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"overseas oil, even after shipping costs, is often cheaper than domestically-produced crude" This is all you need to know. If we had an oil export tariff, the

"overseas oil, even after shipping costs, is often cheaper than domestically-produced crude" This is all you need to know. If we had an oil export tariff, then we would very quickly become oil independent. Buyers in other countries are in competition with Americans for this oil, so if you really want to keep the price low in America, we should have such a tariff. Why should we give away our natural resources like this? Additionally: in these emergency times, a reasonable argument could be made for price controls.

SiempreViernes 5y ago
You realise that selling to the highest bidder is pretty far from giving things away?
- jhallenworld 5y ago
  And how much do they pay to extract the oil from public lands? This is very relevant because of this new thing that just happened. There was an auction for rights to install an off-shore wind farm. The final price was $4.3 billion. This tells you the value of green energy: it's so valuable that you could convince investors and banks to pony up the money. https://www.cnbc.com/2022/02/25/us-offshore-wind-auction-in-ny-nj-raises-a-record-4point37-billion.html https://www.cnbc.com/2022/02/25/us-offshore-wind-auction-in-... So what are the auction prices for oil extraction? https://www.denverpost.com/2021/10/07/john-hickenlooper-oil-gas-drilling-federal-public-lands-blm/ https://www.denverpost.com/2021/10/07/john-hickenlooper-oil-...
  - cpleppert 5y ago
    State commitments in New York and New Jersey mean that off-shore windfarms are guaranteed to be profitable. The cost of extraction doesn't equal the cost of the land or right to drill for oil.
cryptonector 5y ago
Price controls have never worked, and never will work, because they cannot work.
- tombert 5y ago
  Sorry, do you have a citation for this? I know price controls are generally not liked by economists but I don't know that any have said flatout that they will never work.
  - kajecounterhack 5y ago
    +1 in fact there are situations that definitely call for price controls. For example wartime price ceilings to prevent gouging. Or COVID vaccine pricing. Price controls work in these cases if companies have some reason (e.g. governmental mandate) to not seek the highest price. Successful deployment of price controls just have to come with a host of other policies to mitigate downsides. For example, if you enact a price ceiling, you get shortages. You deal with it by employing things like triaged distribution (e.g. early COVID vaccines go to medical professionals, N95 masks go to hospitals, etc, gas gets rationed with much of it going to the military in wartime).
    - cryptonector 5y ago
      Wartime price controls don't help the consumer -- they help the government keep the consumer from consuming goods and services needed for the war effort, and they do so by discouraging consumption. There is always a sense in which price controls work. It's just never the actual publicly ostensible sense. Prices are too high! -consumers Ok, we'll set a price ceiling -government Yayayayay! -consumers Hey wait a minute! Supply has vanished! -consumers <crickets> -government
      - kajecounterhack 5y ago
        You before this comment: > Price controls have never worked, and never will work, because they cannot work. You after this comment: > There is always a sense in which price controls work. That's all I was trying to get at. We agree they work. If you know what effects they're going to have, and they match your intentions, then they work. If you know the general populace will have a shortage of N95 masks but hospital workers will be getting every mask produced in the country at a reasonable price, then it works. If your state has a cold snap and your citizens don't see $100k bills for a few hours of power (even though many folks will experience blackouts), then it works. FWIW black and white statements like "price controls never work" ring of a certain "rah-rah unfettered capitalism is always the answer" mentality that lacks nuance. Just because you've taken some macroeconomic classes doesn't mean that how things work is all that simple.
rib3ye 5y ago
Exactly this. The US could make iPhones too, but we import them. Unfortunately we don't have a "strategic iPhone manufacturing reserve", so we have to keep it cool with China.
- mrcwinn 5y ago
  I do, however, have a strategic reserve of fitness wearables in a kitchen drawer. I am standing by.
- Atlas667 5y ago
  Apple could not make I Phones in the US. The cost of living is too high. Either you bring the cost of living down or you make technology incredibly more productive. Which in itself make the price of the product go down and generates less profits as a tendency. Think of the shareholders my man, what would they do without?
  - stjohnswarts 5y ago
    At their current level of production? Nope, US doesn't have the capacity. Give it 3 or 4 years, probably, at an elevated cost.
