Two words for high refined products price—crack spread.

https://streetwiseprofessor.com/congres ... e-edition/

The modern world runs on four commodities—ammonia, concrete, plastics and steel. All require vast amounts of petroleum for feedstock and energy. Ain’t going away soon, we need more refinery capacity and we needed the investments a decade ago.

As I've mentioned before - a lot of refineries are not owned by the same companies who drill for oil. They are immensely expensive to build and operate. And environmentalist will fight you every step of the way to build a new one or expand an existing one. From the https://www.eia.gov/tools/faqs/faq.php?id=29&t=6

Excerpt -
"The newest refinery in the United States is the Targa Resources Corporation's 35,000 barrels per calendar day (b/cd) condensate splitter in Channelview, Texas, which began operating in 2019. Condensate splitters are distillation units that process condensate, which is lighter than crude oil. Splitter capacity is included as atmospheric distillation units in U.S. Energy Information Administration (EIA) data.

However, the newest refinery with significant downstream unit capacity is Marathon's facility in Garyville, Louisiana. That facility came online in 1977 with an initial atmospheric distillation unit capacity of 200,000 b/cd, and as of January 1, 2021, it had a capacity of 578,000 b/cd."


And for fans of this web site - the airline industry including airports continue to plan on massive expansions of capacity. What they plan on using for fuel is really beyond me.

And the idea that EV's will suddenly replace the ICE - try finding an EV available for delivery this week, or even this month.

GalaxyFlyer wrote:

Two words for high refined products price—crack spread.

https://streetwiseprofessor.com/congres ... e-edition/

The modern world runs on four commodities—ammonia, concrete, plastics and steel. All require vast amounts of petroleum for feedstock and energy. Ain’t going away soon, we need more refinery capacity and we needed the investments a decade ago.

This is exactly what the "keep it in ground" crowd misses - petroleum products are used as a raw material in many industrial processes, including materials used in new EV's, high speed trains, modern efficient aircraft like the A350 or 787, etc... It is not being wasted in some dude's lifted F-350 he uses to drive to the grocery store usually.

As I've been harping on a lot, much of the problem is Wall Street shareholders demanding "capital discipline" (read: Ukraine War profiteering), but these ignorant NIMBYist attitudes are the other big issue.

I would think a brand new facility is way more compliant with EPA regs than one from '77 also. Shooting ourselves in the foot much?

lightsaber wrote:

Which just leads to your point. This is a self fulfilling prophecy. Hopefully we build enough nuclear plants for charging the EVs to avoid the carbon emissions. I am of the opinion solar and wind do not provide the power when people will charge EVs.

I'm all for that and have in fact just voted for a president that has announced a plan to build 14 new 1650MW reactors, as well as investment into small modular reactors.

Solar and wind can still play a significant role, if people and companies play their part. For example all buildings and locations suitable for PV panels should have them, with charging points to go with them.

That's the case at my workplace (for a good reason, as my company provides such solutions), several MW of power are produced, and there are 300 charging points for cars in the car park below the campus.

Wind being less predictable, using it in part to make hydrogen might be the way to go. Hydrogen facilities would also be able to "burn" any excess electricity from PV, if other forms of storage are at capacity.

More and more people and homes will also have battery packs. With cars in V2G mode as a backup.

Can you imagine what the cost to build a nuclear plant would now be? Even in Europe, material and labor costs are skyrocketing.

In January of this year the only new nuke under construction in the US is as noted below (from Goggle search and this overrun was before today's material/labor costs) -

"Once estimated to cost $14 billion, the price tag for two new reactors at Georgia Power's Plant Vogtle property has climbed past $30 billion, and both units will be more than six years late in coming online, the institute reported after combing through public records including testimony at a Georgia Public Service ..."

"Vogtle’s two new nuclear reactors are six years late and at least $16 billion over their original budget. The plant will have no direct carbon footprint, but critics say there are much cheaper ways to reduce emissions." https://insideclimatenews.org/news/2101 ... e-nuclear/

Yes my company is building several nuclear plants in France, UK, Finland, China, and the cost overruns and delays are huge. The main issue is that we had stopped building them for 20 years, and a lot of expertise was lost. That's why president Macron announced the construction of 6+8 reactors, so that the industry can plan investment, recruitment etc. for several decades.

