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The fundamental problem is that there is not enough oil. This gets reflected in higher oil prices, which incentivize companies to produce more oil (which is exp

The fundamental problem is that there is not enough oil. This gets reflected in higher oil prices, which incentivize companies to produce more oil (which is expensive and requires long-term investment). If you force oil prices to stay low such that they do not reflect supply-demand dynamics, you are not solving the fundamental problem. Supply and demand imbalances do not disappear when you fix the price - they are exacerbated.

lapser 4y ago
> The fundamental problem is that there is not enough oil. This is a farce. There's not enough oil because OPEC+ has decided there is not enough oil. They can easily increase supply, causing the price of oil to be more consumer friendly, but no, won't someone think of their profits?!
- Ekaros 4y ago
  Why should they increase supply if they currently make enough profit on their output? Lot of companies don't lower their product prices and produce more... And we don't blame them for that.
  - lapser 4y ago
    Right. Greed is the fundamental problem, and not "that there is not enough oil" as the parent commenter I replied to earlier suggested.
- cykros 4y ago
  It's a little bit more nuanced than that. Could OPEC+ release oil to the market? Sure. Will they, amid the Ukraine situation? Often, perhaps not, but maybe. Could we domestically ramp up domestic production? Yes, though the question becomes, "how quickly?", and the answer is...not very. And then amid this influx of oil, can we quickly ramp up refinery capacity to meet demand? The answer there is generally no, this sort of thing takes time, and skilled labor, which is in short supply, particularly after the lockdowns sent people into other jobs. But yes, the core of what you were saying is correct; there is no shortage of oil presently. That said, it's important to consider different sources of oil, and the cost of harvesting them. Shale is a LOT more expensive to harvest than conventional wells, and things like Tar Sands step things up even further. We shouldn't worry about running OUT of oil in the next couple decades by any means, but the ramp up in cost should have us at least considering other options for avoiding ever-increasing energy costs, such as nuclear. Underestimating the importance of an energy supply is worth avoiding -- much of the Roman decline can be attributed to the marked reduction in available lumber. Much of what allowed the global powers of today to get that way was moving from wood to coal to oil/gas, and then a bit into nuclear -- being hesitant to continue this transition shouldn't be done without the understanding that failure to expand energy resources will necessarily cause an inability to expand, and eventually a need to contract as a civilization. As oil is also used for most modern fertilizer, food production is the other side of this coin, and unfortunately, unlike the options in energy production, there don't seem to be any immediately available remedies that assist with large scale food production that allowed us to get a global population of over 7 billion. Again, this isn't an immediate emergency, but it's on the horizon, and does represent an existential threat to modern civilization; as such it shouldn't be ignored.
boplicity 4y ago
Companies are incentivized to produce more oil as long as it is profitable. They're not going to stop producing oil if they're getting less per barrel. In fact, they'll be motivated to produce more because they want to increase profits. Further -- the medium and short term supply of oil is determined by existing infrastructure, which already exists. (Oil sands facilities in Canada, for example, were extremely expensive to build, but are now profitable if oil is at $20 a barrel.) To say that oil companies won't increase supply if prices go down is like saying you'll stop breathing if there's less air. You'll actually, in all likelihood, just breath more. In terms of supply -- the amount of supply very closely matches demand. A shift of less than 1% of supply versus demand shouldn't be allowed to send the economy into a recession, much less subsidize Russia's war efforts. Supply/demand can (and should) be mediated by sensible regulations. Just as with drug pricing -- buyers should be able to negotiate. Oil sellers operate cartels. Buyers should as well. https://www.eia.gov/outlooks/steo/report/global_oil.php https://www.eia.gov/outlooks/steo/report/global_oil.php

lapser 4y ago

> The fundamental problem is that there is not enough oil. This is a farce. There's not enough oil because OPEC+ has decided there is not enough oil. They can easily increase supply, causing the price of oil to be more consumer friendly, but no, won't someone think of their profits?!

Ekaros 4y ago
Why should they increase supply if they currently make enough profit on their output? Lot of companies don't lower their product prices and produce more... And we don't blame them for that.
- lapser 4y ago
  Right. Greed is the fundamental problem, and not "that there is not enough oil" as the parent commenter I replied to earlier suggested.
cykros 4y ago
It's a little bit more nuanced than that. Could OPEC+ release oil to the market? Sure. Will they, amid the Ukraine situation? Often, perhaps not, but maybe. Could we domestically ramp up domestic production? Yes, though the question becomes, "how quickly?", and the answer is...not very. And then amid this influx of oil, can we quickly ramp up refinery capacity to meet demand? The answer there is generally no, this sort of thing takes time, and skilled labor, which is in short supply, particularly after the lockdowns sent people into other jobs. But yes, the core of what you were saying is correct; there is no shortage of oil presently. That said, it's important to consider different sources of oil, and the cost of harvesting them. Shale is a LOT more expensive to harvest than conventional wells, and things like Tar Sands step things up even further. We shouldn't worry about running OUT of oil in the next couple decades by any means, but the ramp up in cost should have us at least considering other options for avoiding ever-increasing energy costs, such as nuclear. Underestimating the importance of an energy supply is worth avoiding -- much of the Roman decline can be attributed to the marked reduction in available lumber. Much of what allowed the global powers of today to get that way was moving from wood to coal to oil/gas, and then a bit into nuclear -- being hesitant to continue this transition shouldn't be done without the understanding that failure to expand energy resources will necessarily cause an inability to expand, and eventually a need to contract as a civilization. As oil is also used for most modern fertilizer, food production is the other side of this coin, and unfortunately, unlike the options in energy production, there don't seem to be any immediately available remedies that assist with large scale food production that allowed us to get a global population of over 7 billion. Again, this isn't an immediate emergency, but it's on the horizon, and does represent an existential threat to modern civilization; as such it shouldn't be ignored.

boplicity 4y ago

Companies are incentivized to produce more oil as long as it is profitable. They're not going to stop producing oil if they're getting less per barrel. In fact, they'll be motivated to produce more because they want to increase profits. Further -- the medium and short term supply of oil is determined by existing infrastructure, which already exists. (Oil sands facilities in Canada, for example, were extremely expensive to build, but are now profitable if oil is at $20 a barrel.) To say that oil companies won't increase supply if prices go down is like saying you'll stop breathing if there's less air. You'll actually, in all likelihood, just breath more. In terms of supply -- the amount of supply very closely matches demand. A shift of less than 1% of supply versus demand shouldn't be allowed to send the economy into a recession, much less subsidize Russia's war efforts. Supply/demand can (and should) be mediated by sensible regulations. Just as with drug pricing -- buyers should be able to negotiate. Oil sellers operate cartels. Buyers should as well. https://www.eia.gov/outlooks/steo/report/global_oil.php https://www.eia.gov/outlooks/steo/report/global_oil.php