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Tue Oct 23, 2012, 02:08 PM

US may soon become world's top oil producer

Source: AP-Excite

By JONATHAN FAHEY

NEW YORK (AP) - U.S. oil output is surging so fast that the United States could soon overtake Saudi Arabia as the world's biggest producer.

Driven by high prices and new drilling methods, U.S. production of crude and other liquid hydrocarbons is on track to rise 7 percent this year to an average of 10.9 million barrels per day. This will be the fourth straight year of crude increases and the biggest single-year gain since 1951.

The boom has surprised even the experts.

"Five years ago, if I or anyone had predicted today's production growth, people would have thought we were crazy," says Jim Burkhard, head of oil markets research at IHS CERA, an energy consulting firm.

FULL story at link.


Read more: http://apnews.excite.com/article/20121023/DA23DCJ82.html



Drill baby drill seems hollow. And still the climate deniers say President Obama is hampering oil production.

Why do oil companies get subsidies to ship USA oil out of the USA? That costs all of us $ and keeps us from being oil independent.




In this Tuesday, July 26, 2011 file photo, Ben Shaw hangs from an oil derrick outside of Williston, N.D. U.S. oil output is surging so fast that the United States could soon overtake Saudi Arabia as the world's biggest producer. U.S. production of oil and other liquid hydrocarbons is on track to rise 7 percent in 2012 to an average of 10.9 million barrels per day. It's the fourth straight year of crude increases, and this year drillers are on track to post the biggest single year gain since 1951. (AP Photo/Gregory Bull, File)

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Reply US may soon become world's top oil producer (Original post)
Omaha Steve Oct 2012 OP
FightingIrish Oct 2012 #1
kwenu Oct 2012 #2
NickB79 Oct 2012 #40
ErikJ Oct 2012 #3
dipsydoodle Oct 2012 #8
ErikJ Oct 2012 #10
OnyxCollie Oct 2012 #11
hunter Oct 2012 #13
OnyxCollie Oct 2012 #18
krispos42 Oct 2012 #16
DippyDem Oct 2012 #4
Locut0s Oct 2012 #5
DippyDem Oct 2012 #7
SoapBox Oct 2012 #6
Locut0s Oct 2012 #9
hack89 Oct 2012 #12
OnyxCollie Oct 2012 #19
hack89 Oct 2012 #24
OnyxCollie Oct 2012 #26
hack89 Oct 2012 #28
OnyxCollie Oct 2012 #30
NoOneMan Oct 2012 #20
antigone382 Oct 2012 #22
NoOneMan Oct 2012 #25
sulphurdunn Oct 2012 #27
NoOneMan Oct 2012 #31
sulphurdunn Oct 2012 #47
AsahinaKimi Oct 2012 #14
truebluegreen Oct 2012 #17
NickB79 Oct 2012 #41
krispos42 Oct 2012 #15
valerief Oct 2012 #21
antigone382 Oct 2012 #23
tabasco Oct 2012 #29
hughee99 Oct 2012 #32
happyslug Oct 2012 #34
hughee99 Oct 2012 #35
NickB79 Oct 2012 #43
hughee99 Oct 2012 #44
NickB79 Oct 2012 #45
hughee99 Oct 2012 #46
NickB79 Oct 2012 #48
LineNew Reply ^
Wilms Oct 2012 #33
booksenkatz Oct 2012 #36
Kolesar Oct 2012 #37
budkin Oct 2012 #38
Evasporque Oct 2012 #39
NickB79 Oct 2012 #42

Response to Omaha Steve (Original post)

Tue Oct 23, 2012, 02:21 PM

1. And Saudi Arabia plans to go 100 percent renewable

It looks like they see the folly of using a finite resource for energy.

http://t.co/q695blLV

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Response to Omaha Steve (Original post)

Tue Oct 23, 2012, 02:22 PM

2. I'm not sure where the article is going....

U.S. production may be up but Saudi Arabia has so much oil that they could double output almost at the snap of a finger. More importantly, they could reduce output by half at the snap of a finger also. Oil is sold to any consumer that wants to buy it like everything else. If China pays more for U.S. oil then they will get the oil. Is the point of these articles to dissuade people from having interest in alternatives that will reduce dependence long term?

