Impending Global Recession, buckle up yee-haw!

[aurelius]

Oil is not that volatile.

I'm sorry what? Common knowledge that oil is a volatile market.

Reality check: over a long time scale oil has proven to be one of the most lucrative and profitable industries in the modern world. So much so that entire nations have built their economies around it. Yes, for wild cat’ers, speculators, and others looking for short term gains oil can be a hard business. Don’t believe the hype.

Also, the US is the single largest producer of oil in the world since 2018. Not a lot of people know that.

[SnakePlissken]

Oil is not that volatile.

I'm sorry what? Common knowledge that oil is a volatile market.

Reality check: over a long time scale oil has proven to be one of the most lucrative and profitable industries in the modern world. So much so that entire nations have built their economies around it. Yes, for wild cat’ers, speculators, and others looking for short term gains oil can be a hard business. Don’t believe the hype.

Also, the US is the single largest producer of oil in the world since 2018. Not a lot of people know that.

Im not arguing the US oil production and I dont think you understand volatility. Volatility is how hard a commodity can swing in price. Oil is one of the most volitile commodities and it's why so many traders speculate on it's price change and try to profit off of it.

[aurelius]

Im not arguing the US oil production and I dont think you understand volatility. Volatility is how hard a commodity can swing in price. Oil is one of the most volitile commodities and it's why so many traders speculate on it's price change and try to profit off of it.

I understand that. From speculators (gamblers) perspective the price of oil is volatile compared to other commodities.

I'm just pointing out that oil is one of the best economic investments from the macro level of the past 100+ years. We see nations fight wars for the control of oil supply and production. IMO: describing the one of the most profitable industries in the world for the past 100 years as volatile to justify price gouging is a bit of an eyeroll. But we may be talking past one another.

Going back to our original question regarding the Saudis intentionally cutting supply to drive up the global price: this is 100% a move to price gouge. The United States should hold them accountable for that.

[SnakePlissken]

Im not arguing the US oil production and I dont think you understand volatility. Volatility is how hard a commodity can swing in price. Oil is one of the most volitile commodities and it's why so many traders speculate on it's price change and try to profit off of it.

I understand that. From speculators (gamblers) perspective the price of oil is volatile compared to other commodities.

I'm just pointing out that oil is one of the best economic investments from the macro level of the past 100+ years. We see nations fight wars for the control of oil supply and production. IMO: describing the one of the most profitable industries in the world for the past 100 years as volatile to justify price gouging is a bit of an eyeroll. But we may be talking past one another.

Going back to our original question regarding the Saudis intentionally cutting supply to drive up the global price: this is 100% a move to price gouge. The United States should hold them accountable for that.

But we may be talking past one another.

I think we are

It's been volatile for a while now, but in the end it has climbed significantly over the last 100 years with lots of price swings in there. OPEC was started so they could curb those swings and make sure it stayed in a profitable range so from the Saudi perspective it only makes sense to keep supply tight and prices high. They know is 20-30 years that their oil isn't going to be as sought after so they're going to make their profit while they can. Same reason our big oil companies are doing the same thing. As much as I like to shit on Biden, it's not his fault Exxon and the like are keeping rigs capped right now.

OPEC's mission statement
https://www.opec.org/opec_web/en/about_ ... 20industry.

OPEC's objective is to co-ordinate and unify petroleum policies among Member Countries, in order to secure fair and stable prices for petroleum producers; an efficient, economic and regular supply of petroleum to consuming nations; and a fair return on capital to those investing in the industry.

[mikeylikey]

As much as I like to shit on Biden, it's not his fault Exxon and the like are keeping rigs capped right now.

The little sticker on the gas pump begs to differ.

Going back to our original question regarding the Saudis intentionally cutting supply to drive up the global price: this is 100% a move to price gouge. The United States should hold them accountable for that.

how

[Hardartery]

Going back to our original question regarding the Saudis intentionally cutting supply to drive up the global price: this is 100% a move to price gouge. The United States should hold them accountable for that.

how

Price gouging is part of the point of OPEC and the current world oil setup. I doubt that it is a violation of any laws internationally and they are not bound by US law.

