got it. Thanks for that insight.

If you read my posts, you'd know my argument is actually that if our goal is reducing emissions, we should be replacing coal plants with nuclear, natural gas and clean coal plants. But you go ahead and feel good while accomplishing nothing, that's what leftists are all about

And if you read any of my posts you would know I am not a 'leftist' but when you have to resort to asinine labels it means you are reaching.

Sure, we should be using nuclear and natural gas as well, we should be using EVERYTHING because you do not simply ignore something that is economically viable without cause. There are places where wind is economically viable and whining about the carbon used to create them is nothing more than a distraction. Particularly when you are operating under the premise that AGW is a hoax - if you think that then pointing out the carbon footprint is beyond pointless.

Windmills DO reduce overall carbon, that is blatantly obvious and here you are again denying that basic fact. No one anywhere with half a brain is stating that we need to rely on wind power as a backbone for our power production, that is clearly asinine because we all know the wind is simply not as reliable as other methods and power supply must be absolutely reliable. However, that says nothing about augmenting our current power needs with some wind. It will never be one of the primary power generation methods in this nation but it does not have to be to be useful.

Read what I wrote, I addressed all this repeatedly in detail.

You're not really a financial guy. No one who is would agree to an investment you break even on in ten years and even then is just a piddling size investment. But I'll let someone else explain that to you, I already have

 

[CarlinAnnArbor]

Question... If 25% of a commodity is reduced and eventually eliminated, will that increase the costs to the consumers of that commodity?

FACT:
About a quarter (25%) of U.S. oil and an eighth of the nation's natural gas is produced on federal lands.
Supporting link: U.S. oil and natural gas production to fall in 2021, then rise in 2022 - Today in Energy - U.S. Energy Information Administration (EIA)

FACT:
If 25% of oil and gas on Federal lands is eliminated from the supply will the cost go up to gasoline consumers?

PROOF!!!

As gas prices soar, Americans can blame Joe Biden​

Biden's attack on U.S. energy producers, starting with his freeze on federal oil and gas leases, will assuredly take a toll on output down the road and cause prices at the pump to rise.
But today, Biden has pushed those prices, which were already rising because of severe weather, even higher by gratuitously alienating Saudi Arabia. The Gulf kingdom just surprised energy markets by announcing it would not raise oil output, despite developing supply constraints and rising prices.
Oil prices jumped on the news, popping 4 percent to pre-pandemic levels for the first time in a year; the surge rattled markets alread

As gas prices soar, Americans can blame Joe Biden

What say you Mac1958 ?

Suddenly every Biden voter is Egyptian.

They're all in "de-nile"