Saudi Oil Output Cut Clue to High Prices

Rigzone.com ^ | June 06, 2006 | David Bird

[thackney]

Do you still believe +1 million barrels per day from ANWR won't make a difference?

[thulldud]

Will we ever be allowed to find out?

[BW2221]

Our "friends," the Saudis ......

[defenderSD]

This looks like more of a problem with lack of refining capacity. There's not enough refining capacity to process extra Saudi crude even if they produced more.

[FreedomNeocon]

The OVERWHELMING majority of price flucuations are due to the FUTURES MARKET who keep responding to what WHACK-JOB in Iran threatening a total cut-off to retaliate against any action taken towards them.

[defenderSD]

But the extra Saudi production capacity does limit the upward trend in oil prices. Without their extra capacity, prices would be even higher right now. Iran is holding up the price right now. If there's a solution to the Iranian nuclear standoff, I think oil prices would drop $4-8 very quickly.

[Rutles4Ever]

They can pump 100 million barrels a day out of ANWR. Who the hell is going to refine it?

[Racer1]

Man the stories are coming out left and right today trying to pump up the price of oil. All are afraid that Iran is going to agree to some kind of deal letting the price plummet. They've been enjoying the high profits.

[thackney]

We could nearly triple the domestic oil production in the US before we reach our refining capacity. The difference is we would be refining oil that was produced by American workers and paid taxes and royalties to our own government instead of foreign governments.

Crude Oil Production, 5 MMBPD

Refinery Utilization and Capacity, 15 MMBPD, max capacity (not sustained) 17.4 MMBPD

[Racer1]

ANWR in not the answer. Using another source of energy is the real answer. Make them eat their oil.

[headstamp]

"In early April, U.S. refiners processed their lowest volume of crude oil for that time of year since 1997."

Looks more like a lack of refining, period. Not capacity per se.

[topher]

I know there has been talk for a number of years that too high an output by Saudi Arabia (sustaining high output production) would hurt Saudi oil fields in the long run.

Saudi Arabia knows, as does the United States, that it is not in the best interest of either country to do permanent damage to Saudi oil production. Saudi Arabia has stepped into the gap a number of times to help keep oil prices manageable - even allowing the US to see $1 per gallon as long as just 3 years ago.

But a country that produces only 1/3 of its oil needs will always be in trouble. The US could boast in World War II tremendous oil production to sustain a war effort against both Japan and Germany. And the US made sure to blow the Jap and German oil production (refineries) to bits a number of times in the war. Japan was really hurt when they had to put crude oil directly into battleships, cruisers and aircraft carriers. Some timely hits on these targets made some really nice fireworks in World War II.

So our stupid energy policies may hurt our US Navy, US Army, and Air Force in the long run...

This is something Saudi Arabia has to do so that they can eventually maintain much higher production levels.

The cost of oil reaching $6 a barrel here in the United States in 1986 shutdown a number of very small production facilities - so lowering the price of crude can hurt production.

It is a same that the environmental wackos have such powerful control of the US Senate. See for more poor people hurt by stupid DEMOCRATIC SENATORS concerned for slime worms and other eco nut policies... Also too much concern in the Lame Stream Media for wacko environmental policies designed to hurt poor people...

[B Knotts]

The Saudis need more cash to fund madrassas where they can indoctrinate kids into hating America and Israel.

[Racer1]

Lets face it the oil companies have a vested interest in keeping refining production low. That is what is going on.

[B Knotts]

I'd like to see the effort put into this:

http://www.unh.edu/p2/biodiesel/article_alge.html

that we put into landing on the moon.

[thackney]

Who the hell is going to refine it?

The West Coast used to take 2 MMBPD of crude oil from Alaska. Now they take less than 1 MMBPD from Alaska and import 1.2 MMMBPD from foreign countries. Even if you subtract out Canada and Mexico, they still import more than 1 MMBPD from other nations. The largest importer to the West Coast is Saudi Arabia.

PAD District Imports by Country of Origin

[Rutles4Ever]

So private companies are going to lay out all this money to drill these wells and pump oil - and then they're going to sell it for less than the spot market value to the U.S. government? What happens when Saudi Arabia sees they're getting undercut and they decide to drop their production to match our increase, thus keeping prices right where they're at?

[Racer1]

Good site. Thanks for the link. Looks good to me.

[thackney]

ANWR in not the answer. Using another source of energy is the real answer.

Maybe that is what you want. But petroleum is still the most cost effective fuel for the use we have. ANWR is only a piece of the future. It also includes NPRA, Bristol Bay, OCS, all our coastlines, oil shale, oil sands, methane hydrates, nuclear, coal and others. We could be energy independent. We just need to take control back from the environmentalists that hold our country hostage and fund foreign governments.

[K-oneTexas]

Most definitely agree. Wonder when someone in our government will get "cajones" and put our "friends" on notice.