[hector]

Going back to our original question regarding the Saudis intentionally cutting supply to drive up the global price: this is 100% a move to price gouge. The United States should hold them accountable for that.

how

Biden could threaten to make them a pariah state. . .

Wait. No.

[mbasic]

Still no real widespread coverage of the diesel shortage

[aurelius]

how

The US exports about 8.5 million barrels of oil per day and imports about 8.6 million barrels of oil per day. Stop buying Saudi oil (don't allow US producers to export oil) and withdraw US military support of the Royal family.

https://www.eia.gov/energyexplained/oil ... st%201949.

It would seem with a few initiatives the US could be energy independent? I got to be missing something.

[aurelius]

I think we are

It's been volatile for a while now, but in the end it has climbed significantly over the last 100 years with lots of price swings in there.

This is true of the price for a barrel of oil. But Saudi Arabia costs per barrel are between $5-$10 per barrel of oil. US shale oil is around $35-$40 per barrel (which is why the magic number is $50 per barrel to push shale oil in the US) due to the process and exploratory nature (risk). US shale oil is very vulnerable to volatility of the price per barrel. Saudi Arabia is about extracting with existing infrastructure (built by Western companies ) and known reservoirs. My point is that the volatility of oil is irrelevant to the Saudi Arabias' of the world. They make money no matter what. The link below summarizes the costs per barrel by country.

https://money.cnn.com/interactive/econo ... index.html

[Philbert]

how

The US exports about 8.5 million barrels of oil per day and imports about 8.6 million barrels of oil per day. Stop buying Saudi oil (don't allow US producers to export oil) and withdraw US military support of the Royal family.

https://www.eia.gov/energyexplained/oil ... st%201949.

It would seem with a few initiatives the US could be energy independent? I got to be missing something.

There is a law, originally intended to preserve US shipping capabilities, that US products bound for US ports must be shipped on US flagged ships. There are not enough US flagged oil or LNG tankers to come anywhere close to doing that, so oil brought to port by pipeline would have to be transferred to trucks or rail to move it to the refinery. In some cases it is easier to just ship in foreign oil and ship the US oil elsewhere.

[aurelius]

There is a law, originally intended to preserve US shipping capabilities, that US products bound for US ports must be shipped on US flagged ships. There are not enough US flagged oil or LNG tankers to come anywhere close to doing that, so oil brought to port by pipeline would have to be transferred to trucks or rail to move it to the refinery. In some cases it is easier to just ship in foreign oil and ship the US oil elsewhere.

Good to know. Then actually increasing the amount of oil the US produces per day (more drilling) will not help. What doesn't make sense to me is the 2 largest import countries are Canada and Mexico. Why does the same issues not impact their oil? If it is just a regulatory thing, it seems the US could wave the legislative wand and presto it is fixed.

But that seems like a problem that could be addressed in the short-term. It seems the United States could achieve energy independence in 5 years by investing in renewable energy (reduce oil consumption), more efficient/electric cars (reduce oil consumption), and increasing oil conveyance capacity to US refineries (increase US produced supply).

[SnakePlissken]

I think we are

It's been volatile for a while now, but in the end it has climbed significantly over the last 100 years with lots of price swings in there.

This is true of the price for a barrel of oil. But Saudi Arabia costs per barrel are between $5-$10 per barrel of oil. US shale oil is around $35-$40 per barrel (which is why the magic number is $50 per barrel to push shale oil in the US) due to the process and exploratory nature (risk). US shale oil is very vulnerable to volatility of the price per barrel. Saudi Arabia is about extracting with existing infrastructure (built by Western companies ) and known reservoirs. My point is that the volatility of oil is irrelevant to the Saudi Arabias' of the world. They make money no matter what. The link below summarizes the costs per barrel by country.

https://money.cnn.com/interactive/econo ... index.html

I don't disagree with what you've said, but volatility is a global thing and if the Saudis can get bigger profits while they still can, they're going to continue to do so. Volatility still affects them. It's whether they want profits or bigger profits and considering they have a target on their back with the world wanting to ditch oil they're going to opt for "even bigger profits" while they still can and I can't really blame them. They're a banana republic based on oil and don't have any other revenue streams unless they find a ton of Lithium there somehow.

