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The US has long sought to erode OPEC’s ability to dictate global oil prices. The US has made massive progress in being broadly energy independent to isolate it

by cmiles8 6mo ago

The US has long sought to erode OPEC’s ability to dictate global oil prices. The US has made massive progress in being broadly energy independent to isolate it from challenges elsewhere. The US has been a net energy exporter since 2019. Global oil pricing was always an annoying thorn in that strategy. This is an initial but big crack in shaking up global oil markets in a way that meaningfully shifts global power dynamics.

ch4s3 6mo ago
I think the initial crack was ousting Maduro in Venezuela. Since OPEC exempts Venezuela from production caps, it gives the US government a lever on non US production.
- Tangurena2 6mo ago
  Venezuela produces heavy "sour" crude (this means high in sulfur). Many of the US refineries capable of handling sour crude have closed, partly because the sulfur content makes the refineries stink (and emit lots of pollution) and partly because they need more expensive piping to handle the corrosive materials (not just the crude, but HF acid that's used in the refining process). The last refinery to be built in the US opened in the 1970s. Since then, refineries have closed. None of the owners of refineries will sell them because of SuperFund legislation. It is the same reason that when a gas station is sold, the fuel tanks are dug up and replaced. This way, there's no way to claim that the previous owner left hazardous material to be cleaned up. SuperFund laws say that every previous owner is liable for the cost of cleanup. It doesn't matter how long ago the property was sold.
- downrightmike 6mo ago
  2017 when Venezuela accepted RMB for oil and then USDT crypto. USDT is being used to skirt the US's control of the oil and bypassing the dollar. The ships passing through the straight now are also paying Iran in RMB and crypto. The petrodollar is the objective. This isn't over any time soon
  - actuallynotso 6mo ago
    [dead]
melling 6mo ago
Cheap and plentiful fossil fuels. We’re rolling back CAFE standards too.
- nradov 6mo ago
  CAFE standards were always a stupid idea. If we want to reduce fuel usage then increase the tax on fuel instead of punishing manufacturers for selling vehicles that consumers want to buy.
  - a_random_name 6mo ago
    Yeah, but "increasing taxes" always rouses the rabble.
  - post-it 6mo ago
    This is, respectfully, corporate propaganda. Consumers buy the vehicles that are available and advertised. It's in the best interest of manufacturers to convince/compel consumers to buy larger, more expensive vehicles with higher margins, and that's exactly what they're doing.
    - ndisn 6mo ago
      You can’t convince (almost all) consumers to spend money on something that they do not want.
      - post-it 6mo ago
        Of course you can. And for the rest, you just discontinue the product they want so they have no choice.
      - tyre 6mo ago
        You can, but it’s easier to convince them to want something that they don’t need or is actively harmful.
      - adrianN 6mo ago
tootie 6mo ago
Global pricing affects all fossil fuels and always will. Energy independence will remain a fantasy until we are fully on renewables. Which is entirely within reach and requires fighting zero wars.
- nine_k 6mo ago
  The US, or Saudi Arabia, or Venezuela, or Russia could very well be energy independent on fossil fuels alone, even though that won't be wise. Europe, or China, or India could not though.
  - tootie 6mo ago
    How? Being a net exporter implies we make more than we use. Great. How do we force companies to not export until domestic demand is met? And how do we ensure that doesn't raise prices more than just running the system as-is?
    - adrianN 6mo ago
      Self sufficiency generally comes at a cost. The whole promise of globalization is that it makes things cheaper.
    - nine_k 6mo ago
      If foreign supply is cut, we (assuming the US) can still do fine, even though is a sub-optimal way. The US crude is heavy, the Middle Eastern crude is light, so oil processing would need to adapt, the efficiency would go down, and prices would go up. But we'd still be up and running independenty. If foreign oil supply were cut from China or India, they'd be in a much bigger trouble.
      - tootie 6mo ago
        If foreign supply is cut, the price goes up for everybody everywhere. Even net exporters. That's the whole point of this thread. Every drop of oil, gas or coal extracted (and not under sanction) will be sold to the highest bidder anywhere in the world.
kybb4 6mo ago
They export because their own refineries along the Gulf coast esp were designed for middle east heavy crude cuz the US once upon a time believed it was about to run out of American light sweet crude. So the story is not black and white.
- casey2 6mo ago
  Stop repeating this lame talking point like a robot. We export because the crude oil export ban was lifted in 2015. If we didn't then we would already have the refinement capacity now. There are financializing vampires in charge and their only goal is to short term bleed the country dry. "Investors" are allergic to investing.
fulafel 6mo ago
This is horrible from POV of mitigating the climate catastrophe and the global death toll. We (as in humanity) are really late in ramping down fossils production and use.
- nostrademons 6mo ago
  Eh if the U.S. gets into a forever war with Iran the same way we did with Iraq and Afghanistan and Vietnam (or like how Russia got into one with Afghanistan and Ukraine), the climate crisis is solved. Five years of the Straight of Hormuz being closed and everybody will be using EVs. Legislation isn't going to work. Economics isn't going to work. War - which cuts off the flow of petroleum because nobody is willing to risk their life for oil - will work very quickly. Nothing quite like a shortage to spur innovation.
  - downrightmike 6mo ago
    80% of the world's oil is not going through the straight at all. 5 years is still optimistic. Esp if we are starting wars to pump up the futures market
    - nostrademons 6mo ago
      Doesn't take a huge decrease in production to result in a huge increase in price, due to inelasticity in demand. Renewables and EVs are a capital-intensive industry, and the thing about capital-intensive industries is that they're prone to bubbles. If you get a year or so of EVs being cheaper than gas cars, you will see a huge growth in sales as lots of consumers make the rational choice all at once. The spike in sales will spur a bubble in capital investment as investors all rush to capitalize on it. The capital investment spurs R&D, which results in technological improvements which make the cost advantage permanent. At the end of the 5 years (or perhaps even before) the price of oil will crash back down, probably lower than it is now, as increased EV adoption destroys demand more than supply was choked off. But at that point we'll all own EVs, they will cost less than gas cars, there will be chargers everywhere, there will be solar panels everywhere, and we'll have better batteries and V2H charging.
jmyeet 6mo ago
The US isn't insulated from global oil supply shocks because crude oil and refined petroleum products are traded on global markets and natural gas is somewhat traded on global markets (there are limits to LNG exports). So yes the US could limit or ban exports. Many countries (including China) have done this in a kind of energy nationalism, but that hangs out allies to dry in a way that would make the US deeply uncomfortable. It would threaten European energy security. It would come at the cost of Latin American exports. So there's a cost to pay. And more to the point, no US government regardless of party is going to hurt corporate profits by limiting exports. Biden could've done it in 2021-2022 and didn't. And Trump certainly won't. As one example, a big release from the SPR was on an oil-for-oil basis. Rather than cash ii on high prices, it's just a massive gift to oil companies who have to repay the oil (and then some) at some unspecified future point when oil will be cheaper. That's billions the US could've added to government coffers. I do agree there is a power shift going on but not because of US energy independence. No, it's because the US cannot militarily protect GCC countries and cannot force open the Strait of Hormuz or guarantee global shipping, which has essentially been a US guarantee since 1945. I do think this administration does want to crack OPEC but that's likely to be of massive benefit to China without China having to do anything.
advisedwang 6mo ago
The US is a net energy exporter, but it is a net CRUDE OIL importer. Global crude markets are critically important for US energy.

