"We can't just drill our way to lower gas prices"

[qazplm]

no to any person

when demand doesn't rise as quickly as anticipated, that changes supply.

I anticipated I would need 150 widgets, because two years ago I did 50 widgets, the demand went up to 100 widgets last year, so I assumed I would need 150 widgets this year because of a pattern of a 50 widgets a year increase.

But the demand only went up to 120 widgets, now I have 30 extra widgets. Demand went up each time, but the pace of the increased demand slowed, and the supply lagged. Thus, a glut.

Pretty basic econ 101.

 

[qazplm]

you are assuming

a bit there.

Yes, US supply went up. Does that mean that BECAUSE supply went up, prices must have gone down?
Certainly you'd agree the drop in oil prices is a lot more than the percentage increase in US supply.
It's awfully simplistic to point to one chart showing an increased supply without more examination as to other possible causes. As with most things, there are likely multiple reasons. Certainly, increased supply is one of them, but it's not the only one.

And like I said, this is all temporary. Prices will go up again, even with further increases in US supply. That's pretty much guaranteed.

 

[qazplm]

oh of course it is

anything good economically is the result of years of Republican efforts Democrats just happened to luck into (See Bush/Obama or Reagan/Clinton).

anything bad economically is the result of the immediate presence and action of a Democratic President (thus the economic collapse of 09 is all Obama's fault).

got it.

 

[Noodle]

oh come on....

do I need to start putting {TIC} at the end of any post where I poke you with a stick???

 

[Noodle]

I agree with you completely nm


nm

 

[SDBoiler1]

Re: you are assuming


He already did! In the thread above he specifically talks about the strengthening of the US$. That has had a decent impact on oil prices. You can talk all you want about supply and demand, but there are definitely other forces at play. The strengthening dollar is certainly a part of it. Many commodities have gotten slammed due to the dollar getting stronger.

 

[gr8indoorsman]

Re: that's why I used the words "lowered increase in demand"


OK, yes. Thanks for clarifying.

 

[qazplm]

no

but Gr8 took a more serious tone, and I wanted to make sure my meaning was clear on the idea of decreased demand (i.e. lower than expected increase) and the impact it can have on supply and prices and gluts.

A lot of the game is making the right predictions.

 

[gr8indoorsman]

Re: not really

Originally posted by kescwi:

Originally posted by Noodle:

And what's wrong with keeping some of our own oil in our back pocket? No one ever talks about that, but isn't it appropriate to consider the benefits of not producing too much so that we have some left over down the road?

I have always felt this way, but I would think it would take US taxpayers subsidizing limited fracking, offshore...so that when prices rise it is there to start buffering the rise.


This post was edited on 1/5 4:16 PM by kescwi

This plus infinity.

As I mentioned, I think stabilizing happens around 65-70 sometime this summer. We'll see.

 

[gr8indoorsman]

Re: ah so NOW we can look towards Bush


Obama and Democrats have fought oil and natural gas every step of the way, winning in some states like NY.

Infrastructure development that enabled the fracking boom was happening back in the early 2000s, so yes, under Bush. Many of my Navy engineer contemporaries left the Navy for energy - specifically oil and natural gas - positions in 2004 and 2005. They worked in North Dakota and Texas, and in one case still work in Texas, developing the infrastructure to support the increase in supply we're seeing now.

While I don't like the blame Bush/blame Obama game as it comes to the economy - Obama inherited a pretty shitty deal in that regard - in this case they're right that the Bush administration, not the Obama administration, should be credited with the development of oil/natural gas that's happened since Obama took office.

 

[kescwi]

The U$D is very interesting and obviously plays a part in commodity pricing but personally I think it's more a side show than a driver right now. Mainly because IMHO the U$D strengthening is not due due to $ destruction, i.e paying down debt or higher interest rates, but it is other central banks devaluing against the U$D. Structurally nothing in the US economy has really changed.

We'll see how it plays out but without a doubt something to watch.

 

[SDBoiler1]

On this we agree. The EU is definitely devaluing their currency.