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Response to kwenu (Reply #2)

Wed Oct 24, 2012, 02:32 PM

40. Saudi Arabia is almost definitely lying on their oil reserves

http://www.guardian.co.uk/business/2011/feb/08/saudi-oil-reserves-overstated-wikileaks

The US fears that Saudi Arabia, the world's largest crude oil exporter, may not have enough reserves to prevent oil prices escalating, confidential cables from its embassy in Riyadh show.

The cables, released by WikiLeaks, urge Washington to take seriously a warning from a senior Saudi government oil executive that the kingdom's crude oil reserves may have been overstated by as much as 300bn barrels nearly 40%.

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Response to Omaha Steve (Original post)

Tue Oct 23, 2012, 02:25 PM

3. The only way for cheaper oil/gas is to nationalize the oil

Otherwise its on the world market at world market prices. I love teasing the T-baggers with that.

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Response to ErikJ (Reply #3)

Tue Oct 23, 2012, 02:53 PM

8. nationalising

would mean you'd bear all production costs instead of simply paying licensed royalties. Oil produced would still finish up on the world market and it doesn't follow that prices would be lower.

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Response to dipsydoodle (Reply #8)

Tue Oct 23, 2012, 03:15 PM

10. Gas is very cheap in some nationalized oil countries.

Venezueala its 50 cents a gallon. But then in Norway where its also nationalized its $8 a gallon mostly because of added taxes.
We subsidize big oil,coal and gas $750 billion a year. Take that out by nationalizing and you would see the difference.

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Response to ErikJ (Reply #3)

Tue Oct 23, 2012, 03:36 PM

11. Any attempt to nationalize the oil companies

will force the US to invade itself and overthrow its democratically elected leaders.

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Response to OnyxCollie (Reply #11)

Tue Oct 23, 2012, 03:58 PM

13. I think that's already happened.


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Response to hunter (Reply #13)

Tue Oct 23, 2012, 05:58 PM

18. The war in Iraq, the imprisonment of Gov. Don Seigelman,

Yeah, it's already happened.

On the bright side, now that we are aware, we can dispel with the false hope for change.

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Response to ErikJ (Reply #3)

Tue Oct 23, 2012, 04:07 PM

16. We need to get the speculators out of the market.

Only people that own a pipeline or a tanker ship or a tank farm or a refinery, or that own a fleet of trucks or airplanes or ships, should be buying and selling crude and refined oil futures.

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Response to Omaha Steve (Original post)

Tue Oct 23, 2012, 02:25 PM

4. It's all bullshit. Oil as well as all commodities go on global market and goes to highest bidder.

That's the way markets work these days.

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Response to DippyDem (Reply #4)

Tue Oct 23, 2012, 02:37 PM

5. I think the point is that this could make some already stinking rich people in the US much richer...

Not that it will ever send the price at the pump down.

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Response to Locut0s (Reply #5)

Tue Oct 23, 2012, 02:43 PM

7. Exactly correct!

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Response to Omaha Steve (Original post)

Tue Oct 23, 2012, 02:37 PM

6. What you said...

"Why do oil companies get subsidies to ship USA oil out of the USA? That costs all of us $ and keeps us from being oil independent."

Our house has asked this for YEARS!

America is sooo stoopid and sooo ignorant to this stuff.

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Response to SoapBox (Reply #6)

Tue Oct 23, 2012, 02:55 PM

9. Because it makes a small subset of powerful people a FUCKING SHITLOAD of money to do so. nt

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Response to Omaha Steve (Original post)

Tue Oct 23, 2012, 03:44 PM

12. It says that increased domestic production could cut imports in half.

don't you see this as a good thing?

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Response to hack89 (Reply #12)

Tue Oct 23, 2012, 06:01 PM

19. How are you going to force private companies to sell to the US,

and not whomever is the top bidder?

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Response to OnyxCollie (Reply #19)

Tue Oct 23, 2012, 06:34 PM

24. It doesn't matter where it ends up

This represents a lot of jobs and a lot of local taxes. This is a good deal for America.

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Response to hack89 (Reply #24)

Tue Oct 23, 2012, 06:59 PM

26. LOL!

That's what was said about the Keystone XL pipeline.

