4 ms·

A key thing is that the US is now the biggest oil producer, so the exact agreement is less important since the US uses more of its own oil, with the money never

A key thing is that the US is now the biggest oil producer, so the exact agreement is less important since the US uses more of its own oil, with the money never having left the US in the first place

taylodl 2y ago
The US is unable to refine the oil it produces. We're setup to refine Saudi oil and no, they're not the same thing. Also no, you can't just change the refinery without a significant capital investment. That money has to come from somewhere.
- woodruffw 2y ago
  Do you have a source for this? I couldn't find one with some quick searching. (Not that I don't believe you, I hadn't heard it before.)
- deleted 2y ago
  [deleted]
- vel0city 2y ago
  As someone who lived down the street from a significant number of refineries which refined US oil, you're pretty wrong about this. Most oil produced in the US is refined and used in the US. For a long time US oil couldn't be sold overseas. I don't know who would have been refining that oil if not for the US, given they literally couldn't sell it internationally. The US produces around 12 million barrels of oil a day. The US exports under 4 million barrels a day. What do we do with the other 8 million barrels??
  - causal 2y ago
    Not only is it wrong, it's backwards: the US has some of the only refineries capable of processing heavier crudes, and so other countries depend on us to refine it, especially Canada. US is a net energy exporter, and ship out a lot of light crudes. Edit: Maybe GP comment means we don't have as much capacity to refine light sweet crude? That's probably true, but wouldn't be financially advantageous to do so. https://www.eia.gov/todayinenergy/detail.php?id=54199 https://www.eia.gov/todayinenergy/detail.php?id=54199
    - blackhawkC17 2y ago
      Even if the US lacked refinement capacity (which is obviously not true), significant capital investment as implied by the OP is not something the U.S. lacks.
      - DrFalkyn 2y ago
        Yes they could build them, but currently there’s no economic reason to do so. If SHTF and oil companies were barred from exporting, then that changes very quickly
        vel0city 2y ago
        This for sure. Its far easier to rework a refinery designed for heavy, sour oil and make it ready to process light & sweet. And WTI is very light & sweet. More and more refineries in the US have moved to processing more and more light/sweet crude oil as the level of imports lessened.
  - taylodl 2y ago
    The United States produces more oil per day than it consumes, yet we import over 50% of our oil. Have you ever stopped to wonder why? https://www.nasdaq.com/articles/america-produces-enough-oil-to-meet-its-needs-so-why-do-we-import-crude https://www.nasdaq.com/articles/america-produces-enough-oil-...
    - vel0city 2y ago
      Your claim was: > The US is unable to refine the oil it produces This is just entirely factually incorrect. The US can and does refine light, sweet crude. It wouldn't be a massive effort for more US refineries currently set to handle heavier and more sour crude to switch to it. More and more refineries have been making the switch especially since the time WTI went so low it went negative. Most of the rest of the world has a harder time processing heavier and more sour oils. The US led the world in refining technologies, so we have the knowledge and equipment to refine it. This is partially due to the US being so involved in Venezuela's oil industry growth, the US essentially built the refining technology to make Venezuela's oil filds useful and why they were so crushed when relations with the US went bad. Few other refiners are set up to process Venezuela's oil. So, it makes sense we buy the cheaper stuff we can easily process and sell the easy to process more expensive stuff on the world market. Cheaper refined products for us and we make more profit selling the easier stuff. You're still just wrong stating "The US is unable to refine the oil it produces". It wasn't until the Obama administration that the US could export oil on the world market. Have you ever stopped to wonder what we were doing with all that oil we were generating for so many decades?