  - actuator 5y ago
    Apple has enough margins to make the phone in US. They make it outside to increase their profits.
    - ramraj07 5y ago
      Which market research document did you get this factoid from? Many have gone on record and said even if they wanted to make them here the engineer volume and expertise are nowhere to be found except in China now. The speed with which they can deploy factories for new processes in China is unprecedented. You can’t match that here in the US. It’s not apples mistake, it’s the governments. And the people who vote for them. Which includes you if you’re American (and sitting in a liberal state voting democrat doesn’t count; if you care that much move to a swing state and vote there).
john_moscow 5y ago
Price controls shift the pain point from the price to availability. USSR had planned economy and fixed prices for most merchandise, but you had to call in favors to "procure" many wanted items from buddies working near the supply lines, since officially they were practically always out of stock.
Atlas667 5y ago
That's a really nice summary of imperialism in the capitalist era. It really shows the need business has in economically dominating other countries in search of profit through the low production costs in other countries. The cost of production and of living (think poverty) is essential in the formula for generating capital. The reality of this article points out the contradictions inherent in capitalist economies. If there was a tariff how would that impact the rest of the economy. If anything it would only solidify the position of the already big enterprises who are the only ones able to withstand such a hike.
phendrenad2 5y ago
That only makes sense if you're looking at a snapshot in time and try to make sense of it. It's too simplistic to explain this situation if it persists over time. Which, well, it's too early to tell. US domestic oil production ha so only matched import volume for the first time ever in 2020[1]. I expect that if the US keeps production high, eventually the cost of domestic production will reach an equilibrium and the benefit of locality and less transport costs will force the US to use its own oil. [1] - https://upload.wikimedia.org/wikipedia/commons/6/6d/US_oil_production%2C_imports%2C_%26_exports.webp https://upload.wikimedia.org/wikipedia/commons/6/6d/US_oil_p...
- dlp211 5y ago
  A lot of oil produced in the US cannot be used in the US. It's too dirty and so gets shipped to countries with less environmental protections in place.
ggreer 5y ago
Price controls are almost always a terrible idea. Economists agree on this as much as dentists agree that sugared gum is bad for your teeth. If the price of a good increases, several things happen: - People reduce their consumption of that good. - People find substitutes. - People with stockpiles of the good sell it. If price controls were in effect, they would hoard it instead. - On a longer time scale, people start producing more of the good. They pay workers overtime to work more shifts, buy/build more equipment, and so on. Economist Michael Munger wrote an article titled They Clapped: Can Price-Gouging Laws Prohibit Scarcity? which explains the problems with price controls, even in times of disaster.[1] 1. https://www.econlib.org/library/Columns/y2007/Mungergouging.html https://www.econlib.org/library/Columns/y2007/Mungergouging....
- forty 5y ago
  For energy, it's hard for people to either hoard it, find substitute, or producing more of the good. Reducing consumption is possible only to a limit (when you start freezing and getting sick).
  - davidw 5y ago
    Short term, it's a problem in the US, but long term, we have a lot of ways to trim some fat. Like those gigantic, deadly trucks that get used to ferry a kid to school or a dad to the office. Or re-legalize things like corner stores so people can walk or bike to do some of what they need on a day to day basis.
    - forty 5y ago
      True :) that said upgrading to cleanest cars requires to build new car, which apparently requires some metals Russia has too... What a mess. Are corner stores really illegal in the US? I could not find anything on the topic from a quick search
      - mcbits 5y ago
        It's not as if corner stores are banned, but zoning restrictions have that effect in many places.
chiefalchemist 5y ago
Well, there's that and the fact that historically oil is an (economic) weapon. Some ecomonies are more susceptible to price changes than others. Some can use that weapon proactively, others can so nothing but reactively suffer the consequences. For example, when the USA allowed fracking production to hockey stick (started under Bush #2 and took off under Obama), the international price dropped significantly. That hurt countries such as Venezuela and Russia. Oil is like a drug. Once you're hooked you're no longer free.
snowwrestler 5y ago
