Oil is trading close to $1.00 per barrel

[mn78psu83]

One reason for importing crude oil is that we have been importing oil for so long that most of our refineries are designed for high sulfur foreign oil and not sweet domestic crude.

Yep, VLO, PSX, MPC and all the rest depend on it for refining.

 

[wilbury]

While there are no certainties in the current dynamic (beyond uncertainty of course) I believe the pandemic may have accelerated us through global peak oil production. If global travel is very slow to recover (likely), tele-work shrinks the commuter consumption (likely), governments push conversion to renewables as part of their stimulus efforts (starting to happen in Europe) and electric vehicles ramp up (China and Europe) then we’re probably there. US tight oil production is gonna get creamed.

Yes this hurts our tight oil market in the short term but it's still good over the long term. Just the fact that we are now an energy exporting country gives us more leverage than we've had in the past and is one of the reasons that this race to the bottom started in the first place.

 

[Cletus11]

Yes this hurts our tight oil market in the short term but it's still good over the long term. Just the fact that we are now an energy exporting country gives us more leverage than we've had in the past and is one of the reasons that this race to the bottom started in the first place.

hurts the USA O&G industry but cheap oil and gas help other sections of the economy at the same time so not a net total horrible situation. Cheap oil absolutely destroys the Middle East and Russian economies though. And they can cut production over there all they want, oil is going to remain relatively cheap for a while, plus cutting oil production also decreases their revenue when they pump less.

 

[mn78psu83]

Texas Regulator - no quotas, for now.

https://seekingalpha.com/news/35626...ines-for-now-to-force-quotas-on-oil-producers

 

[mn78psu83]

Crude oil futures way down again. As I type, December 2020 at $26.81. Wow.

https://www.cmegroup.com/trading/energy/crude-oil/light-sweet-crude.html

 

[The Spin Meister]

hurts the USA O&G industry but cheap oil and gas help other sections of the economy at the same time so not a net total horrible situation. Cheap oil absolutely destroys the Middle East and Russian economies though. And they can cut production over there all they want, oil is going to remain relatively cheap for a while, plus cutting oil production also decreases their revenue when they pump less.

The damage will be widespread as it is also hurting a lot of financial institutions. Lots of these companies were heavily financed and lots of investors are gonna be hit very hard. That will mean less capital for other sections of the economy.

One good thing is that Russia, and Iran will be hit hard. This is mostly Putin's fault as he refused to cut production when the Saudis and OPEC requested so. He wanted to drive a lot of US shale producers out of business and he will succeed at that. But where he miscalculated is that the price will remain low even after many go belly up.

The ones that go under will be the ones with the least profitable shale. Other companies in the better areas will then increase production until the price allows them a decent profit, around $45-50/B. That is still considerably lower than what Russia and Iran need.

The speed at which US companies adjust production is something that Putin and any masters of controlled economy cannot fathom. Thats one of the beauties of the free market, it allows quick adjustments to the supply demand curve.

 

[Nittany Security]

Crude oil futures way down again. As I type, December 2020 at $26.81. Wow.

https://www.cmegroup.com/trading/energy/crude-oil/light-sweet-crude.html

Ok oil is the

The damage will be widespread as it is also hurting a lot of financial institutions. Lots of these companies were heavily financed and lots of investors are gonna be hit very hard. That will mean less capital for other sections of the economy.

One good thing is that Russia, and Iran will be hit hard. This is mostly Putin's fault as he refused to cut production when the Saudis and OPEC requested so. He wanted to drive a lot of US shale producers out of business and he will succeed at that. But where he miscalculated is that the price will remain low even after many go belly up.

The ones that go under will be the ones with the least profitable shale. Other companies in the better areas will then increase production until the price allows them a decent profit, around $45-50/B. That is still considerably lower than what Russia and Iran need.

The speed at which US companies adjust production is something that Putin and any masters of controlled economy cannot fathom. Thats one of the beauties of the free market, it allows quick adjustments to the supply demand curve.

How much will the surviving shale companies need from Uncle Sam to get back on track?

 

[bobroars]

Ok oil is the

How much will the surviving shale companies need from Uncle Sam to get back on track?

Currently, the shale companies are $60 billion in debt through high yield bonds.

 

[sammyk]

What a great time to move to solar, wind, geothermal, energy

 

[BW Lion]

Texas Regulator - no quotas, for now.

https://seekingalpha.com/news/35626...ines-for-now-to-force-quotas-on-oil-producers

You might enjoy this brief history of oil proration in Texas. Probably not necessary for the Texas RRC to intervene as certain of the major producers have announced significant voluntary cuts and a good number of the highly-leveraged independents are on life-support and looking for the keys to lock their front doors.

https://www.forbes.com/sites/anasal...se-chaos-in-the-texas-oil-patch/#63220caf2e5f

Take a glance at the second to last slide in the attached link:

https://www.dallasfed.org/-/media/Documents/research/energy/energycharts.pdf?la=en

 

[Nittany Security]

Currently, the shale companies are $60 billion in debt through high yield bonds.

$60 billion that's all? Let me contribute my stimulus check that should help.

 

[The Spin Meister]

$60 billion that's all? Let me contribute my stimulus check that should help.

Yeah, that is what I mean when I say the financial biz will be severely damaged. Thats a lot of debt to absorb.

 

[Obliviax]

What a great time to move to solar, wind, geothermal, energy

it wasn't sustainable at $100/barrel why would it be sustainable now? The problem is that nobody needs energy, at least in the short term.

 

[mn78psu83]

You might enjoy this brief history of oil proration in Texas. Probably not necessary for the Texas RRC to intervene as certain of the major producers have announced significant voluntary cuts and a good number of the highly-leveraged independents are on life-support and looking for the keys to lock their front doors.

https://www.forbes.com/sites/anasal...se-chaos-in-the-texas-oil-patch/#63220caf2e5f

Take a glance at the second to last slide in the attached link:

https://www.dallasfed.org/-/media/Documents/research/energy/energycharts.pdf?la=en

Thanks. A good read.

Talk about a truism:

"History shows us that regulation without the ability to monitor or enforce creates chaos and wastes taxpayer money."

Yeah, that slide. Uh, well, um ... Advantage SA Aramco and Russia.

 

[Kiber]

it wasn't sustainable at $100/barrel why would it be sustainable now? The problem is that nobody needs energy, at least in the short term.

Exactly. "right now, nobody needs energy". But we all know eventually, everybody will go back to needing energy. So this is a short term thing. It's just a matter of how "short term".