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Limiting the production of oil in any sense is going to increase the price. Biden has said no more drilling on public land and imposed new regulations on pollut

Limiting the production of oil in any sense is going to increase the price. Biden has said no more drilling on public land and imposed new regulations on pollution. https://www.marketwatch.com/investing/future/crude%20oil%20-%20electronic https://www.marketwatch.com/investing/future/crude%20oil%20-... Here we can see the price of oil futures going back a few years. We can see they start an upward trend once Biden gets into office. and long before the Ukraine conflict. There are two parts of this, what Biden has done, and what people fear he might do. There is a trade off between using goods now, and using them later. The higher the return for using them later, the higher the return for using them now has to be in order to justify consuming it. If Biden says, no more drilling on public land, you are right, that would not impact supply immediately, but it would impact the expected supply and price of oil in the future. Which means that in order for the oil to be consumed now, the price has to be higher. If you add to that the expected regulations to come in the future, further restricting or taxing fossil fuel use, it pushes this even higher. So because it is expected that the price of oil will be more expensive in the future, both because of what Biden has done already, and because of what he has promised to do, then the price of oil has to increase now. Do you understand what I'm trying to convey? FURTHER EXPLANATION Let's say you have 10 barrels of oil to sell. You can sell those barrels now for $100 dollars, or you can sell them in a year for $200 dollars. The more the price of oil in the future increases, so too does your incentive to wait to sell. In response to this, the price of oil has to increase in the present, to compete with the prices promised in the future. So if the future price rises to $250, the present price might increase to $130 in order to incentivize producers to sell now, rather than wait for higher returns in the future. What Biden has done is send signals that in the future, the supply of oil will be lower, and the price higher, which incentivizes producers to wait for those higher returns, which as a result increases the prices now, in order to compete.

tootie 5y ago
Tough to say because Biden is also pushing policy to curb demand and EVs are rising rapidly. I'm not sure if markets have fully absorbed the world of falling supply and falling demand. Or if they actually believe demand will fall appreciably in the near future.
- roamerz 5y ago
  Yup hard to say. Thankfully citizens are seeing the reality of his anti-American policies and will make their displeasure felt at the polls this November.
  - typeofhuman 5y ago
    Without endorsing all that is Trump, what I did like about his tenure is that I had more money in my pocket to make decisions for myself. Whether that be buying more energy efficient appliances or perhaps an EV. Now I have less money, appliances are more expensive, and we're being told "don't like the price at the pump, just buy an EV lol".
    - roamerz 5y ago
      As a person Trump was a shitshow. Had he listened to feedback from his advisors and I dare say the general public he would still be in office. His policies which include foreign relations, immigration, energy and monetary though were pro American and good for the USA as a whole.
      - typeofhuman 5y ago
        The policies were good for America and NATO. He told Germany and other NATO leaders that dependence on Russian oil was a major threat to their economies. He told them they should focus on other avenues. But they didn't listen. He was tough on Russia.
        tootie 5y ago
        https://www.vox.com/policy-and-politics/2019/1/15/18183759/trump-pull-out-of-nato-nyt-mattis https://www.vox.com/policy-and-politics/2019/1/15/18183759/t... He wasn't advising Germany to divest from Russia because it would strengthen NATO. He was saying NATO was corrupted because of Russian oil and therefore was worthless. This is based on the same fallacious perspective that Putin employs. Namely that NATO exists to be Russia's adversary. NATO exists for the defense of politically-aligned democracies against aggressors. Russia is only the enemy of NATO because they choose to be. Trump's behavior towards Ukraine was not only grotesquely unethical and breach of his Constitutional obligations but seriously weakened their position when it came to resisting Russia.
wiz21c 5y ago
> Limiting the production of oil in any sense is going to increase the price. That's a fallacy. If you limit the production, then you have less oil. The fact that the price increase is due to competing, individual, interests. If you limit the production, limit the demand too. Doing it with the price is the worst possible way to do it because speculation turns on...
- nukemaster 5y ago
  This is extremely reductionist. It's like saying untying a balloon doesn't cause it to deflate, the deflation is caused by the random motion and collisions of the air molecules.
- brandmeyer 5y ago
  Are you arguing for a command economy? Doing it with prices is the best possible way, because it empowers distributed decision-making.
rgbrenner 5y ago
Completely wrong. When covid hit and the lock downs started, oil demand took a nose dive, and shortly afterward producers reduced output because of the lack of demand. The reduction in demand was more than the entire oil production of the united states: 15m barrels per day. During the recovery, consumer demand increased at a faster rate than the production increase... leading to rising prices. It continues to be higher than world production. Right now, demand is back to pre-pandemic levels, but production is still a few million barrels (per day) short. You can see that clearly in the first chart on this page: https://www.eia.gov/outlooks/steo/report/global_oil.php https://www.eia.gov/outlooks/steo/report/global_oil.php
- JacobThreeThree 5y ago
  >but production is still a few million barrels (per day) short That fits perfectly with what OP said. If the production wasn't limited, there would be more production.
  - colinmhayes 5y ago
    Except oil producers stopped producing on their own because prices were literally negative. THe government had nothing to do with that.
  - xadhominemx 5y ago
    Production is limited by the choice of the oil and gas companies. There are plenty of sites available for extraction, but they are not being exploited because producers have been burned multiple times investing into a short-term spike in prices. If prices remain elevated for a while, they will start to drill.
  - rgbrenner 5y ago
    The US oil production COVID low was 9.7m bpd.. we're currently at 11.4m bpd. We're already the #1 producer in the world. If you added the current global shortfall, it would put us way past record levels. Your belief that the US alone can make up this shortfall is entirely based on speculation and the belief of unlimited US production. Again, the COVID dip was larger than the entire US production. It's silly to believe a global problem can be solved entirely by the US. And the issue with OPS analysis is that he wants to blame biden, when his own chart clearly shows prices rising since the COVID dip... something that happened before he was elected. This has nothing to do with politics.

