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Should we temporarily subsidize oil shale production in response to OPEC

Should we temporarily subsidize domestic oil shale production in response to OPEC?

  • Total voters
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Where's all that oil we stole in the War for Oil? I'm disappointed.
 
It is in the giant worldwide bucket of oil that effects worldwide oil prices.
American said:
Where's all that oil we stole in the War for Oil? I'm disappointed.
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mak2 said:
It is in the giant worldwide bucket of oil that effects worldwide oil prices.
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Bull****, we fought that war for oil, is what I heard. Now we're suppose to reap the benefits.

iraq-oil-war.jpg
 
A friend of mine spent his whole life in the oil buisness. He told me once over a couple of beers to look at the world wide oil supply as a big bucket. It dont mean diddly where it comes from, it just matters how much is in the bucket. The only costs added are transportation costs, it has to be refined no matter what. The US could very eaisly and probably is manipulating the oil supply in one way or another. It does not have to come here to effect our supply. By the way, try not to call BS on stuff you dont have the most basic understanding of.
American said:
Bull****, we fought that war for oil, is what I heard. Now we're suppose to reap the benefits.

iraq-oil-war.jpg
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mak2 said:
A friend of mine spent his whole life in the oil buisness. He told me once over a couple of beers to look at the world wide oil supply as a big bucket. It dont mean diddly where it comes from, it just matters how much is in the bucket. The only costs added are transportation costs, it has to be refined no matter what. The US could very eaisly and probably is manipulating the oil supply in one way or another. It does not have to come here to effect our supply. By the way, try not to call BS on stuff you dont have the most basic understanding of.
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You don't pick up on sarcasm easily, do you?
 
Sorry. I am funny as hell, but often it is lost on the internet. I will pay more attention.
American said:
You don't pick up on sarcasm easily, do you?
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To play the devils advocate here, the problem is we have private domestic oil producers competing against a cartel of largely state owned oil producers. It is in our national interest to maintain production and long term investment our tight oil reserves (shale oil). However, because we are competing against state owned oil companies with OPEC, its an unfair fight as they can afford to draw on their treasury reserves to float their state owned oil companies and temporarily depress worldwide oil prices and possibly put our domestic tight oil production out of business. Therefore, it could make sense for the government to back some short term interest free loans or something along those lines to keep those domestic producers in business long enough to wait out OPEC. Once OPEC sees that we will not allow them to destroy our domestic oil production industry, they will have no incentive to take short term losses on their end in an attempt to manipulate the market and gain market share.
 
SouthernDemocrat said:
To play the devils advocate here, the problem is we have private domestic oil producers competing against a cartel of largely state owned oil producers. It is in our national interest to maintain production and long term investment our tight oil reserves (shale oil). However, because we are competing against state owned oil companies with OPEC, its an unfair fight as they can afford to draw on their treasury reserves to float their state owned oil companies and temporarily depress worldwide oil prices and possibly put our domestic tight oil production out of business. Therefore, it could make sense for the government to back some short term interest free loans or something along those lines to keep those domestic producers in business long enough to wait out OPEC. Once OPEC sees that we will not allow them to destroy our domestic oil production industry, they will have no incentive to take short term losses on their end in an attempt to manipulate the market and gain market share.
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The problem is far more complex than that, but I can point out a couple of issues with the notion you were going with.

Right off the top shale oil does not represent all our domestic oil extraction capabilities. At the same time I would argue that we have much bigger issues with oil refinement and regulation intentions right here at home causing more headwind against energy independence than other factors. As a nation we have experienced a great deal of legislative intentions over the years for our oil production, often causing our own problems or removing large deposits (of many kinds) from exploration and extraction.

With shale oil specifically, there is a legitimate US interest but we have inherent complications. Deposits of shale oil exist in plenty of locations around the planet but some 60% to 70% (depending upon source you like) of the worlds shale oil deposits are right here in the US. That is the interest. The problem is the term shale oil is a bit of a misnomer. Shale oil is basically a fine grain rock and takes intensive extraction and refinement energy processes to turn into something along the lines of oil. That is one of many reasons production and extraction makes the break even price for shale oil so high. Truth be known we are seeing today a repeat of history. Back in the early 1980s, Exxon got bit in the arse by falling oil prices in conjunction with their shale oil projects in Colorado, losing some $4 to $5 billion in deals walked away from. Those were actual drilling in the ground projects brought to a halt.

