America can't solve its gas price problem (or its Russia problem) with drilling

[babylonsister]

Way too many people don't understand this.


America can’t solve its gas price problem (or its Russia problem) with drilling
The four myths Republicans have been spreading about oil and gas prices, explained.
By Rebecca [e-mail]@vox.com Mar 5, 2022, 7:00am EST


Republicans and conservative commentators in the last week have had a field day using Russia’s invasion of Ukraine as an opportunity to bemoan US energy policy and champion fossil fuel reserves. They’ve pointed fingers at the Biden administration, environmentalists, and even Swedish teenager Greta Thunberg, alleging that climate priorities are what have kept America from its “energy independence.” If only oil and gas companies were allowed to drill or frack more, we’d have a quick fix to rising energy prices in the US and Europe and to Putin’s influence, they’ve said.

There are many problems with these claims, and the stakes of this conversation are very high: The way western Europe and the US respond to this crisis could determine the course on climate change and energy costs in the long run.

Let’s walk through the myths currently circulating and how to avoid falling for them.

Myth No. 1: Biden killed oil production

Republicans on the Senate Natural Resources Committee sent a letter to Biden this week claiming that he has shut down leasing for oil and gas and is holding back more production. “There has not been one lease sale on federal lands since you imposed a ban in violation of federal law,” the letter said. “No other major oil-producing nation shuts off its own reserves to production.” Sen. Joe Manchin echoed the myth at a hearing this week: “The time for leasing pauses has come & gone.”

Biden has done nothing to halt oil leasing. In fact, the Biden administration has outpaced Trump in issuing drilling permits on public lands and water in its first year, according to federal data analyzed by the Center for Biological Diversity. His administration set a record for the largest offshore lease sale ever in the Gulf of Mexico last year, before a federal court blocked the lease sale for not considering climate impacts.

snip//

Clark Williams-Derry, an energy analyst with the Institute for Energy Economics and Financial Analysis, offered a reality check to those complaining that climate regulations have changed the fate of oil and gas. “The idea that the tiny marginal changes in US policy have anything to do with the big shifts we’ve seen in prices is just preposterous,” he told Vox. The marginal Biden measures — like reversing Trump-era environmental rollbacks — haven’t made any kind of dent in the global oil market.

Myth No. 2: The oil and gas industry can quickly ramp up production to make a dent in prices

more...

https://www.vox.com/22959903/russia-ukraine-oil-gas-price-europe-us-exports-climate-change

[Chainfire]

1. Last year we exported more oil than we imported...

The solution is clear.

[orwell]

5. That has nothing to do with domestic price at the pump.

There is no connection whatsoever.

We could export nothing and it wouldn't change gas prices at all.

[Chainfire]

6. I suppose you reject the economic theory of supply and demand.

[orwell]

9. I trade markets so no I don't reject it...

...but I do reject Republican talking points that have no basis in fact.

We are talking about the net effect of US oil or oil product exports on the pump price of gas in the US.

(By the way, I used to trade for a hedge fund and have stood on trading floors in NYC so I have seen the "glories" of capitalism up close...It's not pretty)

Since you don't have a full grasp of what you are asserting, you are susceptible to bullshit that on it's surface seems plausible.

Once again, there is no connection between the fact that we export oil and the price at the pump. If you think that there is you don't grasp how the global oil markets work.

I try to admit when I don't understand something. I've been schooled on DU occasionally when I thought I knew something and ran into someone who knew a lot more. It is the only way I learn. I also understand that something can seem intuitively true when it is not. I've lost a lot of money thinking I knew something about a complex market only to find out I didn't know as much as I thought.

Ignorance is expensive. Education is free.

Here's some questions:

How many bbl per day does the US produce?
How many bbl per day does the US consume?
What are the grades of oil we produce and in what quantity?
What is our refining and storage capacity for each of those grades?
What are the transportation costs to get the refined capacity to the end market?
What are the constraints on adding new production?
What is the overall investment and production cost of this new supply?

There are many more questions that help us find answers to this basic pricing assessment. But CON political demagogues are not interested in reality, only emotional claptrap to motivate poorly educated voters.

That's why we are in this mess in the first place...

[Chainfire]

11. You asked a series of questions, lets hear your answers.

I am not a money changer, never have been, never wished to be. I always made an honest living producing goods and services for a wage. I am proud of that. I don't know or care if you were a stock trader, but if you were, it does not leave me in awe, in fact the opposite is closer to the truth...There are those who produce and those who speculate, I do not subscribe to the notion that the speculators or money changers are superior. Stock traders and speculators were in control in 1929 if memory serves, so we know that they don't have all of the answers.

