Shorting Oil, Hedging Tesla

[mspohr]

Okay. So what's the discussion point? The article advocated for government control of oil production. You quoted directly from the article without further commentary. If you didn't agree with the article, then a quick comment would've helped wouldn't it? Otherwise, you can't fault me for assuming that you agreed with the article.

How should the government should control oil production/prices?
Discuss.

 

[Oil4AsphaultOnly]

How should the government should control oil production/prices?
Discuss.

Government shouldn't control production, because attempts to do so would be futile due to large swaths of the population NOT in favor of government meddling. Additionally, controlling production in order to control oil prices would put us right in the same logic as OPEC. That's a politics issue and is now well off-topic for this thread.

Edit: If it wasn't clear. Regulating industry to control their impact on the environment is HUGELY different from controlling the volume of production.

 

[mspohr]

Government shouldn't control production, because attempts to do so would be futile due to large swaths of the population NOT in favor of government meddling.

Large swaths of the population have only one concern... the high cost of gasoline.
Some special interests only want the government to meddle when it favors their economic interests. They fund politicians to pass laws in their favor. Everybody else (those who don't have the capacity to make large political contributions) just want lower cost gasoline.

Additionally, controlling production in order to control oil prices would put us right in the same logic as OPEC. That's a politics issue and is now well off-topic for this thread.

We have controlled production/prices in the past through permits, regulation and laws prohibiting export of oil and gas. Energy is inherently political so can't just say it's "politics" and not up for discussion.

One "simple" measure to control production and prices would be to reinstate the law prohibiting export of oil and gas. This would help to isolate the US from world prices, promote energy independence and control our own oil and gas production.

 

[Oil4AsphaultOnly]

Large swaths of the population have only one concern... the high cost of gasoline.
Some special interests only want the government to meddle when it favors their economic interests. They fund politicians to pass laws in their favor. Everybody else (those who don't have the capacity to make large political contributions) just want lower cost gasoline.

We have controlled production/prices in the past through permits, regulation and laws prohibiting export of oil and gas. Energy is inherently political so can't just say it's "politics" and not up for discussion.

One "simple" measure to control production and prices would be to reinstate the law prohibiting export of oil and gas. This would help to isolate the US from world prices, promote energy independence and control our own oil and gas production.

Your large swath and my large swath are not the same swath, so that only supports how it wouldn't make it through congress.

And for your large swath of the population who wants to control oil production and prices via export controls, that is even more pointless, since it fails to consider the types of oil being extracted for export versus the types of oil being imported for consumption. Restricting export, but NOT restricting imports just means the sour crude that we produce won't get into the market to improve global supply, while still consuming the sweet crude that we import - which increases the price we pay for the imported oil! Restricting free trade has ALWAYS resulted in higher commodity prices. ALWAYS.

 

[Oil4AsphaultOnly]

Large swaths of the population have only one concern... the high cost of gasoline.
Some special interests only want the government to meddle when it favors their economic interests. They fund politicians to pass laws in their favor. Everybody else (those who don't have the capacity to make large political contributions) just want lower cost gasoline.

We have controlled production/prices in the past through permits, regulation and laws prohibiting export of oil and gas. Energy is inherently political so can't just say it's "politics" and not up for discussion.

One "simple" measure to control production and prices would be to reinstate the law prohibiting export of oil and gas. This would help to isolate the US from world prices, promote energy independence and control our own oil and gas production.

Addendum. The consumers need to realize that they have more control over the price of gas than the government does. Reducing their own consumption (drive less, walk more, switch to electric) will result in a more permanent fix against the high price of gasoline. Everything else is too slow, with too many undesirable side effects to be even worthy of consideration, let alone discussion.

 

[mspohr]

Your large swath and my large swath are not the same swath, so that only supports how it wouldn't make it through congress.

What makes it through Congress has nothing to do with "large swaths". It's only dependent on how much money the congresscritters collect from the small minority of special interests.

And for your large swath of the population who wants to control oil production and prices via export controls, that is even more pointless, since it fails to consider the types of oil being extracted for export versus the types of oil being imported for consumption. Restricting export, but NOT restricting imports just means the sour crude that we produce won't get into the market to improve global supply, while still consuming the sweet crude that we import - which increases the price we pay for the imported oil! Restricting free trade has ALWAYS resulted in higher commodity prices. ALWAYS.

It looks like our refineries are tuned to the global market. Cheaper oil from home should incentivize them to re-tune refineries for local production.
Restricting export will lower the cost of oil since it won't be attracted to the higher priced global market. Producers will be forced to sell into the local market.

