Oil prices

[sooner88]

Oil over 60 now.

It's been predominantly over 60 for a couple weeks now.

[OKCPetro83]

This is representative of the kind of arrogant viewpoint that O&G people have of alternative energy. Lol. Probably still selling buggy whips too. As long as they keep underestimating energy development progress they will keep falling more and more behind modern times. At least some of the big international energy companies have moved heavily Into renewables. It’s more about energy development, not about o&g production. It’s a holistic approach that satisfies energy requirements while minimizing negative effects on our world.

Despite what my name may imply, I am not naive enough to realize that the world has changed dramatically and is going to change even more dramatically over this decade. There a convergence of technology that is taking place this decade with solar, batteries, electric vehicles, and autonomous driving that is going to completely change the dynamics of transportation and the delivery of energy. The morons can poo-poo it all they want but they can do that at their own peril. It is going to destroy the demand side of the equation.

[Pete]

Oil up to nearly $65 today.

Highest prices since 2018.

[Richard at Remax]

I'm very pleased I bought Exxon at $33

[SouthOfTheVillage]

I'm very pleased I bought Exxon at $33

Yep, and it will beat the pants off of ICLN and NEE as the Fed moves the economy away from ZIRP. Had to happen at some point, of course.

[G.Walker]

It's going up!

[G.Walker]

https://oilprice.com/Energy/Energy-G...EC-Report.html

[Plutonic Panda]

Gas is over 5 a gallon in California in needles and 3$ across the river in AZ.

[G.Walker]

Back to $100 a barrel?

https://oilprice.com/Energy/Oil-Pric...ng-To-100.html

[PoliSciGuy]

https://oilprice.com/Energy/Energy-G...EC-Report.html

Interesting, so oil prices are soaring *now* because demand *might* skyrocket in 6 months?

[Bellaboo]

They are called 'futures'.

[soonergolfer]

The price will continue to go up rapidly, especially if the $3.5 Trillion budget plan gets passed as it stands right now.

[Rover]

The price will continue to go up rapidly, especially if the $3.5 Trillion budget plan gets passed as it stands right now.

Please link the two. What in this budget affects the price of oil?

[soonergolfer]

The reconciliation cuts back or eliminates all kinds of drilling tax credits and exemptions (drilling cost deduction, step down depletion, marginal well credits, etc.). However, the bigger issue is the added fees and costs that are proposed (increased federal land royalties, federal land per acre price increase, reducing federal lease terms, and probably the biggest is a $500B methane and greenhouse gas tax on producers).
I promise you, these restrictions are not going to spur more development. Especially in the federal land department.

[sooner88]

The reconciliation cuts back or eliminates all kinds of drilling tax credits and exemptions (drilling cost deduction, step down depletion, marginal well credits, etc.). However, the bigger issue is the added fees and costs that are proposed (increased federal land royalties, federal land per acre price increase, reducing federal lease terms, and probably the biggest is a $500B methane and greenhouse gas tax on producers).
I promise you, these restrictions are not going to spur more development. Especially in the federal land department.

Production from federal lands makes up a relatively small percentage of the total US production....

[Bellaboo]

Production from federal lands makes up a relatively small percentage of the total US production....

I just looked it up - 1/4 of oil production and 1/8 of NG production is on Federal lands. It's significant. Article was as of January 2021.

[jedicurt]

the Biden Administration in on a pace to approve more drilling on Federal Lands than any other year since 2008... and that was while not approving any for 90 days. had that 90 days of no approvals not occurred. we would be on pace for the DOI to have approved more drilling permits for federal lands than ever before. Oil Companies will be fine under this administration.

[soonergolfer]

Production from federal lands makes up a relatively small percentage of the total US production....

That includes offshore drilling. It is a larger portion than you would think.

[Rover]

Less than 1/2 of the leased federal land is actually under production. Lots left to develop even without more leasing.

[BG918]

Oil hovering around $85. If only it could just stay in that range.

https://www.nytimes.com/2021/10/19/b...ices-peak.html

[king183]

Oil hovering around $85. If only it could just stay in that range.

https://www.nytimes.com/2021/10/19/b...ices-peak.html

I know we have several experts on this forum, so perhaps one or many of you can respond to this. It seems that the price of oil is only going to go higher as more, aggressive government regulations on fossil fuels increase and more incentives to move into green energy come online in the US and across the world. Large investors are going to be very hesitant to put their money in an industry that’s increasingly under attack, leading to lower or level production at a time when demand is not decreasing as at commensurate rate. Thus, we’re going to see a temporary (2-5 years?) spike in oil prices while the US transitions to greener fuels but most people are still driving gasoline-powered cars. More people will try to transition to electric cars, while gas-powered cars become less desirable and more difficult to sell on the used market.

Obviously, I’ve made a lot of assumptions above (such as gov’t regulation on fossil fuels being aggressive AND sustained, investors not flooding back into oil production once prices go higher for fear of the aforementioned regulation/taxes killing their investment, etc.) so please tear those apart.

