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Economists: To Protect Frackers, U.S. Should Restrict Oil Imports

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Economists: To Protect Frackers, U.S. Should Restrict Oil Imports

Old 01-14-2015, 01:37 PM
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Exclamation Economists: To Protect Frackers, U.S. Should Restrict Oil Imports

Smart ! An interesting read. Lets try to keep it out of the bilge please.


http://www.forbes.com/sites/christop...t-oil-imports/
Old 01-14-2015, 01:40 PM
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How about "To protect the US security, US should restrict oil imports"
Old 01-14-2015, 01:56 PM
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The whole reason the Saudis are letting the price of oil freefall is to break the back of US fracking. The fracking companies can't produce the oil for what they are making per barrel right now. I don't know what that "magic number" is price per barrel, but you can bet your sweet bippy that's what's going on.

Same thing is true in other industries. In the early 90's I did quite a bit of work for Newmont Gold Company. I asked them what the break even point was for them on an ounce of gold. Then, it was $400 an oz. Anything over, they were making money. Anything below, they were losing money. Oil business is same-same, just different numbers.

Of course, those with the power to stop the cheap imports and protect US interests won't. That's all I can say up here...
Old 01-14-2015, 03:38 PM
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But, how's that a good idea? Right now, filling my tank is cheap, filling your tank is cheap, this is good for the entire US population(we can spend that(saved) money elsewhere right?). Restricting import would drive the cost back up right? Fraking will create some jobs, will possibly get us to our own "sustainability" but in the end likely to make the % at the top of the company rich. prices would be up, bad for entire US.

I'd think using the imported oil for as long as we can for as cheap as we can, holding the threat of fracking to keep the price low. when they get tired of supplying us reasonable cost of oil frack it up.

I am no economist - the article states we are exporting oil. meanwhile importing oil? I don't get it. I have to assume we are exporting the oil for more then the cost of what we are importing?
Old 01-14-2015, 03:50 PM
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Originally Posted by Dulcecita Lures View Post
The whole reason the Saudis are letting the price of oil freefall is to break the back of US fracking. The fracking companies can't produce the oil for what they are making per barrel right now. I don't know what that "magic number" is price per barrel, but you can bet your sweet bippy that's what's going on.

Same thing is true in other industries. In the early 90's I did quite a bit of work for Newmont Gold Company. I asked them what the break even point was for them on an ounce of gold. Then, it was $400 an oz. Anything over, they were making money. Anything below, they were losing money. Oil business is same-same, just different numbers.

Of course, those with the power to stop the cheap imports and protect US interests won't. That's all I can say up here...
looks like around 70 per barrel is the break even.
http://www.bloomberg.com/news/2014-1...t-from-it.html
Old 01-14-2015, 03:52 PM
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I expect what will happen will be a natural balancing of the price of oil. Right now, like was mentioned, the Saudi's are trying to drive the US producers out by dropping below a price-per-barrel where the US Frackers will be profitable. When that happens, some will naturally drop out. Then, OPEC can start limiting production to try and run prices back up. As it starts climbing, though, the US frackers can get back in the game.

My prediction is that we won't see oil stay at this price for the long-term, but we will see it much lower than it has been. The US is now a major influence on the market price, and regardless of what OPEC tries to do, they can't control it like they had been.
Old 01-14-2015, 03:54 PM
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What do you think the Saudis would do if the U.S. did try to curtail imports.

Since the Saudis export a whole lot of crude to our country nearly half of the amount we use daily what do you think they would do.

Hint:

They would make a huge adjustment in the short term. Results of that.... well you can draw your own conclusion.

Let's just say ain't going to happen.

Newsflash:

why do you think they are doing what they are doing right now.

Hint:

At the pace we "were" going the U.S. was on pace to be the largest producer of energy on the globe by the end of the decade.
Old 01-14-2015, 03:57 PM
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To put it another way maybe...would you pay $.50/gallon (guess) more for domestic gasoline? Or if it meant keeping the US producers in the game?

I would.

It also has positive global political effects for us as well.
Old 01-14-2015, 04:06 PM
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Originally Posted by kone View Post
To put it another way maybe...would you pay $.50/gallon (guess) more for domestic gasoline? Or if it meant keeping the US producers in the game?

I would.

It also has positive global political effects for us as well.
Hell Yes!
Old 01-14-2015, 04:08 PM
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Originally Posted by kone View Post
To put it another way maybe...would you pay $.50/gallon (guess) more for domestic gasoline? Or if it meant keeping the US producers in the game?

I would.

