5 ms·

I think oil and gas is staying high because the sanctions on Russia are staying in place and/or escalating. If the sanctions were removed (say because Putin was

by HWR_14 4y ago

I think oil and gas is staying high because the sanctions on Russia are staying in place and/or escalating. If the sanctions were removed (say because Putin was deposed) I imagine the prices would plummet

elzbardico 4y ago
In that case, oil prices will stay high. Russia is winning the war and so the sanctions will remain in place.
diordiderot 4y ago
Russian oil is still being sold to India, China, and in Europe... They're price gouging. They learned their lesson from the shale boom and are colluding to keep prices high / aren't re-opening wells for fears of a sharp drop in prices. Remember when crude went negative?
- wbsss4412 4y ago
  The lesson from the shale boom is that the saudis have no problems with waging a price war to drive them out of business after they’ve made significant upfront investments. Avoiding investments that you know will result in huge losses isn’t price gouging.
- google234123 4y ago
  Why would they bother to open anything new. the Biden will require 3 years of environmental review and will not defend against any frivolous lawsuits for any new production or plants
  - turtledove 4y ago
    First, they wouldn't need to open anything new. They could reopen existing wells. Second, pumping oil out of new sites is myopic, at best. And third, any administration's policies are hardly going to move the needle on the profits oil companies are going to make. They may tell you it's Biden, but that's just convenient cover so folks stop blaming them for problems they could eminently fix.
    - throwaway0a5e 4y ago
      Even just "turning on" existing wells has large up front costs and takes time to have a positive ROI. Between the threat of OPEC turning on the tap and the threat of administration adopting some policy that dings a percent out of the existing margin the risk is too great for north American operators to pull out the stops and go all in.
      - diordiderot 4y ago
        It's basically one sector holding the entire rest of the economy hostage for more record breaking profit. I'd argue for "use it or lose it" laws in basically every sector. Farmland, speculative RE investment, etc. Or a sort of delapidation tax In b4 'but property rights' they're fundamentally a privelidge granted to you by the 'polis'and protected by the polis for it's own benefit.
    - thehappypm 4y ago
      It’s hardly myopic. We can’t get to a green future without a healthy energy mix today to get us there.
turtledove 4y ago
Alternatively, oil is high because there's a cartel interested in maximizing profits, and there's enough dust in the air from world events that they can claim plausible deniability. It's purely free markets doing what they do - trying to optimize for the point where profits are highest by raising prices until demand drops sufficient to level off total profits. Externalities be damned (environmental, social, economic, etc.)
- HWR_14 4y ago
  The cartel just reassessed their output as a result of the continuing war and decided to increase output. And OPEC cares a lot about externalities. They know that pushing oil prices high enough will cause a recession which leads to less money for them. (They learned this in 1979). So they try to maintain a healthy but not runiously shortsighted profit.
sakopov 4y ago
The price of crude oil has been flying to the moon since December 2021. Just look at YTD chart for crude oil. Russian invasion of Ukraine might be one of contributing factors for elevated prices, but it can't be the main one.

by HWR_14 4y ago

elzbardico 4y ago

In that case, oil prices will stay high. Russia is winning the war and so the sanctions will remain in place.

diordiderot 4y ago

Russian oil is still being sold to India, China, and in Europe... They're price gouging. They learned their lesson from the shale boom and are colluding to keep prices high / aren't re-opening wells for fears of a sharp drop in prices. Remember when crude went negative?

wbsss4412 4y ago
The lesson from the shale boom is that the saudis have no problems with waging a price war to drive them out of business after they’ve made significant upfront investments. Avoiding investments that you know will result in huge losses isn’t price gouging.
google234123 4y ago
Why would they bother to open anything new. the Biden will require 3 years of environmental review and will not defend against any frivolous lawsuits for any new production or plants
- turtledove 4y ago
  First, they wouldn't need to open anything new. They could reopen existing wells. Second, pumping oil out of new sites is myopic, at best. And third, any administration's policies are hardly going to move the needle on the profits oil companies are going to make. They may tell you it's Biden, but that's just convenient cover so folks stop blaming them for problems they could eminently fix.
  - throwaway0a5e 4y ago
    Even just "turning on" existing wells has large up front costs and takes time to have a positive ROI. Between the threat of OPEC turning on the tap and the threat of administration adopting some policy that dings a percent out of the existing margin the risk is too great for north American operators to pull out the stops and go all in.
    - diordiderot 4y ago
      It's basically one sector holding the entire rest of the economy hostage for more record breaking profit. I'd argue for "use it or lose it" laws in basically every sector. Farmland, speculative RE investment, etc. Or a sort of delapidation tax In b4 'but property rights' they're fundamentally a privelidge granted to you by the 'polis'and protected by the polis for it's own benefit.
  - thehappypm 4y ago
    It’s hardly myopic. We can’t get to a green future without a healthy energy mix today to get us there.

turtledove 4y ago

Alternatively, oil is high because there's a cartel interested in maximizing profits, and there's enough dust in the air from world events that they can claim plausible deniability. It's purely free markets doing what they do - trying to optimize for the point where profits are highest by raising prices until demand drops sufficient to level off total profits. Externalities be damned (environmental, social, economic, etc.)

HWR_14 4y ago
The cartel just reassessed their output as a result of the continuing war and decided to increase output. And OPEC cares a lot about externalities. They know that pushing oil prices high enough will cause a recession which leads to less money for them. (They learned this in 1979). So they try to maintain a healthy but not runiously shortsighted profit.

sakopov 4y ago

The price of crude oil has been flying to the moon since December 2021. Just look at YTD chart for crude oil. Russian invasion of Ukraine might be one of contributing factors for elevated prices, but it can't be the main one.