SEAorPWM wrote:

GalaxyFlyer wrote:

Two words for high refined products price—crack spread.

https://streetwiseprofessor.com/congres ... e-edition/

The modern world runs on four commodities—ammonia, concrete, plastics and steel. All require vast amounts of petroleum for feedstock and energy. Ain’t going away soon, we need more refinery capacity and we needed the investments a decade ago.

This is exactly what the "keep it in ground" crowd misses - petroleum products are used as a raw material in many industrial processes, including materials used in new EV's, high speed trains, modern efficient aircraft like the A350 or 787, etc... It is not being wasted in some dude's lifted F-350 he uses to drive to the grocery store usually.

As I've been harping on a lot, much of the problem is Wall Street shareholders demanding "capital discipline" (read: Ukraine War profiteering), but these ignorant NIMBYist attitudes are the other big issue.

I would think a brand new facility is way more compliant with EPA regs than one from '77 also. Shooting ourselves in the foot much?

Of course fuel is wasted in the F-350. That's why a carbon tax is needed, with an increasing level known in advance for the next 30 years. So that only oil that is absolutely needed is used.

Aesma wrote:

Yes my company is building several nuclear plants in France, UK, Finland, China, and the cost overruns and delays are huge. The main issue is that we had stopped building them for 20 years, and a lot of expertise was lost. That's why president Macron announced the construction of 6+8 reactors, so that the industry can plan investment, recruitment etc. for several decades.

SEAorPWM wrote:

GalaxyFlyer wrote:

Two words for high refined products price—crack spread.

https://streetwiseprofessor.com/congres ... e-edition/

The modern world runs on four commodities—ammonia, concrete, plastics and steel. All require vast amounts of petroleum for feedstock and energy. Ain’t going away soon, we need more refinery capacity and we needed the investments a decade ago.

This is exactly what the "keep it in ground" crowd misses - petroleum products are used as a raw material in many industrial processes, including materials used in new EV's, high speed trains, modern efficient aircraft like the A350 or 787, etc... It is not being wasted in some dude's lifted F-350 he uses to drive to the grocery store usually.

As I've been harping on a lot, much of the problem is Wall Street shareholders demanding "capital discipline" (read: Ukraine War profiteering), but these ignorant NIMBYist attitudes are the other big issue.

I would think a brand new facility is way more compliant with EPA regs than one from '77 also. Shooting ourselves in the foot much?

Of course fuel is wasted in the F-350. That's why a carbon tax is needed, with an increasing level known in advance for the next 30 years. So that only oil that is absolutely needed is used.

Agreed. Overall, France is really getting the energy mixture right, in my opinion. The US is a lost cause, despite the fact we had some of the best nuke plants in the world at one time and have a large chunk of the country that gets lots of sunlight.

I read somewhere that if all the steel lights in the states were converted to LED, two mega coal plants could be shutdown. How hard would that be?
For $30 billion dollars how many high efficiency furnaces or AC could be bought? 6 million.

MohawkWeekend wrote:

I read somewhere that if all the steel lights in the states were converted to LED, two mega coal plants could be shut down. How hard would that be?
For $30 billion dollars how many high-efficiency furnaces or AC could be bought? 6 million.

I am sure there are quite a low-hanging fruits like those above. It probably needs public pressure at local levels.

Subject of this thread are gazoline prices, so please stay on topic, thanks.

It looks like the high prices are really hitting the demand in the US.

Will be interesting to see how this plays out.


https://www.crainscleveland.com/economi ... gas-prices

Demand on a four-week rolling basis just tumbled to the lowest level for this time of year since 2013, not counting 2020 when consumption was shattered due to the pandemic. Compared with 2021 levels, demand is down nearly 5%, data from the Energy Information Administration (EIA) show.

Something is not adding up with the EIA's latest report "Summary of Weekly Petroleum Data for the week ending May 20, 2022. https://ir.eia.gov/wpsr/wpsrsummary.pdf

In that report "gasoline production last week averaged 9.4 million barrels per day" and "total motor gasoline inventories decreased by 0.5 million barrels last week and are about 8% below the five year average for this time of year inventories"

Now that would explain why prices are still going up. The chart above shows demand at maybe 8.9 mmbd. So where is the missing 500,000 bbls per day of gasoline production? Exports? Or is the above chart incorrect?

