View Poll Results: Should we temporarily subsidize domestic oil shale production in response to OPEC?

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  • Yes, if prices drop too low we should.

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Thread: Should we temporarily subsidize oil shale production in response to OPEC

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    Should we temporarily subsidize oil shale production in response to OPEC

    OPEC is currently using their market power to engage in a price war with the United States in the hopes that it will put our tight oil suppliers out of business. If oil prices drop to a point that oil shale production is no longer profitable (below 60 dollars a barrel), do you think the United States should temporarily subsidize producers in order to keep that production and all of the infrastructure supporting it online for when oil prices inevitably rise again?

    Oil prices keep plummeting as OPEC starts a price war with the US - Vox
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    Re: Should we temporarily subsidize oil shale production in response to OPEC

    No, we should release oil out of the strategic reserves to maintain lower prices to really stick it to OPEC.

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    Re: Should we temporarily subsidize oil shale production in response to OPEC

    I would have thought this move to be expected from OPEC. No, I dont think we should subsidize oil producers.
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    Re: Should we temporarily subsidize oil shale production in response to OPEC

    Quote Originally Posted by SouthernDemocrat View Post
    OPEC is currently using their market power to engage in a price war with the United States in the hopes that it will put our tight oil suppliers out of business. If oil prices drop to a point that oil shale production is no longer profitable (below 60 dollars a barrel), do you think the United States should temporarily subsidize producers in order to keep that production and all of the infrastructure supporting it online for when oil prices inevitably rise again?

    Oil prices keep plummeting as OPEC starts a price war with the US - Vox
    Actually this not true. OPEC cant manipulate the prices anymore .. hell it has not been able to do that for decades. What you should be worried about is the speculators who control 60-70 of the market and are driving down prices at the moment. Some think it is to test the break-even level of US shale oil production.

    Blaming OPEC is the go to excuse these days and it works because people dont realize the power speculators have gotten over commodities and actually think that OPEC, who does not even produce a majority of oil on the planet, can in fact manipulate prices in this way. They cant even agree internally and have not been able for years.
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    Re: Should we temporarily subsidize oil shale production in response to OPEC

    Quote Originally Posted by Declan View Post
    No, we should release oil out of the strategic reserves to maintain lower prices to really stick it to OPEC.
    Given the amount of instability in the Middle East right now, I think that could be a bad idea. We need those reserves in the event that it just completely blows up over there and there are massive supply disruptions as a result. Moreover, by releasing those strategic oil reserves into the market, we only make the situation worse for domestic producers. The Saudis can profitably produce oil at very low oil prices, we can't.
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    Re: Should we temporarily subsidize oil shale production in response to OPEC

    Quote Originally Posted by PeteEU View Post
    Actually this not true. OPEC cant manipulate the prices anymore .. hell it has not been able to do that for decades. What you should be worried about is the speculators who control 60-70 of the market and are driving down prices at the moment. Some think it is to test the break-even level of US shale oil production.

    Blaming OPEC is the go to excuse these days and it works because people dont realize the power speculators have gotten over commodities and actually think that OPEC, who does not even produce a majority of oil on the planet, can in fact manipulate prices in this way. They cant even agree internally and have not been able for years.
    I agree that speculators manipulate the market a lot, but they can't do it indefinitely. They can cause temporary spikes and declines in oil prices, but eventually market fundamentals still rules out. If you have a glut of supply, eventually oil prices will drop no matter what the speculators do. If you have more demand than supply, eventually oil prices will spike no matter what the speculators do.
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    Re: Should we temporarily subsidize oil shale production in response to OPEC

    Quote Originally Posted by SouthernDemocrat View Post
    I agree that speculators manipulate the market a lot, but they can't do it indefinitely. They can cause temporary spikes and declines in oil prices, but eventually market fundamentals still rules out.
    Depends if there is collusion... and we have seen that there is. LIBOR and other cases.

    If you have a glut of supply, eventually oil prices will drop no matter what the speculators do. If you have more demand than supply, eventually oil prices will spike no matter what the speculators do.
    We have had more supply than demand for years and yet prices have remained high and gone higher. Why? Speculation and manipulation. When a market like oil, is 60-70% run by speculators, then "normal market forces" are taken out of the picture.
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    Re: Should we temporarily subsidize oil shale production in response to OPEC

    Quote Originally Posted by SouthernDemocrat View Post
    Given the amount of instability in the Middle East right now, I think that could be a bad idea. We need those reserves in the event that it just completely blows up over there and there are massive supply disruptions as a result. Moreover, by releasing those strategic oil reserves into the market, we only make the situation worse for domestic producers. The Saudis can profitably produce oil at very low oil prices, we can't.
    So? They will run out of oil before we will. We do not have to sell on the international markets to maintain our oil producing capacity. We can just change our laws to alter the markets if need be, effectively nationalizing domestic production and consumption. Money is ephemeral. Natural resources are the only thing that matter and they only have 1.

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    Re: Should we temporarily subsidize oil shale production in response to OPEC

    Quote Originally Posted by SouthernDemocrat View Post
    Given the amount of instability in the Middle East right now, I think that could be a bad idea. We need those reserves in the event that it just completely blows up over there and there are massive supply disruptions as a result. Moreover, by releasing those strategic oil reserves into the market, we only make the situation worse for domestic producers. The Saudis can profitably produce oil at very low oil prices, we can't.
    There is no more instability in the Middle East than there was 20 years. Iraq is a mess now and then. Syria is insignificant in the world oil market. That leaves Iran and the other Gulf Nations and they are pretty much the same. Then you have Libya as the only real change but even they are producing oil now days.
    PeteEU

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    Re: Should we temporarily subsidize oil shale production in response to OPEC

    Quote Originally Posted by Declan View Post
    So? They will run out of oil before we will. We do not have to sell on the international markets to maintain our oil producing capacity. We can just change our laws to alter the markets if need be, effectively nationalizing domestic production and consumption. Money is ephemeral. Natural resources are the only thing that matter and they only have 1.
    I think you are unfortunately ignorant of the economics of oil production. It costs us a lot more to produce our tight oil than it does OPEC to produce oil. If we tried to rely just on our domestic oil production all it would accomplish is us paying a lot more for gas at the pump than we ever have before and thus destroying our economy in the process.
    "You're the only person that decides how far you'll go and what you're capable of." - Ben Saunders (Explorer and Endurance Athlete)

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