Energy independence does not mean “only uses domestically produced energy.” It means “energy is not a significant lever that other nations have over us.” And that is true for the U.S. today. We could meet our domestic fossil fuel energy needs, but we find economic advantage in trading energy anyway. But when we want to use energy as a tool of policy, we have the option. This happens in personal finance too. I can pay off my mortgage: I have enough capital to do so. So I don’t fear the bank. But with mortgage interest rates so low, I’ve found comparative advantage by keeping my mortgage and investing my capital elsewhere.
- stjohnswarts 5y ago
  Exactly, trade tends to build trust and good relations (or at least respectful relations) so it's a good Net-Net thing. However, if in stressful times like war the government can pretty easily enact tariffs and even dictates that all domestic production stays here. That is of course for only emergency conditions.
  - dmingod666 5y ago
    Correct, with exception of arms trade, which finds a way to generate conflict to keep the demand going.
    - edgyquant 5y ago
      I know I shouldn’t respond to comments like this, they’re uninformed and conspiracy ridden so not HN material, but “arms companies” have no need to “generate conflict.” People are fairly efficient at doing that regardless.
      - orestarod 5y ago
        Given the objectively and publicly known huge part of the US destabilizing other countries overtly and covertly, and similar stories from innumerable other powers throughout history, I would say it takes damn much energy from third parties to generate a conflict between people I would love to see a comment defending US actions, in a way that makes sense, using only its official public narrative. Every damn official point made for justification is full of holes and counter examples.
WheatM 5y ago
Animats 5y ago
"overseas oil, even after shipping costs, is often cheaper than domestically-produced crude" If that were really true, the US would not be able to export oil, which it does. There may still be a tax break for some imported oil. Saudi oil was taxed by Saudi Arabia, and this was tax-deductible for US buyers, even though ARAMCO is owned by the Saudi government and that "tax" is the government taxing itself. Not sure if this still applies. Some export is geography. Alaska has good access to Japan. There isn't enough pipeline capacity through the Sierras. Stuff like that. Not sure about the refinery argument. Here's a study made during the last oil glut, so the technology is the same but the economics are different.[1] (Start at page 7.) Refineries can crack heavy crude down to lighter fractions, but they don't have to. Turns out that's not the problem. The problem is getting out too many light fractions - propane, methane, butane - for which markets are limited. Some distillation columns can't handle too much of the light fractions. It's possible to add a reformer stage to combine light hydrocarbons down to at least the gasoline level, but most refineries don't have those. All those problems are solveable on a scale of five years. [1] https://www.eia.gov/analysis/studies/petroleum/morelto/pdf/lightoilprod.pdf https://www.eia.gov/analysis/studies/petroleum/morelto/pdf/l...
- encoderer 5y ago
  It’s a lot cheaper to pump oil in Alaska than to frack it in South Dakota. This is why a lot of fracking stopped in 2020 when gas prices plummeted. It just wasn’t profitable anymore.
- shagie 5y ago
  The refineries made a bet a few decades ago about what type of oil they'd be refining - the stuff from Venezuela, Canada and Russia - heavy sour. This was advantageous for a while, but with fracking, there's an abundance of light sweet crude in the US... that the refineries aren't equipped to process. So, we export that oil. Changing to light sweet crude is a significant investment to the point where switching over isn't economically viable. https://www.npr.org/podcasts/381444600/marketplace https://www.npr.org/podcasts/381444600/marketplace (the March 7th episode at 4:15 and on)
  - 5y ago
landemva 5y ago
>>> "overseas oil, even after shipping costs, is often cheaper than domestically-produced crude" >>>This is all you need to know. And the Jones Act which makes it cost-prohibitive to ship between US ports. https://www.law.cornell.edu/wex/jones_act https://www.law.cornell.edu/wex/jones_act
- antupis 5y ago
  yeah Jones Act is nasty and it kinda ties US obscure ways eg whole thing with ice breakers https://www.arctictoday.com/can-the-us-benefit-from-finland-and-russias-icebreaker-expertise/ https://www.arctictoday.com/can-the-us-benefit-from-finland-... or https://www.vox.com/policy-and-politics/2017/9/27/16373484/jones-act-puerto-rico https://www.vox.com/policy-and-politics/2017/9/27/16373484/j...
mfer 5y ago
That isn't all you need to know from the article. That's about the amount that fits into a tweet and lacks a lot more context. For example, the different types of oil and the way US refineries are setup. That's useful context to know more about the situation.
- jhallenworld 5y ago