MohawkWeekend wrote:

Something is not adding up with the EIA's latest report "Summary of Weekly Petroleum Data for the week ending May 20, 2022. https://ir.eia.gov/wpsr/wpsrsummary.pdf

In that report "gasoline production last week averaged 9.4 million barrels per day" and "total motor gasoline inventories decreased by 0.5 million barrels last week and are about 8% below the five year average for this time of year inventories"

Now that would explain why prices are still going up. The chart above shows demand at maybe 8.9 mmbd. So where is the missing 500,000 bbls per day of gasoline production? Exports? Or is the above chart incorrect?

Or oil companies taking profits? We are a capitalist society in the United States, after all...

Aesma wrote:

Of course fuel is wasted in the F-350. That's why a carbon tax is needed, with an increasing level known in advance for the next 30 years. So that only oil that is absolutely needed is used.

No. If the F350 is used as intended, not a drop of fuel is wasted. And I can assure you that the wast majority of F350's are used as intended. It is the smaller trucks that are used as (luxury) hobby vehicles.

What's interesting though is that you can't even see that the gasoline prices are as high as they never been. I had to take a cab last Saturday from YYZ to home as my YYZ-YXU flight was cancelled and I didn't want to continue wasting my long weekend. The driver kept his speed at a level that does not interest cops; 118km/h ( the speed limit in Ontario is 100 km/h (!). Just about everybody and his brother was passing us, not caring about fuel economy.
BTW, does anybody know an AWD midsize hybrid sedan available in Canada?

https://www.wsj.com/articles/why-shale- ... 1653274423

This article from Wall Street Journal explain why shale oil drillers aren't increasing capacity.

TLDR: Managements of these companies were rewarded to drill as much oil capacity as possible and thus they were expanding at all cost even when they are losing money, but in the past two years this is no longer sustainable, so management are now being asked to actually produce profit for their companies, hence the focus is now improving efficiency/reducing cost of operation, instead of expanding their scale/volume.

MohawkWeekend wrote:

Something is not adding up with the EIA's latest report "Summary of Weekly Petroleum Data for the week ending May 20, 2022. https://ir.eia.gov/wpsr/wpsrsummary.pdf

In that report "gasoline production last week averaged 9.4 million barrels per day" and "total motor gasoline inventories decreased by 0.5 million barrels last week and are about 8% below the five year average for this time of year inventories"

Now that would explain why prices are still going up. The chart above shows demand at maybe 8.9 mmbd. So where is the missing 500,000 bbls per day of gasoline production? Exports? Or is the above chart incorrect?

Historically I know the US exported diesel and imported gasoline, for example with France doing the reverse. Now in France diesel cars are basically being banned so little by little more gasoline and less diesel fuel is needed.

WildcatYXU wrote:

does anybody know an AWD midsize hybrid sedan available in Canada?

Only car I can think of that even remotely comes close on the current market is the Prius AWD. If you want an SUV or CUV or a non-AWD car, then the choices open up.

BMW 530e xDrive

Aesma wrote:

BMW 530e xDrive

Was trying to get the specs on that one through BMW.CA, was having trouble getting the pages to load though so I wasn't sure if you could get the xDrive as a hybrid here or not.

I found a page calling it exactly that (so with AWD) on BMW Canada website.

It's not exactly economic, though. A compliance car for some EU countries, that have since changed their laws.

Aesma wrote:

I found a page calling it exactly that (so with AWD) on BMW Canada website.

Yeah, I saw that, I just can't get the actual specs on it.

ACDC8 wrote:

Aesma wrote:

BMW 530e xDrive

Was trying to get the specs on that one through BMW.CA, was having trouble getting the pages to load though so I wasn't sure if you could get the xDrive as a hybrid here or not.

So far I was only thinking about the 330e. I considered the 530e being beyond our reach. However, it seems like the 530e base model could be doable. The problem is that it is impossible to find out how is the vehicle equipped. Perhaps it is time to visit a dealer.
BTW, there is a beautiful mistake in the configuration page. It is showing a manual transmission as an option.

MohawkWeekend wrote:

Something is not adding up with the EIA's latest report "Summary of Weekly Petroleum Data for the week ending May 20, 2022. https://ir.eia.gov/wpsr/wpsrsummary.pdf

In that report "gasoline production last week averaged 9.4 million barrels per day" and "total motor gasoline inventories decreased by 0.5 million barrels last week and are about 8% below the five year average for this time of year inventories"

Now that would explain why prices are still going up. The chart above shows demand at maybe 8.9 mmbd. So where is the missing 500,000 bbls per day of gasoline production? Exports? Or is the above chart incorrect?

