Posted on 03/17/2016 6:47:47 PM PDT by Hojczyk
Before the rise of fracking, these oil-exporting nations often conspired together to deliberately keep oil production low, thereby artificially raising oil prices. This allowed them to use higher revenues to benefit their populations at the expense of people living in oil-importing nations, such as the United States. Americans have for decades paid higher oil prices than a truly free market would dictate, but with the rise in domestic oil production, the power of OPEC has been reduced markedly.
Fracking has fundamentally altered the way oil and natural gas are produced. Rather than investing billions of dollars and five to 10 years in large offshore oil projects or drilling in the Arctic, oil companies are beginning to flock to shale oil fields, which can typically be drilledwithin 20 days and cost a few million dollars per well. Fracking costs substantially less time and money compared to the larger drilling projects oil companies have been investing in for decades, and as a result, the wheels on many of these larger projects have already started to fall off. Foreign producers are now failing to complete 80 percent of their megaprojects on time and without going over budget, which bodes poorly for nations that are highly dependent upon oil revenues.
In an effort to drive many U.S. oil producers out of business, OPEC has chosen not to decrease its production, thereby allowing the market price of oil to continue to decline. OPEC hopes it can destroy its competition and then reinstitute its low-production policies to drive prices back up, but according to Daniel Yergin, a leading scholar on energy and geopolitics, this strategy will ultimately be unsuccessful.
(Excerpt) Read more at opinion.injo.com ...
Common Sense tells you fracking is here to stay. As the technology improves, the price will continue to be driven down. OPEC states are caught between a rock and a hard place.
They need either high prices or high production rates. They can’t get both.
World Oil prices will settle were fracking is cost effective, unless a total retard like Hillary or Obama artificially raises the prices through some geopolitical agreement.
...unless a total retard like Hillary or Obama artificially raises the prices through some geopolitical agreement...
Made me laugh, because granting the benefit of my doubts - I assumed they were only Partially retarded. I stand corrected.
Read where Saudi Arabia owns the largest refinery in the US.
That’s odd. I saw a banner on a news website today saying that US oil had climbed back up to $40/bbl.
Just imagine what we could do if this once again became a Godly nation and we pulled together!
Read somewhere today that the Saudi have purchased one of the refineries on the Texas Gulf Coast. Can not remember if the seller was Shell or Aramco. Could have a major impact.
My station just went up about 30cents in 3 days
The Wilks brothers have donated at least $15,000,000 to Ted Cruz, and they are fracking billionaires in Texas.
So there’s that.
When I follow the stock market I see the price go up and down with it. When it starting going up again, my son told me I should be happy to pay $1.97 in CT. He is convinced that this is a deal. Should I agree with him?
I paid $2.56 today for Regular in CA, so you should feel lucky indeed.
I thought Wilks bros. sold their interest in Frac Tech nearly 5 years ago?
The oil price surge in 2008 caused the Great Recession as much as the financial crisis and Obama’s election.
There’s not much of a future when oil is $140 a barrel and China and India are just getting started, economically.
Oil has been the poster child for how other countries manipulate their exports to the US and other developed countries. It is just more obvious because most of these are actually state-run “companies” that compete with out private companies.
First they dump their product at below cost — subsidized by government, sometimes using tariff money on US products imported to their country — until they have driven our producers out of business.
Then they create shortages to drive the price back up, but whenever our industry tries to re-enter, they wait just long enough for the capital investments to be made before creating a glut again.
Yes, fracking has greatly reduced the capital cost and therefor the investment that can be lost when they pull the rug out, but it is still LOST. This article doesn’t mention that all those companies that failed when oil dipped down to $25 caused cascade effects among banks, private investors, local real estate that had ramped up to house fracking workers, etc.
So a new trading range of between $25 and $50 may have been established by fracking and that is a good thing, but it still a very volatile industry for Americans due to OPEC puppet masters.
I should put on my flame retardant suit before I say this, but ... asking private corporations to compete against foreign governments with no backstop or support from our own government may not be the best way to prevent these disruptions to what is a critical industry that affects so much of our economy. I would rather see the Federal Government place standing “offers” to buy US-produced oil at $40. That way when OPEC reduces supply to get the price up, our producers sell on the open market for more than $40 while they increase capacity to take OPECs market share away from them and it costs our government nothing because nobody takes them up on their $40 offer. Our producers increase production, creating a glut, and the world price falls back below $40 but they still get $40 from the government contracts. The government loses money reselling on the open market, but OPEC hurts themselves with lower prices without driving our producers out of business. I think OPEC’s attempts would be very short-lived and the US would effectively be dictating world oil prices. As fracking or other new methods make oil production even cheaper, reduce the offer price below $40.
Government intervention in what should be free markets is generally a bad thing, but do you have any choice when other governments are intervening on behalf of their producers ? Is unilateral disarmament in economic warfare any smarter than in military warfare ?
Oh they may have! I did not know that. However, I believe they still donated $15,000,000 to Mr. Cruz, in order to influence him in certain ways.
1.67 in Jersey last night.
Yes.
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.