9 ms·

Unfortunately the goal is to drive out US Shale ...

by bpsh 6y ago

CydeWeys 6y ago
So fracking stops in the US. Win-win-win?
- syshum 6y ago
  Only if you have a 5th grade understanding of Geo-Politics, and Macro-Economics do you believe that is a Win-Win. US Production of Oil and Nat Gas provides for the opportunity to the US to be less dependent on Mid East oil, which is WONDERFUL for Global Peace. Also because the value of the Dollar is tied to Oil being traded in Dollars, reliance on Mid East oil puts the US in a HUGE economic Liability. So sure from a pure climate standpoint it has some benefits but in EVERY other way shuttering US Production of Nat gas and Oil is TERRIBLE
  - wyxuan 6y ago
    The Petro dollar isn't necessarily a bad thing. It doesn't necessarily require us to continue our presence in the middle East, and it ( among other things) ensures that that the dollar system is the most important system. Global dollar system is what allows the us to print so much money: there isn't any alternative safer currency.
    - syshum 6y ago
      >>It doesn't necessarily require us to continue our presence in the middle East History Proves that to be wrong >ensures that that the dollar system is the most important system. Global dollar system is what allows the us to print so much money: there isn't any alternative safer currency. That is not really a good thing. We can print those larges amounts of dollars because they never really get circulated. At some point the music will stop on this moronic policy and the current economic disaster will look like a fun time
- imtringued 6y ago
  It's only a win after the switch to EVs. Before that you are going to need every drop of that oil.
  - toomuchtodo 6y ago
    > Before that you are going to need every drop of that oil. No, you’re not. You want to fundamentally damage oil production economics to make oil as expensive as possible, to speed the uptake of EVs. Cheap oil slows down the electrification of transportation. We don’t want cheap oil. We want this price war to cause a spike in oil prices causing pain to oil consumers.
- lainga 6y ago
  Someone (Matt Levine??) on Bloomberg said that "Russia and Saudi Arabia seem to have accepted that periodically bankrupting US fracking operations is a cost of business". Periodically - because US oil extraction is done by many firms in a country with strong bankruptcy law, and after 2 or 3 years SA and RU will stop dumping, prices will rise, and they'll spring right up again (barring some drastic change in world oil consumption.) So it's more like Don'tlose-don'tlose-losetemporarily.
- therealdrag0 6y ago
  Will that reduce the availability of Gas causing more dependency on Coal, though?
wyxuan 6y ago
No. This is a nice benefit but this war just isn't about shale like the 2012 flooding was. This conflict originated from a spat between Russia and Saudi Arabia and will end when they settle their differences.
- akiselev 6y ago
  A large part of that spat is that Russia still thinks it can drive out the US shale producers whereas Saudi Arabia is done fighting for now. Moscow has a $150 billion warchest whereas Riyadh is bleeding money and risking the biggest IPO in history.
eyegor 6y ago
I believe it's more to bankrupt Alberta's oil sands. US shale is barely a competitor on a global scale.
- JBReefer 6y ago
  The US is the worlds largest oil producer
  - eyegor 6y ago
    Sure but that statistic is always measured as oil + natural gas + additives + other hydrocarbons. If you can find a source for crude oil extraction, not production, the US would almost certainly not be #1.
    - njarboe 6y ago
      Recently the US has been far in the lead for even crude production. Here is a source where you can see the break downs by type for every country from from 1973 to 2018[1]. Data from the US Energy Information Administration. Download the .csv file for easier browsing. The totals for just crude, not including petroleum liquids, for 2018 are: US : 16.8 Mb/d Saudi Arabia: 12.4 Mb/d Russia: 11.4 Mb/d [1]https://www.eia.gov/international/data/world/petroleum-and-other-liquids/annual-petroleum-and-other-liquids-production?pd=5&p=0000000000000000000000000000000000vg&u=0&f=A&v=mapbubble&a=-&i=none&vo=value&t=C&g=00000000000000000000000000000000000000000000000001&l=249-ruvvvvvfvtvnvv1vrvvvvfvvvvvvfvvvou20evvvvvvvvvvvvvvs&s=94694400000&e=1514764800000& https://www.eia.gov/international/data/world/petroleum-and-o...
    - kortilla 6y ago
      I think you missed a decade or so of development in the US energy industry.
    - neonate 6y ago
      What's the difference between extraction and production and why does it matter here? Are the commenters who replied wrong? If so, can you explain why?
crisdux 6y ago
It's way more complex than that. This is completely between the Saudi's and Russians. US shale is just a unintended consequence (tho temporarily good for them.) Damage to US shale is unintended and the Saudi's know it will be very temporary. The US companies have a near endless supply of capital, especially now with the federal government being on a spending spree. The shale fields can be easily turned off and on. Loans can be restructured and renegotiated. The last time the Saudi's tried to aim their efforts at the US it ACTUALLY caused the US shale oil companies to consolidate, innovate and they brought their production costs down significantly! The US oil industry is extremely resilient. The goal for the Saudi's is to bring the Russians to the negotiating table and get them to agree to a meaningful cut in oil production, nothing less than 1 million bpd. They've basically said this. Their strategy is completely aimed at the Russians. The Saudi's are filling EVERY port and transfer station in the world with their cheap crude. The Russians transport all their oil in pipelines. If demand drops for Russian oil, they will be forced to turn off their wells because their pipelines can't handle extra oil, and the Russians have no where to store the extra. The Russians don't want to turn off their oil wells because its dangerous, it usually takes them offline for a long time, and they're expensive to get started again.
- trhway 6y ago
  >The goal for the Saudi's is to bring the Russians to the negotiating table the current oil skirmish is a part of much bigger war - Russia went into Syria and has supported the Shia belt (Hezbollah - Asad - Iraqi Shia government - Iran) against Sunni (ISIS/Saudis) despite having no religious preference between Shia/Sunni in particular to block Saudis from being able to pipeline the stuff to Europe (which is an oil and especially natural gas market critical to Putin's Russia survival, and where Saudis have been trying for example to send oil and LNG tankers to. The LNG is more expensive than pipelined NG while Saudis have a lot of NG, so they need a pipeline to Europe and that would be existential blow to the current Russia economy and its "soft" power (like the threat of turning gas off in winter) power over Europe). In this context i don't see Russia going to negotiate wrt. current skirmish. If anything i think it would go all the way in Stalingrad style, Russian population economical suffering be damned, in hopes of forcing Saudis to come to bigger negotiations in much weaker shape.