They are still producing for predicted summer usage. This is memorial day weekend after all. And if you look at the graph there is a consumption gap that occurs at the start of summer. .

casinterest wrote:

MohawkWeekend wrote:

Something is not adding up with the EIA's latest report "Summary of Weekly Petroleum Data for the week ending May 20, 2022. https://ir.eia.gov/wpsr/wpsrsummary.pdf

In that report "gasoline production last week averaged 9.4 million barrels per day" and "total motor gasoline inventories decreased by 0.5 million barrels last week and are about 8% below the five year average for this time of year inventories"

Now that would explain why prices are still going up. The chart above shows demand at maybe 8.9 mmbd. So where is the missing 500,000 bbls per day of gasoline production? Exports? Or is the above chart incorrect?

They are still producing for predicted summer usage. This is memorial day weekend after all. And if you look at the graph there is a consumption gap that occurs at the start of summer. .

I think it must be exports because gasoline inventories went down and are 8% below average. Which by the way is not a good thing going into the summer driving season. Russia and Europe used to supply a lot of gasoline to the Western Hemisphere market. I think US refineries are making up the difference with exports to Latin and South America. Probably Canada too.

WildcatYXU wrote:

ACDC8 wrote:

Aesma wrote:

BMW 530e xDrive

Was trying to get the specs on that one through BMW.CA, was having trouble getting the pages to load though so I wasn't sure if you could get the xDrive as a hybrid here or not.

So far I was only thinking about the 330e. I considered the 530e being beyond our reach. However, it seems like the 530e base model could be doable. The problem is that it is impossible to find out how is the vehicle equipped. Perhaps it is time to visit a dealer.
BTW, there is a beautiful mistake in the configuration page. It is showing a manual transmission as an option.

Good luck finding any electric or hybrid vehicle in stock. Just traded in my very efficient but poorly running 7 year old Ford Focus (2L) for a 3 year old Honda Fit with a 1.5 liter engine. The Fit has one of the highest efficiency ratings of any ICE vehicle. There were only 4 new cars at the Honda dealership and they were keeping them so people could see what could be ordered.

MohawkWeekend wrote:

Good luck finding any electric or hybrid vehicle in stock. Just traded in my very efficient but poorly running 7 year old Ford Focus (2L) for a 3 year old Honda Fit with a 1.5 liter engine. The Fit has one of the highest efficiency ratings of any ICE vehicle. There were only 4 new cars at the Honda dealership and they were keeping them so people could see what could be ordered.

That's another reason to act and order one. BMW Canada's web site is showing one 530e and several 330e's in stock. I'll take Mrs. Wildcat to a dealer to see both models, as the new car will be her daily driver. If it would be my car, I'd look at a completely different vehicle. But I currently don't need a car. And if everything goes well, I won't need one for many years to come.

MohawkWeekend wrote:

I read somewhere that if all the steel lights in the states were converted to LED, two mega coal plants could be shutdown.[...]

As far as public illumination is concerned, this is just a wide-spread superstition. Those commonly used high pressure soda vapor lamps have nothing in common with ordinary bulbs and they are more efficient than LEDs. Although, the yellowish light they are emitting is quite ugly.

Kilopond wrote:

MohawkWeekend wrote:

I read somewhere that if all the steel lights in the states were converted to LED, two mega coal plants could be shutdown.[...]

As far as public illumination is concerned, this is just a wide-spread superstition. Those commonly used high pressure soda vapor lamps have nothing in common with ordinary bulbs and they are more efficient than LEDs. Although, the yellowish light they are emitting is quite ugly.

So to keep the thread open and not closed by the moderators - street lighting has limited impact on gasoline prices.

I could not find a government or private research report that supports your statement on the internet. A link?

"Sky-high gas prices aren’t stopping Americans from hitting the road this summer". https://www.marketwatch.com/story/sky-h ... mmer-11653

Article confirms that exports account for the missing 500,000 bbl per day of gasoline production we discussed earlier. If this plays out like the author of this article claims, we could be looking at $6 to $7 a gallon for gasoline in many parts of the country.

