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Old 05-31-2022, 11:13 PM   #1
scootro
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Default Who Actually Controls Gas Prices?

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Old 06-01-2022, 07:01 AM   #2
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A bit of a red herring there. Made it to 8:22 before turning this Bill Nye try hard off. He points out things we already know and overlooks the point. Yes we pay a lot for gas because of the price of oil, no shit... and yes we import most of our oil, yup! but why do we import so much?? oh ya because uncle Joe and his best smelling member of that racial jungle he didn't want his crack head kid going to school with did everything they could to keep us out of the oil game. So instead of sending north American oil to our north American refineries, we are buying oil from countries that don't have our best interest in mind. Joe has done everything he can to stop oil production state side. So yes, oil futures prices can be linked to a sitting president stopping the production of American oil, in the same but opposite way that inflation can be linked to that the over printing of money. for fucks sake this is just well crafted propaganda.
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Old 06-01-2022, 08:43 AM   #3
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The market has fundamentally changed with rapidly increasing adoption of EVs and their associated infrastructure. Green energy generation has never been more prevalent or affordable.

These two factors basically indicate the world will never consume as much oil as it does now. Because of this there is little incentive to make capital investments needed to increase supply. These companies are maximizing profit in the short term since the long term outlook is very poor.
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Old 06-01-2022, 09:25 AM   #4
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Originally Posted by scootro View Post
The market has fundamentally changed with rapidly increasing adoption of EVs and their associated infrastructure. Green energy generation has never been more prevalent or affordable.

These two factors basically indicate the world will never consume as much oil as it does now. Because of this there is little incentive to make capital investments needed to increase supply. These companies are maximizing profit in the short term since the long term outlook is very poor.
On the individual consumer side yes, it's trending towards EV... but on the commercial side the whole world still runs on Diesel and needs a fuck ton of it for quite some time.
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Old 06-01-2022, 09:28 AM   #5
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I wanna know how batteries, solar panels and wind power will create the resins and plastics to make 99% of all consumer products? People forget how gasoline/diesel is just a fraction of a barrel of oil…
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Old 06-01-2022, 10:00 AM   #6
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eclectic is fine for city dwellers . but i seriously doubt they will ever pass muster in the country or in the commercial setting. i dont see them performing very well in hard use such as pickups for work . to pull the loads it will be diesel over electric . i dont have time to wait for a battery to charge. the cost of battery replacement/disposal will be big dollars .
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Old 06-01-2022, 11:24 AM   #7
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https://apricitas.substack.com/p/why...es-so-high?s=r

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Why Are Gas Prices So High?
Capital Discipline, OPEC, Russia, and More

Joseph Politano
Apr 16
The views expressed in this blog are entirely my own and do not necessarily represent the views of the Bureau of Labor Statistics or the



Gas prices have jumped nearly 20% in the last month, nearly 50% in the last year, and more than 100% from their mid-2020 lows. In nominal terms, gas prices have never been so high. Given the importance of petroleum products as transportation fuel, electricity sources, and manufacturing inputs, the rising price of oil has immense macroeconomic and geopolitical importance. So why are gas prices so high?

In short: a surplus of demand and a shortage of supply—but people who watch oil markets professionally know that things are rarely so simple. A combination of restrained growth from US producers, lower Organization of Petroleum Exporting Countries (OPEC+) targets (that the group has still failed to meet), the loss of significant Russian energy supplies, and a rapidly-rebounding global economy has sent crude prices through the roof. The radical shift in domestic US oil production dynamics is perhaps the most important change in the post-pandemic oil market—US shale’s position as a competitive, marginal producer of oil supported low prices throughout the latter half of the 2010s and isn’t doing so now.

OPEC+’s decisions are a matter of geopolitics and oligopolistic self-interest—financial and strategic planning designed to maximize returns and political clout for its members (to the extent that they work together). The Russia shock is nearly all geopolitics—a combination of producers pulling out and consumers looking elsewhere due to sanctions and political risk in the fallout of Russia’s invasion of Ukraine. But the radical shift in domestic production behavior is more about economics, and understanding why American oil companies have changed their response function is critical to understanding why gas prices are so high. Combined, these factors have merged to create the perfect storm that has sent gas prices higher and higher.

