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re: Why won't the world's big oil producers lower prices?
Posted on 5/4/22 at 6:12 pm to djmed
Posted on 5/4/22 at 6:12 pm to djmed
The Saudis (and OPEC) are doing what they are best capable of doing - keeping the front month price high and out months low so that US companies are always hedged in at lower $/barrel which can dampen US competition. I don't know why that article is mentioning RUS oil which is basically offline right now.
Regarding US production, the limiter isn't the government (for now), its the ability of producers to get funding. After the debacle of Gen1 shale, plus Dodd-Frank, plus ESG investors and lenders have shied away from O&G investment and the result is a slow ramp up of production by US cos. Right now their investors want to see free cash flow and have punished stock values when they hint at a ramp up.
On top of that shale inventory has become very shallow in most basins except for the Delaware side of the big Perm.
On top of that their hasn't been any investment in reserve replacement - you can't get funding for a 10-20 year project considering the overall power mix outlook.
Prices are also high because we slammed the breaks on the economy and oil production during covid when demand collapsed and then we gave everyone free money so when we opened back up and hit the gas demand for oil and gas and really all commodities sky-rocketed...then add all the above.
I'm having a post work scotch so the above is slightly disjointed. Good luck fellas.
ETA: AND, the materials needed to ramp up drilling/production are also in short supply (supply chain issues) and good luck finding people to man a rig or a frac crew or basically anything in the field or in corporate. The industry suffered a serious exodus 2014 to date and they're not coming back so far.
Regarding US production, the limiter isn't the government (for now), its the ability of producers to get funding. After the debacle of Gen1 shale, plus Dodd-Frank, plus ESG investors and lenders have shied away from O&G investment and the result is a slow ramp up of production by US cos. Right now their investors want to see free cash flow and have punished stock values when they hint at a ramp up.
On top of that shale inventory has become very shallow in most basins except for the Delaware side of the big Perm.
On top of that their hasn't been any investment in reserve replacement - you can't get funding for a 10-20 year project considering the overall power mix outlook.
Prices are also high because we slammed the breaks on the economy and oil production during covid when demand collapsed and then we gave everyone free money so when we opened back up and hit the gas demand for oil and gas and really all commodities sky-rocketed...then add all the above.
I'm having a post work scotch so the above is slightly disjointed. Good luck fellas.
ETA: AND, the materials needed to ramp up drilling/production are also in short supply (supply chain issues) and good luck finding people to man a rig or a frac crew or basically anything in the field or in corporate. The industry suffered a serious exodus 2014 to date and they're not coming back so far.
This post was edited on 5/4/22 at 6:14 pm
4
Posted on 5/4/22 at 6:14 pm to cwill
It's good to see your punk arse back here schooling these fools on the big picture energy situation. 
Posted on 5/4/22 at 6:17 pm to Bunk Moreland
I await the downvotes.
Posted on 5/4/22 at 6:25 pm to cwill
Rush used to compare “big oil” with “big water,” and the differences in the costs to produce and market gasoline vs the costs to produce and market bottled water, and the markups of each. Bottled water is more expensive (by a lot), but you leftists don’t seem to mind that. You should read it.
LINK
LINK
Posted on 5/4/22 at 6:30 pm to cwill
quote:
The Saudis (and OPEC) are doing what they are best capable of doing - keeping the front month price high and out months low so that US companies are always hedged in at lower $/barrel which can dampen US competition.
Can you explain this to me like you would a 6 year old please? I'm genuinely curious.
Posted on 5/4/22 at 6:43 pm to djmed
You may want to try a different source than MSN
Oil is a commodity, its sold on the 'open market'.
The oil producers do NOT set the price as much as the left would have everyone believe.
Price can and is manipulated but not in the long run.
Ole supply and demand cannot be over-turned as much as everyone would love to think.
Oil is a commodity, its sold on the 'open market'.
The oil producers do NOT set the price as much as the left would have everyone believe.
Price can and is manipulated but not in the long run.
Ole supply and demand cannot be over-turned as much as everyone would love to think.
