Economy

[knapplc]

But it's Joe Biden's fault......................  

 

 

 

More oil supply could stop massive price spikes. But US producers won't fill that gap

Oil prices are soaring to seven-year highs, but don't expect US oil producers to ramp up supply.

 

On the face of it, it's an ideal time for US firms to cash in on high prices after Russia's invasion of Ukraine: Traders are nervous about purchasing Russian oil due to uncertainty about the situation, though those exports aren't subject to current sanctions. And other major producers like Saudi Arabia have indicated they won't fill the global supply gap.

 

Making more US oil could net a tidy profit for producers while lowering prices at the pump for drivers. But several issues are stopping these companies from scaling up production.

Like many industries during the pandemic, oil producers are struggling with a shortage of workers. They're also having trouble sourcing some of the equipment they would need to ramp up production, including pipes and specialized sand used in fracking to extract shale oil.

"They can't find people, and can't find equipment," said Robert McNally, president of consulting firm Rapidan Energy Group. "It's not like they're available at a premium price. They're just not available."

As a result, US oil production is just under 12 million barrels a day, 8% lower than in 2019. Experts say the industry is unlikely to get back to that pre-pandemic level this year — and that the last decade's rapid increases in US oil production, typically double-digit percentages year-over-year, are probably a thing of the past.

 

Another factor likely making oil companies cautious about investing too much, too fast is 2020's oil bust. The early days of the pandemic drove oil briefly to negative pricing, resulting in a spate of bankruptcies across the industry.

 

"They're more confident we don't have to worry about a bust, [but] they're not uncorking the champagne," McNally said. "2020 is still fresh in their minds....They're still scarred."

 

The other thing keeping US production in check: investors seem to be reluctant to invest in fossil fuel stocks. Major US oil stocks have lagged behind the broader market for most of the last two years, teaching executives a hard lesson: Use the recent windfalls to reward investors, not sink more wells.

[Guy Chamberlin]

My first years paying for my own gas in the mid-1970s, gas fluctuated between .35 and .45 cents a gallon.

 

Pump prices weren't affected as much by global supply as they were local "gas wars."  Bet you don't remember those. Individual gas stations would very publicly try to outdo each other by dropping their prices, a game of chicken that would last a week or two before everyone leveled back off. 

[Guy Chamberlin]

Just for perspective, this current crisis has driven gas prices in America up to where they were in Italy 25 years ago. 

 

Then again, our rental Fiat got about 70 miles a gallon.

 

Then again, that Fiat was so light you could have put your fist through the metal door. 

[BigRedBuster]

 

[Stumpy1]

22 hours ago, knapplc said:

But it's Joe Biden's fault......................  

 

 

 

More oil supply could stop massive price spikes. But US producers won't fill that gap

Oil prices are soaring to seven-year highs, but don't expect US oil producers to ramp up supply.

 

On the face of it, it's an ideal time for US firms to cash in on high prices after Russia's invasion of Ukraine: Traders are nervous about purchasing Russian oil due to uncertainty about the situation, though those exports aren't subject to current sanctions. And other major producers like Saudi Arabia have indicated they won't fill the global supply gap.

 

Making more US oil could net a tidy profit for producers while lowering prices at the pump for drivers. But several issues are stopping these companies from scaling up production.

Like many industries during the pandemic, oil producers are struggling with a shortage of workers. They're also having trouble sourcing some of the equipment they would need to ramp up production, including pipes and specialized sand used in fracking to extract shale oil.

"They can't find people, and can't find equipment," said Robert McNally, president of consulting firm Rapidan Energy Group. "It's not like they're available at a premium price. They're just not available."

As a result, US oil production is just under 12 million barrels a day, 8% lower than in 2019. Experts say the industry is unlikely to get back to that pre-pandemic level this year — and that the last decade's rapid increases in US oil production, typically double-digit percentages year-over-year, are probably a thing of the past.

 

Another factor likely making oil companies cautious about investing too much, too fast is 2020's oil bust. The early days of the pandemic drove oil briefly to negative pricing, resulting in a spate of bankruptcies across the industry.

 

"They're more confident we don't have to worry about a bust, [but] they're not uncorking the champagne," McNally said. "2020 is still fresh in their minds....They're still scarred."

 

The other thing keeping US production in check: investors seem to be reluctant to invest in fossil fuel stocks. Major US oil stocks have lagged behind the broader market for most of the last two years, teaching executives a hard lesson: Use the recent windfalls to reward investors, not sink more wells.

Another issue why US isn’t moving oil is due to our refineries.  Our refineries are set up to refine heavy crude oil and everything the US produces is light to medium crude.  That is why we import heavy crude and also why the Keystone XL would have fixed a lot of issues.  They blend the heavy crude with our light crude to refine it. 