  Of course the details are more involved, but the refiners will modify their plants to optimize profits on their own. The time-frame involved could be an issue for sure. What kind of oil is in the Strategic Petroleum Reserve? It could possibly help with the time issue. The tweet-sized post is useful as a counter to the oil company talking points. They like banning Russian imports (eliminating a competitor), but want to link it to expanded drilling and the reinstatement of Keystone XL. Both of these also take time. Yet they say that they can immediately increase production, so I'm not sure the rush for their other requests.
rhuru 5y ago
How does forcing American citizens to pay higher for the oil make oil cheaper is beyond me. How does export tarrifs help reduce the price of oil ?
- mrleinad 5y ago
  It reduces the earnings for the exporter from selling it abroad, effectively capping the internal price for the commodity so it cannot go higher than a certain price (it works on anything that can be exported)
_8j50 5y ago
Why? Geopolitics. You can't influence others without leverage and you can't tariff oil and expect others not to tariff other things you need. You tariff crude export but maybe you need to export gasoline/benzene and they tariff you back. There is also the consideration of reserves, when consuming more you want to consume others' more so your finite crude supply won't run out before theirs (decades from now). Either way, death to fossil fuels!!
seanmcdirmid 5y ago
> If we had an oil export tariff, then we would very quickly become oil independent. We typically export refined oil products (think gasoline from WA to BC) that have lots of value add (refined gasoline rather than just oil). A lot of it goes to our allies (Japan), or even China. Cleaner American crude might go to other countries who mix it in with dirtier local crude to create something that is refineable. The trade has a net benefit if you don't treat oil as some homogenous resource. This isn't even to mention geography conveniences: we export to Canada, Canada exports to us because the USA is a big country (and lots of Canadian shale goes to Texas to be refined). IF we had an oil export tariff, the industry would get messed up quickly. It would survive, we would just have to shoulder higher costs for less efficient usage of resources.
- deleted 5y ago
  [deleted]
knownjorbist 5y ago
Tariffs create more problems than they solve.
mrleinad 5y ago
I think you'll see this going into effect before the end of the year.
topspin 5y ago
> If we had an oil export tariff Constitution of the United States Article I, Section 9, Clause 5: "No Tax or Duty shall be laid on Articles exported from any State." see: https://constitution.congress.gov/browse/essay/artI_S9_C5_1/ https://constitution.congress.gov/browse/essay/artI_S9_C5_1/
ChrisLomont 5y ago
Tariffs here would lead to other countries putting tariffs on trade we do care about. Trade wars have been shown to cost countries, not help them. We'd be no exception.
thwerou2343 5y ago
It's not this simple. Petrodollar is contingent on supplying dinosaur-juice to the world's wealthiest country. An isolationist America that resorts to price-controls or money-printing in order to keep its oil producers afloat risks run-away inflation. Not only due to the issue of EROEI, but also due to threats to its primacy in the global order. Of course many of think its unfair that the world pays for the US warmongering and general debauchery, but I imagine there are enough people in the State-dept. and the Fed to understand this even if they pretend this whole thing is a "conspiracy theory" to be punished with blasphemy.
wahern 5y ago
> If we had an oil export tariff, then we would very quickly become oil independent. We had an oil export ban until 2015. Lifting it is at least part of the reason oil production has increased as much as it has over the past 6 years. If you look at production graphs, oil production was already on a sharp upswing between 2010 and 2015. But it kept going between 2015 and today, even though domestic oil consumption declined over that period. If you consider grades of oil and geographic locations (i.e. for what and whom various production areas are best suited), it might even be possible that the only reason we could be hypothetically import independent without substantially increased prices based on today's undifferentiated extraction volume is because of the export market. Without the grade and geography arbitrage provided by trade, current production might not be viable without substantially increased prices. (Though, if global prices become extreme and remain so, then at least we could limit the price increases. OTOH, it's probably just easier--and certainly quicker--to make nice with Venezuela rather than restructure our extraction and refining infrastructure.)
- erosenbe0 5y ago
  Great comment. The growth in the export market lets the domestic market do a bit of optimization and arbitrage, keeping prices down overall.
Entalpi 5y ago
Give away? You are selling it on a global market and buying on the very same market.
mariodiana 5y ago
Price controls are economically destructive. They cause shortages. Were you alive in the 1970's? Lines going for several blocks? Even and odd days? Price controls are a bad idea.