I assume Jet A will be even higher. How in the world will airlines survive that when they've sold so many tickets for summer travel already?

c933103 wrote:

https://www.wsj.com/articles/why-shale-drillers-are-pumping-out-dividends-instead-of-more-oil-and-gas-11653274423

This article from Wall Street Journal explain why shale oil drillers aren't increasing capacity.

TLDR: Managements of these companies were rewarded to drill as much oil capacity as possible and thus they were expanding at all cost even when they are losing money, but in the past two years this is no longer sustainable, so management are now being asked to actually produce profit for their companies, hence the focus is now improving efficiency/reducing cost of operation, instead of expanding their scale/volume.

https://www.bloomberg.com/news/articles ... -100-crude

It's a pay wall but you can get around it. It says that the break even for US Shale is 60-70 USD/barrel, so the margins are most certainly there.

This is why I'm not crying for the the consumer - if we want to live in an economy driven by shareholder capitalism, we have no reason to complain. Either call out this investor kleptocracy or be quiet.

SEAorPWM wrote:

c933103 wrote:

https://www.wsj.com/articles/why-shale-drillers-are-pumping-out-dividends-instead-of-more-oil-and-gas-11653274423

This article from Wall Street Journal explain why shale oil drillers aren't increasing capacity.

TLDR: Managements of these companies were rewarded to drill as much oil capacity as possible and thus they were expanding at all cost even when they are losing money, but in the past two years this is no longer sustainable, so management are now being asked to actually produce profit for their companies, hence the focus is now improving efficiency/reducing cost of operation, instead of expanding their scale/volume.

https://www.bloomberg.com/news/articles ... -100-crude

It's a pay wall but you can get around it. It says that the break even for US Shale is 60-70 USD/barrel, so the margins are most certainly there.

This is why I'm not crying for the the consumer - if we want to live in an economy driven by shareholder capitalism, we have no reason to complain. Either call out this investor kleptocracy or be quiet.

If it is desired to drill at return that cannot satisfy demand for profit from those who fund such operation, isn't the only viable alternative being nationalization?

There are some in the US Congress who would call for that but it isn't going to happen. Nationalization would be a disaster. Now breaking up the conglomerates that were created during the Clinton Administration has some merit (Exxon Mobil, BP Amoco Texaco Chevron, Conoco Phillips)

It's not the BP's and Exxon's doing the bulk of drilling or refining in the US, it's a bunch of medium sized independents. And they have proven time and time again to do the job well. US oil and gas production is already increasing, refineries are running all out

Leading Independent Drillers
Anadarko Petroleum Corporation (APC)
Marathon Oil
Repsol
EOG Resources
Hess
Pioneer Natural Resources
Apache
Hilcorp
Devon Energy
Source: Rigzone.com

Top 10 Refiners US (wikipedia)
Rank Corporation Barrels/Day No. of US Refineries States
1 Marathon Petroleum 3,024,715 16 AK, CA, IL, KY, LA, MI, MN, ND, NM, OH, TX, UT, WA
2 Valero Energy. 2,181,300 13. CA, LA, OK, TN, TX
3 Phillips 66 1,919,300 10 CA, IL, LA, MT, NJ, OK, TX, WA
4 Exxon Mobil 1,732,124 5 IL, LA, MT, TX
5 Chevron 1,037,660 5 CA, MS, TX, UT
6 PBF Energy. 1,021,400 6 CA, DE, LA, NJ, OH
7 Shell 810,645 4.5. AL, LA, TX, WA
8 BP 756,000. 3.5 IN, OH, WA
9 PDV 754,765 3 IL, LA, TX
10 Koch 640,000 2 MN, TX
11 Saudi Aramco. 607,000 1 TX

MohawkWeekend wrote:

There are some in the US Congress who would call for that but it isn't going to happen. Nationalization would be a disaster. Now breaking up the conglomerates that were created during the Clinton Administration has some merit (Exxon Mobil, BP Amoco Texaco Chevron, Conoco Phillips)

It's not the BP's and Exxon's doing the bulk of drilling or refining in the US, it's a bunch of medium sized independents. And they have proven time and time again to do the job well. US oil and gas production is already increasing, refineries are running all out