 

[Oil4AsphaultOnly]

What makes it through Congress has nothing to do with "large swaths". It's only dependent on how much money the congresscritters collect from the small minority of special interests.

It looks like our refineries are tuned to the global market. Cheaper oil from home should incentivize them to re-tune refineries for local production.
Restricting export will lower the cost of oil since it won't be attracted to the higher priced global market. Producers will be forced to sell into the local market.

If you think that restricting the supply of oil to the global market, and thus forcing the global price of oil higher would translate to lower local market prices, then you've failed basic economics. Name one commodity that this was ever true for.

 

[mspohr]

If you think that restricting the supply of oil to the global market, and thus forcing the global price of oil higher would translate to lower local market prices, then you've failed basic economics. Name one commodity that this was ever true for.

If US producers can only sell in the US market, it doesn't matter what the global price is.
If the global market has a lower price, US can import. Win-win
(I studied economics at the Wharton School so I do have some basic economics knowledge.)

 

[Oil4AsphaultOnly]

If US producers can only sell in the US market, it doesn't matter what the global price is.
If the global market has a lower price, US can import. Win-win
(I studied economics at the Wharton School so I do have some basic economics knowledge.)

Then you've wasted your money. And it's evident by the very fact that you've chosen to continue pressing your unfounded claim rather than find an instance where banning the exporting of a global commodity resulted in lower local prices for that commodity.

 

[mspohr]

Then you've wasted your money. And it's evident by the very fact that you've chosen to continue pressing your unfounded claim rather than find an instance where banning the exporting of a global commodity resulted in lower local prices for that commodity.

Anecdote is not data.
How could limiting sales to the local market (less demand, more supply), increase prices?

 

[adiggs]

I did a little research into the idea that crude oil isn't crude oil - there are a wide variety of kinds of crude, and I was wanting more detailed insight into how those differences manifest in the real world. I tend to think that if I find something interesting, then at least some others will as well.

Posted over in the Energy, Environment, and Policy forum.

Prediction: Coal has fallen. Nuclear is next then Oil.

And all solar farms are oversized, so the economics are already pushing hybrid solar. And it is becoming a must have nowadays, just look at the ramp into the evening.

teslamotorsclub.com

 

[mspohr]

Then you've wasted your money. And it's evident by the very fact that you've chosen to continue pressing your unfounded claim rather than find an instance where banning the exporting of a global commodity resulted in lower local prices for that commodity.

Since you seem to want "proof" that oil export ban will lower prices, here's a graph from the last time we banned oil export:

You will see that Brent was consistently more than WTI until the ban was lifted in 2015.
(Also note that this "ban" was very leaky. It was a ban on crude export only, not refined products.)

 

[adiggs]

Since you seem to want "proof" that oil export ban will lower prices, here's a graph from the last time we banned oil export:
View attachment 781436
You will see that Brent was consistently more than WTI until the ban was lifted in 2015.
(Also note that this "ban" was very leaky. It was a ban on crude export only, not refined products.)

Considering what I've just learned about refining today, the pattern of the price differential shrinking as well as the overall price declining in brent / wti after the lifting of the export ban doesn't surprise me.

Of course there could have been lots of other explanations than the crude oil export ban, but both are light, sweet crudes. I expect there is a pretty high degree of substitution available between the two (many refineries that can readily make use of either), so being able to export WTI from the US would expand the pool of that type of crude available world wide.

 

[Oil4AsphaultOnly]

Anecdote is not data.
How could limiting sales to the local market (less demand, more supply), increase prices?

Since you seem to want "proof" that oil export ban will lower prices, here's a graph from the last time we banned oil export:
View attachment 781436
You will see that Brent was consistently more than WTI until the ban was lifted in 2015.
(Also note that this "ban" was very leaky. It was a ban on crude export only, not refined products.)

Ummm, are you referring to the export ban that was implemented in 1975? If so, you have just shown that the WTI was priced at whatever the market would bear and that it was priced relative to global crude oil prices. Just a quick search of macrotrends shows that brent was lower than WTI between 1999 and 2004. It didn't matter what it cost the US producers to make WTI, its price still tracked similiarly to the global prices. Only when US hydraulic fracking (actual new supply) came into the picture (2011-2014) did prices reduce.

Right now, crude oil prices are up, because russian oil has been sanctioned on the market (it's selling for $30/barrel to china), and OPEC isn't willing to increase supply to offset it. Banning exports doesn't create actual new supply, nor does it reduce actual demand.

