Skip to comments.What just happened to domestic production of oil?
Posted on 11/07/2018 9:11:14 AM PST by dangus
The U.S. will become a net exporter of oil if our production of oil increases again as much as it has since last December. It's increased TWO MILLION barrels per day, or over TWENTY PERCENT.
What truly astounded me when I saw this week's data was that the price of oil has been crashing. That tends to depress production by making more expensive means of oil production less profitable. And well, I've never heard oil professionals put it in such terms, but not extracting oil is one way creating a reserve; you never want to sell a non-spoiling commodity at a low point in its price. (If I'm wrong about that, and there's someone in the industry who can correct that, please let me know. But the main point is that oil production goes up less quickly or down more quickly when oil prices drop.)
Three weeks ago, the U.S. produced 10.9 million barrels of oil per day. That was down slightly from 11.2 million a few weeks earlier. But last week, the U.S. produced 11.6 million barrels of oil. As in a single week, we smashed our record oil production by almost half a million barrels of oil in one week!
Last week, we imported about 2.1 million barrels of oil, while slightly building up our oil reserves. Our four-week average of oil imports is actually below 2 million, even though our average production over that time was more than half a million barrels of oil less than it was last week. So we'll probably become a net exporter of oil if we increase our oil production by another two million barrels.
Prior to the Brazilian election, I thought we could easily do that in two years. Now, Brazil looks to be rapidly expanding THEIR oil production, which will reduce the price, and thus whether more expensive production techniques will remain profitable. So I was beginning to hedge my bets inside my own mind about whether we'd reach that. But can you imagine if we became net exporters of oil before the next presidential elections?
1) Our economy would no longer be vulnerable to increases in the cost of oil. That means that if the Saudis or Iranians or Russians want to play hardball, we can go tell them to drill themselves.
2) Of course, there's the direct effect on the trade balance. Suppose we import 5 million fewer barrels of oil after the first four Trump years. Even at only $60 a barrel, that's $109 billion dollars lower trade deficit.
3) Then there's the indirect effect. As it is, we either have to ship manufactured products, or we have to ship the oil used to build them; either way we have to pay for shipping, whether we build at home or build overseas. Not any more.
4) ... and of course, reducing the price of domestic production is always a further boon to the economy.
Oil prices crashing??????
Could have fooled me. Gas station prices have held steddy or gone up a little in the past few weeks.
Could it be they are “gouging” the public???
The Baytown Olefins Plant in Texas is ExxonMobil's largest ethylene production facility in the world. The firms new ethane steam cracker, scheduled to start up in 2017, will increase the sites ethylene capacity by 70 percent. Photo courtesy of ExxonMobil
In the ongoing race to land the largest chemical manufacturing projects in the US, Texas and Louisiana stand out as the veritable Usain Bolt and Michael Phelps of the competition. They dont just beat their opponents; they win by a mile.
Consider the evidence of the recent past:
From 2007 through 2015, Texas ranks first in total plastics exports. During that same time period, Texas ranks first in chemical exports.
From 2011 through 2015, Texas ranks first in total corporate facility investment projects in plastics and chemicals, with 256. Louisiana ranks third with 150.
Fueled mostly by large-scale investments into new chemical manufacturing plants, Texas led all states in total business capital investment last year with $48.3 billion, while Louisiana ranked second with $33.9 billion. The next highest-ranking state, California, had $7 billion.
Most of what you pay at the pump is tax. And yes, it is “gouging the public.”
You got that right. Here in Seattle, the tax on each gallon of gas is disgustingly high. The taxes are indeed hugely gouging drivers.
Current regular gasoline wholesale price is hovering around $1.60 average.
Yet those hybrid & plug-in electric vehicles pay almost no fuel/highway taxes, but still use them every bit as much as anyone else.
There will always be regional variations based on local factors, but I’m surprised to hear that ANYONE’s gas prices have gone up in the past week. Perhaps why the oil production hasn’t slipped is that the collapse in oil prices has been so sudden since the election of Balsonaro that the industry didn’t respond.
In the past week, the national average price of gas has fallen from $2.91 to $2.71, while the price of oil (I’m not sure which market GasBuddy bases its price on) has fallen from $75 to $62.
prices at the pump have dropped about 20 cents per gallon in my neck of the woods over the last few weeks ...
Excuse me... past few weeks...
if crude oil was free gasoline and other refined products would still have a significant cost ...
How far do you think it’ll go? $40?
My guess is that crude oil will become so cheap, in a few decades, that it will be practically free. Global demand is leveling off, technology is increasing, and yes, eventually, renewables will become cheap.
Gas station prices in VA and WV have dropped about $0.08/gal in the last week or two.
Net exporter of oil?
Why do people keep claiming that?
We consume in the range of 19 million barrels a day.
We produce less than 12 million barrels per day.
|Year||Retail Gasoline Price
|Retail Gasoline Price
(Constant 2015 dollars/gallon)
U.S. Department of Commerce, Bureau of Economic Analysis, National Income and Product Accounts, Table 1.1.9. Implicit Price Deflators for Gross Domestic Product, February 2016.
Okay, so the table didn’t format perfectly.
Source for the above stats.
Gasoline prices in New Mexico are higher in the oil producing areas, likely because marketers know that the demand is high for diesel and gasoline in drilling and moving crude by truck (pipelines are inadequate at the present time.
I drove from ABQ to Hobbs yesterday and filled up at Moriarty and Roswell for $2.45 at both locations. Prices in Hobbs are $2.95 to $3.05, 50 cents or higher than other areas of the state.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.