Fine: Washington, D.C., on oil and gas
by Daniel Fine, New Mexico Center for Energy Policy
The complete article is here-> http://www.daily-times.com/story/opinion/columnists/2015/12/28/fine...
The "deal" between the parties over the energy future of the United States and the San Juan Basin at the end of 2015 was the most misguided example of politics at the fuel pump since the 1970s. Then it was retail price control and now it’s a free-for-all in the price of oil in the world market with West Texas Crude approaching 10-year lows.
Lifting the restriction on exporting crude oil adds American oil to a world market which is over-supplied. Expect no cash flow increase for American producers and still lower world prices than with the restriction or ban in place.
This is not the place to assess the other side of the "deal." However, tax credit extensions for wind and solar as alternative fuels to replace coal and later natural gas are no longer of concern to the Republican Party in Congress.
With petroleum economics based on market prices, there is virtually no way that the "deal" will bring about tens of thousands of new jobs in the oil and gas fields. How does exporting crude oil lead to increased drilling and rig deployment if this increases supply in an oversupplied world market? On the contrary, it leads to lower prices and negative cash flows for producers who must cut their workforces.
If oil and gas prices rebound in the next three years, the alternative fuels are beneficiaries as tax credits shape new non-fossil fuel investment, offsetting the risk of lower oil and gas prices, This was no doubt the objective of the climate change politics of Paris and the Democratic Party in Congress as well as the White House.
Although U.S. oil refiners will have a transportation cost tax adjustment from the "deal," what prevents them from buying foreign oil at lower prices than American oil (North Sea Brent at declining prices)?
For more than a year, I have developed an analysis of an OPEC/Saudi Arabian price war against American shale or light tight oil producers. This was regarded lightly while industry and Wall Street funds held on for a price recovery by last June. Now what I wrote in these columns is "mainstream" and U.S. producers survive through selling forward with "hedges."
What will be left of the San Juan Basin oil and gas economy in 2017? Will exporting crude oil to Poland or Sweden, against Saudi discounts, contribute to a Four Corners economic rebound?
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Replies to This Discussion
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Permalink Reply by Joseph-Ohio on -
Domestic 'To Do List' :
Recognize that it's ALL broke and FIX IT :
Trade agreements with vetted allies.
Embargo all non-allied foreign fossil fuels domestically.
Federally subsidize domestic conversion programs to natural gas from diesel and gasoline.
Minimize federal subsidy of alternative / intermittently available fuels (such as solar and wind as they as a result of implementing the above would show to be realistically too expensive).
Keep the military on Diesel and Gasoline.
Domestically - revert to reality.
Domestic Natural Gas and Oil is ours and it's here now.
BTW, we're on a war footing; and it's irresponsible and outright wrong to think that when IS / ISIS / ISIL is / are defeated and dismantled that there would NOT be another next Radical Islamic Fundamentalist Terrorist hierarchy to combat to take their place.
Risk the 'Rule of Unintended Results' kicking in instead of ALL of what is at risk now (as I think it is the lesser risk between the two).
A sea change in leadership and back to reality.
JMHOs
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Permalink Reply by Joseph-Ohio on
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Toss them under Iran's bus.
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Permalink Reply by Bluflame on
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J-O,
We've had this discussion before. I wholeheartedly agree with two of your last three paragraphs. IMHO.....All parties will be better served if the Federal Govt keeps their noses out of the commercial O&G world. This is especially true considering the incompetence of the current administration.
BluFlame
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Permalink Reply by william Allen. Ladd on
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It seems as if all preceding administrations have been incompetent too. Hate to say what might happen if one of the leading candidates wins the election, insults several world leaders, even if partially true, by his unpleasant tirades?
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Permalink Reply by Joseph-Ohio on
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Blu',
Glad we agree on the 2 out of 3.
Trouble with the 3rd is that the boobs that are running the show are the only ones empowered and in a position to act. Admittedly their actions are what constructed the current many faceted debacle in the first place but there is no one else to turn to to fix it is there ?