Posted on 5/4/22 at 6:58 pm to djmed
I wish i could ask the person that wrote that “why won’t you do your job for a 30% pay cut?”.
Posted on 5/4/22 at 9:04 pm to Triple Bogey
quote:
Can you explain this to me like you would a 6 year old please? I'm genuinely curious.
Hedging is a contract to lock in prices over future months and years. Most US cos are required to hedge by their credit facilities (loans). The saudis don’t so they sell all production at the current spot price. The oil futures price is currently backwardated meaning the prices is lower in future months and years. As a result US cos are forced to lock in lower prices in the future. As the month rolls forward the current month stays high and future months remain low. Saudis make the $100/bbl while US cos have a chunk of their production locked in at say $70/bbl. Advantage KSA.
Posted on 5/4/22 at 9:06 pm to Reubaltaich
quote:
The oil producers do NOT set the price as much as the left would have everyone believe.
The article is about opec+ and their manipulation of the market through prod cuts and not about domestic us producers.
Posted on 5/4/22 at 9:08 pm to djmed
I’m sure lefty will blame abortion
Posted on 5/4/22 at 9:29 pm to cwill
Well here is an insert from Fitch, an O&G consulting firm.....
So your theory of lack of capitol is flimsy.
And here is a blurb of FERC absolutely screwing the natural gas pipeline and LNG plant construction. Not only new permits, but dragging their nuts all over projects that were previously approved and being constructed......
So your govt lack of intervention, well thats out the window as well.
quote:
Global oil and gas capex is expected to post a second year of growth in 2022, increasing by 11.6% y-o-y to USD533bn after 2021 guidance suggests growth of 14.1% as elevated oil prices support a return of investment.
North America and Latin America will post the highest growth in capital expenditures in 2022, with 24.1% and 24.6% growth respectively, followed by the Majors wit..
So your theory of lack of capitol is flimsy.
And here is a blurb of FERC absolutely screwing the natural gas pipeline and LNG plant construction. Not only new permits, but dragging their nuts all over projects that were previously approved and being constructed......
quote:
On February 18, 2022, the Federal Energy Regulatory Commission (“FERC” or the “Commission”) issued two controversial policy statements that will significantly impact the permitting and construction of new natural gas pipeline facilities. The policy statements were each approved by a 3-2 majority with Commissioners Danly and Christie issuing separate dissents.
So your govt lack of intervention, well thats out the window as well.
Posted on 5/4/22 at 9:45 pm to cwill
quote:
Saudis make the $100/bbl while US cos have a chunk of their production locked in at say $70/bbl. Advantage KSA.
Interesting and thanks for the explanation
Posted on 5/4/22 at 11:47 pm to djmed
Why did they raise prices under Biden and not under Trump?
Posted on 5/5/22 at 4:00 am to djmed
Remove the sanctions on Russia oil and watch the price drop.
Simple
Simple
Posted on 5/5/22 at 5:02 am to djmed
quote:
Why won't the world's big oil producers lower prices?
Why won’t you ask for a salary reduction today at work??
Posted on 5/5/22 at 5:25 am to teke184
quote:
Biden sucking off Iran means Saudi won’t give him the time of day.
I don’t like either group but KSA is less reprehensible than Iran. Slightly.
Anybody else find it interesting the director of the CIA met with the crown prince to “mend diplomatic relations” last month?
CIA chief met Saudi crown prince last month in push to mend ties
Posted on 5/5/22 at 5:26 am to djmed
quote:
Why won't the world's big oil producers lower prices?
Who makes more off a gallon of gas...
Oil producer or the government (tax)...
Demonize the producer and not the wasteful fricking tax thieves...
Posted on 5/5/22 at 5:44 am to cwill
quote:
I await the downvotes.
I'll always downvote any post you make. You're a cocksucking piece of shite.
Posted on 5/5/22 at 5:52 am to djmed
Why would they? They don't even take potato brain's phone calls. Stolen election have consequences.
Posted on 5/5/22 at 6:05 am to djmed
Like the president of my company said last week discussing raising prices. “Everyone else is getting theirs. We’re going to get ours too”
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