[mikeylikey]

how

The US exports about 8.5 million barrels of oil per day and imports about 8.6 million barrels of oil per day. Stop buying Saudi oil (don't allow US producers to export oil) and withdraw US military support of the Royal family.

https://www.eia.gov/energyexplained/oil ... st%201949.

It would seem with a few initiatives the US could be energy independent? I got to be missing something.

The issue is not producing enough oil, it is refining it into useful fuel.

And it's not that we don't have refining capacity. We do. But. Oil is not all the same. Generalizing and probably butchering the situation: North American wells produce light crude, Arabian wells produce heavy crude. Our current refineries were all built pre-fracking, when we were still massively net importing from Saudis et al. So we are mostly set up to refine the heavy crude. We have not built new refineries that handle the light stuff we are producing, Because Reasons. So even though we produce more than we use, we have to ship basically everything we drill overseas and ship IN everything we refine.

You may know this but I just learned it last night by happenstance.

Could we 'stick it to OPEC' by massively overhauling our national refining infrastructure? Maybe? But given that this would have huge near-term costs, and nebulous, diffuse benefits far off in the future, it's not the kind of project that politicians are going to put their popularity capital behind.

And anyway, this might not hurt OPEC so much as it would hurt the emerging markets that are set up to refine, and rely on, the excess light crude which we export.

[aurelius]

I don't disagree with what you've said, but volatility is a global thing and if the Saudis can get bigger profits while they still can, they're going to continue to do so. Volatility still affects them. It's whether they want profits or bigger profits and considering they have a target on their back with the world wanting to ditch oil they're going to opt for "even bigger profits" while they still can and I can't really blame them. They're a banana republic based on oil and don't have any other revenue streams unless they find a ton of Lithium there somehow.

I never questioned why the Saudis are doing it. I think that is obvious. To be clear, the US government is not asking the Saudis to sell below the market price. The US government asked the Saudis not to engage in market manipulation. Two very different things.

I think the argument of volatility to justify windfall profits (which is not market manipulation) is more legitimate in the context of US shale oil. The extraction costs are much higher and there are additional exploratory costs. US oil companies assume considerable risk and the US wants to encourage a strong domestic oil industry.

The volatility argument doesn't make much sense for Saudi Arabia that is pulling out of the ground at $5 per barrel. Consider the Saudis intentionally engage in market manipulation. Saudi Arabia recently (2014-2015) flooded the market with cheap oil in an attempt to kill the US shale industry. They drove the cost per barrel down and lost hundreds of billions of dollars. It didn't work. Saudi again attempted a similar tactic to counter Russia's emergence as player in oil in 2020.
Those are not the actions of an entity concerned about the volatility of the price of oil. Those are the actions of an entity that thinks they have a lot of control over the price of oil.

What I am questioning is the US continued support of the Saudi Royal family given that they have again and again acted against US interests.

[aurelius]

The issue is not producing enough oil, it is refining it into useful fuel.

And it's not that we don't have refining capacity. We do. But. Oil is not all the same. Generalizing and probably butchering the situation: North American wells produce light crude, Arabian wells produce heavy crude. Our current refineries were all built pre-fracking, when we were still massively net importing from Saudis et al. So we are mostly set up to refine the heavy crude. We have not built new refineries that handle the light stuff we are producing, Because Reasons. So even though we produce more than we use, we have to ship basically everything we drill overseas and ship IN everything we refine.

You may know this but I just learned it last night by happenstance.