SiempreViernes 5y ago

You realise that selling to the highest bidder is pretty far from giving things away?

jhallenworld 5y ago
And how much do they pay to extract the oil from public lands? This is very relevant because of this new thing that just happened. There was an auction for rights to install an off-shore wind farm. The final price was $4.3 billion. This tells you the value of green energy: it's so valuable that you could convince investors and banks to pony up the money. https://www.cnbc.com/2022/02/25/us-offshore-wind-auction-in-ny-nj-raises-a-record-4point37-billion.html https://www.cnbc.com/2022/02/25/us-offshore-wind-auction-in-... So what are the auction prices for oil extraction? https://www.denverpost.com/2021/10/07/john-hickenlooper-oil-gas-drilling-federal-public-lands-blm/ https://www.denverpost.com/2021/10/07/john-hickenlooper-oil-...
- cpleppert 5y ago
  State commitments in New York and New Jersey mean that off-shore windfarms are guaranteed to be profitable. The cost of extraction doesn't equal the cost of the land or right to drill for oil.

cryptonector 5y ago

Price controls have never worked, and never will work, because they cannot work.

tombert 5y ago
Sorry, do you have a citation for this? I know price controls are generally not liked by economists but I don't know that any have said flatout that they will never work.
- kajecounterhack 5y ago
  +1 in fact there are situations that definitely call for price controls. For example wartime price ceilings to prevent gouging. Or COVID vaccine pricing. Price controls work in these cases if companies have some reason (e.g. governmental mandate) to not seek the highest price. Successful deployment of price controls just have to come with a host of other policies to mitigate downsides. For example, if you enact a price ceiling, you get shortages. You deal with it by employing things like triaged distribution (e.g. early COVID vaccines go to medical professionals, N95 masks go to hospitals, etc, gas gets rationed with much of it going to the military in wartime).
  - cryptonector 5y ago
    Wartime price controls don't help the consumer -- they help the government keep the consumer from consuming goods and services needed for the war effort, and they do so by discouraging consumption. There is always a sense in which price controls work. It's just never the actual publicly ostensible sense. Prices are too high! -consumers Ok, we'll set a price ceiling -government Yayayayay! -consumers Hey wait a minute! Supply has vanished! -consumers <crickets> -government
    - kajecounterhack 5y ago
      You before this comment: > Price controls have never worked, and never will work, because they cannot work. You after this comment: > There is always a sense in which price controls work. That's all I was trying to get at. We agree they work. If you know what effects they're going to have, and they match your intentions, then they work. If you know the general populace will have a shortage of N95 masks but hospital workers will be getting every mask produced in the country at a reasonable price, then it works. If your state has a cold snap and your citizens don't see $100k bills for a few hours of power (even though many folks will experience blackouts), then it works. FWIW black and white statements like "price controls never work" ring of a certain "rah-rah unfettered capitalism is always the answer" mentality that lacks nuance. Just because you've taken some macroeconomic classes doesn't mean that how things work is all that simple.

rib3ye 5y ago

Exactly this. The US could make iPhones too, but we import them. Unfortunately we don't have a "strategic iPhone manufacturing reserve", so we have to keep it cool with China.

mrcwinn 5y ago
I do, however, have a strategic reserve of fitness wearables in a kitchen drawer. I am standing by.
Atlas667 5y ago
Apple could not make I Phones in the US. The cost of living is too high. Either you bring the cost of living down or you make technology incredibly more productive. Which in itself make the price of the product go down and generates less profits as a tendency. Think of the shareholders my man, what would they do without?
- stjohnswarts 5y ago
  At their current level of production? Nope, US doesn't have the capacity. Give it 3 or 4 years, probably, at an elevated cost.
- actuator 5y ago
  Apple has enough margins to make the phone in US. They make it outside to increase their profits.
  - ramraj07 5y ago
    Which market research document did you get this factoid from? Many have gone on record and said even if they wanted to make them here the engineer volume and expertise are nowhere to be found except in China now. The speed with which they can deploy factories for new processes in China is unprecedented. You can’t match that here in the US. It’s not apples mistake, it’s the governments. And the people who vote for them. Which includes you if you’re American (and sitting in a liberal state voting democrat doesn’t count; if you care that much move to a swing state and vote there).

john_moscow 5y ago

Price controls shift the pain point from the price to availability. USSR had planned economy and fixed prices for most merchandise, but you had to call in favors to "procure" many wanted items from buddies working near the supply lines, since officially they were practically always out of stock.

