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The global oil market is broken, drowning in crude nobody needs

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Re: The global oil market is broken, drowning in crude nobody needs

#251

Post by RestlessMind »

fulafel wrote: post #244
elamje wrote: post #234

Earlier quoted context omitted.

I think most people forget that the American oil industry is one of the largest in the world, i.e. it employs a ton of middle and upper class labor. For that reason, it makes this a political issue. For instance, just one aspect of oil that is huge in the US is Shale production, which is not profitable at the current WTI price per barrel. What does that mean? Well, hundreds of thousands of people, or more likely mill…

Ah, the good old employment argument for destroying the planet. We are so wise and far sighted if we let this happen... It would be make more economic sense to pay these people to stay home and do nothing!

Sure - but would it make political sense to pay home to sit and do nothing? If so, can you point us to some locality where this has been accomplished?

Re: The global oil market is broken, drowning in crude nobody needs

#253

Post by dang »

axus wrote: post #46

The market is broken because demand is way down, but production isn't being lowered to match. Saudi Arabia intends to keep their production high. The other producers are losing money but haven't reduced output, because changing output levels is more expensive than taking the loss.

(This subthread was originally a child of https://news.ycombinator.com/item?id=22718785)

Re: The global oil market is broken, drowning in crude nobody needs

#254

Post by trhway »

crisdux wrote: post #247
bpsh wrote: post #79

Earlier quoted context omitted.

Unfortunately the goal is to drive out US Shale ...

It's way more complex than that. This is completely between the Saudi's and Russians. US shale is just a unintended consequence (tho temporarily good for them.) Damage to US shale is unintended and the Saudi's know it will be very temporary. The US companies have a near endless supply of capital, especially now with the federal government being on a spending spree. The shale fields can be easily turned off and on. Lo…

>The goal for the Saudi's is to bring the Russians to the negotiating table

the current oil skirmish is a part of much bigger war - Russia went into Syria and has supported the Shia belt (Hezbollah - Asad - Iraqi Shia government - Iran) against Sunni (ISIS/Saudis) despite having no religious preference between Shia/Sunni in particular to block Saudis from being able to pipeline the stuff to Europe (which is an oil and especially natural gas market critical to Putin's Russia survival, and where Saudis have been trying for example to send oil and LNG tankers to. The LNG is more expensive than pipelined NG while Saudis have a lot of NG, so they need a pipeline to Europe and that would be existential blow to the current Russia economy and its "soft" power (like the threat of turning gas off in winter) power over Europe). In this context i don't see Russia going to negotiate wrt. current skirmish. If anything i think it would go all the way in Stalingrad style, Russian population economical suffering be damned, in hopes of forcing Saudis to come to bigger negotiations in much weaker shape.

Re: The global oil market is broken, drowning in crude nobody needs

#255

Post by dang »

praptak wrote: post #60

That's another piece of good news. Two countries with a particularly shitty track records are in a lose-lose situation.

Please don't post shallow flamebait like this to HN. It has noticeably degrading effects on discussion, and the last thing we need here are political or nationalistic flamewars.

We detached this subthread from https://news.ycombinator.com/item?id=22718650.

Re: The global oil market is broken, drowning in crude nobody needs

#256

Post by neonate »

eyegor wrote: post #147
JBReefer wrote: post #135

Earlier quoted context omitted.

The US is the worlds largest oil producer

Sure but that statistic is always measured as oil + natural gas + additives + other hydrocarbons. If you can find a source for crude oil extraction, not production, the US would almost certainly not be #1.

What's the difference between extraction and production and why does it matter here?

Are the commenters who replied wrong? If so, can you explain why?

Re: The global oil market is broken, drowning in crude nobody needs

#257

Post by lstodd »

chasd00 wrote: post #238
lstodd wrote: post #138

Earlier quoted context omitted.

Russia has just lost about 20-30% yearly income in these first months just from the oil price war. Saudis cannot care less because they have about three times of Russia reserves nominally. In fact I suspect about five to seven times that, because Russia reserve structure is basically unknown. Saudis can certainly afford a year or three of having no income. This is on top of the virus panic (which just cut any remaini…

I hope this doesn't mean war. I have a feeling Russia will take out capacity by force if it becomes an existential threat.

No it does not. There is no one in Russia able to execute such a decision. There were some people in 2008 maybe, but that was almost 12 years ago.

Arguably there isn't anyone like this in the rest of the world either, but I digress.

Re: The global oil market is broken, drowning in crude nobody needs

#258

Post by lstodd »

krapp wrote: post #189
lstodd wrote: post #149

Earlier quoted context omitted.

Tech, innovation - they are just the other words for "infinite supply". Yes, it is not physically infinite. But it is effectively. As long as someone is willing to pay for it, it will be provided. And even cheaply - look, what's 1970's $12/barrel in nowadays dollars? $50? $100? We are so nowhere near running out of oil, that the whole possibility is best ignored.

>As long as someone is willing to pay for it, it will be provided. And even cheaply This is only true until it isn't. At some point oil will become economically and technologically infeasible and alternatives will win out, because no one wants the million-dollar a barrel oil economy that results when we have to resort to mining Titan for it.

>At some point oil will become economically and technologically infeasible and alternatives will win out

And it will, but I fail to see how this defeats my statement.

Oil will become obsolete not because its price will rise, but only because the alternatives will finally become cheaper.

Which is not the case as of now.

Re: The global oil market is broken, drowning in crude nobody needs

#259

Post by unlinked_dll »

csours wrote: post #134

It's easy to say "we live in a Just-In-Time Economy", but it's things like this that really demonstrate the implications. The supply chain is set up to flow, so when demand drops or spikes up you get a flood or a shortage. If there's a flood, some companies will go out of business, leaving the survivors with a bigger slice of the pie. If there's a shortage, companies will respond, and some will over-react and build o…

Is there any way to model a supply chain as a control system? Like what you're describing is why PID controllers exist and they do a pretty good job of preventing failure conditions.

Re: The global oil market is broken, drowning in crude nobody needs

#260

Post by howlin »

ReptileMan wrote: post #100
JoeAltmaier wrote: post #59

Earlier quoted context omitted.

Not to mention if Methane Hydrate comes online - endless natural gas for the price of a drill and pipeline.

In that case also invest in beachfront properties in northern russia and Antarctica. The weather there will be awesome

You'd need a matching property in the southern hemisphere for the dark winters.
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