jyoutz
Super Member
I think supply and demand are still a factor in economics, and producers are definitely able to manage supply.
Midwest Gasoline to Spike $0.50-$1.00 Per gallon
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WM75Guy
Elite Member
The government's decision to cancel leases in Alaska will not be a major impact on the price of gas, like some of the media portray it. According to the U.S Energy Information Administration, the Alaska oil production accounted for 2.4% of the crude oil input to refineries last week. The U.S. imported 16X more oil than what Alaska produced.
As was said, drilling in the lower 48 is cheaper than drilling in Alaska. Our 33 wells in West Texas generate 30,000 barrels per day, as compared to Alaska's 402,000 barrels per day production. Our wells daily production alone is equivalent to 7.5% of the daily Alaska production. And there are a lot more wells coming online on a daily basis in West Texas.
The Trans-Alaska pipeline started transporting oil in 1977. An oil well typically has a 30-year lifespan. You get 50% of the production in the first 3 years, then the remainder over 27 years. It is too expensive to maintain and pump a well with little production. Many of the wells in Alaska have reached their end of life and are being plugged. New ones are not being drilled to replace them.
"Most of Alaska's crude oil production—typically over 95%—occurs on the North Slope.33 The Trans-Alaska Pipeline System, which began operating in 1977, transports crude oil 800 miles from the frozen North Slope to the warm-water port at Valdez, on Alaska's southern coast.34 In 1988, the pipeline's oil throughput peaked at just over 2 million barrels per day. Since 2003, actual deliveries have been less than 1 million barrels per day, and averaged 483,000 barrels per day in 2022, the first year-over-year increase since 2017." US EIA
As was said, drilling in the lower 48 is cheaper than drilling in Alaska. Our 33 wells in West Texas generate 30,000 barrels per day, as compared to Alaska's 402,000 barrels per day production. Our wells daily production alone is equivalent to 7.5% of the daily Alaska production. And there are a lot more wells coming online on a daily basis in West Texas.
The Trans-Alaska pipeline started transporting oil in 1977. An oil well typically has a 30-year lifespan. You get 50% of the production in the first 3 years, then the remainder over 27 years. It is too expensive to maintain and pump a well with little production. Many of the wells in Alaska have reached their end of life and are being plugged. New ones are not being drilled to replace them.
"Most of Alaska's crude oil production—typically over 95%—occurs on the North Slope.33 The Trans-Alaska Pipeline System, which began operating in 1977, transports crude oil 800 miles from the frozen North Slope to the warm-water port at Valdez, on Alaska's southern coast.34 In 1988, the pipeline's oil throughput peaked at just over 2 million barrels per day. Since 2003, actual deliveries have been less than 1 million barrels per day, and averaged 483,000 barrels per day in 2022, the first year-over-year increase since 2017." US EIA
JasperFrank
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Since i have an 8.5 gallon tank, and get 35 MPG, I couldn't care less where I get gas at.
Maybe I need new glasses then. I don’t see where there has been a 50% decline in oil for quite some time.
Hay Dude
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Maybe show a little “care” for those who produce things or manufacture things and are paying record prices for fuel?
Or take a moment to realize that the price you pay for everything has increased because it requires fuel to make and deliver everything you buy.
Torvy
Super Member
The oil companies do not individually control enough of the supply to make an impact. Countries, on the other hand, do. Most, if not all, US oil companies are publicly traded and have a fiduciary responsibility to make money for stock holders. If one company reduces output, the gap would be filled by another taking advantage of the void. To do otherwise would be illegal collusion. Y'all keep living in fantasy land vis-a-vis oil companies being the problem rather than government actions that are overtly designed to drive up production costs.
OP
NoTrespassing
Veteran Member
THIS^^^^^^ GOOD POST...
sea2summit
Elite Member
Some farmer co-op must have made a great sales pitch to the environmentalists. If they actually understood you can’t get “something from nothing” and how many chemicals/fertilizers are needed to grow that much healthy corn…
jyoutz
Super Member
World markets determine prices, not just one country.
Goldman Sachs warns that Russia and Saudi cuts could send oil prices above $100 a barrel by the end of 2024, just in time for Election Day
Should oil producers choose next year not to reverse their cuts, then the Biden administration may have a problem on its hands.
Snobdds
Elite Member
Are you being silly or just playing a angle to be contrarian of me? There is no way you can look at a WTI price chart of the last 3 years and make that statement.
So if we take the peak of 123 and the low of 70, which was March of 22-March of 23 that is a 75% decline of price. (123-70)/70=75% I was noting the last cycle, which is defined as a peak through trough and giving a little to not account for the extremes. So my 50% number was conservative. BTW, WTI is back up to almost $90.
I would look into some glasses.