Atlas667 5y ago

That's a really nice summary of imperialism in the capitalist era. It really shows the need business has in economically dominating other countries in search of profit through the low production costs in other countries. The cost of production and of living (think poverty) is essential in the formula for generating capital. The reality of this article points out the contradictions inherent in capitalist economies. If there was a tariff how would that impact the rest of the economy. If anything it would only solidify the position of the already big enterprises who are the only ones able to withstand such a hike.

phendrenad2 5y ago

That only makes sense if you're looking at a snapshot in time and try to make sense of it. It's too simplistic to explain this situation if it persists over time. Which, well, it's too early to tell. US domestic oil production ha so only matched import volume for the first time ever in 2020[1]. I expect that if the US keeps production high, eventually the cost of domestic production will reach an equilibrium and the benefit of locality and less transport costs will force the US to use its own oil. [1] - https://upload.wikimedia.org/wikipedia/commons/6/6d/US_oil_production%2C_imports%2C_%26_exports.webp https://upload.wikimedia.org/wikipedia/commons/6/6d/US_oil_p...

dlp211 5y ago
A lot of oil produced in the US cannot be used in the US. It's too dirty and so gets shipped to countries with less environmental protections in place.

ggreer 5y ago

Price controls are almost always a terrible idea. Economists agree on this as much as dentists agree that sugared gum is bad for your teeth. If the price of a good increases, several things happen: - People reduce their consumption of that good. - People find substitutes. - People with stockpiles of the good sell it. If price controls were in effect, they would hoard it instead. - On a longer time scale, people start producing more of the good. They pay workers overtime to work more shifts, buy/build more equipment, and so on. Economist Michael Munger wrote an article titled They Clapped: Can Price-Gouging Laws Prohibit Scarcity? which explains the problems with price controls, even in times of disaster.[1] 1. https://www.econlib.org/library/Columns/y2007/Mungergouging.html https://www.econlib.org/library/Columns/y2007/Mungergouging....

forty 5y ago
For energy, it's hard for people to either hoard it, find substitute, or producing more of the good. Reducing consumption is possible only to a limit (when you start freezing and getting sick).
- davidw 5y ago
  Short term, it's a problem in the US, but long term, we have a lot of ways to trim some fat. Like those gigantic, deadly trucks that get used to ferry a kid to school or a dad to the office. Or re-legalize things like corner stores so people can walk or bike to do some of what they need on a day to day basis.
  - forty 5y ago
    True :) that said upgrading to cleanest cars requires to build new car, which apparently requires some metals Russia has too... What a mess. Are corner stores really illegal in the US? I could not find anything on the topic from a quick search
    - mcbits 5y ago
      It's not as if corner stores are banned, but zoning restrictions have that effect in many places.

chiefalchemist 5y ago

Well, there's that and the fact that historically oil is an (economic) weapon. Some ecomonies are more susceptible to price changes than others. Some can use that weapon proactively, others can so nothing but reactively suffer the consequences. For example, when the USA allowed fracking production to hockey stick (started under Bush #2 and took off under Obama), the international price dropped significantly. That hurt countries such as Venezuela and Russia. Oil is like a drug. Once you're hooked you're no longer free.

snowwrestler 5y ago

Energy independence does not mean “only uses domestically produced energy.” It means “energy is not a significant lever that other nations have over us.” And that is true for the U.S. today. We could meet our domestic fossil fuel energy needs, but we find economic advantage in trading energy anyway. But when we want to use energy as a tool of policy, we have the option. This happens in personal finance too. I can pay off my mortgage: I have enough capital to do so. So I don’t fear the bank. But with mortgage interest rates so low, I’ve found comparative advantage by keeping my mortgage and investing my capital elsewhere.