Who will be paying for the externalities this drilling will bring? US taxpayers, that's who.

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Response to OnyxCollie (Reply #26)

Tue Oct 23, 2012, 07:08 PM

28. Did you read the link?

where it talks about the economic boom this has set off in parts of America?

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Response to hack89 (Reply #28)

Tue Oct 23, 2012, 07:27 PM

30. And?

Does that mean wells will never leak, causing damage to our environment, while oil companies avoid responsibility?

BTW, have you had any Gulf seafood lately? The bp commercial says it tastes great.

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Response to hack89 (Reply #12)

Tue Oct 23, 2012, 06:07 PM

20. I don't

 

The actual source of hydrocarbons does not mitigate its environmental impact. Further, increasing supply & security will certainly only lead to more usage & exploitation of it.

If you cut imports in half via conservation, that is a good thing. Otherwise, you are just playing a shell game.

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Response to NoOneMan (Reply #20)

Tue Oct 23, 2012, 06:31 PM

22. Thank you. This is the exact fucking point.

More oil production equals the unstoppable deaths of billions of people and the absolute collapse of multiple ecosystems.

Let's see what the "yay, cheap oil" crowd has to say when they're stuck with the ridiculous food prices that will result from this summer's drought.













....Yeah, I know. They'll just point out that it's snowing somewhere...and also Al Gore...so there.

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Response to antigone382 (Reply #22)

Tue Oct 23, 2012, 06:51 PM

25. There was a drought this summer?

 

Are you sure? I didn't here a peep about it during the important debates.



Our locals rivers turned to mud in many places due to 3-4 months of zero rainfall. The chinook run, a major source for nitrogen & other nutrients for the surrounding forests, was devastated. Four more years of that and this species will virtually disappear from our rivers.

I wanted to take my kids out to watch the runs this year, because when they are my age it will likely be over. Trying to give them that memory has become a poignant experience; I am astonished that it is already this difficult. It really is unfolding before our eyes if we just care to look.

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Response to NoOneMan (Reply #25)

Tue Oct 23, 2012, 07:06 PM

27. What's up the salmon runs?

I spent many years fishing commercially in Alaska and the North West. I thought they were holding their own.

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Response to sulphurdunn (Reply #27)

Tue Oct 23, 2012, 07:34 PM

31. The drought took a major toll around my neck of the woods

 

I walked our rivers for miles since September, and only found a handful of Chinook each day. I walked in flip flops through areas I normally have to use waders in; the river was feet low. The regional management branch shut down all angling on three rivers nearby during this time (Nitinat, Cowichan, Puntledge); catch and release wasn't even allowed. I am talking absolute devastation to this run.

Its been raining the last 12 days or so, and the chum have come on strong at least, finally. But the chinook season was a bust--they cooked themselves while staging out in the estuaries, waiting for sweet river water that never came this year due to the drought.

As far as I was aware, Alaska faced similar conditions this year, right?

http://www.bclocalnews.com/news/172753511.html?mobile=true
http://www.timescolonist.com/Drought+water+levels+river+force+cowichan+tribes+halt+salmon+fishery/7356369/story.html
http://hqcowichanvalley.com/home/local/news/Local/12/10/09/Potential-Disaster-Prompts-Fishing-Ban-on-Cowichan-River

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Response to NoOneMan (Reply #31)

Wed Oct 24, 2012, 03:29 PM

47. Don't know.

I still have friends in the business out there (I live in Virginia now). I'll check with them and let you know.

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Response to Omaha Steve (Original post)

Tue Oct 23, 2012, 04:04 PM

14. Just curious but

Where is this oil coming from? Seems to me, I remember reading about how in the 1970s people were once waiting in long lines to get gas at the gas stations. Recently gas prices had gone though the roof... and now suddenly there is lots of oil? I don't get it.

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Response to AsahinaKimi (Reply #14)

Tue Oct 23, 2012, 04:17 PM

17. People waited in long lines in the 70s

because of the rise of OPEC and the oil embargo; the cartel demanded higher prices for their oil.