Could we 'stick it to OPEC' by massively overhauling our national refining infrastructure? Maybe? But given that this would have huge near-term costs, and nebulous, diffuse benefits far off in the future, it's not the kind of project that politicians are going to put their popularity capital behind.

And anyway, this might not hurt OPEC so much as it would hurt the emerging markets that are set up to refine, and rely on, the excess light crude which we export.

The underlined is the crux of it. But you have half the country convinced that drilling more oil wells is the path to energy independence. A better solution is building nuclear power to hasten energy independence.

As I understand it: Essentially the US refines as much light crude as we can then ship the rest overseas. As US consumption decreases that 'frees' up light crude to be exported. As long as there is worldwide demand, the US will continue to export light crude. Because they will have the opposite problem the US has.
They can't refine the heavy crude the US stopped importing. And reaching far back into the memory bank, oil is shipped from the Middle East to the US to be refined then shipped overseas. The US would still be a necessary link in the supply chain for Middle Eastern oil. Probably a gross simplification.

[GlasgowJock]

And it's not that we don't have refining capacity. We do. But. Oil is not all the same. Generalizing and probably butchering the situation: North American wells produce light crude, Arabian wells produce heavy crude. Our current refineries were all built pre-fracking, when we were still massively net importing from Saudis et al. So we are mostly set up to refine the heavy crude. We have not built new refineries that handle the light stuff we are producing, Because Reasons. So even though we produce more than we use, we have to ship basically everything we drill overseas and ship IN everything we refine.

You may know this but I just learned it last night by happenstance.

Likewise, that's quite interesting and explains why you aren't as self sufficient as people would be inclined to think.

The UK has millions of tonnes of the best coal found globally though due to the geology of the terrain where it's located it is too expensive to mine in commercial quantities.

[SnakePlissken]

What I am questioning is the US continued support of the Saudi Royal family given that they have again and again acted against US interests.

I think this is a very fair point. My argument isn't that the Saudis should be manipulating the market, but that they have freedom to do so (and power to do so through OPEC). My point is just that Oil is a volatile market no matter how you look at it.

[SnakePlissken]

And it's not that we don't have refining capacity. We do. But. Oil is not all the same. Generalizing and probably butchering the situation: North American wells produce light crude, Arabian wells produce heavy crude. Our current refineries were all built pre-fracking, when we were still massively net importing from Saudis et al. So we are mostly set up to refine the heavy crude. We have not built new refineries that handle the light stuff we are producing, Because Reasons. So even though we produce more than we use, we have to ship basically everything we drill overseas and ship IN everything we refine.

You may know this but I just learned it last night by happenstance.

Likewise, that's quite interesting and explains why you aren't as self sufficient as people would be inclined to think.

The UK has millions of tonnes of the best coal found globally though due to the geology of the terrain where it's located it is too expensive to mine in commercial quantities.

The sour and sweet crude difference isn't defined to just certain parts of the world. The US Gulf has "Texas Sour Crude" and "Louisiana Sweet" so we do have sour crude in a lot of places in the US. A lot of shale is also sour. Refineries are setup to get rid of impurities (in this case, sulfur) and sour crudes have different levels of how "sour" they are. For instance, the US has grenaded the Venezuelan economy because they have some of the most sour crude on Earth and the US is (or maybe just was now) the only country on Earth that could refine their oil meaning they can't sell to anyone but the US. Refiners like sweet crude more because it's not as many steps to refine meaning more profit so sour crude isn't as sought after. When supply gets tight though, sour crude becomes more profitable because of the margins.

[mikeylikey]

the US has grenaded the Venezuelan economy because they have some of the most sour crude on Earth and the US is (or maybe just was now) the only country on Earth that could refine their oil meaning they can't sell to anyone but the US.

"And when he saw the plight of his people, lo, the dictator was struck with overwhelming guilt. And didst repent of his evil ways, and relinquished power back to the citizens. And yea, they all lived happily ever after, and there was great rejoicing, and they did feast on lambs, and the sloth, carp, and orangutan."