Posted on 01/13/2016 6:48:20 AM PST by thackney
If there was a surplus of refining capacity yes, I do not know if there is however. So my answer is I don't know.
Free markets domestically is good thing.
And both are under supply and demand curves.
I use the wheat example because it is simple to understand with a shorter time frame.
Oil production from existing wells continues to fall. To keep up or grow production, it takes investment of capital. Which is why the total US oil production has begun falling with our low prices.
If he can make a profit. If he cannot, he doesn't spend money to lose money.
In the wheat ban example, next year many of them will plant something else. You won't get wheat below market rates. You will get less wheat.
If we keep a ban that puts production of light sweet up against the limit of consumption, future investment for this will go somewhere else.
Also producers now spend more money chasing gas production or natural gas liquids, those do not have the same limits to export.
Since we export more refined product than we import, we have surplus refining capacity.
So when we have excess light sweet oil production, more than the existing refineries are designed to use, why should we not export that surplus?
There is not enough domestic crude oil production to meet even half the domestic market.
Oil is a finite resource (plentiful yes; perhaps abiotically renewable). The refinery process is a value added process, a service so to speak. Different animals.
I am assuming you mean that the per bushel price will go up?
Install an export ban and see how long that continues.
There is not enough domestic crude oil production to meet even half the domestic market.
False, we are up to 55% of oil production versus refined product consumption. 9.44 mmbpd versus 16.95 mmbpd.
Supply is diminished and demand has not changed. Price will go up until demand lowers to meet the new supply curve.
What you are saying if there is a halt to exporting of wheat there will not be enough supply to meet DOMESTIC demand? You are also implying that if there is a wheat export ban then wheat growers cannot make a profit supply only the domestic demand. That is total bull s---. There is a price point for the domestic market in the presence of an export ban where supply and demand meet, regardless if there is an export ban or not. My contention that price point would either be the same or lower in the presence of an export ban.
Sorry a few years ago it was lees than 50% . 55% is pathetic.
“Or, it will stimulate more production, bringing lower costs”
HAHAHAHAHAHAHAHAHAHA
If you believe that you don’t understand the basics of the economics.
US produces about 40% of its gas needs domestically, 60% it purchases on the open market. If that 40% can now be exported, 100% of the needs of the domestic market must compete on cost with the rest of the worlds demand, that means that instead of 60% of the oil needs being purchased from the open market 100% must.
So, you can’t PRODUCE more and lower cost, the global demand for oil is above and beyond the US needs, the US cannot produce, no matter how many wells it drills its domestic needs. So, the idea that suddenly the US will have an oil boom and produce more than it needs and cause lower costs is illogical and disingenuous.
All you have done is guarantee that the 40% we do produce domestically will cost more to the consumer.
This entire situation is ridiculous, and will drive up prices... there is no way you are going to see more production in the US lower prices, its impossible. You export products you have a surplus of, you don’t do it to vital resources you can’t under any model produce enough of.
IDIOTIC on every level.
Do you think government bans and regulations will increase or decrease our domestic supply?
The market would settle out at a point that we were normally supplying below market demand. Farmers run too great a risk at that excess production in a good weather year could not be sold. The peaks of demand would be met by imports.
You continue to ignore the supply curve and have the mistaken belief that only the demand curve impacts the economics of a commodity. It is rather bizarre thinking.
Are you talking about gasoline or natural gas? It is far from the truth for either one.
So if a meteor were to strike the earth and wipe out everyone on the planet except the 320 million people in the USA we'd all starve from a lack of wheat because the export market disappeared. You are on LSD.
When you want a conversation in reality, come on back to us in the real world.
God Bless, I hope you get better soon.
Anything that would boost the economy of NE Penn would be of tremendous benefit to the area...
I guess I have a different understanding of the word tremendous.
Cheers!
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