stjohnswarts 5y ago
Exactly, trade tends to build trust and good relations (or at least respectful relations) so it's a good Net-Net thing. However, if in stressful times like war the government can pretty easily enact tariffs and even dictates that all domestic production stays here. That is of course for only emergency conditions.
- dmingod666 5y ago
  Correct, with exception of arms trade, which finds a way to generate conflict to keep the demand going.
  - edgyquant 5y ago
    I know I shouldn’t respond to comments like this, they’re uninformed and conspiracy ridden so not HN material, but “arms companies” have no need to “generate conflict.” People are fairly efficient at doing that regardless.
    - orestarod 5y ago
      Given the objectively and publicly known huge part of the US destabilizing other countries overtly and covertly, and similar stories from innumerable other powers throughout history, I would say it takes damn much energy from third parties to generate a conflict between people I would love to see a comment defending US actions, in a way that makes sense, using only its official public narrative. Every damn official point made for justification is full of holes and counter examples.

WheatM 5y ago

Animats 5y ago

"overseas oil, even after shipping costs, is often cheaper than domestically-produced crude" If that were really true, the US would not be able to export oil, which it does. There may still be a tax break for some imported oil. Saudi oil was taxed by Saudi Arabia, and this was tax-deductible for US buyers, even though ARAMCO is owned by the Saudi government and that "tax" is the government taxing itself. Not sure if this still applies. Some export is geography. Alaska has good access to Japan. There isn't enough pipeline capacity through the Sierras. Stuff like that. Not sure about the refinery argument. Here's a study made during the last oil glut, so the technology is the same but the economics are different.[1] (Start at page 7.) Refineries can crack heavy crude down to lighter fractions, but they don't have to. Turns out that's not the problem. The problem is getting out too many light fractions - propane, methane, butane - for which markets are limited. Some distillation columns can't handle too much of the light fractions. It's possible to add a reformer stage to combine light hydrocarbons down to at least the gasoline level, but most refineries don't have those. All those problems are solveable on a scale of five years. [1] https://www.eia.gov/analysis/studies/petroleum/morelto/pdf/lightoilprod.pdf https://www.eia.gov/analysis/studies/petroleum/morelto/pdf/l...

encoderer 5y ago
It’s a lot cheaper to pump oil in Alaska than to frack it in South Dakota. This is why a lot of fracking stopped in 2020 when gas prices plummeted. It just wasn’t profitable anymore.
shagie 5y ago
The refineries made a bet a few decades ago about what type of oil they'd be refining - the stuff from Venezuela, Canada and Russia - heavy sour. This was advantageous for a while, but with fracking, there's an abundance of light sweet crude in the US... that the refineries aren't equipped to process. So, we export that oil. Changing to light sweet crude is a significant investment to the point where switching over isn't economically viable. https://www.npr.org/podcasts/381444600/marketplace https://www.npr.org/podcasts/381444600/marketplace (the March 7th episode at 4:15 and on)
- 5y ago

landemva 5y ago

>>> "overseas oil, even after shipping costs, is often cheaper than domestically-produced crude" >>>This is all you need to know. And the Jones Act which makes it cost-prohibitive to ship between US ports. https://www.law.cornell.edu/wex/jones_act https://www.law.cornell.edu/wex/jones_act

antupis 5y ago
yeah Jones Act is nasty and it kinda ties US obscure ways eg whole thing with ice breakers https://www.arctictoday.com/can-the-us-benefit-from-finland-and-russias-icebreaker-expertise/ https://www.arctictoday.com/can-the-us-benefit-from-finland-... or https://www.vox.com/policy-and-politics/2017/9/27/16373484/jones-act-puerto-rico https://www.vox.com/policy-and-politics/2017/9/27/16373484/j...

mfer 5y ago

That isn't all you need to know from the article. That's about the amount that fits into a tweet and lacks a lot more context. For example, the different types of oil and the way US refineries are setup. That's useful context to know more about the situation.