Now OPEC regulates the price of oil by controlling demand: they want to keep the price high enough to support their governments, but low enough to discourage the development of alternatives. Speculators can also have an effect on the price, and so can the economy: the cost of a gallon of gas was so low when Obama came into office because the worldwide economy was in free fall (i.e. supply was normal but demand was low).

That's an over-simplification, but the important thing to remember is that oil producers--nations and corporations--are looking out for themselves, period.

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Response to AsahinaKimi (Reply #14)

Wed Oct 24, 2012, 02:35 PM

41. New drilling techniques and high global oil prices

Basically they're fracking oil in the same way they're fracking natural gas, ie injecting massive amounts of fluid underground to crack rock formations and sucking out the fossil fuels that leak out with very accurate, computer-guided flexible drilling systems.

That, and the high price of oil makes it profitable. If the oil price fell below $75/barrel, most of these rigs would shut down because that's their break-even point.

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Response to Omaha Steve (Original post)

Tue Oct 23, 2012, 04:05 PM

15. US proven oil reserves 20,680 million barrels

US production of crude oil:

10.9 million barrels per day.


Total days of pumping before we're dry: 1,897.

That's 5.2 years. The beginning of 2018.

"drill here, drill now" my ass.


If we were to be entirely self-sufficient in regards to oil, we'd have to double our crude oil production... and then we'd run out shortly after the next Congressional election.


https://www.cia.gov/library/publications/the-world-factbook/geos/us.html

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Response to Omaha Steve (Original post)

Tue Oct 23, 2012, 06:18 PM

21. You mean this was done during the Obama years? Heavens to Murgatroid, the GOPers

will faint over this.

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Response to valerief (Reply #21)

Tue Oct 23, 2012, 06:34 PM

23. Everyone should faint over this...or rather, they should blockade the oil executives' doors.

The holocaust that *is currently* resulting from fossil-fuel driven global warming is one of the most savage injustices in the history of the human race.

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Response to Omaha Steve (Original post)

Tue Oct 23, 2012, 07:19 PM

29. We've been there before.

Big deal.

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Response to Omaha Steve (Original post)

Tue Oct 23, 2012, 07:38 PM

32. The US should attempt to produce as much oil as we consume,

regardless of where we sell the oil we produce and where we buy the oil we use.

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Response to hughee99 (Reply #32)

Tue Oct 23, 2012, 11:34 PM

34. We have NOT done that since 1969, and for at least 20 years afterward, the US was the #1 producer

The key paragraph which everyone seems to be skipping is the following:

But Saudi oil is cheap to tap, while the methods needed to tap U.S. oil are very expensive. If the price of oil falls below $75 per barrel, drillers in the U.S. will almost certainly begin to cut back.

In simple terms, oil has to be at least $75 a barrel to break even on most of these wells, if the price drops below that number, the production will stop for it will NOT be profitable.

75/42 gallons in a Barrel equals $1.75 a gallon, to which you must add refining and distribution costs and 18.5 cents in federal Gasoline tax. Refining and Distribution costs is roughly 18 cents per gallon (10 cents for refining, 8 cents for distribution). Thus before we even get to state taxes we are looking at $2.115 per gallon (Distribution costs vary across the country, between the Rockies and the Appalachians Mountains, most goes from Louisiana up the Mississippi by barge to where pipelines exists. Thus the further from Louisiana you are the higher the cost of distribution and the higher the cost of Gasoline.

The coasts and the Mountains of the West have their own distribution system. The East Coast using both tankers on the Atlantic, the inter-coastal barge canal, various and various pipelines so distribution costs tend to be lower then in the Ohio Valley (Philadelphia, for example, has the same states rules and taxes as Pittsburgh being in the same state, but Pittsburgh is at the end of the Mississippi-Ohio distribution system, Philadelphia is in the East Coast Distribution system. Philadelphia is thus generally cheaper then Pittsburgh, and both are generally a few cents cheaper then in the Appalachian Mountains.