Sand Trap


For more than a decade, US oil production has been growing at breakneck speeds as the shale revolution allowed America to become the world’s largest oil producer. Even the 2014 oil price crash—which wreaked havoc on the economies of many large oil producing nations—barely interrupted the rapid growth of US oil output in the long run. American oil was nowhere near as as cheap to produce as, say, Saudi oil—but the competitive nature of the US oil market made it the marginal supplier for the entire globe. If prices went up, American shale would increase production and keep costs contained. If prices went down, American shale would be forced to pare back unprofitable drilling until prices rose again.



From basically 2012 to 2020, US oil investment followed a fairly consistent pattern; when prices went up, so too did drilling and vice versa. The post-2014 oil market saw a lot less drilling thanks to some of the lowest prices since the depths of the 2008 recession, but American production was still fairly strong. Then, the entire relationship broke down after the onset of the COVID pandemic. Crude oil futures briefly went negative (remember that story?) as global oil demand fell off a cliff. Meanwhile, Russia decided it would not agree to Saudi-devised production cuts and effectively ruined the working arrangement within OPEC+—leading to a massive Saudi-Russian price war that kept crude oil trading at low levels (the price war was eventually resolved when Russia agreed to production cuts). In the aftermath, American oil companies were far less willing to invest in new production—and domestic output has still not fully recovered despite oil prices hovering at nearly twice pre-pandemic levels.



The phrase of the day in the oil industry became “capital discipline”—a catch-all term for policies that kept production low even in the face of higher prices. In the most recent Dallas Fed Energy Survey, 59% of oil and gas executives cited capital discipline as the primary reason why publicly traded oil companies are restraining growth despite high prices. Many small companies were forced to fold, restructure, or be bought out by oil majors just to survive the 2020 crash—often under harsh terms or with restrictive debt covenants. Oil majors were under increasing pressure from shareholders to pare back investment dramatically in order to recoup losses. The result was a dramatic shift in behavior throughout the US oil market.



But why did investors and lenders suddenly shift so hard into capital discipline? For one, an incredible amount of uncertainty still pervades the oil market—it is not healthy when crude prices can swing up and down 10% in a matter of days due to virus-related and war-related risks. But perhaps more importantly, and despite the decade-long growth in US oil output, shareholders have barely made any money on the US oil boom. XOP—the SPDR Oil and Gas Exploration and Production ETF—has just barely netted a positive return since its inception in mid 2006. The 2014 and 2020 oil crashed wiped out billions of dollars in wealth and shareholders blamed overproduction. Capital discipline was designed to ensure that another crash wouldn’t happen.



Looking at profits for the broader US petroleum and coal industries, it becomes clear just how bad the post-2015 market has been. The US fossil fuel industry has been in the red for nearly 7 years at this point—and has only recently clawed its way into the black. The boom-and-bust rollercoaster hasn’t been profitable for American oil producers, so they’re rationally trying their hardest not to get caught in another crash.



Oil production outside the US hasn’t exactly been stellar either as analysis from friend-of-the-newsletter Rory Johnston of Commodity Context shows. OPEC+ was ever-so-slowly unwinding their pandemic-era production cuts before the Russian invasion of Ukraine, but were having significant difficulties even meeting these lower obligations. OPEC+ as a whole is underproducing its own targets by nearly a million barrels per day—and Russia was the only major country overshooting its targets.



Then, of course, came the Russian invasion of Ukraine. Russia is the second largest oil producer in the world, and much of Western Europe is dependent on Russian natural gas. Although sanctions from the European Union have excluded Russian energy, major producers are pulling out of the country, input materials are harder to import, and many countries are less willing to take Russian exports. Ural crude is trading at a $25 discount to Brent crude, indicating the extreme difficulty Russia is having in selling its oil. The country may be running out of storage capacity and willing buyers—especially as the European Union debates cutting itself off from Russian fossil fuels. Russia remains a source of extreme uncertainty and a significant shock to global oil supply.