 

[GMM]

So, to summarize the statements of qazplm and kescwi

1) There are many, many factors that led to lower gas prices.........except for a huge increase in US oil production.

They simply can't admit that their side got it wrong. Their side laughed at the idea of "drill, baby, drill" having any effect on gas prices. At the same time we were told that increasing "investments" in green energy would work. (You see, increasing green energy output works but it doesn't work for fossil fuels. Got it?)

Both of their side's beliefs have been shown to be completely wrong. But don't expect any changes from the left when it comes to opposing or supporting fossil fuels/green energy. It was never about results. It was always about ideology and political power.

 

[Noodle]

Re: not really

Originally posted by kescwi:

I have always felt this way, but I would think it would take US taxpayers subsidizing limited fracking, offshore...so that when prices rise it is there to start buffering the rise.

This post was edited on 1/5 4:16 PM by kescwi

So let me get this straight--you are proposing subsidies for oil companies, while also restricting their ability to drill wherever they want?

While that might make sense for a number of reasons, you might as well be proposing that California parole Charles Manson--that probably has better odds of ever happening.

 

[kescwi]

Okay, sorry you got confused there, let me make this clear, the current drop in oil is coming from the demand side not supply. Got it?

I get you share some ideological DNA with gr8, Noodle, 97 and SD and you're giddy that your cool cousins came to your aid but it still doesn't change the fact your OP is a lame attempt to take credit when the drop has absolutely nothing to do with drill baby drill in the way you would have it interpreted.
Posted from Rivals Mobile

 

[qazplm]

I'll just restate

that I think it's dangerous and misleading to draw long-term implications or meaning from what is likely to be a short-term phenomenon.

I think we all agree that oil prices will rise again in the next 6-18 months. I think we all also agree that oil prices don't quite follow the supply/demand curve that a lot of other commodities follow.

Refining, taxation, weather, etc are all factors that affect oil prices more than say sugar prices. (When I say weather, I mean weather and the use of fuel which is different from localized weather issues and say sugar production).

Which is why I say, it's a combination of factors, and not solely US produced more. I have little idea how much US production increase actually contributes to the current glut/price drop. Obviously, it's some percentage. What that percentage is, I think is a little hard to day.

 

[qazplm]

perfect summary of my position

if you're a simpleton or English is your second language.

 

[qazplm]

A lot of liberals

would disagree with you on Obama. Many are disappointed in his rather lukewarm approach to environmental issues, and I think it's fair to say it hasn't really been a strong part of his presidency other than talk.

Certainly many Democrats have, and I approve that for many reasons. It's time to start transitioning away from fossil fuels for both environmental and economic reasons. Better to start it now, when oil is cheap, than later when it isn't.

But my point was a larger one, and it was confirmed by his follow-on response. Time works the same way all of the time.

If good things take time to result from choices, then so do bad things.

And vice versa. So if you are going to look backwards for good, you should look backwards for bad.

This whole everything bad is the current Dem President's fault, and everything good is the former Republican President's doing (or just plain luck) is a meme I've seen going back a long, long time.

 

[Noodle]

what have I ever done to you?

Originally posted by kescwi:
Okay, sorry you got confused there, let me make this clear, the current drop in oil is coming from the demand side not supply. Got it?

I get you share some ideological DNA with gr8, Noodle, 97 and SD and you're giddy that your cool cousins came to your aid but it still doesn't change the fact your OP is a lame attempt to take credit when the drop has absolutely nothing to do with drill baby drill in the way you would have it interpreted.

Posted from Rivals Mobile

Please don't lump me with GMM ever again or there will be hell to pay.

As for "drill, baby drill," despite the fact that greater U.S. oil production is the biggest factor in the drop in the price of oil, there absolutely other significant factors as well.

In addition, the focus of the "drill, baby drill" cry was primarily offshore drilling and drilling in Alaska. Ironically, offshore and Alaskan production have actually been stagnant, at best, over the past 4 years. Almost all of the increase in US oil production has come from Texas and North Dakota. The ramp-up started in late 2009 in Texas, and in late 2007/early 2008 in North Dakota--before "drill, baby drill" was even mentioned.

