Oil Price Drama

[Digressions]

https://thehill.com/opinion/energy-...-a-cameo-role-in-saudi-russia-oil-price-drama

I'm interested in your thoughts regarding the oil price drama. There are so many issues packed inside this matter. Namely:

1. Government's role in protecting domestic oil and gas industry vs freetrade?

2. Short term benefits of cheap gas during the COVID-19 era vs long term health of the economy, U.S. industries, including green energy?

3. Similarly, is dumping oil (or any commodity) on the market, a fair practice, and just part of the market process, or is there a point to which it becomes an antitrust matter? Where is that line, and what should our policy toward other sovereign countries be?

There are many more issues ancillary to these, feel free to discuss. I probably won't have time to join the discussion, but look forward to the WC's answers.

 

[tooold4]

On April 17th 2018 Morgan Stanley put this out. As investment advice it's useless (?) and the whole article isn't worth reading. But two facts struck me as worth keeping.
1) Most American refineries are configured to process heavier crude grades, creating a mismatch with the growing supply of light shale oil being extracted in places like the Permian Basin in Texas.

2) Output from American shale oil fields has pushed U.S. crude production to all-time highs. But Morgan Stanley warns that the nation’s shale wells are mostly yielding a type of light oil for which domestic refiners don’t have much use.

Given the kind of oil the States are producing I don't think we have much leverage as a producer. Up to this point I thought oil was oil and you refined it to produce jet fuel, diesel and gas, apparently not. Are we really self reliant?
https://www.cnbc.com/2018/04/17/sha...em-and-morgan-stanley-smells-opportunity.html

 

[JamieDimonsBalls]

Given the kind of oil the States are producing I don't think we have much leverage as a producer. Up to this point I thought oil was oil and you refined it to produce jet fuel, diesel and gas, apparently not. Are we really self reliant?

First, very good post.

I'm a bit confused and admittedly know nothing about the chemistry behind oil. From quick checks, it seems like light crude is used to produce diesel and gasoline products, but not jet fuel and other industrial end products. The good news is that light crude is less environmentally damaging than heavy.

Here's a post from the EIA:
https://www.eia.gov/todayinenergy/detail.php?id=41033#

On the plus side, do you really want to be in the jet fuel business right now? That business is heading towards zero (will never get to there, but you get the point) with the cessation of commercial flights globally.

 

[JamieDimonsBalls]

1. Government's role in protecting domestic oil and gas industry vs freetrade?

I don't like government intervention, but there has never been a free market or anything close, in regards to oil/energy. OPEC is literally a cartel/oligopoly. I'm never a fan of tariffs, so you know my opinion on those. However, I also haven't thought or read of any other alternatives.

2. Short term benefits of cheap gas during the COVID-19 era vs long term health of the economy, U.S. industries, including green energy?

Definitely a tailwind to recover and spur consumption and demand. To what degree? Someone smarter can figure that out. How much will it hurt alternative energy solutions? Depends on their cost/benefit. Some have come down far enough where, in theory (Tesla's cheap model car for example), they should be able to compete regardless of gasoline costs.

3. Similarly, is dumping oil (or any commodity) on the market, a fair practice, and just part of the market process, or is there a point to which it becomes an antitrust matter? Where is that line, and what should our policy toward other sovereign countries be?

Sorry, quick trigger, was trying to keep to one post. I have no idea, but let's be honest, no international organizations have any clout. It would take a global effort of US, Asia, Europe to tell OPEC and Russia to fvck off, for any chance of impactful sanctions to occur. I don't see it happening given what is going on.

 

[Digressions]

On April 17th 2018 Morgan Stanley put this out. As investment advice it's useless (?) and the whole article isn't worth reading. But two facts struck me as worth keeping.
1) Most American refineries are configured to process heavier crude grades, creating a mismatch with the growing supply of light shale oil being extracted in places like the Permian Basin in Texas.

2) Output from American shale oil fields has pushed U.S. crude production to all-time highs. But Morgan Stanley warns that the nation’s shale wells are mostly yielding a type of light oil for which domestic refiners don’t have much use.

Given the kind of oil the States are producing I don't think we have much leverage as a producer. Up to this point I thought oil was oil and you refined it to produce jet fuel, diesel and gas, apparently not. Are we really self reliant?
https://www.cnbc.com/2018/04/17/sha...em-and-morgan-stanley-smells-opportunity.html

I don't like government intervention, but there has never been a free market or anything close, in regards to oil/energy. OPEC is literally a cartel/oligopoly. I'm never a fan of tariffs, so you know my opinion on those. However, I also haven't thought or read of any other alternatives.



Definitely a tailwind to recover and spur consumption and demand. To what degree? Someone smarter can figure that out. How much will it hurt alternative energy solutions? Depends on their cost/benefit. Some have come down far enough where, in theory (Tesla's cheap model car for example), they should be able to compete regardless of gasoline costs.



Sorry, quick trigger, was trying to keep to one post. I have no idea, but let's be honest, no international organizations have any clout. It would take a global effort of US, Asia, Europe to tell OPEC and Russia to fvck off, for any chance of impactful sanctions to occur. I don't see it happening given what is going on.

At what point is energy independence a matter of economic and national security, not to mention the global environmental impact? What is that worth?

 

[JamieDimonsBalls]

At what point is energy independence a matter of economic and national security, not to mention the global environmental impact? What is that worth?

I wouldn't have any idea how to model that out. All I know is that it is worth more than me.