re: Latest Updates: Russia-Ukraine Conflict

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those of us that actually stay informed.

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The head of Aeroflot, Mikhail Poluboyarinov, has left his post and probably #Russia as well

Earlier, the head of Pobeda Airlines, Andrei Kalmykov, also left his post. On March 4, he published a farewell letter to the employees

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And Airbus and Boeing will no longer service Russian planes.

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Monty Python FTW

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Always, but the same album also has "I Like Chinese" which isn't going to fly on this board these days.

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US cranked up production could it not increase the total amount and thus offset the interruption of the Russia supply to some extent?

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Really depends on what type of oil(s) the US produces and what is increased compared to what types of oil(s) Russia produces

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And Airbus and Boeing will no longer service Russian planes.

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They've also been locked out of all online maintenance materials and products.

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if we opened up the pipelines to the shale and also opened up drilling season; and pumped as much oil as we could into the market, it would increase global supply and, thus, lower the price of oil and concentration of dependence. I'm pretty sure that's what we want to achieve....seems obvious to me.

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That might be what you or I or any other consumer of oil products wants to achieve, and that might be what a nation wants to achieve, but that's not the aim of capitalism.

Josh Rogin (closest in the media you’ll find to my opinion and mentality) on with Ben Shapiro today: YouTube

EDIT: Sorry, accidentally pushed IMG. But Josh thinks China won’t invade Taiwan until next year due to Xi’s November “election” but I find his insight to be very interesting. He knows more about China than I do, and I don’t say that lightly for another Caucasian.

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They've also been locked out of all online maintenance materials and products.

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I wouldn’t put too much emphasis on the. I’m sure someone at the shop printed one out at some point.

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Maybe, but if US cranked up production could it not increase the total amount and thus offset the interruption of the Russia supply to some extent?

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Sure. But the US can’t just crank up production at the flick of a switch. US producers don’t sit around with idle capacity the way that national oil companies (particularly OPEC members) do.

Most of the cost to produce a barrel of oil is expended prior to production - meaning drilling, completion, field development, etc. - while the actual operating cost for the completed well is low. So producers in the US don’t just drill new wells and keep them idle waiting for a price increase. Once the well is drilled, they need to maximize production in order to recoup the capital expenditure.

On top of that, in many cases the producer is obligated to start production once the well is completed, per the lease agreement. This is the case for federal leases, though I’m not sure how it works for private leases. The idea is that whoever owns the mineral rights wants their royalties.

There are cases of “drilled but uncompleted” (DUC) wells, where the producer drills a well but doesn’t finish completion - the installation of hardware for production - due to market conditions. But this was more common after the crash in 2014-2015. It costs the producer more in the long run to complete a well at a later date because they have to remobilize a rig.

So the end result is that in order for US production to rise based on price increases, US oil companies have to:
1. Make the financial decision to drill new wells based on their long term market outlook.
2. Physically drill and complete those wells, which takes time before US output increases significantly.

Contrast this with OPEC countries like Saudi Arabia and UAE. Since they are operating as part of a global cartel, they control the price. US producers can’t legally operate in this manner because it’s straight up collusion/price fixing. Since OPEC countries control the price, they have price certainty.

That price certainty allows OPEC to drill excess capacity and keep if offline for “swing production” during times like these. On top of that, it’s much cheaper to drill conventional wells in Saudi Arabia than to drill shake wells in the US. So the swing capacity doesn’t cost them nearly as much as it would for US producers. The fact that OPEC operates in unison also allows them to flood the market and punish US producers if our market share gets too large, as they did in 2014-2015.

Ironically though, OPEC is also in a bind right now because they actually haven’t done a very good job of maintaining that spare capacity post-COVID.

The best the US can really do right now is to utilize the SPR to help stabilize the market - which we have done to some extent but the releases haven’t been that significant.

ETA: Oops, realized I didn’t finish my last sentence.