Posted on 12/02/2014 5:18:54 AM PST by thackney
All twenty years? 1998~99? 20004?
No one knows the true break even point...that is yet to be determined. It is considerably lower than the industry is willing to admit.
That must be with the oil companies consistently have such higher profit margins than other businesses.
“Projects such as oil sands developments and most offshore projects are longer term investments that are more insulated from oil price swings, according to the analysis.”
The Keystone pipeline is designed to reduce the cost of shipping oil sand product to market in the US. The lower the cost/barrel in shipping it to the refineries in OK, LA & TX, the more they can pay FOB Alberta. So, I believe the opposite to be true. It gives them more of an incentive to build the pipeline than it did before.
Keep in mind there is no current pipeline to move Alberta land locked oil to a place where it can be loaded on a supertanker , thereby reducing its ocean going freight/barrel. The refineries in Canada can only refine X amount of oil. The demand is outside of Canada. There is another proposal to build a pipeline directly west to the BC coast. Even this pipeline would primarily reduce the cost bringing it to Washington, OR and California. It would also reduce the cost to Asia. However, the west coast of the US is a lot less freight than China, India, South Korea and Japan.
Heard the same over the weekend on Kudlow's radio show.
Much of the food cost increase was a direct result of the Ethanol mandates. Turning food for animal or you and me into fuel might be good for Archer Daniels Midland, but not so much for you and me.
Get rid of the 10% Ethanol and the price of beef, pork, Cheerios Corn Flakes, Coke Cola all go down.
Inaccurate. Replace “eliminate” with “suspend”. The tech and resources aren’t going to evaporate into thin air. The free market will revive production when oil prices settle into their natural position. If it’s not profitable, then that means the market price is too low to waste time pumping it out of the ground. Either scenario is a good thing for the US economy. What is actually MORE of a story is the fact that the free market is eroding the monopoly long held by OPEC and the Russians. They no longer set the price they want, it’s compete or die now.
Except for Vancouver (Port Moody). Sometimes the very large oil carriers are loaded/unloaded by lightering.
Crude oil from Canada enters the US currently by this port to Washington and California ports.
http://www.eia.gov/petroleum/imports/companylevel/data/import.xls
The only thing keeping the price of gasoline above $2 is the lack of refineries, limiting the supply of gasoline in the marketplace. The supply of oil is hitting a bottleneck due to limited refinery capacity.
It doesn’t say the oil flow will stop. It says the price may drop enough to stop the growth rate.
Most understand that doesn’t mean forever in time.
False. We refine more crude oil than we use in the US. We finally have a surplus of refinery capacity. Not much, relative to our use, but we have some surplus products we export. Much of that is refinery "leftovers" like petroleum coke and residual oil. We also are net export of diesel while importing gasoline and its blending components.
The margin on refining tends to be rather small.
The boom/bust cycle is a normal part of the energy economy.
Ask folks in Houston. They have ridden the wave many times. The rest of the country is only now learning about it.
Thank you for the insights.
I'm one of the folks in Houston. Been done this road before. I still have some doubts it is going to be as bad as some are suggesting at this time. But it will slow down, certainly.
You need to change your description to horizontal tight formation wells.
It is not a function of being hydraulic fractured. We do that in most traditional type fields as well. Most wells in production today, traditional or not, will get hydro frac sometime in their production lifetime.
You are describing the shale plays with horizontal laterals, which are not the only wells hydro frac'd.
No not the the entire twenty years mostly the past ten or so but that’s not counting the years starting in the seventies either. The oil companies have enjoyed some record profits but I don’t lay the blame completely at their feet. A more than willing government either catering to them or the flipside that does everything in it power to drive up prices through excessive regulation. Either way the consumer is left holding the bag. Quoting the percent of profit is misleading when talking about a product that most people have to have. When an industry has a captive clientale it can operate on a rather small percent of profit. I think it tells all when the industry you give that has the highest profit margin is slowly going bankrupt. So much for profit margin. By the way I believe the grocery business has a much smaller profit margin than the oil industry.
And falling pizza prices MIGHT mean fewer new pizzerias. The observation says NOTHING about pizza production capability.
Typical blog-disguised-as-news article.
And some record losses in the same 20 years. Some went bankrupt, many bought up by others.
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Quoting the percent of profit is misleading when talking about a product that most people have to have.
No, it is not. The oil business isn't a charity or a hobby. It is owned almost entirely by investors in the market place. The compete for capital investments to provide their products just like everyone else.
http://www.whoownsbigoil.org/wp-content/uploads/2014/10/who-owns-big-oil1-1320x819.jpg
When an industry has a captive clientale it can operate on a rather small percent of profit.
Where does the billions of dollars required to keep producing oil come from when the investors don't get a return on their investment? Again, it isn't a hobby or a charity and their is competition within the industry.
Sorry, meant to make this display, not link
You are correct. I was just using linguistic shorthand. I actually worked on vertical hydraulic fracturing wells in the Slaughter oil field south of Lubbock for Pan American Petroleum as a summer intern in 1966. The technology was considered mature even at that time.
In my opinion, too many people actually think the Hydro Frac'ing is new and will stop at the recent price drop. Those knowledgeable in the industry should not add to the misconceptions.
Cheers!
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