Leading Independent Drillers
Anadarko Petroleum Corporation (APC)
Marathon Oil
Repsol
EOG Resources
Hess
Pioneer Natural Resources
Apache
Hilcorp
Devon Energy
Source: Rigzone.com

Top 10 Refiners US (wikipedia)
Rank Corporation Barrels/Day No. of US Refineries States
1 Marathon Petroleum 3,024,715 16 AK, CA, IL, KY, LA, MI, MN, ND, NM, OH, TX, UT, WA
2 Valero Energy. 2,181,300 13. CA, LA, OK, TN, TX
3 Phillips 66 1,919,300 10 CA, IL, LA, MT, NJ, OK, TX, WA
4 Exxon Mobil 1,732,124 5 IL, LA, MT, TX
5 Chevron 1,037,660 5 CA, MS, TX, UT
6 PBF Energy. 1,021,400 6 CA, DE, LA, NJ, OH
7 Shell 810,645 4.5. AL, LA, TX, WA
8 BP 756,000. 3.5 IN, OH, WA
9 PDV 754,765 3 IL, LA, TX
10 Koch 640,000 2 MN, TX
11 Saudi Aramco. 607,000 1 TX

.... As you mentioned, it isn't those conglomerates doing the drilling, why do you think breaking them up would affect the volume of drilling?

c933103 wrote:

SEAorPWM wrote:

c933103 wrote:

https://www.wsj.com/articles/why-shale-drillers-are-pumping-out-dividends-instead-of-more-oil-and-gas-11653274423

This article from Wall Street Journal explain why shale oil drillers aren't increasing capacity.

TLDR: Managements of these companies were rewarded to drill as much oil capacity as possible and thus they were expanding at all cost even when they are losing money, but in the past two years this is no longer sustainable, so management are now being asked to actually produce profit for their companies, hence the focus is now improving efficiency/reducing cost of operation, instead of expanding their scale/volume.

https://www.bloomberg.com/news/articles ... -100-crude

It's a pay wall but you can get around it. It says that the break even for US Shale is 60-70 USD/barrel, so the margins are most certainly there.

This is why I'm not crying for the the consumer - if we want to live in an economy driven by shareholder capitalism, we have no reason to complain. Either call out this investor kleptocracy or be quiet.

If it is desired to drill at return that cannot satisfy demand for profit from those who fund such operation, isn't the only viable alternative being nationalization?

I guess my point is, we need to stop complaining in the US at least (I say this as I've been listening to my fat neighbor idle his 4Runner for the last 5 minutes ).

There are Western consumers who are profiting nicely from this crisis, just look at the comments and "articles" on sites like Seeking Alpha.

Question is, do we want to risk the economic recovery and threaten global security for these enlarged returns? Investors usually don't think about the good of the overall economy or world peace.

[/quote]
.... As you mentioned, it isn't those conglomerates doing the drilling, why do you think breaking them up would affect the volume of drilling?[/quote]

The Super majors that should be broken up used to be major explorers and refiners in the States. When they got bigger, their cost structures went thru the roof. More corporate jets, bigger and fancier headquarters, and bloated C-suites. To cover those higher expenses they had to look outside the US for what are called "elephant" fields.

Exxon for example has basically stopped looking for oil in Alaska and instead made a huge off shore find in Guyana. BP has sold all of it's Alaskan oil fields and most of its US refineries and gas stations. Their costs are just too high to develop US production even with massive layoffs and asset sales. For example, both BP and Exxon failed miserably in developing shale gas and oil reserves the US. The smaller more nimble companies were successful in the US.

IMO just like Boeing and McDonnell Douglas, making big companies even bigger sometimes makes them lose their edge.

SEAorPWM wrote:

Question is, do we want to risk the economic recovery and threaten global security for these enlarged returns? Investors usually don't think about the good of the overall economy or world peace.