As far as your backhanded suggestion that I am ignorant, I admit that I am not schooled in economic theory, so please, explain why the cost of gasoline has nearly doubled over the past few months. And I have a question, Could it possibly have anything to do with money changers and greed, of taking advantage of the news to increase their wealth, or is it just the natural order of things.

[orwell]

15. It has to do with greed...

...as well as the real price of oil that is inflated due to the Russian incursion.

But you are still missing the point. We were talking about US exports and their effect on US pump price. That is all.

Before you call me a money changer, I live below the poverty level. I am a critical support person for many of the businesses and private customers in my area. I live in the poorest county in my state. I gave up money for morality. I make less than almost anyone I know and I know a lot of retired people. I am still working at 67, under a great deal of stress, responsible for fire departments, water and sewer districts, and other critical infrastructure agencies. I do this because I care for my customers, my community, and I can't find anyone to take over my business who is ethical.

I am not asking you to be in awe, I am stating that I have some real world knowledge that you may not possess. I never said speculators were superior or inferior. I never said that markets were rational. To the contrary, I think they are mostly irrational. The stock market has been irrational on a valuation basis for the better part of a decade now.

It is not backhanded. I am stating a fact reflected in your statement. I am sure you are much smarter than me in your field. It is your area of expertise. I am asking you to research what is actually going on. The internet provides a wealth of information. The key is to find unbiased sources with real expertise. That is the most difficult part. I have a liberal bias. I admit it. At least I am aware of it.

There is no natural order of things. We left that paradigm 10's of thousands of years ago when we adopted patriarchy as our dominant system and cut off half the population from decision making. It has brought us to the brink of collapse, possibly facing nuclear war because a little man with an inferiority complex wants us to see what a tough guy he is. There is nothing natural about this.

Markets are not inherently evil but there is evil in markets, sometimes more than others. Speculation is inherent in human nature and will always be there. Sports betting is speculation. Going to a casino is speculation. I don't do any of these things because I prefer investing in things I believe in that reflect my values. I invest in things like alternative energy production, or extra insulation on my house so that I can have a smaller ecological footprint. I have invested in micro lending for poor people in third world countries.

All investment isn't bad. Neither is all speculation.

Prices will go up, then they will go down.

Evil will stay constant...

[Chainfire]

16. Here are my questions:

Is there less gasoline in the world today than there was last month? Will the oil companies make more money this month than last month?

[orwell]

19. I don't know that but likely...

...there is more gasoline being sold now than a month ago because the world economies are still in the post pandemic lockdown growth phase. There is also a decent quantity of gas and diesel being consumed by the Russian Army while they slaughter people but that is probably a drop in the bucket so to speak.

Is there less gasoline stock worldwide on hand right now? I would not know that. But global gasoline demand is remarkably constant (slightly rising) unless an outside event happens like the pandemic.

The oil companies should make more money since they do own oil reserves which they are now selling at record breaking prices on the spot market. I doubt whether they are making more profits on the refining end as thee margins are relatively stable.

The other actor here is the gas station itself. Gas stations tend to raise prices immediately as the headline price (global spot price quoted on the nightly news) rises even though the gas in their tank was purchased at cheaper prices, and they tend to lower the price slowly in response to falling prices. That is normal price gouging by operators in a non-competitive market. It is wrong, but station owners do it. They are in business to make money and if they can get away with it they will. The way we can punish them is to go to the cheapest gas station in our neighborhood and reward them for accept less profit.

The first year in 62 years that the US has greater energy production than consumption was 2019. But even during all those years when we were in a production deficit, the amount we exported had no discernable effect on the pump price. If I am wrong, then point me to data that says so.

Bottom line, rising oil prices are good for producers profits, and bad for consumers wallets. That is why my partner and I both consume as little gas as possible by driving very old hybrid vehicles. Both of our cars get over 45 miles to the gallon and we drive them as little as possible. (We made that "investment" because we "speculated" on future oil prices...)

Supply and demand do matter at some point. The pandemic proved that.

Unfortunately right now we are in a market panic condition and profiteers and speculators will take advantage of it.

But once again, this has nothing to do with us exporting oil. Oil is a global commodity with global (cartel) pricing. It is not a free market. That all ended with the formation of OPEC in the 70's. The formation of OPEC, with the blessing of the Nixon White House, began the meteoric rise of oil. We often forget that reality.

[Chainfire]

20. The price is driven by profits and speculation, not some change in the nuts and bolts of production.

The robber barons increase their wealth on the backs of the consumers. Again.

[orwell]

21. Here you go...

...read this.

https://www.dallasfed.org/research/economics/2022/0104

I think we are done here. Have a nice day.

[NickB79]

12. America is already energy independent

And we'll likely be like that for years to come. We pump more oil than any other country in the world.