 

[mspohr]

Ummm, are you referring to the export ban that was implemented in 1975? If so, you have just shown that the WTI was priced at whatever the market would bear and that it was priced relative to global crude oil prices. Just a quick search of macrotrends shows that brent was lower than WTI between 1999 and 2004. It didn't matter what it cost the US producers to make WTI, its price still tracked similiarly to the global prices. Only when US hydraulic fracking (actual new supply) came into the picture (2011-2014) did prices reduce.

Right now, crude oil prices are up, because russian oil has been sanctioned on the market (it's selling for $30/barrel to china), and OPEC isn't willing to increase supply to offset it. Banning exports doesn't create actual new supply, nor does it reduce actual demand.

Anecdote is not data

 

[Doggydogworld]

What does Jen Psaki have to do with it? She's not quoted anywhere.

She said VZ was the world's top oil producer in a press briefing the other day. They're actually about 25th. They were 5th in 1997, before Hugo Chavez took over. Hooray for government control!

Restricting export, but NOT restricting imports just means the sour crude that we produce won't get into the market to improve global supply, while still consuming the sweet crude that we import -

That's backwards. We mostly import heavy and sour because we have high complexity refineries that were built to handle low quality VZ oil and to a lesser extent Canadian tar sands oil. When fracking took off around 2010 it flooded our markets with light, sweet oil. Crack spreads for light/sweet are very low because cheap, simple refineries can refine it. Our expensive refineries aren't competitive against simple distillation towers, so we import the cheap stuff others can't handle and export some of our expensive light/sweet fracked oil.

We also export a lot of NGLs which often end up in plastics and other non-motor fuel stuff.

 

[Oil4AsphaultOnly]

Anecdote is not data

I was giving a contrarian interpretation of the data, since that's all you've offered. I asked for any other commodity, and you provided WTI vs. Brent, but only from year 2010-2015 and provided one interpretation of the data. I interpreted the data differently (since 1999-2004's prices didn't corroborate the 2010-2013 interpretation) and explained it.

 

[mspohr]

She said VZ was the world's top oil producer in a press briefing the other day. They're actually about 25th. They were 5th in 1997, before Hugo Chavez took over. Hooray for government control!

Here's the transcript of her press briefing. Can't find where she says Venezuela was the world's top oil producer...

Press Briefing by Press Secretary Jen Psaki, March 7th, 2022 | The White House

James S. Brady Press Briefing Room 2:42 P.M. EST MS. PSAKI: Hi, everyone. Okay. I have two items for all of you at the top. This week, we are marking one year — the one-year anniversary of the American Rescue Plan, which has been the key driver of our strong economic recovery, provided…

www.whitehouse.gov

Do you have another source or is this just something that somebody made up and others keep repeating?

 

[Doggydogworld]

Since you seem to want "proof" that oil export ban will lower prices, here's a graph from the last time we banned oil export:
View attachment 781436
You will see that Brent was consistently more than WTI until the ban was lifted in 2015.
(Also note that this "ban" was very leaky. It was a ban on crude export only, not refined products.)

Brent was consistently less than WTI for the vast majority of the time the export ban was in effect (1975-2010). Your chart shows the impact of fracking, which took off around 2010 and caused a surplus of light/sweet oil in the US. Especially in the TX/OK region (WTI is priced in Cushing, OK).

We could have repurposed our expensive, high complexity refineries to do the simple job of refining light, sweet oil, but that would be stupid. Furthermore, we import more than twice as much crude oil as we export (6m+ bpd vs. <3m bpd). The only reason we're close to neutral overall is we also export almost 3m bpd of NGLs (ethane, propane, etc.) and are a small net exporter of finished products.

Here's the transcript of her press briefing.

Wrong transcript. On March 10 she said VZ was "the largest producer of oil in the world". As I said they're something like 25th. Some reporters gave her a WTF look so she quickly backpedaled to "one of them".

 

[mspohr]

Brent was consistently less than WTI for the vast majority of the time the export ban was in effect (1975-2010). Your chart shows the impact of fracking, which took off around 2010 and caused a surplus of light/sweet oil in the US. Especially in the TX/OK region (WTI is priced in Cushing, OK).

We could have repurposed our expensive, high complexity refineries to do the simple job of refining light, sweet oil, but that would be stupid. Furthermore, we import more than twice as much crude oil as we export (6m+ bpd vs. <3m bpd). The only reason we're close to neutral overall is we also export almost 3m bpd of NGLs (ethane, propane, etc.) and are a small net exporter of finished products.


Wrong transcript. On March 10 she said VZ was "the largest producer of oil in the world". As I said they're something like 25th. Some reporters gave her a WTF look so she quickly backpedaled to "one of them".

Anecdote is not data. I provided data. Where's yours?

Transcript or video or it's just made up bull.