by cmiles8 6mo ago

ch4s3 6mo ago

I think the initial crack was ousting Maduro in Venezuela. Since OPEC exempts Venezuela from production caps, it gives the US government a lever on non US production.

Tangurena2 6mo ago
Venezuela produces heavy "sour" crude (this means high in sulfur). Many of the US refineries capable of handling sour crude have closed, partly because the sulfur content makes the refineries stink (and emit lots of pollution) and partly because they need more expensive piping to handle the corrosive materials (not just the crude, but HF acid that's used in the refining process). The last refinery to be built in the US opened in the 1970s. Since then, refineries have closed. None of the owners of refineries will sell them because of SuperFund legislation. It is the same reason that when a gas station is sold, the fuel tanks are dug up and replaced. This way, there's no way to claim that the previous owner left hazardous material to be cleaned up. SuperFund laws say that every previous owner is liable for the cost of cleanup. It doesn't matter how long ago the property was sold.
downrightmike 6mo ago
2017 when Venezuela accepted RMB for oil and then USDT crypto. USDT is being used to skirt the US's control of the oil and bypassing the dollar. The ships passing through the straight now are also paying Iran in RMB and crypto. The petrodollar is the objective. This isn't over any time soon
- actuallynotso 6mo ago
  [dead]

melling 6mo ago

Cheap and plentiful fossil fuels. We’re rolling back CAFE standards too.

nradov 6mo ago
CAFE standards were always a stupid idea. If we want to reduce fuel usage then increase the tax on fuel instead of punishing manufacturers for selling vehicles that consumers want to buy.
- a_random_name 6mo ago
  Yeah, but "increasing taxes" always rouses the rabble.
- post-it 6mo ago
  This is, respectfully, corporate propaganda. Consumers buy the vehicles that are available and advertised. It's in the best interest of manufacturers to convince/compel consumers to buy larger, more expensive vehicles with higher margins, and that's exactly what they're doing.
  - ndisn 6mo ago
    You can’t convince (almost all) consumers to spend money on something that they do not want.
    - post-it 6mo ago
      Of course you can. And for the rest, you just discontinue the product they want so they have no choice.
    - tyre 6mo ago
      You can, but it’s easier to convince them to want something that they don’t need or is actively harmful.
    - adrianN 6mo ago

tootie 6mo ago

Global pricing affects all fossil fuels and always will. Energy independence will remain a fantasy until we are fully on renewables. Which is entirely within reach and requires fighting zero wars.