What we are seeing today is what we have seen before, and similar arguments were made back then on how to keep shale oil production in conjunction with other type oil productions with far less break even prices. Investment dollars into shale oil project need either assurance of oil price or assurance of "help" if oil continues to stay below $80 or even $90 per barrel. I have personally seen prospectuses written on projects all over this nation suggesting if oil can maintain $100 per barrel over a long term then there is long term return, without everyone walks away literally leaving the equipment on the property until price levels can be maintained over a sustainable period.

Personally I see no reason to do this today. Those shale oil deposits are not going anywhere and at some point down the line there will be an economic reason to go after shale oil. You have to understand at these quick price drops there will be even some oil sands projects walked away from. Today we have enough alternatives right here in the US to keep going with domestic extraction and production. Our present problem is the political will up in DC to allow that to happen including refinement restrictions and of course EPA restrictions. Subsidies on top of the existing mess would be a disaster.
 
Oil producers are the last people who need subsidies. How about we enjoy the low gas prices instead of trying to inflate them again?
 
Lakryte said:
Oil producers are the last people who need subsidies. How about we enjoy the low gas prices instead of trying to inflate them again?
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I've read stories about how falling gas prices are actually a bad thing for the economy, and while I'm sure there are some precautions that need to be maintained, I'm having a hard time feeling bad about it.
 
SouthernDemocrat said:
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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I'd rather see greater subsidies on electric cars and if we had the money, buying up domestic oil that can be used to increase the level of the US oil reserve. IMO the best thing to do is do some permanent damage to OPEC by getting more cars on the roads that don't require oil, help advance their development and their acceptance. The money being spent on electric cars, the less be have to spend on ISIS, Al Qaeda, etc. and at the same time the more rapidly the technology improves and in time production costs go down (see the cell phone, PC, HDTV, and so on.)
 
Smeagol said:
I'd rather see greater subsidies on electric cars and if we had the money, buying up domestic oil that can be used to increase the level of the US oil reserve. IMO the best thing to do is do some permanent damage to OPEC by getting more cars on the roads that don't require oil, help advance their development and their acceptance. The money being spent on electric cars, the less be have to spend on ISIS, Al Qaeda, etc. and at the same time the more rapidly the technology improves and in time production costs go down (see the cell phone, PC, HDTV, and so on.)
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For the life of me, I do not understand why big oil doesn't invest in and perfect electric cars.

It'd be long-term thinking, though, and most corporations have no vision beyond the next quarter.
 
Why don't we let the market do as the market does.
 
No.

The IPAA has been saying since the beginning of the year that tight oil production will remain profitable for most producers as far down as the $40-$50 bbl level.

Those that can't stand that kind of heat will have to get out of the kitchen and will be swallowed up by those that can.

That's how a free market works and it'll serve to strengthen the remaining producers and make them still better capable to compete with OPEC.

While some OPEC nations can easily function at $40-$50 bbl price levels others, Iran and Venezuela in particular, simply can't. Not for long.

Those OPEC nations that are essentially living "paycheck to paycheck" off of oil revenue will be hurt a great deal more than the U.S.

By playing OPEC's game it's possible that we may even be able to break the cartel.
 
radcen said:
For the life of me, I do not understand why big oil doesn't invest in and perfect electric cars.

It'd be long-term thinking, though, and most corporations have no vision beyond the next quarter.
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They are, but get real, they are in the energy business, not the car business. The vast majority of R&D dollars they have to spend go towards finding new reserves. They know every new barrel they find and sell is one barrel closer to liquidation of their company.
 
ocean515 said:
They are, but get real, they are in the energy business, not the car business. The vast majority of R&D dollars they have to spend go towards finding new reserves. They know every new barrel they find and sell is one barrel closer to liquidation of their company.
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Yes and no. They are in the money making business, hence my inclusion regarding long-term thinking. Besides, many corporations diversify. Nothing says they are limited to oil only.
 
iacardsfan said:
Why don't we let the market do as the market does.
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Once again to play the Devils advocate, the problem with that is that it's not a free market. You have private companies here competing with state owned oil companies in OPEC.
 
radcen said:
For the life of me, I do not understand why big oil doesn't invest in and perfect electric cars.

It'd be long-term thinking, though, and most corporations have no vision beyond the next quarter.
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There's still $100 Trillion worth of oil still in the ground and because of this big oil wants to declare electric cars "not ready yet," which is completely understandable. However some people, namely Tesla Motors are proving to everyone they're wrong.
 
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