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Why Venezuela's crisis could send oil prices above $100 a barrel


Why Venezuela's crisis could send oil prices above $100 a barrel

Old 05-20-2018, 04:57 PM
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Default Why Venezuela's crisis could send oil prices above $100 a barrel


Just in time for boating season. Higher gas prices
Old 05-20-2018, 05:00 PM
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Settled in 2 weeks......no room for stupid here...globally crushed....10 years ago maybe
Old 05-20-2018, 05:26 PM
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Venezuela and oil are a sore subject for me. About 15 years ago I was doing some contract jobs for two guys that were in the oil and gas industry working in Venezuela. I was earning about 50-60k a year on the side creating some software for the guys. It dried up as soon as Hugo Chavez took over. I still miss that money.

Hopefully things will clear up there so it doesn't affect our oil/gas prices.
Old 05-20-2018, 05:31 PM
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Oil investors are back. Any excuse that makes sense or creates fear is reason for them to keep driving the price up. We won't see 60bbl or less for a longgg time.

Old 05-20-2018, 05:52 PM
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It's all BS, they are just breaking the news to you that the screwing is about to begin once again, invest in lube!
Old 05-20-2018, 06:00 PM
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there is oil out there to be had, but companies need to make money and they need to refresh their coffers to do more expensive exploration and so they are not just going to open the taps full on and drop the price back to $50 or $55

people might not like to hear that, but without big profits occasionally there is no incentive to make big investments for the bigger finds

there is a lot or places in Mexico that have potential, Brazil has a lot of off shore areas that have been pretty thoroughly looked at, but have not been fully developed

Venezuela while they have a lot of reserves also has a lot of heavy sour crude that requires specific refineries to deal with it and in addition they need other by products of refining to thin that crude to make it easier to refine.....no one wants to sell those to them on credit....the one thing is there are several large refineries on the gulf coast that are set up for that heavy sour crude specifically because it sells at a discount so they want it and prefer it

in addition to that there is the fact that gas and diesel prices do not fully track the price of crude because of the refinery issue in the USA......we are short of full needed capacity for a robust economy......when the economy is going well there is just not enough refinery capacity no matter how much oil there is and at what price.....and it is extremely difficult to build a new refinery with only one new one in the USA in decades (I believe) and that was a small one in North Dakota that was finally built.....most new capacity has come from expansion, but often that either shuts a refinery down or it slows it down so doing that when prices are good does not make sense and only drives prices higher and refineries cost a ton to build and maintain so again they need to make profits at some point to invest for the future....but of course their industry is under attack so who would want to expand especially when times are slow and you might be able to pull a refinery off line without driving up prices....and of course when everyone is screaming about gas prices and you are making decent money they will scream more if you slow down or shut down for expansion

there is also the issue of when demand for gas and diesel (or even more so other refined products that are harder to sell) is low you cannot make money running a refinery at 80% so eventually they get shut down and the market reacts with higher prices until such time as demand picks back up to start the refineries off line back up....but the industry is under such attack that it is often easier to just shut it down and sell it off for good

there are 3 refineries in the Caribbean that are shut down or slowed down right now and that have issues, Aruba, Curacao, and St. Croix

St. Croix is Hess and Venezuela and shut down and expensive to run because it is powered by fuel oil not natural gas and of course the Venezuela issue and the fact that Hess is rapidly leaving the refining game

Curacao relies on heavy Venezuelan crude and Conoco Phillips just seized it for Venezuela nationalizing their assets....it currently runs at a reduced rate I would see something being worked out where Venezuela is allowed to ship to it and half of the crude shipped is paid for to Venezuela and half of it goes to Conoco Phillips (and others eventually) to pay them for nationalized assets....the issues here are complex, but if Conoco Phillips wants to get their money out of the deal they need that refinery to run.....they could sell it off, but the only buyers would most likely be the ChiComs and if the ChiComs buy it then they have major leverage in the economy of Curacao and in fuel delivery in the Caribbean and they will of course have no issue taking crude from Venezuela and in fact they are owed money from Venezuela as well and they will put a major squeeze on them and they will not give a damn where the money goes

if the USA allows a deal for it to run full on with Conoco Phillips in charge and owning it and Venezuela supplying it then there is some slight control possible of where the money sent to Venezuela goes and more importantly the Chicoms are kept out of that region and it is the best way for USA companies to get money back for nationalized assets in Venezuela

the refinery in Aruba is owned Valero and leased by Citgo and of course Venezuela that owns a majority of Citgo....the lack of credit has slowed the work over of the refinery because of the USA restrictions and Aruba is not happy and wants something done....it is a larger refinery as well and I could see a deal where Conoco Phillips is perhaps awarded part of Citgo taken from the Venezuelan share of the company and then the refinery is allowed to start the work over at a faster pace and eventually the same deal is worked as I think will be worked with the Curacao refinery.....Venezuelan oil is taken with half to pay back nationalized creditors and half goes to Venezuela

there is talk the St. Croix refinery may reopen with joint US company and ChiCom company ownership and it is a large refinery as well so that would help prices and being a US territory means the ChiComs have little actual leverage.....I can foresee a future LNG terminal built there and then that would lower the cost of refining and it would allow natural gas to be supplied to the entire island eventually and that would help them a great deal both in terms of cost or energy and new jobs