[0] Have you stopped to consider what we're doing with those 8 million barrels we produce every day that don't get exported today? [0] https://apnews.com/united-states-government-united-states-congress-08a04454def141049f848dba70144107 https://apnews.com/united-states-government-united-states-co...
      - taylodl 2y ago
        Okay - we're unable to refine most of the oil we produce. Is that better? The point is Americans believe the United States is energy dependent, and we are not. Not by a long shot.
- localfirst 2y ago
  Canada routinely sends oil to US for refinement and buys it back at a higher price.
- AnAfrican 2y ago
  I’m pretty sure US refeneries are not setup to refine Saudi oil. I remember it being the case with Venezuelan oil and that fact being a boon for West African oil producers when things were sour between the US and Venezuela.
  - vel0city 2y ago
    This is also largely true. Saudi oil is generally pretty light but sour. The fact the US has a lot of refineries set up to process heavy oil means its literally not set up to process Saudi oil. Another good example of how taylodl really has no clue about what they're talking about.
- redleader55 2y ago
  The US crude is "sweet", the easiest oil to be refined. US is the main source of technology for the "sour" oils - Russia, Saudi, Venezuela, etc. Regarding currency, US will be fine pretty much whatever happens - there is no other currency that is not controlled, in large supply, and globally accepted.
- grumple 2y ago
  The US refines 20% of global oil. This is the most of any nation. We buy cheap crude and sell the higher quality stuff because that makes us more money. My understanding is that we could switch to refining light sweet if we ever needed to, and this would be easier than other nations doing the opposite (refining heavy sour). The US is clearly the heavyweight globally in terms of both oil production and refining.
thsksbd 2y ago
The petrodollar was never about access to Saudi oil. Even when we imported large amounts of oil, we also produced a lot and we had very many different suppliers. The petrodollar was about creating a massive market for USD despite us having a massive trade deficit. Every country that wanted to buy oil had to hold USD and US treasuries to buy the oil. This cemented the USD as the world currency therefore financing our budgetary (as opposed to trade) deficit with cheap interest rates.
- daedrdev 2y ago
  I guess my point is that the USD has many other reasons for being the world currency, (firstly the lack of alternatives) and the money that was spent on Saudi Oil and would partly come back due to the petrodollar now stays in the US on US oil so its not like the US has lost any value.
- halJordan 2y ago
  Why do you guys insist on presenting as an educated authority but get such basic verifiable facts wrong? Among other things, the US was absolutely worried about maintaining access to Saudi oil. And the us-saudi "oil for protection" scheme stated in the 40s when the US was the world's factory. Its not even the wrong facts, it's that you could just Google it and still present as this authority you want to be, but actually be correct.