So, even I'm not willing to say that "drill, baby drill" has anything to do with the drop in the price of oil for the simple reason that there was never much of a fight against drilling in Texas and North Dakota--especially in Texas where protesting oil drilling might get you shot.

 

[gr8indoorsman]

Re: A lot of liberals

Slow rolling Keystone XL for six years, providing subsidies to solar and alternative energy (but not nuclear, no no no!), tighter emissions standards aimed at limiting or eliminating coal power are all pretty strong initiatives, not just talk. It's fine if that's the party's platform, but to say "he hasn't done much" is silly. Maybe he hasn't done everything liberals want, but that's probably a good thing considering what liberals want as compared to the reality of energy requirements vs. capabilities.

Among the dumbest things that have happened since Democrats became the power party nationwide from 2006-2014 is the continued shrinking of our nuclear power generation capability and the outlawing of fracking in several states. Just because we haven't made fracking illegal everywhere and eliminated all use of nuclear and coal doesn't make those decisions any better in my opinion. Obviously, you probably feel differently... politics.

 

[qazplm]

Re: A lot of liberals

slow-rolling is different from killing...providing subsidies to alternative energy has nothing to do with the oil industry since they get a ton of subsidies as well...tighter emissions standards for coal are not anti-energy either IMO.

So no, I don't think he's done much that's "anti-energy." He's just not rabidly pro-oil, coal and natural gas. He's certainly no green-lover. Much more stringent environmental standards were passed by other Presidents, even Nixon.

Nuclear power is not the savior you present it to be. And the idea that if only the liberals would get out of the way there'd be nuke plants all over the place is wrong. Plenty of other folks don't want a nuke plant next to them, whether you think that dumb or not. Nor do they want nuclear waste, again whether you think that dumb or not.

Fracking? Sorry but fracking has way too many potential issues from water source contamination to destabilization and possible mini-earthquakes even. And my reasons for thinking that aren't "politics."

 

[gr8indoorsman]

Re: A lot of liberals


Like I said, "politics." "Potential issues" with no evidence supporting them... that's the story for nuclear and fracking both. Fear and ignorance reign supreme. Nuclear is absolutely the savior I espouse it to be.

 

[qazplm]

Re: A lot of liberals

no evidence? Come on. I said potential issues because rarely is there 100 percent evidence for anything. There CLEARLY is evidence of the dangers of fracking to water supplies, and microquakes triggered by fracking. Considering fracking ain't been around that long, you aren't going to have iron-clad proof yet.

Nuclear has been around quite awhile, we know a LOT more about that than we do fracking, so comparing the two as if both are well known and any concerns are "Fear and ignorance" is well ignorant.

As for nuclear, it ain't a savior if few people want it.

 

[gr8indoorsman]

Re: A lot of liberals


Few people believed the world was round.

Anyway, we've been through this before...

I don't think there's CLEARLY evidence of anything regarding fracking. I think there's clearly concern, but I don't think they're well-founded.

 

[qazplm]

Re: A lot of liberals

so on the one hand, nothing is clear regarding fracking, on the other hand any concern is not well-founded??

 

[Purdue97]

I really did not mean to attack/blame Obama on my derivative/credit default swaps/leverage statement.

I just think it is to the point, especially withh the amount of debt the USA has, that the only way we are now going to "grow" is through the use of "monetary policy."

I mean sure some of it is on him but it is not like he inherited a healthy financial system either. IMO, this is a good 40+ years in the making.

 

[Purdue97]

Really the main thing I pointed out in this thread was that SA more than anything does not mind the lower prices due to being able to hurt its not so friendly neighbors that surround them in the pocket book. That and threw out a general reminder that the financial tools that caused the poop to hit the fan in 08 are higher now than they were then.

 

[kescwi]

No, no, no, I wasn't slamming your or the others, hell I agree to some extent on most of what all of you say. My point was GMM seemed to be getting uppity and I was pointing out his more intelligent relatives commenting didn't in any way make his simplistic nonsense significant.