jhallenworld 5y ago
Of course the details are more involved, but the refiners will modify their plants to optimize profits on their own. The time-frame involved could be an issue for sure. What kind of oil is in the Strategic Petroleum Reserve? It could possibly help with the time issue. The tweet-sized post is useful as a counter to the oil company talking points. They like banning Russian imports (eliminating a competitor), but want to link it to expanded drilling and the reinstatement of Keystone XL. Both of these also take time. Yet they say that they can immediately increase production, so I'm not sure the rush for their other requests.

rhuru 5y ago

How does forcing American citizens to pay higher for the oil make oil cheaper is beyond me. How does export tarrifs help reduce the price of oil ?

mrleinad 5y ago
It reduces the earnings for the exporter from selling it abroad, effectively capping the internal price for the commodity so it cannot go higher than a certain price (it works on anything that can be exported)

_8j50 5y ago

Why? Geopolitics. You can't influence others without leverage and you can't tariff oil and expect others not to tariff other things you need. You tariff crude export but maybe you need to export gasoline/benzene and they tariff you back. There is also the consideration of reserves, when consuming more you want to consume others' more so your finite crude supply won't run out before theirs (decades from now). Either way, death to fossil fuels!!

seanmcdirmid 5y ago

> If we had an oil export tariff, then we would very quickly become oil independent. We typically export refined oil products (think gasoline from WA to BC) that have lots of value add (refined gasoline rather than just oil). A lot of it goes to our allies (Japan), or even China. Cleaner American crude might go to other countries who mix it in with dirtier local crude to create something that is refineable. The trade has a net benefit if you don't treat oil as some homogenous resource. This isn't even to mention geography conveniences: we export to Canada, Canada exports to us because the USA is a big country (and lots of Canadian shale goes to Texas to be refined). IF we had an oil export tariff, the industry would get messed up quickly. It would survive, we would just have to shoulder higher costs for less efficient usage of resources.

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knownjorbist 5y ago

Tariffs create more problems than they solve.

mrleinad 5y ago

I think you'll see this going into effect before the end of the year.

topspin 5y ago

> If we had an oil export tariff Constitution of the United States Article I, Section 9, Clause 5: "No Tax or Duty shall be laid on Articles exported from any State." see: https://constitution.congress.gov/browse/essay/artI_S9_C5_1/ https://constitution.congress.gov/browse/essay/artI_S9_C5_1/

ChrisLomont 5y ago

Tariffs here would lead to other countries putting tariffs on trade we do care about. Trade wars have been shown to cost countries, not help them. We'd be no exception.

thwerou2343 5y ago

It's not this simple. Petrodollar is contingent on supplying dinosaur-juice to the world's wealthiest country. An isolationist America that resorts to price-controls or money-printing in order to keep its oil producers afloat risks run-away inflation. Not only due to the issue of EROEI, but also due to threats to its primacy in the global order. Of course many of think its unfair that the world pays for the US warmongering and general debauchery, but I imagine there are enough people in the State-dept. and the Fed to understand this even if they pretend this whole thing is a "conspiracy theory" to be punished with blasphemy.

wahern 5y ago

> If we had an oil export tariff, then we would very quickly become oil independent. We had an oil export ban until 2015. Lifting it is at least part of the reason oil production has increased as much as it has over the past 6 years. If you look at production graphs, oil production was already on a sharp upswing between 2010 and 2015. But it kept going between 2015 and today, even though domestic oil consumption declined over that period. If you consider grades of oil and geographic locations (i.e. for what and whom various production areas are best suited), it might even be possible that the only reason we could be hypothetically import independent without substantially increased prices based on today's undifferentiated extraction volume is because of the export market. Without the grade and geography arbitrage provided by trade, current production might not be viable without substantially increased prices. (Though, if global prices become extreme and remain so, then at least we could limit the price increases. OTOH, it's probably just easier--and certainly quicker--to make nice with Venezuela rather than restructure our extraction and refining infrastructure.)

erosenbe0 5y ago
Great comment. The growth in the export market lets the domestic market do a bit of optimization and arbitrage, keeping prices down overall.

Entalpi 5y ago

Give away? You are selling it on a global market and buying on the very same market.

mariodiana 5y ago

Price controls are economically destructive. They cause shortages. Were you alive in the 1970's? Lines going for several blocks? Even and odd days? Price controls are a bad idea.