A key thing is that the US is now the biggest oil producer, so the exact agreement is less important since the US uses more of its own oil, with the money never having left the US in the first place

taylodl 2y ago

The US is unable to refine the oil it produces. We're setup to refine Saudi oil and no, they're not the same thing. Also no, you can't just change the refinery without a significant capital investment. That money has to come from somewhere.

woodruffw 2y ago
Do you have a source for this? I couldn't find one with some quick searching. (Not that I don't believe you, I hadn't heard it before.)
deleted 2y ago
[deleted]
vel0city 2y ago
As someone who lived down the street from a significant number of refineries which refined US oil, you're pretty wrong about this. Most oil produced in the US is refined and used in the US. For a long time US oil couldn't be sold overseas. I don't know who would have been refining that oil if not for the US, given they literally couldn't sell it internationally. The US produces around 12 million barrels of oil a day. The US exports under 4 million barrels a day. What do we do with the other 8 million barrels??
- causal 2y ago
  Not only is it wrong, it's backwards: the US has some of the only refineries capable of processing heavier crudes, and so other countries depend on us to refine it, especially Canada. US is a net energy exporter, and ship out a lot of light crudes. Edit: Maybe GP comment means we don't have as much capacity to refine light sweet crude? That's probably true, but wouldn't be financially advantageous to do so. https://www.eia.gov/todayinenergy/detail.php?id=54199 https://www.eia.gov/todayinenergy/detail.php?id=54199
  - blackhawkC17 2y ago
    Even if the US lacked refinement capacity (which is obviously not true), significant capital investment as implied by the OP is not something the U.S. lacks.
    - DrFalkyn 2y ago
      Yes they could build them, but currently there’s no economic reason to do so. If SHTF and oil companies were barred from exporting, then that changes very quickly
      - vel0city 2y ago
        This for sure. Its far easier to rework a refinery designed for heavy, sour oil and make it ready to process light & sweet. And WTI is very light & sweet. More and more refineries in the US have moved to processing more and more light/sweet crude oil as the level of imports lessened.
- taylodl 2y ago
  The United States produces more oil per day than it consumes, yet we import over 50% of our oil. Have you ever stopped to wonder why? https://www.nasdaq.com/articles/america-produces-enough-oil-to-meet-its-needs-so-why-do-we-import-crude https://www.nasdaq.com/articles/america-produces-enough-oil-...
  - vel0city 2y ago
    Your claim was: > The US is unable to refine the oil it produces This is just entirely factually incorrect. The US can and does refine light, sweet crude. It wouldn't be a massive effort for more US refineries currently set to handle heavier and more sour crude to switch to it. More and more refineries have been making the switch especially since the time WTI went so low it went negative. Most of the rest of the world has a harder time processing heavier and more sour oils. The US led the world in refining technologies, so we have the knowledge and equipment to refine it. This is partially due to the US being so involved in Venezuela's oil industry growth, the US essentially built the refining technology to make Venezuela's oil filds useful and why they were so crushed when relations with the US went bad. Few other refiners are set up to process Venezuela's oil. So, it makes sense we buy the cheaper stuff we can easily process and sell the easy to process more expensive stuff on the world market. Cheaper refined products for us and we make more profit selling the easier stuff. You're still just wrong stating "The US is unable to refine the oil it produces". It wasn't until the Obama administration that the US could export oil on the world market. Have you ever stopped to wonder what we were doing with all that oil we were generating for so many decades?[0] Have you stopped to consider what we're doing with those 8 million barrels we produce every day that don't get exported today? [0] https://apnews.com/united-states-government-united-states-congress-08a04454def141049f848dba70144107 https://apnews.com/united-states-government-united-states-co...
    - taylodl 2y ago
      Okay - we're unable to refine most of the oil we produce. Is that better? The point is Americans believe the United States is energy dependent, and we are not. Not by a long shot.
localfirst 2y ago
Canada routinely sends oil to US for refinement and buys it back at a higher price.
AnAfrican 2y ago
I’m pretty sure US refeneries are not setup to refine Saudi oil. I remember it being the case with Venezuelan oil and that fact being a boon for West African oil producers when things were sour between the US and Venezuela.
- vel0city 2y ago
  This is also largely true. Saudi oil is generally pretty light but sour. The fact the US has a lot of refineries set up to process heavy oil means its literally not set up to process Saudi oil. Another good example of how taylodl really has no clue about what they're talking about.
redleader55 2y ago
The US crude is "sweet", the easiest oil to be refined. US is the main source of technology for the "sour" oils - Russia, Saudi, Venezuela, etc. Regarding currency, US will be fine pretty much whatever happens - there is no other currency that is not controlled, in large supply, and globally accepted.
grumple 2y ago
The US refines 20% of global oil. This is the most of any nation. We buy cheap crude and sell the higher quality stuff because that makes us more money. My understanding is that we could switch to refining light sweet if we ever needed to, and this would be easier than other nations doing the opposite (refining heavy sour). The US is clearly the heavyweight globally in terms of both oil production and refining.

thsksbd 2y ago

The petrodollar was never about access to Saudi oil. Even when we imported large amounts of oil, we also produced a lot and we had very many different suppliers. The petrodollar was about creating a massive market for USD despite us having a massive trade deficit. Every country that wanted to buy oil had to hold USD and US treasuries to buy the oil. This cemented the USD as the world currency therefore financing our budgetary (as opposed to trade) deficit with cheap interest rates.

daedrdev 2y ago
I guess my point is that the USD has many other reasons for being the world currency, (firstly the lack of alternatives) and the money that was spent on Saudi Oil and would partly come back due to the petrodollar now stays in the US on US oil so its not like the US has lost any value.
halJordan 2y ago
Why do you guys insist on presenting as an educated authority but get such basic verifiable facts wrong? Among other things, the US was absolutely worried about maintaining access to Saudi oil. And the us-saudi "oil for protection" scheme stated in the 40s when the US was the world's factory. Its not even the wrong facts, it's that you could just Google it and still present as this authority you want to be, but actually be correct.