The West Coast has its own distribution system, that is only marginally connected to the Mississippi River distribution system. The Western Mountains are marginal for both areas (Through in area if the Dakotas to Idaho, due to the keystone pipeline NOT being finished, have the lowest prices in the country due to the fact it has a lot of "Captured" oil it can NOT ship out and sell for higher elsewhere. Thus the prices in that area is low for it has a oil surplus it can NOT ship out of the area). To a limited degree we can see the difference in distribution costs in the following table:

Notice: Changes to Petroleum Marketing Survey Forms for 2013

U.S. Regular Gasoline Prices* (dollars per gallon)

10/08/12
U.S...................................3.850
East Coast (PADD1).........3.798
New England (PADD1A)...3.955
Central Atlantic (PADD1B)..3.911
Lower Atlantic (PADD1C)..3.667
Midwest (PADD2)........3.772
Gulf Coast (PADD3).....3.537
Rocky Mountain (PADD4).....3.7484
West Coast (PADD5)......4.409
West Coast less California...3.978

Notice that the Midwest is $3.772 while the Gulf coast is only $3.537, some of that is taxes, but some of it is the variation as to distribution costs. The East Coast is high due to the high taxes of New York State, Pittsburgh on 10-8-2012 was about $3.95 today it is $3.79 but that is two weeks later we have to use the $3,95 number to be relevant for the above numbers are all for 10-8-2012.

http://www.eia.gov/petroleum/gasdiesel/

Thus before we even look at State Gasoline Taxes, we are looking at $2.115 per gallon gasoline. More in the Mid-West, less along the Gulf Coast (But we are talking about pennies).

The lowest state gasoline tax is Alaska at 8 cents a gallon, second is Wyoming at 14 cents per gallon, third is New Jersey at 14.5 cents per gallon. New York, at 49, California at 47 and Connecut at 46 are the only states with taxes in the 40s, every one else is mostly in the 20s and 30s with and additional handful in the high teens).

Thus in Alaska the price of Gasoline will drop to no lower then $2.195 per gallon (through I have to point out Alaska has one of the highest distributions costs of any state so prices will be higher due to the higher distribution costs), Wyoming would be no lower then $2.255 per gallon (Through Wyoming is also affected by the lock in oil due to the Keystone pipeline NOT being finished so it may have lower prices). New Jersey lowest price would be $2.249 per gallon. New York lowest possible price would be $2.605.

Compare that to the price today:
http://www.fueleconomy.gov/feg/gasprices/states/PA.shtml

In Philadelphia it is $3.51, Pittsburgh, $3.63 and Johnstown $3.75. $3.45 in Scranton (Nearest the New Jersey oil import terminals, lowest distribution costs), $3.49 in the Erie Area, again near the Great Lakes oil import area (Cleveland or Erie). Tells you something about the distribution cost and how much it varies.

http://www.fueleconomy.gov/feg/gasprices/states/PA.shtml

For Pennsylvania the State Gasoline Tax is only 32.3 cents thus the minimum price would be $2.438. Thus a reduction from $3,51 (Philadelphia Ara) would only be a drop of $1.032 is significant but not a real game changer but will lead to a drop domestic oil production.

If you actually study the theory behind Peak Oil such drops in price is fully expected. Coal suffered the same fate when it was the dominate energy source. When prices were high, marginal mines would open up, excess capacity would result due to over supply and prices would drop, and the marginal mines would close back up until the price of coal went back up and the whole cycle would start all over again.

What we are seeing with oil, what was known about coal during its life time, price went up and down all the time, even when demand was steady.

Now, we did NOT see much of this with oil for three reasons, First was Standard Oil, second was the Texas Railroad Commission and Third was Saudi Arabia. From the 1860s to 1912, Standard oil set the price of oil in the US and the World by simply saying what the price would be. If you try to undersell Standard Oil, you found yourself unable to ship on any railroad (the Railroads wanted a steady price for their oil and Standard oil gave them that standard price and to keep that price the Railroad companies were willing to deal with Rockefeller). The reason behind Standard oil is that people want to be able to budget and to budget you need to be able to estimate what your costs will be. Standard oil provided that steady price, if the price of oil went high, Standard oil would give it to you at the price Standard oil had agreed to sell it to you. In times when the prices was low, the buyer could buy the cheap oil, but then he ran the risk of having to pay market prices when the prices went back up, while his competitors only had to pay what Standard oil charged. Thus Standard oil controlled the price of oil in the US, not to high to drive people to other sources, but not as low as the market would send it, all to maximize profits. Please note Standard oil controlled price by controlling production, if the price went to high, Standard oil put more wells into production, if the price was to low, Standard oil would take wells OUT of production.

