"The Truth About Oil" ***

[Quantum Windbag]

I really like the dirty oil theme that people are using now. Funny thing, once the oil is refined you end up with exactly the same gasoline if you start with "dirty oil" or if you start with "clean oil" from the Middle East.

 

[editec]

Supply is up DEMAND is down and yet prices continue to spike.

FRACKING and the gas that comes of it is beginning to change the entire energy picture and STILL the price of petroleum rises, too.

Odd isn't it?

 

[sparky]

and gee, we can all trust big oil to operate with the utmost respect to our social and political issues right?

~S~

 

[Mr. H.]

Increasing domestic oil production was never about lowering gasoline prices. I Agree. Seems the usual RWers on this board don't.
It's about decreasing imports, lowering the trade defecit, employing Americans, keeping our petro dollars within our own borders, increasing royalty and bonus revenues to the Treasury, contributing to the GDP, improving tax revenues to Federal State and Local entities, and boosting economic activity

Oh, you mean stimulating the economy because keystone is shovel ready? I wonder how shovel ready it will be once the neighbors engage in NIMBY activity?

All of what you suggest would be available and we would be better served by the Government supporting R&D of Green and renewable energy.

I mean crude oil IS the economy. It is a base commodity upon which many other industries operate. Agriculture for one. And it will survive without the Keystone pipeline.
But it will not survive if it is singled out for punitive taxation and environmental over-regulation.

And there's a difference between private capital investment and direct government support.

 

[sparky]

There's nothing quite as ironic as this too big to fail social engineering that's captured the hearts and minds of America's patriots, by sorts who's only allegiance is the almighty $$$

How's about having some skin in the game?




The Corporate Pledge of Allegiance to the United States

The [fill in blank] company pledges allegiance to the United States of America. To that end:

We pledge to create more jobs in the United States than we create outside the United States, either directly or in our foreign subsidiaries and subcontractors.

If we have to lay off American workers, we will give them severance payments equal to their weekly wage times the number of months they’ve worked for us.

We further pledge that no more than 20 percent of our total labor costs will be outsourced abroad.

We pledge to keep a lid on executive pay so no executive is paid more than 50 times the median pay of American workers. We define “pay” to include salary, bonuses, health benefits, pension benefits, deferred salary, stock options, and every other form of compensation.

We pledge to pay at least 30 percent of money earned in the United States in taxes to the United States. We won’t shift our money to offshore tax havens and won’t use accounting gimmicks to fake how much we earn.

We pledge not to use our money to influence elections.

~S~

 

[Wry Catcher]

Increasing domestic oil production was never about lowering gasoline prices. I Agree. Seems the usual RWers on this board don't.
It's about decreasing imports, lowering the trade defecit, employing Americans, keeping our petro dollars within our own borders, increasing royalty and bonus revenues to the Treasury, contributing to the GDP, improving tax revenues to Federal State and Local entities, and boosting economic activity

Oh, you mean stimulating the economy because keystone is shovel ready? I wonder how shovel ready it will be once the neighbors engage in NIMBY activity?

All of what you suggest would be available and we would be better served by the Government supporting R&D of Green and renewable energy.

I mean crude oil IS the economy. It is a base commodity upon which many other industries operate. Agriculture for one. And it will survive without the Keystone pipeline.
But it will not survive if it is singled out for punitive taxation and environmental over-regulation.

And there's a difference between private capital investment and direct government support.

I'm not suggesting oil be punished or that we no longer need oil/gas as a source of energy. All I'm suggesting is we need to develop other sources of energy.

You assert, "And there's a difference between private capital investment and direct government support", an obvious comment. So, why does the government continue to support the oil industry?

 

[Baruch Menachem]

Essentially, econ 201. The price of a commodity is set by the marginal cost to produce that commodity. The price of oil in the US has reached the point where we are able to recover oil supplies that would have previously been un profitable. Since gas is now 4.25 a gallon, it now makes sense to extract petroleum that while known to be there, was too expensive to extract.

As the price goes up, we extract more and more marginal supplies of oil. Prior to 1973 no one thought to dril for oil off of Norway and Scotland. After 1973 this oil became very profitable and lots of drilling and production took place.

We have lots of oil we are not, for whatever reason, drilling and extracting. There are huge supplies of natural gas that we won't currently touch. When gas reaches $6 a gallon, the political calculus might change tremendously and we will go for oil we are currently ignoring. Gas at $2 means that polar bears and caribou are cute and adorable and we don't want to mess up their habitat. Gas at $6 will change a lot of minds. The price of Natural Gas gets high enough, rigs will show up all over the Florida coast because the national government will have decided that Folks in New York shouldn't freeze just because the folks in Florida like a nice sea view.

 

[Dragon]

Essentially, econ 201. The price of a commodity is set by the marginal cost to produce that commodity.