Economic recovery/growth, and global security, being threatened by fossil fuel is something happening constantly ever since 1973. Now we actually have two options to exit this scenario. One is exploration and exploitation of unconventional oils like shale oil. Another is non fossil fuel energies.
The risk of expanding unconventional oil drills now, other than climate change risk and risk to be ultimately replaced by other energy sources, is that their costs are still substantially higher than conventional oil sources from other countries. Sure, they are profitable now for the current energy price, but no one would guarantee that the energy pdice stay as high like this for the entire investment and return cycle. There's risk that like after 1970s oil crisis that triggered the construction of nuclear plants, that the oil price ultimately fall back relative to inflation, and as a result the investment can no longer be regained. It is not like providers can put in the capitals and equipment only when the oil price is high and then withdrawn all of them after it fall back. That's why they are now focusing on ways to lower the cost. Only when the cost is lowered enough to be profitable even in low oil price environment like those that are in the previous few years, it can be made sure that their investment won't go down the drain, as have happened in the past two years causing a lot of shale oil companies in the US to bankrupt. And such record of shale oil companies in the past two years is why investors demand financial return of their investment, as otherwise those companies could bankrupt and those investors could lost everything, as have been repeatedly occurred in 2020-2021.

MohawkWeekend wrote:

.... As you mentioned, it isn't those conglomerates doing the drilling, why do you think breaking them up would affect the volume of drilling?

The Super majors that should be broken up used to be major explorers and refiners in the States. When they got bigger, their cost structures went thru the roof. More corporate jets, bigger and fancier headquarters, and bloated C-suites. To cover those higher expenses they had to look outside the US for what are called "elephant" fields.

Exxon for example has basically stopped looking for oil in Alaska and instead made a huge off shore find in Guyana. BP has sold all of it's Alaskan oil fields and most of its US refineries and gas stations. Their costs are just too high to develop US production even with massive layoffs and asset sales. For example, both BP and Exxon failed miserably in developing shale gas and oil reserves the US. The smaller more nimble companies were successful in the US.

IMO just like Boeing and McDonnell Douglas, making big companies even bigger sometimes makes them lose their edge.

I don't get what's wrong with large players leaving a field and let the smaller players explore in it after large companies grow bigger and resukted in higher cost for the product or service they provide. Like nowadays IBM no longer make PCs, moved on to server businesses. It's now companies lik Lenovo that sell PCs to individual customers. And I can't see anything wrong? Companies with different expertise and different past experience focus on different market segments, and have a structure that best suite their business needs.

MohawkWeekend wrote:

The Super majors that should be broken up used to be major explorers and refiners in the States. When they got bigger, their cost structures went thru the roof. More corporate jets, bigger and fancier headquarters, and bloated C-suites. To cover those higher expenses they had to look outside the US for what are called "elephant" fields.

Exxon for example has basically stopped looking for oil in Alaska and instead made a huge off shore find in Guyana. BP has sold all of it's Alaskan oil fields and most of its US refineries and gas stations. Their costs are just too high to develop US production even with massive layoffs and asset sales. For example, both BP and Exxon failed miserably in developing shale gas and oil reserves the US. The smaller more nimble companies were successful in the US.

IMO just like Boeing and McDonnell Douglas, making big companies even bigger sometimes makes them lose their edge.

Isn't one advantage of these small companies that they bought fields developed by other small companies that went belly up ?

The argument they made was that they needed to get bigger to compete with the national oil companies of OPEC and Russia. Please.

Instead once they merged, they laid off a ton of really qualified people(myself included) to come up with the cost savings to justify the expense of the merger. They also cut maintenance budgets too and all kinds of bad things happened (but that's another thread). The stock market loved it, the stocks went up and the C-Suite made out like bandits because they are paid in stock options.

Now they (Big Oil) are under more pressure to return more cash to investors instead of building new and improved. (Hey - that's just like Boeing) Big American oil companies used to be innovators of drilling and refining technology. Now can you think of anything they developed recently? Remember the green washing ads Exxon Mobil used to run about algae based fuels. Right. Just around the corner.

I have no problem with small guys buying other small outfits or ones in bankruptcy. But once they get to be a certain size, innovation seems to stop.

Breaking up those mergers IMO would create smaller companies that would be more lean and mean and better able to deliver the products the country and the world needs.

It worked when Standard Oil was broken up at the beginning of the 20th century. IMO it would work now.

What I meant, and I've seen financial articles and videos about it, is that the small guys lost tons of money for their investors, they weren't really financial successes overall. The surviving ones now benefit from "free investment" when buying others in bankruptcy.

MohawkWeekend wrote:

Now they (Big Oil) are under more pressure to return more cash to investors instead of building new and improved. (Hey - that's just like Boeing) Big American oil companies used to be innovators of drilling and refining technology. Now can you think of anything they developed recently? Remember the green washing ads Exxon Mobil used to run about algae based fuels. Right. Just around the corner.

