Once again, you’re missing the point. This isn’t about how much oil the US would get, it’s about whether or not the US government is anti-oil and how will that impact global supply. It was a giant signal flare that instead of increasing production as a rule, our government intended to “go green”. That drives up the price of oil, whether you understand it or not.
As to US companies choosing not to invest… NO. They’re NOT going to dump money into a hole that they can’t be reasonably assured that they will profit from it. Did we have issues with US companies investing on private lands during Obama’s tenure? Of course not. Did we have issues with US companies investing in the Gulf during Trump? Of course not. When you make it harder to get a drilling permit, then start talking about “windfall taxes”, why the hell WOULD we invest? The idea is to make a profit, not to adhere to idiotic green agenda policies.
You keep repeating this, do you not understand the significance of even 1/10th of 1% of the world oil supply? That said, it’s STILL about signaling. When you signal to the world that the US isn’t interested in increasing supply, you drive the cost of oil UP and it’s DELIBERATE so they can push this green agenda crap.
Good, you’re starting to work with data now. Take a look at supply and demand along with rig count. The rig count is going up but MOST of those rigs are land rigs on private land. The number of rigs dropped by half during the start of the pandemic worldwide. It was FAR worse in the US. The rig count includes DRILLING rigs, rather than production facilities. From drilling to production is 3-6 months on land, 2-5 years offshore. World oil production is still 3MM barrels down from the oil production prior to the pandemic. US production is still 1.5MM barrels down. Meanwhile, expected consumption is about 0.3MM barrels lower than prior to the pandemic. World wide, we need more rigs working and that’s in process but it’s not helped by Biden’s administration when they make it harder to comply with BSEE regulations and they run off good rigs by promising to tack on additional taxes. Right now, we can reduce the cost of oil by doing 3 things. 1. Streamline BSEE regulations. 2. Give a tax holiday for 5 years for royalties. 3. Open up federal lands for drilling and MEAN it. Do those three things and the cost of oil will start falling in anticipation of the coming increase in oil production.
Oil production will go up when the price is high enough to make it worthwhile to drill more. If the cost of getting the oil is greater than you can sell the oil for, you are not going to drill.
How would a decrease in royalties incentivize companies who posted record profits last year? Whatever they are doing is providing more value to the shareholders than any other time in history. Why would they stray from that path?
Isn’t this all just - as you cite - the long time from decision to output inherent in teh business, and compounded by labor shortages? You can’t just say ‘boo!’ and have oil shooting out of the ground again.
This pathetically slow rate of growth is part of the problem. I’ve been in the oil industry for 30 years or so. We’re not even CLOSE to pre-Covid rig activity. MOST of this stuff is on private property so it’s just another clear indication that the Feds have no interest in helping to increase supply. If government would get out of our way, we could put MANY more rigs to work.
You just flat out don’t understand oil companies. I’d rather have $70 oil that I can plan on. I can make money all day, every day at $70. When we start getting to the $100 range, sure, it helps business but it’s also a precursor to killing our economy and killing demand. It’s supply and demand 101. I run a woodworking business now but I’m still in the oil industry. What kills oil companies is spikes in both directions. Price too high = recessions and reduction in demand. It’s not exactly easy to turn on and off production and every time you shut in a well, it risks the asset. Too low of cost and it’s not viable to replace depleted wells with new ones. I don’t WANT $110 oil, it just puts everyone in crisis mode and then they compound that problem with allowing BSEE to create idiotic rules, such as CFR 250.724 and 250.739.
Record profits? I love that statement. It’s an idiotic talking point with no awareness of the size and scope of oil companies. Where were you for the past 4 years when we were all posting loss after loss? Do you know the standard profit margins?
If you kill royalties on a field for development, companies will MOVE assets from cold stack to active. It’ll enable them to spend the $50-$100MM in reactivation costs.
So again, why would they do anything differently right now as they are making more many than they ever have? Why do they need tax breaks and royalty holidays? They are doing really, really well.