tootie 5y ago

Tough to say because Biden is also pushing policy to curb demand and EVs are rising rapidly. I'm not sure if markets have fully absorbed the world of falling supply and falling demand. Or if they actually believe demand will fall appreciably in the near future.

roamerz 5y ago
Yup hard to say. Thankfully citizens are seeing the reality of his anti-American policies and will make their displeasure felt at the polls this November.
- typeofhuman 5y ago
  Without endorsing all that is Trump, what I did like about his tenure is that I had more money in my pocket to make decisions for myself. Whether that be buying more energy efficient appliances or perhaps an EV. Now I have less money, appliances are more expensive, and we're being told "don't like the price at the pump, just buy an EV lol".
  - roamerz 5y ago
    As a person Trump was a shitshow. Had he listened to feedback from his advisors and I dare say the general public he would still be in office. His policies which include foreign relations, immigration, energy and monetary though were pro American and good for the USA as a whole.
    - typeofhuman 5y ago
      The policies were good for America and NATO. He told Germany and other NATO leaders that dependence on Russian oil was a major threat to their economies. He told them they should focus on other avenues. But they didn't listen. He was tough on Russia.
      - tootie 5y ago
        https://www.vox.com/policy-and-politics/2019/1/15/18183759/trump-pull-out-of-nato-nyt-mattis https://www.vox.com/policy-and-politics/2019/1/15/18183759/t... He wasn't advising Germany to divest from Russia because it would strengthen NATO. He was saying NATO was corrupted because of Russian oil and therefore was worthless. This is based on the same fallacious perspective that Putin employs. Namely that NATO exists to be Russia's adversary. NATO exists for the defense of politically-aligned democracies against aggressors. Russia is only the enemy of NATO because they choose to be. Trump's behavior towards Ukraine was not only grotesquely unethical and breach of his Constitutional obligations but seriously weakened their position when it came to resisting Russia.

wiz21c 5y ago

> Limiting the production of oil in any sense is going to increase the price. That's a fallacy. If you limit the production, then you have less oil. The fact that the price increase is due to competing, individual, interests. If you limit the production, limit the demand too. Doing it with the price is the worst possible way to do it because speculation turns on...

nukemaster 5y ago
This is extremely reductionist. It's like saying untying a balloon doesn't cause it to deflate, the deflation is caused by the random motion and collisions of the air molecules.
brandmeyer 5y ago
Are you arguing for a command economy? Doing it with prices is the best possible way, because it empowers distributed decision-making.

rgbrenner 5y ago

Completely wrong. When covid hit and the lock downs started, oil demand took a nose dive, and shortly afterward producers reduced output because of the lack of demand. The reduction in demand was more than the entire oil production of the united states: 15m barrels per day. During the recovery, consumer demand increased at a faster rate than the production increase... leading to rising prices. It continues to be higher than world production. Right now, demand is back to pre-pandemic levels, but production is still a few million barrels (per day) short. You can see that clearly in the first chart on this page: https://www.eia.gov/outlooks/steo/report/global_oil.php https://www.eia.gov/outlooks/steo/report/global_oil.php

JacobThreeThree 5y ago
>but production is still a few million barrels (per day) short That fits perfectly with what OP said. If the production wasn't limited, there would be more production.
- colinmhayes 5y ago
  Except oil producers stopped producing on their own because prices were literally negative. THe government had nothing to do with that.
- xadhominemx 5y ago
  Production is limited by the choice of the oil and gas companies. There are plenty of sites available for extraction, but they are not being exploited because producers have been burned multiple times investing into a short-term spike in prices. If prices remain elevated for a while, they will start to drill.
- rgbrenner 5y ago
  The US oil production COVID low was 9.7m bpd.. we're currently at 11.4m bpd. We're already the #1 producer in the world. If you added the current global shortfall, it would put us way past record levels. Your belief that the US alone can make up this shortfall is entirely based on speculation and the belief of unlimited US production. Again, the COVID dip was larger than the entire US production. It's silly to believe a global problem can be solved entirely by the US. And the issue with OPS analysis is that he wants to blame biden, when his own chart clearly shows prices rising since the COVID dip... something that happened before he was elected. This has nothing to do with politics.