[Rover]

I know we have several experts on this forum, so perhaps one or many of you can respond to this. It seems that the price of oil is only going to go higher as more, aggressive government regulations on fossil fuels increase and more incentives to move into green energy come online in the US and across the world. Large investors are going to be very hesitant to put their money in an industry that’s increasingly under attack, leading to lower or level production at a time when demand is not decreasing as at commensurate rate. Thus, we’re going to see a temporary (2-5 years?) spike in oil prices while the US transitions to greener fuels but most people are still driving gasoline-powered cars. More people will try to transition to electric cars, while gas-powered cars become less desirable and more difficult to sell on the used market.

Obviously, I’ve made a lot of assumptions above (such as gov’t regulation on fossil fuels being aggressive AND sustained, investors not flooding back into oil production once prices go higher for fear of the aforementioned regulation/taxes killing their investment, etc.) so please tear those apart.

What govt regulations are keeping them from drilling on the millions of acres leased now?

[pw405]

I'm an employee in one of OKC's larger energy co's. While I'm certainly not trained in prognosticating the oil futures market, I've followed things closely for the last ~8 years and below are my thoughts on a few points:

...
It seems that the price of oil is only going to go higher as more, aggressive government regulations on fossil fuels increase and more incentives to move into green energy come online in the US and across the world.
...

I believe the above theory to be mostly right, however we're yet to TRULY tests this idea. Biden's EO to ban new drilling permits on federal land (currently overruled and not in effect) was the closest such action to truly testing this theory. While it would have taken a year or longer to have a material effect on crude prices - drillers generally have permits ready to drill new wells long before the actual drilling occurs - the cause and effect of this theory is clear and I think few would argue that more aggressive reg's like this can reduce future supply.

...

Large investors are going to be very hesitant to put their money in an industry that’s increasingly under attack...
...

Lending from the large financial institutions to US Oil & Gas producers is a key part of a company's strategy to expand. Running a drilling rig on land can easily cost $50,000/day. (Likely much more now, I've been out of drilling for a few years.) Bringing new oil supplies online is VERY capital intensive. And Risky. Not only are fossil fuel co's under pressure from the green crowd - the lenders get pressure from their shareholders to not lend to fossil fuel co's. Additionally, the US shale industry had god awful financial performance once oil prices fell back in 2015. Even with no green-activism pressure on the big investment banks, many banks/lenders are very hesitant to loan money to drillers in fear that another 2015 or 2020 price crash could wipe out many drillers and blow up their entire loan. US oil producers themselves are a bit hesitant to roll out an aggressive drilling program this year. After watching oil fall to -$40 just 18 months ago, many drillers are aggressively protecting their capital. The wrong bet could bankrupt them.

...

Thus, we’re going to see a temporary (2-5 years?) spike in oil prices while the US transitions to greener fuels but most people are still driving gasoline-powered cars. More people will try to transition to electric cars, while gas-powered cars become less desirable and more difficult to sell on the used market.
...

While it certainly seems we could be entering a ~5 period of higher oil prices now, I get the feeling that the the Exec's of US drillers aren't so confident that high prices will be sustained for 2-5 years. Maybe their 2022 budgets will begin to reflect this, but as mentioned above, the wrong bet now could put a company out of business. There is too much uncertainty for many drillers to invest heavily in an aggressive drilling program. Additionally - the transition to alternative fuels, (natural gas doesn't count) or battery cars will not occur in 2-5 years. Could we see material progress in 5 years measured by the % of electric vehicles on the road? Sure... will it make a sizeable dent in overall US Oil demand? Seems unlikely.

The size, scale, cost, and time of what must be built to "transition" is truly mind boggling to comprehend - from alternative sources (solar panels, windmills, nuclear, hydropower, etc.) to distribution ("smart grids", new grid transmission lines, some from of grid storage) could take 100+ of years at the pace the US has been building. This is the one thing I see the general public get EXTREMELY wrong - estimating the size of the job to transition and how much energy production it would take to replace the chemical energy of fossil fuels.

[BG918]

The size, scale, cost, and time of what must be built to "transition" is truly mind boggling to comprehend - from alternative sources (solar panels, windmills, nuclear, hydropower, etc.) to distribution ("smart grids", new grid transmission lines, some from of grid storage) could take 100+ of years at the pace the US has been building. This is the one thing I see the general public get EXTREMELY wrong - estimating the size of the job to transition and how much energy production it would take to replace the chemical energy of fossil fuels.

Agree the full conversion to green energy is a monumental undertaking. A lot of headway has been made over the past couple decades with regard to wind and solar energy but the percentage that is still tied to fossils fuels is very large. So while green energy and electric-everything are popular buzz words the reality is that there will still be a need for fossil fuels for several more decades, maybe longer. Smart companies will begin to diversify from strictly oil & gas to overall energy - possibly incorporating, for example, biofuels and carbon capture technology. We can't power everything with renewables but can begin to further explore alternative sources like fusion.

[Rover]

Agree the full conversion to green energy is a monumental undertaking. A lot of headway has been made over the past couple decades with regard to wind and solar energy but the percentage that is still tied to fossils fuels is very large. So while green energy and electric-everything are popular buzz words the reality is that there will still be a need for fossil fuels for several more decades, maybe longer. Smart companies will begin to diversify from strictly oil & gas to overall energy - possibly incorporating, for example, biofuels and carbon capture technology. We can't power everything with renewables but can begin to further explore alternative sources like fusion.

And we can extend fossil fuel usefulness through some improvements in its processing and infrastructure to significantly impact its negative ecological impact.