nine_k 6mo ago
The US, or Saudi Arabia, or Venezuela, or Russia could very well be energy independent on fossil fuels alone, even though that won't be wise. Europe, or China, or India could not though.
- tootie 6mo ago
  How? Being a net exporter implies we make more than we use. Great. How do we force companies to not export until domestic demand is met? And how do we ensure that doesn't raise prices more than just running the system as-is?
  - adrianN 6mo ago
    Self sufficiency generally comes at a cost. The whole promise of globalization is that it makes things cheaper.
  - nine_k 6mo ago
    If foreign supply is cut, we (assuming the US) can still do fine, even though is a sub-optimal way. The US crude is heavy, the Middle Eastern crude is light, so oil processing would need to adapt, the efficiency would go down, and prices would go up. But we'd still be up and running independenty. If foreign oil supply were cut from China or India, they'd be in a much bigger trouble.
    - tootie 6mo ago
      If foreign supply is cut, the price goes up for everybody everywhere. Even net exporters. That's the whole point of this thread. Every drop of oil, gas or coal extracted (and not under sanction) will be sold to the highest bidder anywhere in the world.

kybb4 6mo ago

They export because their own refineries along the Gulf coast esp were designed for middle east heavy crude cuz the US once upon a time believed it was about to run out of American light sweet crude. So the story is not black and white.

casey2 6mo ago
Stop repeating this lame talking point like a robot. We export because the crude oil export ban was lifted in 2015. If we didn't then we would already have the refinement capacity now. There are financializing vampires in charge and their only goal is to short term bleed the country dry. "Investors" are allergic to investing.

fulafel 6mo ago

This is horrible from POV of mitigating the climate catastrophe and the global death toll. We (as in humanity) are really late in ramping down fossils production and use.

nostrademons 6mo ago
Eh if the U.S. gets into a forever war with Iran the same way we did with Iraq and Afghanistan and Vietnam (or like how Russia got into one with Afghanistan and Ukraine), the climate crisis is solved. Five years of the Straight of Hormuz being closed and everybody will be using EVs. Legislation isn't going to work. Economics isn't going to work. War - which cuts off the flow of petroleum because nobody is willing to risk their life for oil - will work very quickly. Nothing quite like a shortage to spur innovation.
- downrightmike 6mo ago
  80% of the world's oil is not going through the straight at all. 5 years is still optimistic. Esp if we are starting wars to pump up the futures market
  - nostrademons 6mo ago
    Doesn't take a huge decrease in production to result in a huge increase in price, due to inelasticity in demand. Renewables and EVs are a capital-intensive industry, and the thing about capital-intensive industries is that they're prone to bubbles. If you get a year or so of EVs being cheaper than gas cars, you will see a huge growth in sales as lots of consumers make the rational choice all at once. The spike in sales will spur a bubble in capital investment as investors all rush to capitalize on it. The capital investment spurs R&D, which results in technological improvements which make the cost advantage permanent. At the end of the 5 years (or perhaps even before) the price of oil will crash back down, probably lower than it is now, as increased EV adoption destroys demand more than supply was choked off. But at that point we'll all own EVs, they will cost less than gas cars, there will be chargers everywhere, there will be solar panels everywhere, and we'll have better batteries and V2H charging.

jmyeet 6mo ago

The US isn't insulated from global oil supply shocks because crude oil and refined petroleum products are traded on global markets and natural gas is somewhat traded on global markets (there are limits to LNG exports). So yes the US could limit or ban exports. Many countries (including China) have done this in a kind of energy nationalism, but that hangs out allies to dry in a way that would make the US deeply uncomfortable. It would threaten European energy security. It would come at the cost of Latin American exports. So there's a cost to pay. And more to the point, no US government regardless of party is going to hurt corporate profits by limiting exports. Biden could've done it in 2021-2022 and didn't. And Trump certainly won't. As one example, a big release from the SPR was on an oil-for-oil basis. Rather than cash ii on high prices, it's just a massive gift to oil companies who have to repay the oil (and then some) at some unspecified future point when oil will be cheaper. That's billions the US could've added to government coffers. I do agree there is a power shift going on but not because of US energy independence. No, it's because the US cannot militarily protect GCC countries and cannot force open the Strait of Hormuz or guarantee global shipping, which has essentially been a US guarantee since 1945. I do think this administration does want to crack OPEC but that's likely to be of massive benefit to China without China having to do anything.

advisedwang 6mo ago

The US is a net energy exporter, but it is a net CRUDE OIL importer. Global crude markets are critically important for US energy.