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The US is a net exporter of oil I think, in the post fracking era. As a commodity, for the most part there is one global price, modulo delivery location. What

The US is a net exporter of oil I think, in the post fracking era. As a commodity, for the most part there is one global price, modulo delivery location. What happened last week is that the normal buyers don't want to transact with Russia, so they're in the unique position of having to sell a global commodity at a discount. What we may be seeing is a thinning out of suppliers on the exchange. I dont think Pussia can transact on WTI given current sanctions (did they in the past?) and intermediaries may not want the ambiguous risk of being stuck with sanctioned oil in the future.

pclmulqdq 5y ago
Not any more. The biden administration halted oil exploration on federal land, so now we are a net importer. We are running the existing wells dry and not drilling any more. With the price of oil so high, though, I wonder if more dramatic changes to the market are coming, including massive numbers of oil wells on private land and fracking nearer to cities.
- jjeaff 5y ago
  Actually, they only halted the issuing of new permits. Oil companies have years of existing permits stacked up. Additionally, federal land makes up for about 10% of total US production. So it has about zero effect right now and will have minimal effect in the future.
  - pclmulqdq 5y ago
    From the outside, you can see stats like "wells produce an average of 1000 barrels a day and last 20 years" and it looks like this doesn't have a big effect. However, most oil wells have output that decreases exponentially over the life of the well. After about 2 years of life, an average well's production decreases by 80-90%. As a result, new wells account for an outsized fraction of production, and considering all of the costs involved (including high constant costs per well regardless of pumping output), new wells are the cheapest source of oil. Without new wells, the average price to produce a barrel of oil goes up substantially. The US oil industry is starting the new wells they have in their backlog, but markets are ridiculously forward-looking and you should note that we are talking about the price of futures, not spot price today. Markets are anticipating having a much harder time getting further oil wells, and they are anticipating that the largest supply of currently unexploited oil is on public land. Put another way, current production doesn't involve much federal land, but future production expansion will largely have to happen on federal (and state) land. The number of wells on federal land has been declining over its history: we are at 38,000 leases in 2020 compared to 55,000 in 2008 (per the BLM), and data presented to congress suggests that in the past, 25% of oil production was on federal land. Today, the number is 8%. That supports the theory that new oil wells will largely have to be started on federal land rather than private land. This is a particular policy where extrapolation from current data undervalues the effect of the policy.
- bandyaboot 5y ago
  How would halting exploration on federal land have such a dramatic effect in only a year?
  - alphabettsy 5y ago
    It’s technically but not practically true since the ban was at least partially lifted and of course it isn’t the cause in such a short time.
    - ms512 5y ago
      The US Energy Information Administration publishes a variety of energy related information, including US Oil Extraction. In Dec 2021, 11,567,000 barrels per day were extracted, compared to a 12,966,000 bbl/day peak in Nov 2019 [1]. Of course, this aggregate number doesn't disambiguate the cause of the decrease in production. [1] https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MCRFPUS2&f=M https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=M...
      - MagnumOpus 5y ago
        There was of course a fairly obvious reason for decreased oil production between late 2019 and late 2021. You may remember a certain pandemic that caused demand to drop, oil prices to go negative and highly-levered oil exploration/production companies to go bankrupt...
  - deleted 5y ago
    [deleted]
- shagie 5y ago
  Some older articles... Nov 9 - OPEC Says To Biden: If You Want More Oil, Pump It Yourself https://www.forbes.com/sites/arielcohen/2021/11/09/opec-says-to-biden-if-you-want-more-oil-pump-it-yourself/?sh=37a1b4323efd https://www.forbes.com/sites/arielcohen/2021/11/09/opec-says... > OPEC and its oil-producing partners have rebuffed President Joe Biden’s calls for increased production amidst rising fuel prices, retorting that if the United States believes the world’s economy needs more energy, then it has the capability to increase production itself. The OPEC+ alliance, made up of OPEC members led by Saudi Arabia and non-member top producers guided by Russia, approved an increase in production of 400,000 barrels per day for the month of December. --- Dec 14 - US urges domestic oil producers to raise output https://www.argusmedia.com/en/news/2283072-us-urges-domestic-oil-producers-to-raise-output https://www.argusmedia.com/en/news/2283072-us-urges-domestic... > US energy secretary Jennifer Granholm told oil executives today the administration was not "standing in the way" of oil and gas production and supported increased output. She noted that the administration has approved drilling permits on federal land at a faster pace than the prior administration, while pursuing other policies that could bring down retail gasoline prices that in the week ending 13 December were still just 10¢/USG shy of a seven-year high. > The change in tone comes amid growing frustration from US oil executives, who have bristled at what they see as a lack of support from the administration. Biden in one of his first acts in office blocked the 830,000 b/d Keystone XL pipeline and spent this summer unsuccessfully asking Opec+ to accelerate plans to boost output. US independent producer Pioneer Natural Resources' chief executive Scott Sheffield last week said he has yet to meet another oil executive who has received a call from the administration asking them to increase drilling. --- Mar 2 - More oil supply could stop massive price spikes. But US producers won't fill that gap https://www.cnn.com/2022/03/02/energy/us-oil-production/index.html https://www.cnn.com/2022/03/02/energy/us-oil-production/inde... > "They can't find people, and can't find equipment," said Robert McNally, president of consulting firm Rapidan Energy Group. "It's not like they're available at a premium price. They're just not available." As a result, US oil production is just under 12 million barrels a day, 8% lower than in 2019. Experts say the industry is unlikely to get back to that pre-pandemic level this year — and that the last decade's rapid increases in US oil production, typically double-digit percentages year-over-year, are probably a thing of the past. > Another factor likely making oil companies cautious about investing too much, too fast is 2020's oil bust. The early days of the pandemic drove oil briefly to negative pricing, resulting in a spate of bankruptcies across the industry.
- asteroidp 5y ago
  Why do oil companies feel entitled to federal lands. They really are part of the welfare state

pclmulqdq 5y ago

Not any more. The biden administration halted oil exploration on federal land, so now we are a net importer. We are running the existing wells dry and not drilling any more. With the price of oil so high, though, I wonder if more dramatic changes to the market are coming, including massive numbers of oil wells on private land and fracking nearer to cities.