Venezuela is going down the toilet no matter what and they really should not play a major part in the price of oil or motor fuels for the USA, BUT the USA can do themselves, their companies with nationalized Venezuelan assets, their territories, and their interest in the Caribbean region a favor by getting these refining assets out of the hands of Venezuela and into the hands of US companies and back up and running at full speed and if that means having to pay for partial loads of crude from Venezuela then I think in the long term it is worth it

so it is more than just the price of oil making gas and diesel go up and there is enough crude to keep gas prices from going through the roof, but the taps are not going to be opened for it to just flood in immediately

Last edited by Insider; 05-21-2018 at 01:27 AM.
Old 05-20-2018, 06:04 PM
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I hope that this news is wrong about $100 barrels. But:

American land-based production capacity has grown in the last several years to fill most of that market gap. Fracking is the reason why.
Saudi production capacity could easily fill the remainder.
Chinese production is just beginning to come online, and totally outside OPEC agreements or production targets.

The investor in me is rethinking short-term opportunities into energy players.
Old 05-21-2018, 12:58 AM
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The last time this happened, speculation went overboard. There were tankers anchored of Corpus Christi of months, full of crude bought at stupid prices and eventually sold at a big loss.

Supply and demand. When the prices rises too fast, demand drops just as fast. When the median US cost for a gallon hits $4, used car lots will be full of SUVs and pickups. People will prioritize their driving and demand will dwindle.

I've seen this happen 4 or 5 times in my life. Fueled by the media. We're running out of oil, peak oil, Middle East crisis, not enough refining capacity, the weather is too hot/too cold. Those never lasted and this won't either.

I guess gold and silver will go crazy next. The next housing bust is probably not far off either.
Old 05-21-2018, 03:28 AM
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The gulf platforms are idle no demand. Crew boats supply boats sitting idle .. so why prices rise because of Iran ,Venezuela???
Old 05-21-2018, 04:20 AM
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Prices are rising because the oil companies cannot replace their assets (oil&gas) when the cost of replacing the assets outstrip the profit. As the asset base of these companies dwindle, then the price(new drill or work over) to replace the asset will start to happen, but this is not like starting g a boat motor. Years to plan a well, gather the right assets, drill, evaluate the reservoir of it is feasible to
it in the infrastructure to produce it commercially.

land wells are numerous and plentiful but they are running into labor and mechanical limitations to their production thus also adding to the rise in oil. The producers have to pay more to get a barrel out the ground, buses who will pay them back for this additional cost.

Big oil needs Big finds to keep,the price down, small plentiful finds cost more money.

supply and demand baby, MAGA!!!!!
Old 05-21-2018, 04:43 AM
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The big difference is these days we the US has a striving oil industry and some experts estimate that the US has more oil reserves then Saudi and with the advances in fracking have it made it possible for us to be oil independent if prices escalate. As prices rise you will see more US oil available.
Old 05-21-2018, 05:00 AM
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Originally Posted by Saltydawg15 View Post
The big difference is these days we the US has a striving oil industry and some experts estimate that the US has more oil reserves then Saudi and with the advances in fracking have it made it possible for us to be oil independent if prices escalate. As prices rise you will see more US oil available.
Yeah but, if based on what Canada did with their oil supplies the last time oil prices peaked, Canada sold it's own oil back to Canada at OPEC prices. So it didn't matter or doesn't matter if Canada has enough oil to supply the whole world. they want matching top dollar pricing. I would suspect the same would happen in United States.
Old 05-21-2018, 05:12 AM
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There one big opportunity left in the energy sector. Offshore Drillers are still lagging the sector. Big oil coffers are just starting to fill up, but they haven’t started spending as evidenced by few new offshore contracts. Q1 was the 1st quarter to show improvement over the prior quarter so it’s just starting. The offshore drillers like RIG are sooo undervalued , as soon as new contracts start rolling in, its off to the races with the drillers.

Just look at the refiners like Valero, sure missed the boat on that one.


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