Unfortunately the goal is to drive out US Shale ...

by bpsh 6y ago

Unfortunately the goal is to drive out US Shale ...

CydeWeys 6y ago

So fracking stops in the US. Win-win-win?

syshum 6y ago
Only if you have a 5th grade understanding of Geo-Politics, and Macro-Economics do you believe that is a Win-Win. US Production of Oil and Nat Gas provides for the opportunity to the US to be less dependent on Mid East oil, which is WONDERFUL for Global Peace. Also because the value of the Dollar is tied to Oil being traded in Dollars, reliance on Mid East oil puts the US in a HUGE economic Liability. So sure from a pure climate standpoint it has some benefits but in EVERY other way shuttering US Production of Nat gas and Oil is TERRIBLE
- wyxuan 6y ago
  The Petro dollar isn't necessarily a bad thing. It doesn't necessarily require us to continue our presence in the middle East, and it ( among other things) ensures that that the dollar system is the most important system. Global dollar system is what allows the us to print so much money: there isn't any alternative safer currency.
  - syshum 6y ago
    >>It doesn't necessarily require us to continue our presence in the middle East History Proves that to be wrong >ensures that that the dollar system is the most important system. Global dollar system is what allows the us to print so much money: there isn't any alternative safer currency. That is not really a good thing. We can print those larges amounts of dollars because they never really get circulated. At some point the music will stop on this moronic policy and the current economic disaster will look like a fun time
imtringued 6y ago
It's only a win after the switch to EVs. Before that you are going to need every drop of that oil.
- toomuchtodo 6y ago
  > Before that you are going to need every drop of that oil. No, you’re not. You want to fundamentally damage oil production economics to make oil as expensive as possible, to speed the uptake of EVs. Cheap oil slows down the electrification of transportation. We don’t want cheap oil. We want this price war to cause a spike in oil prices causing pain to oil consumers.
lainga 6y ago
Someone (Matt Levine??) on Bloomberg said that "Russia and Saudi Arabia seem to have accepted that periodically bankrupting US fracking operations is a cost of business". Periodically - because US oil extraction is done by many firms in a country with strong bankruptcy law, and after 2 or 3 years SA and RU will stop dumping, prices will rise, and they'll spring right up again (barring some drastic change in world oil consumption.) So it's more like Don'tlose-don'tlose-losetemporarily.
therealdrag0 6y ago
Will that reduce the availability of Gas causing more dependency on Coal, though?