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Old 06-01-2022, 11:25 AM   #8
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pt 2


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On the flipside of supply, domestic US oil demand remains extremely strong—total American consumption is actually ahead of pre-pandemic levels. That’s partially because Americans are driving just as much as they were before the pandemic—despite the increase in telework. Only about 10% of American workers teleworked at any point in March, and the jury is out on whether teleworkers actually drive less than commuters. Telecommuters might commute less, but they can take several small car trips in place of their daily commute and may move to areas that are farther from city centers than regular commuters. The other reason that oil demand is so strong is that goods demand remains robust and oil is an important input material in many manufactured products.

China is experiencing the exact opposite situation as America: a rapid drop in oil demand. Recent COVID outbreaks in the country have been met with strict lockdowns from the Chinese government, and the resulting decline in mobility and consumption is perhaps the only thing keeping a lit on global oil prices. Chinese imports have fallen off a cliff recently, and a lot of that import reduction is coming from a collapse in domestic Chinese fossil fuel demand. The knock-on effects of the shutdown will likely have adverse impacts on the global economy in the long-run, but for right now the rest of the world is benefitting from the drop in Chinese demand.



In March, retail spending at gas stations crossed $63B, the highest on record. As a share of total retail spending it hit nearly 11%, higher than at any point in the last seven years. Though gasoline represents a smaller share of total consumer spending than in previous decades, it still represents a good chunk of low-income workers’ budgets. So what should we do?

For one, there are reasons to be optimistic that production will continue to ramp up outside of Russia. That same Dallas Fed Energy survey also showed the strongest reading for the of quarter-on-quarter business activity and capital expenditure diffusion indexes since the survey started in 2016. Rig counts and refinery capacity utilization are both growing at a brisk pace now. The number of permits issued for drilling in the Permian Basin just hit a new record high. The administration’s decision to release 180 million barrels from the Strategic Petroleum Reserve should help bridge consumption to a point where more domestic and foreign output can come online.

But the counterproductive policies have to be thrown out. Suspending gas taxes or issuing cash to drivers based on the number of cars they own may be politically popular but they don’t solve the core problem of the energy shortage. In fact, they only make the shortage worse by subsidizing gasoline consumption and doling out more money to the wealthier households who consume more gas but nevertheless have a better ability to absorb higher prices. Closing nuclear reactors in the middle of an energy crisis—as Germany, New York, and others have done—is short-sighted considering how much cleaner nuclear power is compared to fossil fuel. The implementation of the Department of Energy’s Civil Nuclear Credit Program should help bolster the US’s existing nuclear fleet, but we should work to prevent as many closures as possible while investing in next-generation reactors.

Fundamentally, oil remains a critical input to human society and the global economy. But it is a toxic one—millions of people die every year from emissions exposure and millions more will die from the adverse effects of climate change. The world needs to make serious efforts to reduce its dependence on oil, but if decarbonization is done in a haphazard way it will be impossible to maintain the political will to get through the climate transition. Economists nearly universally agree that carbon taxes and gas taxes are extremely effective climate policies, but the efforts from state governments across the political spectrum to suspend gas taxes in the face of today’s energy shortage underscore the political fragility of those policies. We can’t have green energy policy without green energy investment, and that means getting serious about solving today’s energy crisis.
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Old 06-01-2022, 11:32 AM   #9
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So instead of sending north American oil to our north American refineries, we are buying oil from countries that don't have our best interest in mind.
Not saying you're entirely wrong, but different refineries are setup to process different crudes. You can't just take some western Canada oil sands crude and send it to the Alon refinery out in Big Spring... there's a lot more that goes into it. There are very physical reasons that countries and companies export and import volumes all day long.
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Old 06-01-2022, 11:54 AM   #10
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Originally Posted by scootro View Post
The market has fundamentally changed with rapidly increasing adoption of EVs and their associated infrastructure. Green energy generation has never been more prevalent or affordable.

