Posted on 11/14/2014 2:28:23 AM PST by TigerLikesRooster
You jinxed it. The price is going up now.
Except that domestic producers are losing money at this price
Special tax credits to the federal government selected "winners" is spending.
Selecting which industries get incentives and which do not is a form of regulation the federal government has no business being involved with.
As I said above, it doesn’t have to be price controls per se. Securing our energy supplies from foreign control is or should be our top priority.
One option would be to, say, massively expand the Strategic Petroleum Reserve. What we have now is rather laughable. Do it at an announced set price plus a reasonable profit over what the current break-even number is. That alone would keep at least some of it rolling along.
Yes, the industry has shown it can produce - but it won’t if oil prices drop below break-even.
So will, most will not.
See my last two posts above - perhaps it was poor word choice, but we *need* to become energy independent. Unless you like feckless idiots like Obama putting American lives at risk for oil (which isn’t even going to go to us!) as he did in Libya to appease the French.
How large do you think it should be? We currently could replace all we import from OPEC for about 8 months. Is that enough? How would you size it?
Do it at an announced set price plus a reasonable profit over what the current break-even number is.
I do not understand what you are suggesting. Do you want the federal government to become a competing supplier to private industry? A Strategic back-up to supply makes sense; becoming a competitor to private industry does not.
I think that is OPEC’s strategy.
OPEC offered a 45¢/barrel discount to the US below the commodities exchange rate.
It cost more than 45¢ to transport their oil from Saudi to the US.
We can compete with that.
While our system is not good, making it worse is not a good idea.
That being the case, incentivizing the oil industry to create more economic activity is not a bad idea.
Yes it is. And it should not be the role of the federal government.
8 months is not enough in my view. It needs to be a number measured in years and calculated to be an amount that could supply wartime operations in addition to the domestic economy for that same time period. For purposes of this discussion, let’s say that the number should be three years.
I am not saying the government should compete with domestic suppliers. What I am saying is that the government could, in the interests of securing domestic supplies, say that they were going to expand the SPR. It could then say that it would buy the oil to fill this expansion from domestic suppliers only and the initial price paid by the government would be X plus Y. X would be the break even number for shale oil, Y would be a number reflecting a reasonable amount of profit over X.
I appreciate you giving a number to discussion. I don't agree with it, and mostly because of the effect of the global market after 6 months of OPEC not selling their oil to us.
It could then say that it would buy the oil to fill this expansion from domestic suppliers only and the initial price paid by the government would be X plus Y. X would be the break even number for shale oil, Y would be a number reflecting a reasonable amount of profit over X.
I would rather see, if the decision to expand the SPR was made, bought in limited quantities at the market value, rather than trying to manipulate market prices.
You should keep in mind, there really is no set breakeven price for shale. There are average prices, and they differ for each field, and they differ for companies in the same field, and they differ for different locations in the same field. Sweet spots are cheaper, marginal spots are more expensive.
Thanks, that need to be said loudly.
And after the last few weeks of reading posts, apparently often as well.
Why not shut off the auto-correct?
You write well and spell well without it, I can see that.
““Someone trying to kill the domestic industry”
We have a winner. That is EXACTLY what is going on. OPEC is trying to financially drive out the exponential growth in the US production by killing off the companies responsible for it by undercutting their revenues. Aided by the world wide recession, they may be effective in causing a huge consoladation in the US as this increase has mostly been achieved by lightly capitalized heavily indebted companies.
“
The genie is already out of the bottle on the shale revolution. Nothing OPEC can do will accomplish anything but short-term setbacks.
Over the long run, the technology will guarantee continued oil development in unconventionals in this country, and you ain’t seen nothing yet when it comes to the much, much bigger gas unconventionals.
This country prospers bigtime with cheap energy, whether it comes by Saudis dumping crude or by new technology.
Tariffs on imported products, both to raise revenue and to protect domestic sources, is actually constitutional, and was the originally intended way to fund government operations.
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