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It's really not though. Back when the US was a oil importer yes, but under normal market conditions we are the largest exporter in the world. The shale guys ca

It's really not though. Back when the US was a oil importer yes, but under normal market conditions we are the largest exporter in the world. The shale guys can basically flip a switch and go from 0 to millions of BPD. So we are really just paying to move oil from one rock formation to another...

kube-system 7y ago
Right now we can, yes. There's nothing that guarantees that will continue to be the case in the future. If we could accurately predict future changes in market conditions, nobody would ever need stockpiles. If anything, the writing is on the wall for American oil production. The current low prices are mainly a manufactured attempt to bankrupt oil producers with higher overhead costs.
- BurningFrog 7y ago
  The ability to start pumping the oil in American soil is not dependent on market conditions. The shale oil in the ground is a perfectly good stockpile as is. Or so it seems to this perhaps overconfident computer guy with little relevant expertise...
  - nordsieck 7y ago
    > The shale oil in the ground is a perfectly good stockpile as is. I think the point people are trying to make is that it's quite a bit less expensive to buy crude and store it right now than to extract it from shale in the future.
    - BurningFrog 7y ago
      Sure, but you have to weigh in the probability that such a strategic stockpile will ever be used. As an economic investment, it may well be a real good idea to buy up cheap oil now. But that's separate from the stockpile argument.
      - kube-system 7y ago
        That probability is 100% because it has already been used. Multiple times. https://www.energy.gov/fe/services/petroleum-reserves/strategic-petroleum-reserve/releasing-oil-spr?mod=article_inline https://www.energy.gov/fe/services/petroleum-reserves/strate...
    - valuearb 7y ago
      They aren’t making that argument, they are making the ludicrous argument that moving a fraction of 1% of our oil supplies from one hole to another at taxpayer expense somehow protects us from something. Even if they were it’s not the purpose of government to gamble public money on market timing bets. Oil has a history of always getting cheaper. Plenty of private funds are going to be spent in the energy market in these bets.
    - markdown 7y ago
      You're forgetting the opportunity cost. $3B spent on buying something you don't really need but that might save you some cash in the future, versus $3B saving lives today.
      - brianwawok 7y ago
        Does opportunity cost really exist when print money? You can print 3 billion to do this. Or not. Unclear if it would change the inflation of our currency.
        nordsieck 7y ago
        > Does opportunity cost really exist when print money? You can print 3 billion to do this. Or not. Unclear if it would change the inflation of our currency. Just because the US can transmute solvency risk into inflation risk doesn't mean that the cost goes away.
        brianwawok 7y ago
        Sure, but you measure it very different compared to a man standing around with $100 in his pocket. It's more like a man with a money press in his pocket.
    - renewiltord 7y ago
      Well, we have a bunch of call options at $40 (50% of American shale is viable there, probably more if labour costs drop). Given that, the downside is capped so that reduces the need to stockpile, and hyper-optimize this stuff.
      - quickthrowman 7y ago
        Are these 40Cs for the Apr contract expiration?
        renewiltord 7y ago
        Sorry, I was being metaphorical. Shale becomes viable at $40 so the US has practically unlimited oil if prices hit $40. There's no need to hedge against. America has a natural resources hedge.
        quickthrowman 7y ago
        Gotcha! Similar to the ol “Fed Put” :)
  - kube-system 7y ago
    The shale was there in 1979 too. But in order to use it, you have to be able to get it out of the ground in a way that is economically viable.
    - BurningFrog 7y ago
      Well, the invention of fracking solved that!
      - kube-system 7y ago
        No it didn't, commercial fracking had existed for almost 30 years during the '79 crisis. It was horizontal drilling that made it cheaper. That doesn't necessarily mean that these things will be cheap in the future. There are plenty of social, economic, or political events that could change that.
- kortilla 7y ago
  > The current low prices are mainly a manufactured attempt Unfortunately this isn’t true. This is what it looks like when the cartel (OPEC) isn’t artificially constraining supply.

kube-system 7y ago

Right now we can, yes. There's nothing that guarantees that will continue to be the case in the future. If we could accurately predict future changes in market conditions, nobody would ever need stockpiles. If anything, the writing is on the wall for American oil production. The current low prices are mainly a manufactured attempt to bankrupt oil producers with higher overhead costs.

BurningFrog 7y ago
The ability to start pumping the oil in American soil is not dependent on market conditions. The shale oil in the ground is a perfectly good stockpile as is. Or so it seems to this perhaps overconfident computer guy with little relevant expertise...
- nordsieck 7y ago
  > The shale oil in the ground is a perfectly good stockpile as is. I think the point people are trying to make is that it's quite a bit less expensive to buy crude and store it right now than to extract it from shale in the future.
  - BurningFrog 7y ago
    Sure, but you have to weigh in the probability that such a strategic stockpile will ever be used. As an economic investment, it may well be a real good idea to buy up cheap oil now. But that's separate from the stockpile argument.
    - kube-system 7y ago
      That probability is 100% because it has already been used. Multiple times. https://www.energy.gov/fe/services/petroleum-reserves/strategic-petroleum-reserve/releasing-oil-spr?mod=article_inline https://www.energy.gov/fe/services/petroleum-reserves/strate...
  - valuearb 7y ago
    They aren’t making that argument, they are making the ludicrous argument that moving a fraction of 1% of our oil supplies from one hole to another at taxpayer expense somehow protects us from something. Even if they were it’s not the purpose of government to gamble public money on market timing bets. Oil has a history of always getting cheaper. Plenty of private funds are going to be spent in the energy market in these bets.
  - markdown 7y ago
    You're forgetting the opportunity cost. $3B spent on buying something you don't really need but that might save you some cash in the future, versus $3B saving lives today.
    - brianwawok 7y ago
      Does opportunity cost really exist when print money? You can print 3 billion to do this. Or not. Unclear if it would change the inflation of our currency.
      - nordsieck 7y ago
        > Does opportunity cost really exist when print money? You can print 3 billion to do this. Or not. Unclear if it would change the inflation of our currency. Just because the US can transmute solvency risk into inflation risk doesn't mean that the cost goes away.
        brianwawok 7y ago
        Sure, but you measure it very different compared to a man standing around with $100 in his pocket. It's more like a man with a money press in his pocket.
  - renewiltord 7y ago
    Well, we have a bunch of call options at $40 (50% of American shale is viable there, probably more if labour costs drop). Given that, the downside is capped so that reduces the need to stockpile, and hyper-optimize this stuff.
    - quickthrowman 7y ago
      Are these 40Cs for the Apr contract expiration?
      - renewiltord 7y ago
        Sorry, I was being metaphorical. Shale becomes viable at $40 so the US has practically unlimited oil if prices hit $40. There's no need to hedge against. America has a natural resources hedge.
        quickthrowman 7y ago
        Gotcha! Similar to the ol “Fed Put” :)
- kube-system 7y ago
  The shale was there in 1979 too. But in order to use it, you have to be able to get it out of the ground in a way that is economically viable.
  - BurningFrog 7y ago
    Well, the invention of fracking solved that!
    - kube-system 7y ago
      No it didn't, commercial fracking had existed for almost 30 years during the '79 crisis. It was horizontal drilling that made it cheaper. That doesn't necessarily mean that these things will be cheap in the future. There are plenty of social, economic, or political events that could change that.
kortilla 7y ago
> The current low prices are mainly a manufactured attempt Unfortunately this isn’t true. This is what it looks like when the cartel (OPEC) isn’t artificially constraining supply.