I have no problem with small guys buying other small outfits or ones in bankruptcy. But once they get to be a certain size, innovation seems to stop.

If you read the article I linked, it specifically mentioned it was those smaller drillers that are being made to deliver profit ibstead of quantity - primary reason because of the many example of failure and bankruptcy before them. If they don't focus on.profit then they would be next on the list of bankruptcy once the oil price turn down again. The cost cutting is what they delivered. No one would put money into something that can be certain to end up with bankruptcy with the exception of airlines companies.

Spot on about the airlines!

I totally agree that the all companies need to be profitable.

My posts were directed at the fact that by allowing large oil companies to merge, the combined companies did not become bastions of efficiencies and innovations. It's easy to cut costs but they cut costs too aggressively - not for the good of the company or the country but to deliver on the unreasonable expectations they told Wall Street they would deliver. So you quit drilling so much and production falls, maybe you don't spend enough on maintenance (and your refineries blow up), push your contractors beyond safety standards (and your drilling rig blows up).

But you hit you numbers in those first few years to show shareholders and Wall Street that your worth your obscene pay. It's only later that the lawsuits from the disasters pile up and production falls off. But the C-Suites have already made theirs. The future be damned.

In mid-March, Furnace Creek Fuel and Auto Service had regular fuel available for $8.75 per gallon and diesel for $9.99 per gallon.

As of March 28, the price of fuel at Furnace Creek has risen, now being reported at $8.94 per gallon for regular.

https://www.newsweek.com/why-does-this- ... us-1693078

Time to buy a new 4 digits display !

Aesma wrote:

Time to buy a new 4 digits display !

The Postmillennial was spinning that story a few weeks ago about how some gas stations in Washington State were already doing that but they failed to mention that it was for ultra premium (100 octane plus) which has been hovering around the $10/gallon mark for years.

Took my little gas sipper for a spin yesterday - traffic was heavy and motorcycles were everywhere.

Prices don't seem to be impacting folks too much. Was able to fill up yesterday at $4.25 but this morning all stations seem to be around $4.69 per gallon.

Looks like Citi is starting to sound the warning bells. Not sure it will shake anything until we see demand get crushed as new wells come online.

https://oilprice.com/Energy/Oil-Prices/ ... arrel.html

But it’s all overblown, says Citi’s Ed Morse.

"I'd say it's more in the $70 range than it is in the $120 range," Morse told Bloomberg. "If you look at the fair value for oil, look at the flowing curve. It's exaggerated."

On Wednesday, oil prices continued to rise with the reopening of China’s key financial hub, Shanghai, after two months of lockdowns that had chipped away at fuel demand.

At the same time, more in line with Citi’s $70 oil valuation based on demand, the OPEC+ Joint Technical Committee (JTC) in a Wednesday meeting reduced its global oil demand forecast for 2022 by 200,000 bpd, now expecting oil demand growth to be 3.4 million bpd. This is the second month in a row OPEC has downwardly revised its oil demand growth projections.

I don't really understand what they're saying. "fair value" has to take into account the new reality, with usual patterns completely disrupted, oil/products flows reversing in some cases, etc.

The oil itself might be worth that price, but since it's difficult in some cases to actually get it delivered, then competition between customers make the price go up.

I agree with Aesma - how can you take a couple million barrels of oil and oil products out of the market and expect oil to be a $70 dollars. Products are even worse with the vacation season starting in the Northern Hemisphere.

Sometime those economists are too smart and can't see the forest for the trees.

MohawkWeekend wrote:

I agree with Aesma - how can you take a couple million barrels of oil and oil products out of the market and expect oil to be a $70 dollars. Products are even worse with the vacation season starting in the Northern Hemisphere.

Sometime those economists are too smart and can't see the forest for the trees.

It's a matter of long term value. Oil crashed on overproduction in the past, and right now the companies are shutting down production due to slack in demand. The only saving grace for the oil companies is the current embargos on Russian Oil. If Oil stays high, and production continues to get cut, demand will need to be spurred in order to keep from shutting down wells. That will result in a drop in price. By September/October we will see the prices ease a bunch.

Many of my neighbors are cutting back on travel plans for the summer as prices are through the roof.

will states that are pausing gas taxes cause more harm than good with the loss of revenue for things like road repairs?