wyxuan 6y ago

No. This is a nice benefit but this war just isn't about shale like the 2012 flooding was. This conflict originated from a spat between Russia and Saudi Arabia and will end when they settle their differences.

akiselev 6y ago
A large part of that spat is that Russia still thinks it can drive out the US shale producers whereas Saudi Arabia is done fighting for now. Moscow has a $150 billion warchest whereas Riyadh is bleeding money and risking the biggest IPO in history.

eyegor 6y ago

I believe it's more to bankrupt Alberta's oil sands. US shale is barely a competitor on a global scale.

JBReefer 6y ago
The US is the worlds largest oil producer
- eyegor 6y ago
  Sure but that statistic is always measured as oil + natural gas + additives + other hydrocarbons. If you can find a source for crude oil extraction, not production, the US would almost certainly not be #1.
  - njarboe 6y ago
    Recently the US has been far in the lead for even crude production. Here is a source where you can see the break downs by type for every country from from 1973 to 2018[1]. Data from the US Energy Information Administration. Download the .csv file for easier browsing. The totals for just crude, not including petroleum liquids, for 2018 are: US : 16.8 Mb/d Saudi Arabia: 12.4 Mb/d Russia: 11.4 Mb/d [1]https://www.eia.gov/international/data/world/petroleum-and-other-liquids/annual-petroleum-and-other-liquids-production?pd=5&p=0000000000000000000000000000000000vg&u=0&f=A&v=mapbubble&a=-&i=none&vo=value&t=C&g=00000000000000000000000000000000000000000000000001&l=249-ruvvvvvfvtvnvv1vrvvvvfvvvvvvfvvvou20evvvvvvvvvvvvvvs&s=94694400000&e=1514764800000& https://www.eia.gov/international/data/world/petroleum-and-o...
  - kortilla 6y ago
    I think you missed a decade or so of development in the US energy industry.
  - neonate 6y ago
    What's the difference between extraction and production and why does it matter here? Are the commenters who replied wrong? If so, can you explain why?

crisdux 6y ago

It's way more complex than that. This is completely between the Saudi's and Russians. US shale is just a unintended consequence (tho temporarily good for them.) Damage to US shale is unintended and the Saudi's know it will be very temporary. The US companies have a near endless supply of capital, especially now with the federal government being on a spending spree. The shale fields can be easily turned off and on. Loans can be restructured and renegotiated. The last time the Saudi's tried to aim their efforts at the US it ACTUALLY caused the US shale oil companies to consolidate, innovate and they brought their production costs down significantly! The US oil industry is extremely resilient. The goal for the Saudi's is to bring the Russians to the negotiating table and get them to agree to a meaningful cut in oil production, nothing less than 1 million bpd. They've basically said this. Their strategy is completely aimed at the Russians. The Saudi's are filling EVERY port and transfer station in the world with their cheap crude. The Russians transport all their oil in pipelines. If demand drops for Russian oil, they will be forced to turn off their wells because their pipelines can't handle extra oil, and the Russians have no where to store the extra. The Russians don't want to turn off their oil wells because its dangerous, it usually takes them offline for a long time, and they're expensive to get started again.

trhway 6y ago
>The goal for the Saudi's is to bring the Russians to the negotiating table the current oil skirmish is a part of much bigger war - Russia went into Syria and has supported the Shia belt (Hezbollah - Asad - Iraqi Shia government - Iran) against Sunni (ISIS/Saudis) despite having no religious preference between Shia/Sunni in particular to block Saudis from being able to pipeline the stuff to Europe (which is an oil and especially natural gas market critical to Putin's Russia survival, and where Saudis have been trying for example to send oil and LNG tankers to. The LNG is more expensive than pipelined NG while Saudis have a lot of NG, so they need a pipeline to Europe and that would be existential blow to the current Russia economy and its "soft" power (like the threat of turning gas off in winter) power over Europe). In this context i don't see Russia going to negotiate wrt. current skirmish. If anything i think it would go all the way in Stalingrad style, Russian population economical suffering be damned, in hopes of forcing Saudis to come to bigger negotiations in much weaker shape.