Wrong. The price is set by what the market will bear. Marginal production cost merely sets a floor.

 

[OODA_Loop]

Oil is the most energy dense option going on a scalable availability. [/thread]

 

[Baruch Menachem]

Essentially, econ 201. The price of a commodity is set by the marginal cost to produce that commodity.

Wrong. The price is set by what the market will bear. Marginal production cost merely sets a floor.

The cost of bringing the final product to the market which meets the price folks are willing to pay.

For sake of describing the point, I am just going to pull some numbers out of thin air just to explain the point. I have no idea what the real numbers are.
In Saudi, the cost of producing a barell of oil is like $2. In Iran it is like $20. In Texas it is like $50 In the north Sea it is like $85. The cost of Oil Shale is like $200

The price is set where the demand for the product at a particular price is equal to the marginal cost of producing the last marginal bit of the product. As price goes up, the demand goes down, but it still exists. People don't change behavior as quickly as they used to as the price goes up, but as prices increase you do see some elasticity which gets more pronounced over time. At 195 a barrel, it is not profitable to produce oil from shale. At $201 a barrel, fracking becomes profitable. As prices rise, it becomes possible to produce stuff that was impossible before.

The article is noting that as prices rise, we go to more marginal sources which are only available at these higher prices. More production in marginal areas won't reduce the price because they are only tenable for production at these higher prices.

In a way, the article is being disingenuous. Higher prices bring on more production in marginal areas and more drilling here WILL NOT reduce prices.

However, we have lots of areas in the US which are not marginal for production. Oceans of stuff under the north slope for example which is recoverable at a price a great deal lower than we are currently paying. We drill there, we will be producing large quantities under the current marginal price which will cause the marginal cost to drop precipitously.

 

[FireFly]

Supply is up DEMAND is down and yet prices continue to spike.

FRACKING and the gas that comes of it is beginning to change the entire energy picture and STILL the price of petroleum rises, too.

Odd isn't it?

That is a lie. It is a global market. Demand is up but supply is not.

 

[Quantum Windbag]

Supply is up DEMAND is down and yet prices continue to spike.

FRACKING and the gas that comes of it is beginning to change the entire energy picture and STILL the price of petroleum rises, too.

Odd isn't it?

Demand is up, but thanks for lying in order to make the evil corporations look bad, your check from your government masters is in the mail.

 

[Quantum Windbag]

There's nothing quite as ironic as this too big to fail social engineering that's captured the hearts and minds of America's patriots, by sorts who's only allegiance is the almighty $$$

How's about having some skin in the game?




The Corporate Pledge of Allegiance to the United States

The [fill in blank] company pledges allegiance to the United States of America. To that end:

We pledge to create more jobs in the United States than we create outside the United States, either directly or in our foreign subsidiaries and subcontractors.

If we have to lay off American workers, we will give them severance payments equal to their weekly wage times the number of months they’ve worked for us.

We further pledge that no more than 20 percent of our total labor costs will be outsourced abroad.

We pledge to keep a lid on executive pay so no executive is paid more than 50 times the median pay of American workers. We define “pay” to include salary, bonuses, health benefits, pension benefits, deferred salary, stock options, and every other form of compensation.

We pledge to pay at least 30 percent of money earned in the United States in taxes to the United States. We won’t shift our money to offshore tax havens and won’t use accounting gimmicks to fake how much we earn.

We pledge not to use our money to influence elections.

~S~

The United States has the highest corporate income tax in the entire world.

 

[Mr. H.]

Oh, you mean stimulating the economy because keystone is shovel ready? I wonder how shovel ready it will be once the neighbors engage in NIMBY activity?

All of what you suggest would be available and we would be better served by the Government supporting R&D of Green and renewable energy.

I mean crude oil IS the economy. It is a base commodity upon which many other industries operate. Agriculture for one. And it will survive without the Keystone pipeline.
But it will not survive if it is singled out for punitive taxation and environmental over-regulation.

And there's a difference between private capital investment and direct government support.

I'm not suggesting oil be punished or that we no longer need oil/gas as a source of energy. All I'm suggesting is we need to develop other sources of energy.

You assert, "And there's a difference between private capital investment and direct government support", an obvious comment. So, why does the government continue to support the oil industry?

I agree about developing other energy sources. But taking revenues away from the hydrocarbon industry and giving them outright to alternatives projects is counterproductive.

Regarding government support to the oil industry- that's a big bone of contention around here and it's rooted in the misunderstanding and misinterpretation of the tax code.

And I also don't consider "reflagged tankers" or military presence to be direct support to the oil industry.

 

[sparky]

The United States has the highest corporate income tax in the entire world

don't matter squat if they're sellin' us out like hotcakes......

~S~