OK Republicans, Question...

[Bowhunter4l1fe]

Oil guys....

Do you see any evidence that domestic producers are beginning to slow their production yet? Are any wells being shut off? With the tanks at Cushing filling up fast, they sure need to, I think.

Yes sir, we do. The North American rig count is down almost 900 rigs from a year ago. http://www.wtrg.com/rotaryrigs.html We are down 22 in the Gulf alone this year. http://dnr.louisiana.gov/assets/TAD/...ountUpdate.pdf

So if our domestic oil is so expensive, how do we manage to sell any? Not arguing, seriously asking (I don't know the dynamics of the petroleum market).

The biggest reason that we are still selling domestic oil is contractual obligation. A lot of the oil that is being produced right now was sold in years past, based on speculative pricing.


"So would taxing foreign oil give domestic producers a boost? I don't think that would be a bad thing. I kinda think that our government should be benefitting American companies who produce jobs here in the States. I know encouraging people/businesses to buy American is a little harder on the consumer but isn't it worth it?"

We couldn't (or more aptly wouldn't) do it. We would have to tax the foreign oil to the tune of $35 or $40 to make it break-even. The U.S Government would be scared to death of the hit to our collective image. Additionally, the folks reading these posts might be OK with another $.80 a gallon to support American production (and thus jobs), but Joe consumer/voter will only see that the feds made a new tax and his gas went up 55%, and they won't go for that.

[donpablo]

?

The biggest reason that we are still selling domestic oil is contractual obligation. A lot of the oil that is being produced right now was sold in years past, based on speculative pricing.

So once said contractual obligation has been met/completed, does this mean we (America) will have oil that we can't sell due to our costs/prices?

[Let's go Brandon!]

.99/gal

http://247wallst.com/energy-economy/2016/02/09/99-cent-gas-may-be-on-its-way/

Domestic crude oil inventories reached their highest level for this time of year in nearly eight decades, and barring any major disruptions in supply, gas prices are likely to remain near their lowest price point since the Great Recession in the near term. Today’s average price of $1.74 per gallon reflects a savings of $1.07 per gallon versus the 2015 peak price reached this past June, and gas prices have fallen for 31 of the past 33 days. Pump prices are down six cents per gallon on the week, 24 cents per gallon on the month, and consumers are saving 44 cents per gallon versus this same date last year.

[Shane]

Yes sir, we do. The North American rig count is down almost 900 rigs from a year ago. http://www.wtrg.com/rotaryrigs.html We are down 22 in the Gulf alone this year. http://dnr.louisiana.gov/assets/TAD/...ountUpdate.pdf



The biggest reason that we are still selling domestic oil is contractual obligation. A lot of the oil that is being produced right now was sold in years past, based on speculative pricing.


"So would taxing foreign oil give domestic producers a boost? I don't think that would be a bad thing. I kinda think that our government should be benefitting American companies who produce jobs here in the States. I know encouraging people/businesses to buy American is a little harder on the consumer but isn't it worth it?"

We couldn't (or more aptly wouldn't) do it. We would have to tax the foreign oil to the tune of $35 or $40 to make it break-even. The U.S Government would be scared to death of the hit to our collective image. Additionally, the folks reading these posts might be OK with another $.80 a gallon to support American production (and thus jobs), but Joe consumer/voter will only see that the feds made a new tax and his gas went up 55%, and they won't go for that.

Getting into a trade/tariff war with other countries wouldn't be good.

As for contracted oil.....how far out do the contracts go? In other words, when are the contracts to sell oil at good prices over? I would imagine that as soon as those contracts expire, production numbers will start to drop faster. Am I right?

[Bowhunter4l1fe]

Getting into a trade/tariff war with other countries wouldn't be good.

As for contracted oil.....how far out do the contracts go? In other words, when are the contracts to sell oil at good prices over? I would imagine that as soon as those contracts expire, production numbers will start to drop faster. Am I right?

Some of those contracts are pretty long term. But I believe that you are right on the money about production continuing to decline. There are certainly other factors as well, but generally speaking, if OPEC continues to give the world $30 oil, the world will by as much as it can from them.

[Shane]

Some of those contracts are pretty long term. But I believe that you are right on the money about production continuing to decline. There are certainly other factors as well, but generally speaking, if OPEC continues to give the world $30 oil, the world will by as much as it can from them.

Yep.

They were hinting at maybe selling off part of ARAMCO a couple weeks ago. They're bleeding money like crazy. Their pile of cash is getting smaller by the minute. I think their ginormous game of chicken won't last much longer.

[Beleg]

It was my understanding that a lot of domestic producers have to keep pumping, even at a loss, due to making interest payments on loans taken out to drill the well.

[Kdog]

So would taxing foreign oil give domestic producers a boost? I don't think that would be a bad thing. I kinda think that our government should be benefitting American companies who produce jobs here in the States. I know encouraging people/businesses to buy American is a little harder on the consumer but isn't it worth it?

Tariffs in general are a bad idea. (I think that is what you are generally talking about, a tax on imports.) You start doing this and generally other countries are going to do the same thing in kind. Here is an historical example of what can happen...

https://en.wikipedia.org/wiki/Smoot%E2%80%93Hawley_Tariff_Act

Bottom line is all Obama is trying to do is create a slush fund for "green energy". We saw what happened with the stimulus money. It is where the Government picks the winners and losers. Well the real loser is going to be the tax payer, and the money will be largely wasted (think companies like Solyndra).

[donpablo]

Learning

This has been an informative thread. I think that maybe I have a better understanding of the situation. Thanks.

Pablo

[Tommyh]

Getting into a trade/tariff war with other countries wouldn't be good.

As for contracted oil.....how far out do the contracts go? In other words, when are the contracts to sell oil at good prices over? I would imagine that as soon as those contracts expire, production numbers will start to drop faster. Am I right?

i disagree to an extent. Placing a tariff would cause the saudis and opec to reconsider flooding the market just to try to lower the price against iran and russia, the main reason we are so low at this time.

ive also wondered what a short term halt on production would do to oil prices. stop refining it until the demand comes back up to help bolster the price.