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I understand that it's hard to stop oil production, leading to pileups. But even after 2 months it's still unstoppable?
by lonelappde 7y ago
I understand that it's hard to stop oil production, leading to pileups. But even after 2 months it's still unstoppable?
- somebodythere 7y agoNobody wants to cut production, unless everyone else does so too. Otherwise they're just giving up a chunk of their revenue stream for a negligible rise in prices. It's a classic prisoner's dilemma game. Anyway, OPEC+ did cut production, a little bit. The market is saying it's not enough, at least in the near term.
- lonelappde 7y agoSurely when storage is full you do start to want to stop production?
- kube-system 7y agoThat's what producers would do in a competitive and rational market, but oil is not that. Oil is notoriously anti-competitive and political. https://en.wikipedia.org/wiki/2020_Russia%E2%80%93Saudi_Arabia_oil_price_war https://en.wikipedia.org/wiki/2020_Russia%E2%80%93Saudi_Arab...
- thinkcontext 7y agoFor many oil companies when the price of oil goes down they have to produce more in order to pay their heavy debt loads. With many companies producing as much as they can to stay afloat this forces the price down even further.
- syncsynchalt 7y agoSome wells can't be turned off without permanent loss of production.
- giarc 7y agoI talked with a friend the other day that works for a big Canadian producer. SAGD (which is popular in Alberta) can't just be turned off since the heating of steam takes months to ramp up.