By the numbers: As recently as 2010, America imported 9.4 million barrels a day of oil more than it exported. That had swung to a 650,000 barrel per day surplus in 2020, and preliminary numbers for 2021 show trade pretty much in balance last year.

https://www.axios.com/us-energy-independent-petroleum-2982ed18-9110-4c31-ad67-82abe643f661.html

[Jim__]

2. The Dems need to put out an ad titled Republican bullshit and then debunk these myths.

It seem like the Democrats have the facts on their side, but the Republicans get out their message.

[FoxNewsSucks]

7. Having a way to spread a message widely

is apparently far more effective than being correct but unable to do little more than preach to the choir.

[Buckeyeblue]

3. I think OPEC could increase production and solve the problem

A few years ago OPEC increased output to lower the price of oil to make arctic drilling less profitable. They could do the same thing tomorrow to drive down the overall cost. They won't this time because I think they want to see if the sharing cost of energy ultimately leads to the west to ease sanctions on Russia. If it does the energy producers of the world will have a new blue print to run amuck.

[orwell]

4. All of this is true...

...I wrote a couple of posts earlier this morning that addressed some of these realities.

The world would blunt the reliance on fossil fuels far more by investing in efficiency rather than more fossil fuel production and infrastructure. Instead of bemoaning cartel pricing and profits, use the capitalist system to create profitable enterprises that reduce reliance on fossil fuel.

The cheapest btu is the one you don't use.

The most expensive is the one that leads to climate collapse...

[crickets]

14. +1

[Wounded Bear]

8. Until we get off of fossil fuels, we will continue to fight wars over it...nt

[NickB79]

10. The obvious solution is to use less oil and gas

Be that thru conservation or a switch to EV's and renewables/nuclear.

But no one wants to consider that. It's our God given right to consume all we want, after all.

[BumRushDaShow]

13. Somebody posted a tweet of a clip of Psaki's response to a deer-in-the-headlights Faux reporter

regarding oil production. The tweet may have been this one (the below has the same video clip in it) -

Link to tweet

Carl Quintanilla
@carlquintanilla
I’d like to report a murder. 👀
The Recount
@therecount
Psaki and Fox’s Jacqui Heinrich go back-and-forth over domestic oil production:

Heinrich: “Is there nothing the admin can do to get ... back to pre-pandemic levels?”

Psaki: “You think the oil companies don’t have enough money to drill on the places that have been pre-approved?”
Embedded video
1:58 PM · Mar 3, 2022

Based on Psaki's (paraphrased) response to the clueless reporter, there are some "9000 pre-approved oil leases" that have not been used at all by the oil companies. I know I have read story after story after story over the years where these oil barons have drilled wells and capped them. Drilled more wells and capped them. Drilled even more wells and capped them.

There are literally thousands of untapped oil wells all over the frickin' place. They don't want to add production because that will drop the price. It's easier to blame their engorgement of profits from the high prices artificially generated by their purposeful limiting of supply in order to "own the libs" and Biden.

I have posted this before but all we need do is look at what happened almost 2 years ago when Saudi and Russia got into an oil production/price war - literally pumping out so much oil that the price/bbl reached negative territory, at one point reaching almost -$39/bbl (meaning what they were willing to PAY someone to store the excess because there was no place to put it all).



They are all still trying to recover from that.

[crickets]

17. Oh, my goodness.

Psaki has the patience of a saint, but that only goes so far. This is what happens to a reporter who doesn't listen to the answer the first time, who doesn't know when to quit. Ouch.

As your post points out, US companies could be producing more but aren't - because they want the profits. They don't mind that higher energy prices will push up the price of everything else. They don't care if they put the squeeze on US households just to make a buck. It's just business. That was implied in Psaki's answer, but you know this Fox reporter will never connect the dots, and even if she did Fox would never report it.

One lesson from all of this (again) is we need to be doing more about developing other energy sources.

[BumRushDaShow]

18. I think in this case

that reporter was actually aiming to talk about the "Keystone pipeline" after doing all that convoluted pretzel twisting before finally uttering the name. And Psaki quickly batted that nonsense away with her usual "truth bomb" just as smoothly. That pipeline is basically to pump that nasty shale oil from Canada down to the Gulf of Mexico refineries.

All the Faux Snooze talking points are being shredded left and right and the Keystone pipeline cancellation is their latest idiotic one.

Republicans in Disarray™.

[msongs]

22. usa could reduce gasoline use by 10% in a heartbeat nt

[Danascot]

23. I'm hoping these fuel prices

will help accelerate the transition to solar, wind and other technologies that don't depend on fossil fuels. It's a national security issue that we are so dependent on Russian or Middle East oil (or WV coal for that matter).