These two factors basically indicate the world will never consume as much oil as it does now. Because of this there is little incentive to make capital investments needed to increase supply. These companies are maximizing profit in the short term since the long term outlook is very poor.
"Rapidly increasing adoption of EVs" is a bit of a stretch - yes, the EV market share is growing but a lot of pundits like to point to CA which has a much higher adoption rate than other areas (and you could debate "adoption" vs "forced"), but I'd agree that fossil consumption will likely fall from now until forever as the fuel market moves to renewable liquids and electrons... and maybe hydrogen.
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Old 06-01-2022, 02:38 PM   #11
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Originally Posted by bubbaearl View Post
eclectic is fine for city dwellers . but i seriously doubt they will ever pass muster in the country or in the commercial setting. i dont see them performing very well in hard use such as pickups for work . to pull the loads it will be diesel over electric . i dont have time to wait for a battery to charge. the cost of battery replacement/disposal will be big dollars .
expect rolling blackouts this summer in some states! the grid can't keep up


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"Rapidly increasing adoption of EVs" is a bit of a stretch - yes, the EV market share is growing but a lot of pundits like to point to CA which has a much higher adoption rate than other areas (and you could debate "adoption" vs "forced"), but I'd agree that fossil consumption will likely fall from now until forever as the fuel market moves to renewable liquids and electrons... and maybe hydrogen.
Elon Musk said hydrogen power is just dumb for the masses
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Old 06-01-2022, 03:55 PM   #12
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Elon Musk said hydrogen power is just dumb for the masses
Depends on the application. Hydrogen is a good energy transportation method, and for in-city cars where tailpipe criteria pollutants are the biggest concern fuel cell H2 vehicles do have their place - emissions are water vapor and heat.
For bigger over-the-road stuff hydrogen combustion gets a lot of attention, but the jury's still out.

I met with Cummins (technology directors, combustion architects, etc) at their HQ two weeks ago right after they debuted their new "fuel agnostic" engine at the Advanced Clean Transportation Expo and got the full rundown on it - common short block and fuel-dependent top end that can do diesel, NG, or hydrogen - and they have a very solid strategy around it. Even if hydrogen doesn't win as the petrol displacer it's not like they'll be fucked.



But last week I was with more Cummins people (VP Research & Technology), plus Toyota, P66, Shell, some of the national labs (NREL, Oak Ridge, etc), even a VP of Penske who own one of the largest fleets of vehicles in the US outside of the military. They all agree there's a big chicken and egg thing going on with alternative fuels. Fueling infrastructure is a giant concern... then you throw charging infrastructure needs on top of that as well. Lots of forks in the road and if you can only put your chips on one bet...
Example, Toyota said they wouldn't release a hydrogen car into a market until there were at least ~6 fueling stations in a certain radius. But why would a c-store owner install hydrogen infrastructure that might pay off in 18-24 months, if ever?

It's going to be a fun few years going forward trying to figure this out.

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Old 06-01-2022, 06:07 PM   #13
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Hydrogen sounds great and all but I remember BMW, Mercedes and Lexus had hydrogen models in the late 90s and they weren’t very successful. I think part of the reason is the same reason CNG isn’t catching on; lack of infrastructure and tanks to store the hydrogen pose a problem on where to mount them and when you do, they are tiny and offer very little capacity. Maybe things have changed.
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Old 06-01-2022, 08:05 PM   #14
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Hydrogen sounds great and all but I remember BMW, Mercedes and Lexus had hydrogen models in the late 90s and they weren’t very successful. I think part of the reason is the same reason CNG isn’t catching on; lack of infrastructure and tanks to store the hydrogen pose a problem on where to mount them and when you do, they are tiny and offer very little capacity. Maybe things have changed.
90s is definitely not the same as 2022. Hydrogen will get bigger for sure. It won't dominate the passenger car market, but there will be more - I'd guess only on the trucking side. Some fuel cell, some combustion.
NG will get bigger, no doubt, as more renewable natgas (RNG) comes online from landfill capture, digesters, etc With corporate ESG goals, CAFE standards, etc. taking the forefront all alternative fuels will be huge in the future. Maybe not for the light duty passenger car side - that will go EV - but commercial, off-higway, ag, rail, etc "hard to abate" stuff for sure.

Honestly, this is a huge can of worms. No answers, but lots of good guesses.

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