jjeaff 5y ago
Actually, they only halted the issuing of new permits. Oil companies have years of existing permits stacked up. Additionally, federal land makes up for about 10% of total US production. So it has about zero effect right now and will have minimal effect in the future.
- pclmulqdq 5y ago
  From the outside, you can see stats like "wells produce an average of 1000 barrels a day and last 20 years" and it looks like this doesn't have a big effect. However, most oil wells have output that decreases exponentially over the life of the well. After about 2 years of life, an average well's production decreases by 80-90%. As a result, new wells account for an outsized fraction of production, and considering all of the costs involved (including high constant costs per well regardless of pumping output), new wells are the cheapest source of oil. Without new wells, the average price to produce a barrel of oil goes up substantially. The US oil industry is starting the new wells they have in their backlog, but markets are ridiculously forward-looking and you should note that we are talking about the price of futures, not spot price today. Markets are anticipating having a much harder time getting further oil wells, and they are anticipating that the largest supply of currently unexploited oil is on public land. Put another way, current production doesn't involve much federal land, but future production expansion will largely have to happen on federal (and state) land. The number of wells on federal land has been declining over its history: we are at 38,000 leases in 2020 compared to 55,000 in 2008 (per the BLM), and data presented to congress suggests that in the past, 25% of oil production was on federal land. Today, the number is 8%. That supports the theory that new oil wells will largely have to be started on federal land rather than private land. This is a particular policy where extrapolation from current data undervalues the effect of the policy.
bandyaboot 5y ago
How would halting exploration on federal land have such a dramatic effect in only a year?
- alphabettsy 5y ago
  It’s technically but not practically true since the ban was at least partially lifted and of course it isn’t the cause in such a short time.
  - ms512 5y ago
    The US Energy Information Administration publishes a variety of energy related information, including US Oil Extraction. In Dec 2021, 11,567,000 barrels per day were extracted, compared to a 12,966,000 bbl/day peak in Nov 2019 [1]. Of course, this aggregate number doesn't disambiguate the cause of the decrease in production. [1] https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MCRFPUS2&f=M https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=M...
    - MagnumOpus 5y ago
      There was of course a fairly obvious reason for decreased oil production between late 2019 and late 2021. You may remember a certain pandemic that caused demand to drop, oil prices to go negative and highly-levered oil exploration/production companies to go bankrupt...
- deleted 5y ago
  [deleted]
shagie 5y ago
Some older articles... Nov 9 - OPEC Says To Biden: If You Want More Oil, Pump It Yourself https://www.forbes.com/sites/arielcohen/2021/11/09/opec-says-to-biden-if-you-want-more-oil-pump-it-yourself/?sh=37a1b4323efd https://www.forbes.com/sites/arielcohen/2021/11/09/opec-says... > OPEC and its oil-producing partners have rebuffed President Joe Biden’s calls for increased production amidst rising fuel prices, retorting that if the United States believes the world’s economy needs more energy, then it has the capability to increase production itself. The OPEC+ alliance, made up of OPEC members led by Saudi Arabia and non-member top producers guided by Russia, approved an increase in production of 400,000 barrels per day for the month of December. --- Dec 14 - US urges domestic oil producers to raise output https://www.argusmedia.com/en/news/2283072-us-urges-domestic-oil-producers-to-raise-output https://www.argusmedia.com/en/news/2283072-us-urges-domestic... > US energy secretary Jennifer Granholm told oil executives today the administration was not "standing in the way" of oil and gas production and supported increased output. She noted that the administration has approved drilling permits on federal land at a faster pace than the prior administration, while pursuing other policies that could bring down retail gasoline prices that in the week ending 13 December were still just 10¢/USG shy of a seven-year high. > The change in tone comes amid growing frustration from US oil executives, who have bristled at what they see as a lack of support from the administration. Biden in one of his first acts in office blocked the 830,000 b/d Keystone XL pipeline and spent this summer unsuccessfully asking Opec+ to accelerate plans to boost output. US independent producer Pioneer Natural Resources' chief executive Scott Sheffield last week said he has yet to meet another oil executive who has received a call from the administration asking them to increase drilling. --- Mar 2 - More oil supply could stop massive price spikes. But US producers won't fill that gap https://www.cnn.com/2022/03/02/energy/us-oil-production/index.html https://www.cnn.com/2022/03/02/energy/us-oil-production/inde... > "They can't find people, and can't find equipment," said Robert McNally, president of consulting firm Rapidan Energy Group. "It's not like they're available at a premium price. They're just not available." As a result, US oil production is just under 12 million barrels a day, 8% lower than in 2019. Experts say the industry is unlikely to get back to that pre-pandemic level this year — and that the last decade's rapid increases in US oil production, typically double-digit percentages year-over-year, are probably a thing of the past. > Another factor likely making oil companies cautious about investing too much, too fast is 2020's oil bust. The early days of the pandemic drove oil briefly to negative pricing, resulting in a spate of bankruptcies across the industry.
asteroidp 5y ago
Why do oil companies feel entitled to federal lands. They really are part of the welfare state