[knapplc]

19 minutes ago, Stumpy1 said:

Another issue why US isn’t moving oil is due to our refineries.  Our refineries are set up to refine heavy crude oil and everything the US produces is light to medium crude.  That is why we import heavy crude and also why the Keystone XL would have fixed a lot of issues.  They blend the heavy crude with our light crude to refine it. 

 

Nope.

 

Why gas prices are so high and what Biden can do about it

 

[BigRedBuster]

1 hour ago, knapplc said:

 

Nope.

 

Why gas prices are so high and what Biden can do about it

 

You don't say....

 

Wonder why the number of oil rigs started dropping off in late 2018 and continued to drop all through 2019.  That's long before Biden took office and the pandemic started.

 

I thought everything was amazing in our oil drilling until Biden took office.

 

 

 

Quote

 

Between the lines: U.S. oil drillers haven’t returned to 2019 production levels in part because investors have called for discipline to put an end to boom-and-bust cycles of overproduction and bankruptcies.

• The industry is also suffering from broader supply chain problems and labor shortages that make it harder to rapidly scale up production, as Occidental Petroleum CEO Vicki Hollub said this week, per Reuters.

 

[knapplc]

 

[BigRedBuster]

 

[JJ Husker]

My question about the Keystone Pipeline is this; Would it actually be transporting new additional oil or would it just be a handier way to get it to the gulf coast?

 

I could be wrong but I’m guessing Canada is able to supply all the oil that we want now. So if the pipeline were up and running today, wouldn’t it just be more oil flowing through the pipeline and less being trucked or shipped? And we still have to refine it. How does that really help things? 
 

Additionally, the worldwide price of oil is pretty much what determines the market. Even if the pipeline was up and running and providing new additional oil, wouldn’t that just be more oil at the same higher prices?

[Archy1221]

5 hours ago, BigRedBuster said:

 

Thanks Joe Biden!!

[BigRedBuster]

18 minutes ago, Archy1221 said:

Thanks Joe Biden!!

Refer to this post.

 

Quote

Well, anyone who constantly claims "gas prices are high and it's all Biden's fault" are proving that statement true.

 

[JJ Husker]

If you are tired of my steel price updates, move along.

 

Stainless steel took another huge increase a couple days ago.  What was running about $1.50 to $1.80 per pound just over a year ago and $3.50 to $3.90 per pound a week ago, jumped to about $4.50 per pound a few days ago. That’s 20% this week (so far) and 300% in just over a year.

 

Stainless steel is used extensively in beef/pork/poultry production and general food processing as well as many other areas. It will impact things downstream and make it’s way to consumers. I cannot even hold quotes for the same day. It is absolutely bonkers. The reasons given are, nickel prices (apparently Russia is a big nickel producer) and energy/gas prices. Just FYI if you’re interested.

 

Also have heard that one of the large local steel (non stainless) distributors, based out of Norfolk Nebraska, has stopped selling sheet and plate due to all current inventory being sold and the market being too volatile for them to order more. This is hearsay from a fellow fabricator.

 

It’s a real s#!tshow.

[BigRedBuster]

7 minutes ago, JJ Husker said:

If you are tired of my steel price updates, move along.

 

Stainless steel took another huge increase a couple days ago.  What was running about $1.50 to $1.80 per pound just over a year ago and $3.50 to $3.90 per pound a week ago, jumped to about $4.50 per pound a few days ago. That’s 20% this week (so far) and 300% in just over a year.

 

Stainless steel is used extensively in beef/pork/poultry production and general food processing as well as many other areas. It will impact things downstream and make it’s way to consumers. I cannot even hold quotes for the same day. It is absolutely bonkers. The reasons given are, nickel prices (apparently Russia is a big nickel producer) and energy/gas prices. Just FYI if you’re interested.

 

Also have heard that one of the large local steel (non stainless) distributors, based out of Norfolk Nebraska, has stopped selling sheet and plate due to all current inventory being sold and the market being too volatile for them to order more. This is hearsay from a fellow fabricator.

 

It’s a real s#!tshow.

Thanks for the update.  We buy some things in SS.  I'm sure those prices will be going up.

 

We used to purchase one of our ingredients at around 3.00 per lb.  We just purchased some for 8.50.  And...oh by the way....there's a shortage so we don't know when we will get it.

[JJ Husker]

5 minutes ago, BigRedBuster said:

Thanks for the update.  We buy some things in SS.  I'm sure those prices will be going up.

 

We used to purchase one of our ingredients at around 3.00 per lb.  We just purchased some for 8.50.  And...oh by the way....there's a shortage so we don't know when we will get it.

Yeah, I have seen some smaller, lighter items going for upwards of $12 to $15 per pound, and that was before this most recent leap.

 

I can’t imagine being in an industry where you would have to eat some of these increases. Luckily I don’t have to hold my prices for any longer than I feel like it. I’ve already informed a few customers that any price I’ve quoted to them before today is no longer valid.