It also has positive global political effects for us as well.
Absolutely.
Old 01-14-2015, 04:08 PM
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Funny to think that in the 3 months since that article was published oil has fallen 50%. Protectionism doesn't work, oil is a global product sold on a global market. And to say Saudi Arabia has "let" the price of oil fall in order to hurt US drillers is shortsighted. In the same boat as US drillers are countries like Iran and Venezuela and to a somewhat lesser extent Russia and Brazil. If oil stays flat these countries will begin to feel the effects on their domestic spending since their costs of production are much higher than those in Saudi Arabia. I saw a figure a couple days ago saying Saudi Arabia's break even cost per barrel was $5, let that sink in for a second. Some of our domestic producers have break even costs over $60 a barrel to say nothing of Canadian oil sands operations. While lower oil may be bad for domestic producers, its probably helpful in our foreign policy. Saudi Arabia and Kuwait are our two closest allies in the region and the countries they're hurting by letting oil fall aren't exactly our BFFs these days: Iran, Venezuela, Russia.

Domestically we'll see a push toward efficiency and cost cutting, which will benefit everyone down the road when domestic production picks back up again. These producers took a chance to operate at the most expensive portion of the production curve, they knew what they were getting into, we don't need to bail them out with legislation that harms everyone who drives a car. If fracking can be competitive, great have at it, if not, shut things down until it is competitive again.
Old 01-14-2015, 04:12 PM
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Originally Posted by Dulcecita Lures View Post
The whole reason the Saudis are letting the price of oil freefall is to break the back of US fracking. The fracking companies can't produce the oil for what they are making per barrel right now. I don't know what that "magic number" is price per barrel, but you can bet your sweet bippy that's what's going on.

Same thing is true in other industries. In the early 90's I did quite a bit of work for Newmont Gold Company. I asked them what the break even point was for them on an ounce of gold. Then, it was $400 an oz. Anything over, they were making money. Anything below, they were losing money. Oil business is same-same, just different numbers.

Of course, those with the power to stop the cheap imports and protect US interests won't. That's all I can say up here...
Drilling for oil in 19 shale regions loses money at $75 a barrel, according to calculations by Bloomberg New Energy Finance. Those areas pumped about 413,000 barrels a day, according to the latest data available from Drillinginfo Inc. and company presentations

Old 01-14-2015, 04:37 PM
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This is more than likely a long term rather than short term adjustment.

The last time the Saudis started this back in the mid 80's oil didn't recover for a long time.

A bit different now with the potential worldwide demand however production can be adjusted as we already know.
Old 01-14-2015, 05:10 PM
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Originally Posted by magua View Post
This is more than likely a long term rather than short term adjustment.
Everything I've read agrees - that gas prices are gonna stay lowered for quite awhile. Even Saudis are saying we'll never see $100/barrel ($3/gal gas roughly) ever again.
Old 01-14-2015, 07:46 PM
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I'm no expert and the "economist" may be correct but he's also (according to the article) the managing director of an oil company. Skewed comes to mind.
Old 01-14-2015, 08:25 PM
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Originally Posted by kone View Post
To put it another way maybe...would you pay $.50/gallon (guess) more for domestic gasoline? Or if it meant keeping the US producers in the game?

I would.

It also has positive global political effects for us as well.
Yes.
Old 01-14-2015, 08:30 PM
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Saudis are not allies. They may be the best we can do in the middle east, but they have no use for US, except money.
Old 01-14-2015, 08:48 PM
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Oil is a global commodity, no way to stop the import/export of it without screwing up the world economy. I always never understood why people would want to ban foreign oil imports. Judging from the recent US finds, we have a ton of domestic oil. Why not drain everybody else before we tap into our reserves. We should still encourage domestic exploration but let the Arabs run dry.

There are two cost associated with oil. New well exploration/production cost and the cost to just keep the lights on and oil pumping. At this current bbl price no new exporation/drilling will be taking place and companies are already paying the drilling companies penalties to cancel contracts.

Some US wells will still be producing even if they are loosing money because it may be cheaper than shutting down.
Old 01-14-2015, 09:07 PM
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get government out of the business of regulating commerce. let the free market set the prices, not government intervention. no need to protect domestic suppliers. let them compete in the open market, its good for all of us.
Old 01-14-2015, 09:18 PM
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Originally Posted by wezie View Post
Saudis are not allies. They may be the best we can do in the middle east, but they have no use for US, except money.
This is not accurate. Very delicate balance, but it's not money as much as defense technology and slight western backing. They need western ties without sanctions... But for imports. They sell enough oil that average Saudi will never do any real work. They import all of their labor and street workers. They do not possess the military back bones to protect themselves from the other Arab nations without western (us) ties.

They really want western ties without necessarily giving up their Muslim roots. They have notoriously harbored terrorism while simultaneously denouncing it.

****ing rag heads do what is convenient for them, but say what you want to hear. Its the Muslim culture.

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