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Might be time to sell GOM oil related stocks?
Posted by crazycubes on 4/14/16 at 8:58 am00
LINK
quote:
Exxon Says `$25 Billion Rule' Will Sink Deepwater Oil Drilling
quote:
The world’s biggest oil explorers are fighting a U.S. plan to toughen offshore drilling rules that Exxon Mobil Corp. said will cost $25 billion over 10 years and render many offshore discoveries worthless.
The Obama administration is expected to issue the sweeping new regulations Thursday, a person familiar with the decision said, as part of an effort to reduce the number of well blowouts after the explosion aboard the Deepwater Horizon rig in 2010. The government has pegged the rules’ costs at less than $1 billion.
quote:
Environmental groups say the new rules don’t go far enough to safeguard marine life and the people who depend on it for their livelihoods. Friends of the Earth has called on the government to halt all auctions of offshore drilling leases.
“There’s no such thing as safe offshore drilling,” said Marissa Knodel, a climate campaigner for the Washington-based group. “Tougher rules aren’t going to mitigate the human and environmental costs of allowing more drilling to occur.”
quote:
Exxon’s $25 billion warning isn’t even the most dire forecast out there. An analysis conducted by consulting firms Quest Offshore and Blade Energy Partners on behalf of the industry-funded American Petroleum Institute estimated extra costs over 10 years at $31.8 billion and result in the the loss of the equivalent of 500,000 barrels of crude a day by 2030.
This post was edited on 4/14 at 9:00 am
re: Might be time to sell GOM oil related stocks?Posted by LSUFanHouston on 4/14/16 at 9:19 am to crazycubes
So the government says it won't be all that expensive, industry says it will be the death of them, and the environmental wackos say it doesn't go near far enough, because it still actually allows drilling.
re: Might be time to sell GOM oil related stocks?Posted by Solo on 4/14/16 at 9:26 am to crazycubes
Time to buy.
quote:That's not quite how it works for companies selling publicly traded commodities, particularly when said commodities come from different places with different levels of quality. The price of a company's oil that it sells is determined by current prices for a benchmark (like WTI or brent) and the quality of the company's oil compared to the benchmark (lower quality = lower price, for example).
extra cost will passed down to the consumer
That's not a perfect explanation by any means, but it points out companies usually only have the ability to sell for less than market for their quality of product, not above, even if the cost of production increases.
re: Might be time to sell GOM oil related stocks?Posted by GoldenD on 4/14/16 at 2:01 pm to crazycubes
There was zero substance in that article. Unless I missed something while reading on my phone, it didn't mention any of the proposals.
re: Might be time to sell GOM oil related stocks?Posted by LSUFanHouston on 4/14/16 at 2:05 pm to Omada
quote:
That's not quite how it works for companies selling publicly traded commodities, particularly when said commodities come from different places with different levels of quality.
Yes and no. It all goes back to supply and demand. In an environment with tight demand, you most certainly could pass the cost down. In an environment with loose supply, it is much harder to do. ESPECIALLY with a geo-political hot potato like oil. Other countries not subject to such regulations would gladly undercut the US on price in that type of environment.
re: Might be time to sell GOM oil related stocks?Posted by dabigfella on 4/14/16 at 2:11 pm to LSUFanHouston
guys we want electric cars, thats what liberals want, and nothing is cooler than a tesla. 275,000 were pre-ordered sight unseen. We are entering the golden age of electric
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Proposals I have heard of include reclassifying Lift Boats to MODUs (requiring shutting in of production to move onto location), strict enforcement of a 0.5 ppg drilling margin, requirement of using kill-weight mud to maintain overbalance during cementing, function testing all BOP components every 7 days and among some other heavy hitters.
Drilling margin and cementing rules would essentially kill most offshore drilling through depleted zones.
Drilling margin and cementing rules would essentially kill most offshore drilling through depleted zones.
re: Might be time to sell GOM oil related stocks?Posted by Dan Bilzerian on 4/14/16 at 3:45 pm to crazycubes
quote:
The Obama administration is expected to issue the sweeping new regulations Thursday, a person familiar with the decision said, as part of an effort to reduce the number of well blowouts after the explosion aboard the Deepwater Horizon rig in 2010. The government has pegged the rules’ costs at less than $1 billion.
Helping his OPEC buddies reclaim their lost market share.
re: Might be time to sell GOM oil related stocks?Posted by Dan Bilzerian on 4/14/16 at 3:47 pm to dabigfella
quote:
We are entering the golden age of electric
It's too bad those cars have to be charged by something. I hear it'll be unicorns and fairies.
This post was edited on 4/14 at 3:52 pm
re: Might be time to sell GOM oil related stocks?Posted by Omada on 4/14/16 at 4:45 pm to LSUFanHouston
Yeah, I failed to point out supply and demand, though that should be reflected in the price of the benchmarks.
As far as passing on costs, though, I don't think that is much of a possibility unless the costs are a small percentage of the oil prices at that point. A 2% increase in costs could potentially be passed on, but 20%? Probably not. But then, would the producers be the ones to raise their prices, or would it be the futures markets that raise the price of the benchmarks instead?
As far as passing on costs, though, I don't think that is much of a possibility unless the costs are a small percentage of the oil prices at that point. A 2% increase in costs could potentially be passed on, but 20%? Probably not. But then, would the producers be the ones to raise their prices, or would it be the futures markets that raise the price of the benchmarks instead?
re: Might be time to sell GOM oil related stocks?Posted by barry on 4/14/16 at 7:57 pm to crazycubes
quote:
, as part of an effort to reduce the number of well blowouts
Reduce the number of deep water well blowouts? From 1 in the last 20 years?
quote:
From 1 in the last 20 years?
yeah but that one crippled the offshore fishing industry for decades, made beaches uninhabitable for hundreds of miles, and generally killed off life as we know it. We can't have another spill like that. We wouldn't survive.
re: Might be time to sell GOM oil related stocks?Posted by lsugradman on 4/14/16 at 9:02 pm to barry
quote:
The changes were needed because well blowouts have continued at about the same rate as before the explosion at BP Plc’s Macondo well in 2010 that killed 11 and spewed millions of gallons of crude, the government says.
Uhhh what?
re: Might be time to sell GOM oil related stocks?Posted by lsugradman on 4/14/16 at 9:13 pm to C
These regulations would essentially put a halt to development drilling at some of the most prolific fields in the deepwater GOM. Wells in depleted and high overpressure fields just could not be drilled with these requirements in place. Its not just an incremental cost issue, its a loss of production and reserves issue.
exxons argument
exxons argument
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