Posted on 04/26/2020 6:20:13 PM PDT by brownwill6767
As oil prices have plummeted to levels never before seen, a rift has opened among the companies that extract crude.
Some of them say state regulators should force producers to pump less in the hopes such regulation will raise prices.
Others say no, just let the market do its job.
While Texas, an oil-producing behemoth, is weighing the controversial idea of imposing limits, New Mexico, now an oil powerhouse in its own right, has largely stayed out of that debate.
Depending where oil prices go and what other states decide to do, there may come a point when the state needs to take a position. But key state officials disagree on where New Mexico should go.
The issue has come to the fore as the COVID-19 crisis — paired with an international price war between Saudi Arabia and Russia — triggered a precipitous decline. Stay-at-home orders that keep Americans from traveling have drained demand for products like gasoline and jet fuel.
Yet oil producers continued to pump through the spring, leading to a massive oversupply — and an unprecedented crash. Early last week, that glut of crude caused oil futures to fall into negative territory for the first time ever, and despite somewhat of a recovery since then, prices remain far below profitable levels for U.S. companies.
The decline also means New Mexico oil revenue has become peanuts compared to the hefty sums the state was taking in during the boom. One key legislator has projected oil and tax revenue will fall short of projections by as much as $2 billion for next fiscal year.
(Excerpt) Read more at santafenewmexican.com ...
So far, the State Land Office has issued an emergency rule allowing oil and gas companies to voluntarily shut in, or close, their wells without penalty, and regulators said many companies are doing so because they can’t ship their oil anywhere.
Yet Land Commissioner Stephanie Garcia Richard suggested the state should go even further.
“If there was a way for the state to have more flexibility in terms of authorizing production cuts, that would benefit us,” Garcia Richard said.
I can store some Diesel for, say, a buck a gallon/month.
ping.
Thought it might it might interest you
So, if they do this, who would have guessed that it would be Texas to be the first openly communist State and adopt & implement standard Soviet and chicom dogma...
And Trump stays silent.
We’ve been cutting back production for some time now. When oil went below 25 many started shutting down high cost low producing wells. I’ve turned off 18 of the 72 wells here on the ranch, only thing running is my plunger lifts, my AJAX pumping wells and my flowing wells. I haven’t sold any oil this month. My tanks are reaching capacity. We’re still selling all the gas we can.
Actually, Texas pioneered the concept back in the 30s.
https://en.wikipedia.org/wiki/Railroad_Commission_of_Texas
A crisis for the petroleum industry was created by the East Texas oil boom of the 1930s, as prices plunged to 25 cents a barrel. The traditional TRC policy of negotiating compromises failed; the governor was forced to call in the state militia to enforce order. Texas oilmen decided they preferred state to federal regulation, and wanted the TRC to give out quotas so that every producer would get higher prices and profits. Pure Oil Company opposed the first statewide oil prorationing order, which was issued by the TRC in August 1930. The order, which was intended to conserve oil resources by limiting the number of barrels drilled per day, was seen by small producers like Pure as a conspiracy between government and major companies to drive them out of business and foster monopoly in the oil industry.[9]
We’re already cutting back and long before anybody was talking about it. If I can’t make any money off of oil I’m shutting the well down. Which is exactly what many of us have been doing.
Low demand causing low prices and lack of storage will force shut-ins. No government actions needed.
My first thought was let’s build more storage for SPR and fill it up. Who knows what the future holds, so it would help to have more backup for our nation.
Since I know so little about the subject, I read a little on Wikipedia and found this:
Richton, Mississippi: This facility, if built as planned, would have had a capacity of 160 million barrels (25,000,000 m3) with a drawdown capacity of 1 million barrels (160,000 m3) per day. Former Secretary of Energy Samuel Bodman announced the creation of this site in February 2007.
As of 2008, this site was facing some opposition.According to the DOE: “Activities towards the goal of expansion of the SPR to one billion barrels, as directed by Congress in the 2005 Act, were cancelled in 2011 after Congress rescinded all remaining expansion funds.”
link: https://en.wikipedia.org/wiki/Strategic_Petroleum_Reserve_(United_States)
Oh boy.................
Let the market do its job. If the government didn’t constantly interfere, the economy wouldn’t be imploding
I want the politically dictatorial Democrat regime to collapse in New Mexico (Lujan/Grisham, the Castro Brothers and their Marxist La Raza founding mother, the Marxist organizations in Albuquerque and Santa Fe, etc.
Only then can the Republicans take back the state and clean it up.
Sorry folks. I’ve worked on cleaning up the environment of New Mexico but the Democrats are more dangerous than any uranium mine in my legal work.
Right! That's fine... As long as you are the owner making the decision... Not a state apparatchik or commissar...
I continue to be stunned that we don’t ban the foreign import of oil.
NM ping list.
There is some kind of irony in an American Economy where:
1) Oil producers lament the loss of Arab Cartel price-fixing that helped the Arabs fund Al Quida muzzy terrorists to kill Americans.
2) American workers pine for the 60-hour work-weeks so they could pay into an insolvent Ponzi scheme of unfundable Federal Entitlements, received in majority part by a demographic under threat from a Chinese made virus released to kill them.
3) Federal taxes also collected from the poor schlubs in 2) are given by America’s bloated Federal “health care” to that same China to develope the virus.
Did I miss any of the irony?
Exactly, oil, like gold does not require one in a down Market to give it away
Tanks of this size would require quite a bit of time to build.
They require a significant amount of site preparation.
The amounts of steel required isn’t exactly laying off in the weeds waiting to be used, it’s ordered from a steel mill for the job.
And then finally there is the construction of the tank proper. 12-18 months or longer. You can only load so many bodies on a project at any one time and still get any acceptable increase in production.
Then there would be the miles of piping, valves, pumps e.t.c that would be needed to use any of the stored oil.
And the often overlooked portion of inspection and maintenance of all of this capital equipment one built.
Even if the decision was made to build this tomorrow, there would be little chance of having any of it completed before there current crisis is over.
If this current state of events continues as is, it will not matter anyway.
Without an economy, there isn’t any need for oil, or it’s products.
Except to the ruling class and their personal armies.
They will need the finished goods.
Big difference in Texas and New Mexico. In Texas, 99% of the time the oil is being pumped from private property where the owner has mineral rights. This is rarely true anywhere else on earth and in half the USA.
The State cannot easily order a stop to pumping lest it be a “taking”.
In New Mexico you are almost always pumping from State or BLM land and they get a bigger say.
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