Posted on 12/06/2017 12:17:40 PM PST by Ernest_at_the_Beach
The behind the scenes work is the best
“I didn’t realize we’re still importing 50%.”
US refineries buy oil from the source that is the least expensive delivered to their location. Oil is a commodity. It trades sells in price/ barrel. Much of that delivered price is a function of freight(shipping costs) to its location around the world.
It was explained to me once upon a time that some refineries are set up to process heavy crude oil. This is what countries like Venezuela export or the tar sands out of Alberta.
That is why the Keystone pipeline was so important to build. It lowered the cost/barrel to ship heavy crude to the refineries in LA & TX that are the most efficient in turning that oil into finished product. With Keystone completed the Canadian oil producer in Alberta can deliver their oil cheaper to TX than other sources in the world.
The Canadians are also building a pipeline from Alberta to the Pacific Ocean. Much of that oil will ship to refineries in California, OR & WA. These refineries currently get most of their oil from Alaska. However, these refineries are competing with what China, South Korea, Japan, etc. will pay for the same product.
JD Irving owns a refinery in St. Johns New Brunswick located on the Atlantic Ocean. It was built in that location so it could receive super tankers. However, when oil production from North Dakota increased due to fracking improvements they started shipping oil all the way to New Brunswick by train because it was cheaper than what could be delivered by boat.
So, Trump knows that if we increase supply overall, price will go down.
Purchasing lease rights is cheap (relatively), you're right. The return of big $$$ is in royalties via oil & gas or mineral production covered by the leasing of mineral rights.
Not selling lease rights is zero. Repeat zero. It is every mineral rights owner's call whether to accept a lease bid or not. A bid consists of lump sum for the right to drill or dig as the case may be (small return) plus a royalty percentage from sale of the oil & gas, coal, mineral, etc. (big return). I own mineral rights. In one case, a dry hole for oil produced zero royalty thus just a modest payment for the lease, which was not renewed at the end of the lease term. In another case, there was first the small amount of the lease itself, oil was commercially produced and now I have a multi-decade of royalty payments coming in. Gotta love that fracing!
Well so it is...even better. I’d still like to see it approach “Zero,” even though I doubt its possible.
Critters waiting for the Global Warming,...trying to get a bit warmer!
What Trump did was to put the market into play.
The people in the business will decide to participate or nt and to what extent.
He effectively destroyed the envirowacko’s foolish arguments.
Brilliantly said...
Also, the oil from ND and the shale oil from TX is Light Sweet Crude. This increase in production for this type of oil from fracking hurt the country of Nigeria greatly. That is because their oil is light sweet crude.
However, much of the new production out of Texas did not have the infrastructure in place to load railcars. The big refineries in Texas are not really set up to unload by the truckload. Therefore, these new Texas producers had to sell their oil at a discount to allow for it to be shipped to some place by truck tanker and then reloaded onto a railcar tanker.
Similarly, oil from Alberta can be shipped currently to Vancouver, BC by pipeline. However, you can not load a Supertanker ship at the port where the pipeline ends. Therefore, it needs to be transloaded from a smaller tanker ship to a super tanker before it ships across the ocean. These all drive up the cost delivered to it final destination wherever that may be in China, Japan, Korea, or the Pacific US.
Note that the pace of the WINNING is increasing
...soon be up to ludicrous speed.
Remember the campaign rallies? He said we will have so much winning that we will ask “please Mr. President” can we slow down the winning? Or words to that effect. And recall his reply? No. Lmao. MAGA.
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Go Trump!
MAGA!
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Let economics prevail over politics!
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Thanks for your comments. Much appreciated.
Thanks for the thoughts, and glad to hear that one lease paid off handsomely.
Cool.
I still want profit incentives so we don’t have shortages, but I realize you want that also.
Thanks for the mention. Sounds reasoned.
I do fervently recall that, during the campaigning, this wonderful Guy stated that we may get tired of winning.
Mr. President, my President, my Ronald Reagan on steroids President.....Sir, no, I will not tire of these winning ways, so keep on keepin’ on.
I agree.
“Keep on Trumpin’”
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