It seems to me, from my limited study of the industry is that our production capacity has been hampered and limited by endless regulation. As a result, we can't make any more and the refineries that are working are at full capacity. Our production is the result of the industry not building additional refineries, not because they don't have the oil to refine.
As for the state of our reserves...why spend the money to get it when you could have it for almost free (when oil was $10/barrel)? Of course todays economics might give reason to start getting the oil we have.
The purchaser is the payee, the seller the recipient. Those are long-term contracts for future delivery that are traded and the
Have nothing whatsoever to do w/ it...it's an open market and again, those are futures contracts being traded, not (directly) oil purchases. No different than pork bellies on the Chicago Mercantile exchange.
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Same as when retail was $1/gal -- the federal excise taxes haven't changed and they're on a per gal basis, not on the retail price.
Both, w/ minor fluctuations. There is some very recent upsurge in exploration and production owing to the higher prices over the last year or two, but they're both just now beginning to reach market and very small increases in terms of overall consumption levels...
Certain amount of truth on both sides of the production issue here although actual exploration and production has been hampered by low prices for a long period until the recent run-up so that there have been only 10's of wildcat rigs in actual use as opposed to 1000's in the heyday of US exploration. As noted above, that is to change, but there aren't any huge new fields in the continental US waiting to be tapped--they're going in an reworking old wells and drilling in areas that were marginal previously or in areas that were much more expensive to bring into production and thus weren't economically feasible at low crude prices.
That's on the refined side and there's some truth there as well. The fastest way to lower consumer prices in the short term would be to add refinery capacity but there's a reason that crude oil futures are at a high price and that has to do w/ increased consumption as well as shortage of refinery capacity.
The effect political events and simple speculation on the futures markets should not be underestimated, either.
See above...it's occurring although despite what some would try to have you believe, there simply isn't enough available in the continental US at even current prices to supply the current demand.
As an example, however, there were a number of wells drilled on our land and around us back in the 50s and 60s. Very few of these were brought into production then as they were not high enough producers of oil to make it worthwhile. Starting about two or three years ago, however, small independents have renewed the mineral leases and two of these old capped wells so far have been opened and brought into production as well as one new well. They're mostly natural gas, however, w/ only a very small amount of oil being brought up in conjunction w/ the gas (which, of course, is why they were considered "dry holes" originally).
The Hugoton gas field, the largest natural gas field yet to be discovered was initially opened in the 20s. While it is still producing, production rates are now failing every year even with extensive rework even to the extent of pulling negative pressures on the wellheads. Nothing that can be done will ever again generate the amounts of gas that were produced from that field for the last 60 years and in another 30 or so the production will essentially fall to nothing.
The "new" wells on our place are nothing in terms of daily production as compared to most wells in the heart of the field but in today's terms they're pretty darn good...we have about 1500 psi at the well head whereas as noted above in large areas of the main field they're now to the point of having to pull vacuum to get any significnt extraction (and that, of course, is only a tiny fraction of the former production rates).
One more example...our midwest farmers' coop organization had a nice little refinery at which me made a significant fraction of the refined products for our members and sold a little outside. This refinery is now closed owing to the inability to obtain sufficient local crude to supply its needs. It would be required to buy crude on the open market and transport it which is simply not economically viable.
Doesn't matter which source you use, notice the correlation of market moves and world events (or don't you pay any attention to them, either?) A great deal of the current run up is, as noted previously, simply speculation against the potential for future events making world supplies even more tenuous than they currently are. That this speculation holds up is indicative of the fact that there is a) worldwide increased demand and b) at least perceived serious potential for loss of supply either by political instability in the major producing areas of the world or loss of refining capacity in the US.
Well, to understand anything of oil futures you need at least a minimal basis in the underlying market mechanics.
OK, here's a short summary and a couple of links that should be informative...
COMMODITY FUTURES
Futures, which are traded on the futures market, are contracts to buy or sell a fixed quantity and quality of a particular commodity for delivery at a fixed date in the future at a fixed price. Unlike options, futures are binding contracts and may therefore entail a potentially unlimited loss.
Futures, which on most exchanges represent the major part of total transactions, are above all used for speculative and for hedging purposes. By fixing the price of the underlying commodity in advance, futures enable users and producers to hedge against spot price fluctuations, which on commodity exchanges tend to be very high. And for hedging to be possible there must be speculators willing to offer these contracts, thus helping to make an active market.
Futures are negotiable instruments. The goods are represented by documents. Although the documents give a right to physical possession of the goods, futures contracts are usually closed out by offsetting a purchase against a sale (maturing at the same time), and vice versa. This is called an offsetting transaction. The settlement of money differences, i.e. the difference between the price of the original and the price of the offsetting futures contract, is usually made through a clearing house.
You're welcome and given that I hadn't seen this at the time I saw your other retort I'll retract mine (even though I didn't say nor even necessarily mean major network news in my previous question--that was an inference you drew).
I really was only trying to illustrate that the futures prices being reported are currently more directly related to world events (and yet even more strongly perceptions/fears of future events) than they are with respect to actual current supply and demand. I won't say we're currently in a "panic" mode, but certainly one of heightened concern combined w/ rising demand coupled to nearly inelastic supply (certainly in the short term) and this is the fuel for speculation in any economic arena.
That I may have overstepped slightly and added a perhaps unjustified barb, sorry.
I agree. The tree huggers have stopped us from drilling in our own country and then they piss and moan about how we are so dependent on foreign oil...... the NITWITS !!! Also, the reason we haven't built a new refinery in 20 years, is because the tree huggers stop them from being built.
as long as we're off topic, let's not forget that every state has their own personal blend that is the BEST blend, ~ according to that state.
this means refieneries can't just crank away undisturbed at doing ONE blend. they have to do several. 50 states, 3 blends minimum each, summer & winter grades...
yet i can drive across country & exhaust that stuff in any state anywhere i want to drive.
and just what good is that middle blend? not quite the low grade, not quite the top grade? why bother? cars have been designed for the basic blend for some 15 years now?
Wonder if this theory is popular with creationists. Err sorry, ID fans.
As much as the environmental tree hugger climate cooling/warming people harbour their own bunch of happy useless kooks, the they're all wrong everything will be just fine crowd has their own.
"Any notion which might suggest that hydrocarbon molecules spontaneously evolve in the regimes of temperature and pressure characterized by the near-surface of the Earth, which are the regimes of methane creation and hydrocarbon destruction, does not even deserve consideration."
it kind of ignores the fact that methane can trivially be produced in anaerobic digesters at around atmospheric pressure. In short it's industrial strength bollocks.
And who said anything spontaneously evolved ? WTF do they mean by that ?
LOL. You're right. Their profit goes up by the cost of producing 1,000,000 barrels at the old cost, minus the cost of producing 500,000 at the current cost.
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