What's it take to get them to pull their heads out of each others and their own buts ?
We do agree on part of the 3rd in that we both think the inmates are running the asylum.
We really need to find leadership that put's our interest / living standard / economy / security above that of any other country in the world.
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Permalink Reply by william Allen. Ladd on
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What you are saying here, Joseph, is:
"We need to find leadership that puts our interest/ living standard /economy / above that of any other country in the world."
This thought is very short sighted because it will never lead to peace on our planet. And is not "peace on earth" what we really want?
Would you rather be looking over your shoulder at you next door neighbor in a distrusting manner or would you rather have that neighbor ready to help you in an emergency situation?
Ok now turn my words around. Would you help your neighbor if he should have an emergency situation or would you just say, "Oh well, it's not my problem?"
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Permalink Reply by Joseph-Ohio on
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Considerng history and current events I for one have concluded that 'world peace' is an impractical / impossible pipe dream / simply beyond mankind's capacity to achieve / realize.
Regarding helping a 'neighbor' :
A 'neighbor' is someone that I can trust too.
I would help a 'neighbor' if I could.
Unfortunately, it seems to me 'neighbors' are few and far between these days.
As a result I spend a lot of time 'looking over my shoulder' these days.
Good luck to all of us neighbor - I think we need it.
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Permalink Reply by william Allen. Ladd on
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It helps to be a good neighbor first instead of showing suspicion every time you encounter him. No sense to be paranoid about everyone!
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Permalink Reply by Joseph-Ohio on
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Who among any readers here would think me or mine would (at 1st meeting) do anything / treat any new acquaintance as other than a 'neighbor' ?
If you do, why ?
Nothing wrong with looking both ways before crossing a busy street is there ?
You see, I've crossed a lot of streets during my tenure and I'm still crossing them.
I call that a success thus far.
We've never met and have already called you a neighbor but notice you haven't reciprocated - who's being the most unfriendly here between the two of us ?
BTW william Allen. Ladd are you shouting at me ?
If so, why ? ?
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Permalink Reply by Joseph-Ohio on
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You know William (can I call you William my friend ?) - I'm not a psychologist or psychiatrist (are you ?) but, I think there's alot of difference between excercising an appropriate amount of caution and being paranoid - don't you think so too ?
Are you somehow thinking I'm being paranoid ?
If so what makes you think that of me ?
How does this discussion make you feel ?
lol neighbor !
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Permalink Reply by william Allen. Ladd on
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Oh Joseph, Joseph, Joseph!
There are many different kinds of cultures on this planet we call earth. Each individual tries to survive as best as he can. Look at it this way, If you can make a better pair of shoes then I can, And you have more then you can wear. Does that make you a better person then me?
Now supposing I can grow a better garden then you can. Does that make me a better person then you?
You have better shoes then I do but you are very hungry. I am not the least bit hungry because I have an over supply of food.
Well lets trade a pair of your great shoes for a months worth of my garden produce.
So now I have a good pair of shoes and you have a kitchen of tasty food to eat.
And now we are both better off then before.
But then I get to thinking that my garden produce is worth more then your shoes are because a third neighbor across the street has told everyone else that we, you and I are both less then honest with each other..
And now neither one of us will trust the other. You have lots of shoes and I have way too much garden produce. The rest of the neighbors will not trust either one of us because they would rather believe that third neighbor across the street who is un able to make a good pair of shoes or grow a garden.
But this third person is a good tool maker and can make tools that each of us needs.
If one or the other has the idea that we are above all of the others then no trust is possible and consequently no peace can ever be acquired.
As human beings we suppose that we are way above all the other creatures that walk the earth. No other creature has done more to change the earth then we have. Far too many of these changes have been done only to fatten bank accounts and acquire control over other folks. Instead much of the earth has been destroyed and caused mistrust of world leaders!
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