This ended in 1912, not only due to the Anti-Trust breakup of Standard Oil, but the finding of the huge Texas Oil Fields by Gulf Oil. WWI increased the demand for oil so no problems of low prices till the 1920s. As the Farmer went into the Depression in 1927 (The farmers started the Great Depression two to three years early) demand for oil slowed down, just as more and more Texas oil was coming into production. To solve this problem the Texas Railroad Commission was given the power to regulate oil production in the State of Texas, including how much oil that could be produced. Given that most of the World's known oil was in Texas (Russia was known to have a lot of oil, but being communists not counted, no one yet knew how big the oil fields in the Persian Gulf were), how much oil the Texas Railroad Commission permitted to be produced set the price of oil world wide. If the price was to high, production was increased, if to low, production was reduced. Texas was the
Swing producer" and the Texas Railroad commission set world wide oil prices by how much oil was produced in Texas. One of the reasons OPEC was formed in 1960 was the Seven Sisters wanted to be able to tell the Foreign producers of oil all, at the same time, what the Texas Railroad Commission had decided would be the price of oil.

From the 1930s to 1969, the Texas Railroad Commission refused to permit full production of Texas oil except for WWII. In 1969, the Texas Railroad Commission permitted every well in Texas to produced at full rate, for the price of oil world wide was to high. The problem was the price did NOT go down. Texas was no longer the "Swing Producer" of oil and thus could no longer set the world wide price of oil.

In 1973 the Yom Kipper War occurred. This caused shocks, not only to Israel, Egypt and Syria who fought the war, but to the US and Saudi Arabia. Americans tend to forget the 1973 Oil embargo was the THIRD oil embargo, one had occurred in 1956 after the 1956 Suez Canal War, another in 1967 after the Seven days war. Both produced massive shortages of oil in Europe, but no affect in the US for the US was still a oil EXPORTER in 1956 and 1967. The problem was in 1970 the US started to import oil for its own needs (The US had imported oil since 1900, mostly from Mexico and Venezuela, but for refining and reshipping NOT for internal use).

Thus, the 1973 oil Embargo hit the US hard, much harder then the 1979 oil crisis. The reason was simple, the US was unprepared. The Government had always assumed we would be self sufficinet in oil, that we were not was a shock, not only to the people but the people in charge of the Government.

Worse, Saudi Arabia which had been a leader behind the oil embargo, on the grounds it would look like they were doing something, when they will did NOT want to do anything, found out how dependent the US was on Persian Gulf Oil. They knew Europe and Japan were dependent but that the US was dependent came as a shock (Through if they had looked at the imports and exports it would have been clear, just no one in charged looked at those statitics). The Shah of Iran was pleasantly please, he had NOT participated in the Embargo, but did agree to the increase in oil prices authorized by OPEC. Prices became unstable during the 1970s and during the Iranian Revolution Saudi Arabia finally took over the rule previously held by Standard Oil and the Texas Railroad Commission by setting the price of oil by how much oil Saudi Arabia would produce. The House of Saud would go through the formality of OPEC setting the price of oil, but in reality it made clear its intention based on how much oil was produced in Saudi Arabia. This was became clear to everyone in the 1980s, when the North Sea oil came on line. Thachter wanted to use that oil to destroy the Soviet Union, who had become a huge non-OPEC oil exporter.

Side note: The Soviet Union depended on that oil to pays its bills. In fact Soviet Oil production peaked in 1987, started to drop after that date and the subsequet cash shortage was the reason the Soviet Union collasped. THe Sovien Union could NOT cut its bills. Due to this refusal to cut its military the Soviet Union tried everything else, finally Gorbachev came into power and started to cut the Military and the Soviet Industrial-Military complex tried to overthrow him. The problem was the men of the Soviet Army supported Gorbachev's solutions and rally around Yelsin, for Yelsin was free and in Moscow while Gorbachev was in custody on the Crimia. The reason the Soviet Army backed Gorbachev and Yelsin was the Army was a Univeral Service Army, i.e draftees, and as draftees had more in common with the common people of Russia then the Military Industrial Complex and thus supported what the people wanted NOT want the Military-Industrial Complex wanted. Gorbnachev ended up being on the losing side anyway for Yelsin was in the right place at the right time and thus won out over Gorbachev and the Soviet Military-industrial complex.

