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We already have that, the scarcity is fake. Induced to increase profits, that's why the oil/gas companies refuse to increase production. They've literally been

by feet 4y ago

We already have that, the scarcity is fake. Induced to increase profits, that's why the oil/gas companies refuse to increase production. They've literally been saying this recently on earnings calls. They could drill more but they won't, the administration has been granting more permits than the last. They could refine more of what they have but they refuse. Again, all clear as day stated in their earnings calls This is just one prominent example, another would be the huge amount of food waste produced by grocers and other retailers.

bluGill 4y ago
Oil companies know EVs are coming. Investing in oil wells - which won't start producing for several years is a stupid investment that probably will not pay off. The only sane investment in oil is to milk previous investments all the way to zero. Of course there are non gasoline car uses for oil, and those are worth investing in, but there is much less of them.
pc86 4y ago
I haven't listened to the earnings calls but I seriously doubt the content boils down to "we could drill more and make more money, but... meh"
- feet 4y ago
  Huh? No they make more money by restricting supply, that's what I'm saying. Not drilling and not refining let's them jack up prices while blaming inflation
  - pc86 4y ago
    This doesn't make sense at the micro level though. You have (let's say) half a dozen oil companies all producing roughly x BBL for $y/BBL. What's to stop Company A, who has the means to do so already, from simply producing 1.1x BBL and keeping its price at $y? At a macro level yes, if everyone increases supply 10% you'll see some price fluctuation, but that doesn't necessarily hold for an individual, self-interested company. Hell, that company could produce 10% more but sell it for $y-0.05 and presumably make more money selling for cheaper.
    - feet 4y ago
      Have you listened to the earnings calls?
osigurdson 4y ago
Two years ago, oil was at $0. If the war in Ukraine ends, oil will likely go back to $40 or less. Larger projects take years to develop and long term prospects are dismal since we won't be using oil anymore. Can you really blame companies for being cautious?
- feet 4y ago
  They have essentially tripled their profits at the expense of everyone else This is what unbridled capitalism and profit seeking gets us
  - ericd 4y ago
    It’s not easy/quick to spin up production. The demand is somewhat inelastic, and they sell it to the highest bidder. Not sure what you want?
    - feet 4y ago
      Its purposeful, go listen to the calls They have production capacity already and they refuse to use it
  - osigurdson 4y ago
    Were you petitioning for government bailouts for the oil industry when oil was at $0?
kortilla 4y ago
This explanation is dumb. If the oil investments looked like they would pay off, companies would be incentivized to expand way more and capture more profit. You’re suggesting they are refusing to increase production out of greed, but the greedy move would be to expand drilling and refinement to capture more of the high margin volume. Preventing this defector behavior requires an explicit cartel (see OPEC), which is not legal in the US. So your explanation for why oil companies don’t increase production is lacking.
- feet 4y ago
  Restricting the supply allows them to keep the margins high, increasing supply would mean that price would drop How does your stance make sense at all? In what market does increasing supply not lead to decreasing prices? Of course they're going to keep restricting supply to keep prices high while they can. What I don't understand is why you're here defending them without listening to the earning calls where they literally state what I am telling you
  - kortilla 4y ago
    > How does your stance make sense at all? In what market does increasing supply not lead to decreasing prices? It’s super basic economics unless you control 100% of the market. An oil provider that doubles their output from 1% of the market to 2% will only put a slight downward pressure on the price while doubling their high margin income. The winning move is always to increase production. > without listening to the earning calls where they literally state what I am telling you I’m telling you that you don’t understand what they are saying. If they are unwilling to build it’s because the future of the oil is uncertain, not because the margins are high right now. The margins being high is a great reason to expand drilling even into hard to extract areas.
    - feet 4y ago
      You're misunderstanding what I'm saying. They don't need to build anything They already have capacity, they have the distilleries and holding already built but sitting entirely unused, they just aren't spinning it up to purposely restrict supply and keep profit margins high. That's what we get with an oligarchy, the companies work together to control production and price.

by feet 4y ago

bluGill 4y ago

Oil companies know EVs are coming. Investing in oil wells - which won't start producing for several years is a stupid investment that probably will not pay off. The only sane investment in oil is to milk previous investments all the way to zero. Of course there are non gasoline car uses for oil, and those are worth investing in, but there is much less of them.

pc86 4y ago

I haven't listened to the earnings calls but I seriously doubt the content boils down to "we could drill more and make more money, but... meh"

feet 4y ago
Huh? No they make more money by restricting supply, that's what I'm saying. Not drilling and not refining let's them jack up prices while blaming inflation
- pc86 4y ago
  This doesn't make sense at the micro level though. You have (let's say) half a dozen oil companies all producing roughly x BBL for $y/BBL. What's to stop Company A, who has the means to do so already, from simply producing 1.1x BBL and keeping its price at $y? At a macro level yes, if everyone increases supply 10% you'll see some price fluctuation, but that doesn't necessarily hold for an individual, self-interested company. Hell, that company could produce 10% more but sell it for $y-0.05 and presumably make more money selling for cheaper.
  - feet 4y ago
    Have you listened to the earnings calls?

osigurdson 4y ago

Two years ago, oil was at $0. If the war in Ukraine ends, oil will likely go back to $40 or less. Larger projects take years to develop and long term prospects are dismal since we won't be using oil anymore. Can you really blame companies for being cautious?

feet 4y ago
They have essentially tripled their profits at the expense of everyone else This is what unbridled capitalism and profit seeking gets us
- ericd 4y ago
  It’s not easy/quick to spin up production. The demand is somewhat inelastic, and they sell it to the highest bidder. Not sure what you want?
  - feet 4y ago
    Its purposeful, go listen to the calls They have production capacity already and they refuse to use it
- osigurdson 4y ago
  Were you petitioning for government bailouts for the oil industry when oil was at $0?

kortilla 4y ago

This explanation is dumb. If the oil investments looked like they would pay off, companies would be incentivized to expand way more and capture more profit. You’re suggesting they are refusing to increase production out of greed, but the greedy move would be to expand drilling and refinement to capture more of the high margin volume. Preventing this defector behavior requires an explicit cartel (see OPEC), which is not legal in the US. So your explanation for why oil companies don’t increase production is lacking.

feet 4y ago
Restricting the supply allows them to keep the margins high, increasing supply would mean that price would drop How does your stance make sense at all? In what market does increasing supply not lead to decreasing prices? Of course they're going to keep restricting supply to keep prices high while they can. What I don't understand is why you're here defending them without listening to the earning calls where they literally state what I am telling you
- kortilla 4y ago
  > How does your stance make sense at all? In what market does increasing supply not lead to decreasing prices? It’s super basic economics unless you control 100% of the market. An oil provider that doubles their output from 1% of the market to 2% will only put a slight downward pressure on the price while doubling their high margin income. The winning move is always to increase production. > without listening to the earning calls where they literally state what I am telling you I’m telling you that you don’t understand what they are saying. If they are unwilling to build it’s because the future of the oil is uncertain, not because the margins are high right now. The margins being high is a great reason to expand drilling even into hard to extract areas.
  - feet 4y ago
    You're misunderstanding what I'm saying. They don't need to build anything They already have capacity, they have the distilleries and holding already built but sitting entirely unused, they just aren't spinning it up to purposely restrict supply and keep profit margins high. That's what we get with an oligarchy, the companies work together to control production and price.