2 ms·

There's a $60+ / barrel incentive to find and extract more.

twodave 10mo ago
Ostensibly not all known oil fields are actively being extracted. This fact alone makes it unlikely that discovering a new source would affect the price of oil, unless it can be retrieved using cheaper than the existing methods. It’s also worth pointing out that “oil” as a resource isn’t this homogenous substance. Basically every different source of oil has a different (and expensive) refinement process on the other end. It’s a lot more variables than the Reddit-style armchair oil tycoon would probably expect.
- DANmode 10mo ago
  Nobody was talking about changing the price of oil, though. Just someone getting paid market rate for the additional barrels.
  - twodave 10mo ago
    Fair enough, though production does impact price to a degree. For oil this is less important than some other commodities, but it’s still a factor. But this is really a tangent from the central argument that is: oil exploration isn’t so important if we already aren’t producing from many existing known sources, and exploration itself is only sort of loosely tied to selling the end-product in terms of sales.
- mothballed 10mo ago
  I'm sorry, Reddit-style armchair oil tycoon? I've been using the word "oil" commodity the same way as everyone else has, why did you pick out my comment for that aspersion? Why not upthread when people were discussing 0 incentives? You are applying this aspersion and standard asymmetrically.
  - twodave 10mo ago
    Am I? I think I used it in 100% of my comments before this one… it was not meant as an offense, but more as an acknowledgement that almost nobody here (including myself; I’ll happily take the moniker if you won’t) has the appropriate knowledge to argue this topic.
igftiuhugfduh 10mo ago
New exploration is in the $35-40 break even range, not $60. A well with $60 break even is a poor investment right now.
- mothballed 10mo ago
  Incentive != break even point. $35-40 takes into account the risks and time value of the investment, potential price fluctuations, and the preference for (all else equal) lowest cost extraction. I would not expect someone to dump in a shit ton of money, hope the well works out, and nothing else go wrong right at an expected cost at $60/barrel with amortized investments/operations included.

Ostensibly not all known oil fields are actively being extracted. This fact alone makes it unlikely that discovering a new source would affect the price of oil, unless it can be retrieved using cheaper than the existing methods. It’s also worth pointing out that “oil” as a resource isn’t this homogenous substance. Basically every different source of oil has a different (and expensive) refinement process on the other end. It’s a lot more variables than the Reddit-style armchair oil tycoon would probably expect.

DANmode 10mo ago
Nobody was talking about changing the price of oil, though. Just someone getting paid market rate for the additional barrels.
- twodave 10mo ago
  Fair enough, though production does impact price to a degree. For oil this is less important than some other commodities, but it’s still a factor. But this is really a tangent from the central argument that is: oil exploration isn’t so important if we already aren’t producing from many existing known sources, and exploration itself is only sort of loosely tied to selling the end-product in terms of sales.
mothballed 10mo ago
I'm sorry, Reddit-style armchair oil tycoon? I've been using the word "oil" commodity the same way as everyone else has, why did you pick out my comment for that aspersion? Why not upthread when people were discussing 0 incentives? You are applying this aspersion and standard asymmetrically.
- twodave 10mo ago
  Am I? I think I used it in 100% of my comments before this one… it was not meant as an offense, but more as an acknowledgement that almost nobody here (including myself; I’ll happily take the moniker if you won’t) has the appropriate knowledge to argue this topic.

igftiuhugfduh 10mo ago

New exploration is in the $35-40 break even range, not $60. A well with $60 break even is a poor investment right now.

mothballed 10mo ago
Incentive != break even point. $35-40 takes into account the risks and time value of the investment, potential price fluctuations, and the preference for (all else equal) lowest cost extraction. I would not expect someone to dump in a shit ton of money, hope the well works out, and nothing else go wrong right at an expected cost at $60/barrel with amortized investments/operations included.