Anyway, Thacher so wanted the price of oil to go down, both to help Reagan get gasoline prices down in the USA, but also to reduce revenue for the old Soviet Union. Thus Thachter was always cutting the price of North Sea oil to increase market share at trhe cost of the Soviet Union and OPEC. Finally the House of Saud had enough. Thachter cut the price after the House of Saud asked her not to, so the House of Saud then reduced they own price to below the cost of production of North Sea Oil. Thachter got the point, when Saudi Arabia raised prices, she only matched the price not cut from it.

Side note: Thachter not only wanted to use the oil to destroy the Soviet Union and Help Reagan, she also wanted to destroy the Coal Mine Union in the United Kingdom. Coal had been the main stay of Energy in England for Centuries, but has been in decline since WWI due to the mines being either played out OR expensive to produce. After WWII, the mines were taken over by the British Government and kept open, providing high salarles for the miners and keeping up salaries for the rest of the working class of Britain. Thachter wanted to destroy this power base and saw the North Sea oil as her weapon to do it. With the oil, she could shut down power plants that used coal in favor of power plants that used oil, and after a few years be in a position to close down the mine if the miners did not take a substantial cut in pay. That seems to be her main gaol as Prime Minister, to destroy Labor in the United Kingdom, and she did using oil as her weapon and her ally. Now the North Sea oil field is coming to an end as an oil field (has Natural Gas potential but most of the oil is gone) and Britain is behind every other country in Western Europe on Solar, wind and other alternative enegy sources for Thachter saw it was more important to destroy the unions then to look as an energy replacement not only for coal but for oil.

Anyway, this thread is on Saudi Arabia and that it has been the "Swing Producer" since 1973. It showed its power to Thachter in the 1980s, and when it increase oil production during Desert Stoam that power was again shown. Since 2001 the House of Saud has said several times that the price of oil was to high, then changed its mine said it had set a new price point. This continued till 2008, when the prices went through the roof and then came smashing back down. The increase in production from Saudi Arabia during this time period was minisule, so small several commentators said it looked like Saudi Arabia had lost control over the price of oil.

Since 2008 the prices have fallen and then rose back up, even as Saudi Arabian oil production finally incrased (through it was in thicker harder to regined "Sour" oil, not the "Sweat" oil Saudi Arabia had exported in the past). On the surface this would imply that Saudi Arabia is still the Swing Oil producer, the oil producer that can turn off or on its oil as needed. The under current is Saudi Arabia has lost that edge and is selling whatever it can produce to keep the prices down (While the Average Citizen of Saudi Arabia cares less of the rest of the world, the members of the House of Saud do, for they have more investiments in Europe and the USA then in Arabia, investments that would lose value if the price of oil went to far up to fast).

Since the 1860s Standard Oil, then the Texas Railroad Commission and then Saudi Arabia set world wide oil prices, producing a stable priceing system. If the House of Saud has LOST that ability, then we are going to enter a period with huge changes in the price oil will become the norm. $2 one year, $3 the next, $4 the following and then back to $2 (or maybe $5, then $6 then $2). $2 is to low for the marginal producers of oil to make a profit thus will produce an oil shortage as more and more people use oil, but as prices go higher and higher more and more marginal producers will come on line. The problem is sooner or later the price will get so high no one will want to pay it and thus demand will drop, which will feed on itself in a fast decline, knocking out most of the marginal producers along the way. This decline will be rapid for once prices starts to drop, each time it drops below someone costs, that producer goes out of business and has to sell his inventory at a lost. Sooner or later it will bottom out and a slow increase will re-start.

