Posted on 12/09/2016 3:49:05 PM PST by nickcarraway
OPEC's agreement last week to cut oil production is creating an opportunity for U.S. oil producers to get crude into the hands of very valuable customers: Asian crude buyers.
The members of the Organization of the Petroleum Exporting Countries have vowed to cut a collective 1.2 million barrels a day and are asking other oil producers to reduce output by 600,000 barrels a day.
The long-awaited output limits are expected to make it possible for U.S. producers to ply the expensive, complicated route to Asia from the United States. The stage was set when the United States lifted a 40-year-old ban on exporting American crude last December. Since then, much of the oil has gone to Europe, but now industry heavyweights are attempting to extend those exports to Asia, a region whose oil consumption is growing.
"It is still in testing the phase. The export ban was lifted last last year, and since then, we're seeing this evolution of the U.S. export industry, as there's this period of exploration to figure out how best to get these exports out, how to make this work economically," said Matt Smith, director of commodity research at tanker-tracking firm ClipperData.
(Excerpt) Read more at cnbc.com ...
We refine?? Why export crude?? Not sure I understand the market on this.
Opec cuts back, price goes up a little. Frackers see opportunity, sell crude to Asia taking up the slack. Price stays put. Win win for American producers, at least for the short term. That is how I see it,
Saudia can no longer control the price of oil to a large extent. They can only raise it to the level where enough shale oil becomes profitable enough to pump to level off the price and that level continues to get lower as the most innovative engineers in the world work to make the process more and more efficient. That oil spike to $140 is the best thing to happen to the US oil industry and to the American economy. It made expensive fracking profitable and thereby set off an endless series of new techniques and efficiencies.
Is this TPP?
“Fair Trade” is government managed trade and will make the world poorer, including the USA. What we need to do is absolutely stabilize the value of the dollar and get rid of the regulations and the agencies that enact them and reduce the tax rate on commerce, best tax level for business is $0.
Sometimes there are limitations on transportation and refining capacity that limits the amount of crude that can be processed in the US.
I generally agree, but, what does one do about, say, the Chinese tariffs and taxes, etc., that make a Harley (motorcycle) cost 3x in China (in USD) what it does in the US?
Even if Harley could reduce production costs by a factor of 3 (really unlikely, even if all regs in the US were nixed!), China would just increase their levy’s to keep the US produced product out of the reach of most Chinese buyers.
Sure, US consumers would benefit if Harleys were cheaper to produce (at the same quality), but, we need more export sales of manufactured products too...
Agreed. IIRC, oil from the Bakken formation is now around $30 at the wellhead (cost to produce), and several other formations are at or under $50 / barrel, with further economies expected. Saudi is in deep doo-doo, as they need nearly $80 / barrel to prop up the country. Ditto that, in varying degrees, for places like Iran and Venezuela.
However, we need more pipelines to keep transport cost down.
Right. Even though US refineries have increased capacity, in recent years, it is still borderline. Every time there is a refinery incident, etc., gas prices spike briefly, until the problem is repaired.
Much better would be to have, say, 25% or more “excess” capacity, and export the excess refined products when “surplus”.
BTW, if curious, “map” that terminal near Patoka, (downstate) IL, that the Dakota Access pipeline is supposed to go to. It’s appprox. one square mile of “terminal”. (There are probably not a lot of Obama voters there, BTW.)
You are exactly wrong on trade. There is no way we can sustain growth in this nation by running a deficit in trade the way we now do. It is sucking this nation dry financially. I dont care what you or anyone else thinks about it. We CAN NOT SUSTAIN a trade deficit of this magnitude and survive.
BTW. Foriegn commerce is absolutely constitutional for the federal government.
But I agree with your other points.
Trade deficits do not occur where the government is not tinkering with the currency. You make the common error of seeing the distortions of trade caused by the government and proposing to correct those errors by institutionalizing the government created trade distortions and then giving the government more power to create more and greater distortions. Those distortions are entirely detrimental to prosperity and to trade generally.
Art 1 sec 8, To regulate commerce with foreign nations, and among the several states, and with the Indian tribes;
Ya its nonsense. Nice try though bub.
Behind a wall of protectionism the USA became an industrial powerhouse from 1789 to 1913. So you would be just plain wrong.
Free Traitor™ propaganda. Blankest statements of nothingness.
The problem is, some things, many, in fact, don’t fit your “picture”. For example, in a “former life” I dealt directly with both US and Chinese ceramic magnet manufacturers. The worst of the US suppliers were better than the bottom 2/3 of the Chinese vendors, for sure. But, a couple of the Chinese suppliers could match the quality, etc., and sometimes even delivery (!) of any of the US suppliers. And, there was one (quite big) Chinese mfgr. whose quality and consistency was just plain better than any US vendor, they had excellent staff (including a US born sales engineer) AND they blew the US vendors out of the water when it came to price, especially if a custom part needed to be tooled. No one at the company I worked for really wanted to use a Chinese vendor, but, to stay in business / be competitive, we had to.
Then there were the cold forged steel parts mfgrs. The best of the Chinese factories were freaking unbelievable — and I’ve been in some pretty impressive US factories. These Chinese factories were, er, are HUGE (especially given that the average part they make is maybe 4” x 4” x 2”), they are efficient (lots of automated and / or semi automated processes), and they crank out a very good product. There is NOTHING a US plant could do to be 25x, or even 10x more “productive” per worker. 2x, maybe, and a US plant would have lower shipping costs to their US customers.
Now, if serious innovation is involved, then we (the US) do have advantages (unless the Chinese mfgr. goes out and hires some US or Euro engineers, which some do.)
The language advantage lies at least partially in English’ large vocabulary and capacity for nuance, while also providing, when need be, a high degree of “precision”. A great example is the comparison of the number of words English has to describe weather. My wife (a Filipina) is very intelligent (started off in engineering, in fact) and spoke quite good English before coming to the US. But in her language (Visayan) she can come up with maybe 10 words tops to describe weather.
I would add, BTW, that in general I believe tariffs should be the “last resort”. It’s also true that if the US is near the year 2000, in terms of real employment (and with good real-world pay), then probably it makes sense to import items that do not require a lot of innovation, and focus on what we are good at. However, being able to “ramp up” in case of a large, extended war should always be kept in mind. The conversions of seemingly unrelated mfg. plants to wartime production, in WW2, is an example of American ingenuity and flexibility at its finest.
OTOH, to use my earlier examples, if we needed a lot of magnets (of most any type), or cold forged steel parts, in a hurry, in 2017, and China cut us off, we’d be up the creek.
A prosperous and rapidly expanding economy is much more conducive to rapidly building and maintaining a powerful and extensive military than a stagnant regulation bound economy such as you prescribe. By thus freeing the economy we also unleash the innovation powers of this society in industry and in the military and no one else can pretend to keep. I believe that we would get far ahead in the antinuclear and detection tech to render a nuclear attack useless. EMP protection might have to be legislated but with a rapidly expanding economy and the concomitant innovation, that might come quickly anyway. Also by dropping all the fairness-in-the-ME nonsense and firmly and formally allying with Israel we gain the vast well of innovation in that society, too.
Protection as a strategy in world trade or military protection is a dog that only bites its master.
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