Posted on 05/05/2025 11:22:54 AM PDT by Miami Rebel
Yeah, it’s ridiculous. OPEC is pumping like crazy and I believe it’s at Trump’s urging to deprive Russia’s war economy.
https://www.zerohedge.com/energy/us-crude-oil-output-peak-early-year-kpler
A tidbit of how oil wells work.
The day an oil well is completed, fracked, everything, is the highest oil flow that well will produce. With shale, about 1000 barrels/day (far below conventional or offshore, 10K+ bpd).
That’s day 1. On day 365 a shale well will be down 40% to call it 600 bpd. The next year, 400. Down to maybe 20-50, at which point it will be capped and abandoned because costs exceed its ability to pay them depending on price at that time.
This is very important to understand. All oil wells start to die the first day they are in operation. This decline rate must be overcome by new wells and their brand new 1000 bpd. But then that new well also starts to die.
It’s walking up a down escalator. The more wells already drilled, and dying, the faster you have to walk or run or sprint up that escalator to just stay where you are (in terms of bpd for an entire field).
Now then, a period of low prices. You stop doing new wells. The old wells flow, but less and less and less per day. You dig a deep hole, as it were, that new drilling has to accumulate to overcome.
This is largely why North Dakota has not recovered from Covid. Wells stopped being drilled. The old wells continued to die. Their rate of flow declined and that decline accumulated. New wells have a very big bar to jump over to re-achieve new highs.
That’s what low prices do. It stops new wells.
Cash Flow is a real thing.
The Kingdom increased production to put pressure on Russia and Iran. To bring them both to the negotiating table.
Therefore, ending the Ukraine war and preventing Israel from attacking Iran.
Low oil prices are a sign of a strong supply side economy.
I’d give you an F in my econ class
If you believe Russkies.
“Kinda got the feeling this was not only unexpected but a Trump drive to get energy prices and inflation down as a priority”
Energy companies don’t produce when they can’t sell at a profit and most energy companies aren’t profitable below $55 a barrel. We are at $57ish now, so this is cutting it close.
Trump has been talking about drill baby drill, but this will cause sit baby sit.
Saudi-led OPEC recently raised production and pledged to raise production more in June, thus increasing supply and lowering prices. It appears the bright boys at the Slimes missed the news.
Great point. Also smother one of their biggest complaint vectors, although they'll replace it with something else.
Thanks for the compliment. Doesn't ensure my accuracy but gives me a better shot. I impose money and power preconceptions, they seem immutable.
“That’s what low prices do. It stops new wells.”
Yep. Trump already knew what was coming when he went to the meeting. I think he offered something and asked for something. The OPEC+ move is a problem for his ‘drill baby drill’ wish.
I guess you are not best-in-class.
Weak prices demand that we refill the strategic oil reserve when the prices are down ... remember that Slow Joe emptied the oil reserve for cheap political points and oil for the greasy haired Demonrat politicans.
I was a grad teacher.
I guess there is a downside to being cured of cancer too.
Lucky we may have an opportunity to do so with lower oil prices.
BTW the overall story is way overhyped.
The OPEC increase in allowed production is 411K bpd.
That doesn’t mean really anything at all because cheating on the current limits is probably 500K bpd. This won’t be much if any new additional supply. It’s mostly changing the total quota for members so that the quota does not become more and more ridiculous, since it is ignored.
You also have the issue of various producers operating at max right now.
With all matters oil, never ever forget that India increases consumption about 8%/yr and China about 6%/yr. Seeing a production increase doesn’t really need to mean more supply for western countries — since China and India already drank it up.
‘What would we do without the NY Times to find the dark cloud in every silver lining.”
I laughed when I saw the headline. If oil prices were going up, the NYT would fire all kinds of criticism at Trump.
Higher oil prices can indicate increased demand and economic growth, as they often reflect a robust economy where consumers and businesses are willing to spend more on energy. However, they can also lead to inflation and increased costs for consumers, complicating the overall economic picture.
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