The only way to reduce these prices changes is for someone to step in and set minimun prices. Yes, Minimum prices, that is how Standard oil set up its monoploy, stable supply at a set price. The only agency that can do that is the Government and it will have to do it over the opposition of most people, thus it has to somehow bring in revenue to the Government, i.e. a tax. If the Federal Government would support a $210 a Barrel ($5 a gallon) import tax, that would give domestic producers of oil $210 cost advantage over importers. Now this has to be done with an excess profits tax, i.e. if the oil company does NOT invest its $210 advantage in price in looking for more oil, or other energy sources, the income should be taxed at 100%. i.e. If the cost to produce the oil is only $100, the person selling the oil at $210 or more a gallon has to spend that profit of $110 on looking for new oil or other energy projects or have to pay the entire $110 in profit to the US Treasuay. I am willing to accept a 90% excess profits tax (The owner the the oil can keep 10% of the EXCESS PROFITS he is making since foreign oil would cost $210 just in taxes). But the excess profits has to go into some sort of energy search (could be looking for new wells to drill, or even Solar Panals, I don's care as long as it is used in some sort of energy search).

Given that the US has NOT been energy self-sufficient since 1969 and has failed for over 43 years to reduce its dependence on foregn oil, something has to be done, but that includes REDUCING oil usage for without addressing oil USAGE, the US will NEVER be Energy self-sufficient. The recent drop in usage has had the most effect on the price of oil (Less demand, the lower the price), that drop has been lead by the US and we need to reduce energy usage even more, but it is an unpopular position, popular in theory but when you look at how it has to be done unpopular (i.e attack suburbia). Thus until we decide as a nation to make the commentments to reduce oil usage in the US, we will NEVER be energy self sufficient and that means attacking Suburbia and the Car Culture, two things neither party wants to do .

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Response to happyslug (Reply #34)

Tue Oct 23, 2012, 11:52 PM

35. Given our current consumption, I realize that this isn't likely to happen

(or even realistically possible) but If we're going to consume 25% of the worlds oil, we should be willing to bear 25% of the environmental damage it causes. It's certainly not fair for us to TALK about reducing consumption while we "outsource" the environmental damage that our demand for oil creates. Perhaps the thought of having to do this would encourage all Americans to get serious about reducing consumption.

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Response to hughee99 (Reply #32)

Wed Oct 24, 2012, 02:43 PM

43. Yeah, because it's not like global warming is established science or anything



But who needs food, when the Midwest has turned to dust from the drought brought on by the melting Arctic icecap? We'll have oil, fuck yeah!

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Response to NickB79 (Reply #43)

Wed Oct 24, 2012, 03:10 PM

44. The US is responsible for 25% of the earth's oil consumption,

why should the US "outsource" its environmental damage to other countries.

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Response to hughee99 (Reply #44)

Wed Oct 24, 2012, 03:23 PM

45. The problem is that CO2 release is global

No matter where the fossil fuel is burned, it enters the atmosphere and becomes a problem for the whole planet. The environmental impacts of oil drilling and extraction are small potatoes compared to the effects of global warming, so even outsourcing the drilling of oil to other countries doesn't really change the final outcome: a cooked planet.

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Response to NickB79 (Reply #45)

Wed Oct 24, 2012, 03:29 PM

46. The CO2 isn't the only environmental damage done by drilling.

Production and transportation may only cause localized environmental damage, but Americans should be willing to accept more of that risk if they want to continue to consume at current rates. When people oppose drilling in ANWR, on federal lands, or offshore it's not primarily because they oppose increasing global oil supply, it's because they don't want the damage in their backyards.

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Response to hughee99 (Reply #46)

Wed Oct 24, 2012, 03:41 PM

48. Like I said, they're small potatoes

Even the BP blow-out in the Gulf of Mexico pales in comparison. While the BP oil spill was devastating, global warming will wipe out most of it's coral reefs, the rainforests of the ocean, within our lifetimes:

http://www.guardian.co.uk/environment/2011/feb/23/coral-reef-report-dying-danger

I don't say that to downplay the oil spill; it shows just how massively bad things are about to get now that global warming is really kicking into high gear. What we thought were environmental disasters in the 20th century will be looked at fondly by our children

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Response to Omaha Steve (Original post)

Tue Oct 23, 2012, 09:18 PM

33. ^

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Response to Omaha Steve (Original post)

Wed Oct 24, 2012, 12:16 AM

36. Awww, frack.:( NT

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Response to Omaha Steve (Original post)

Wed Oct 24, 2012, 05:52 AM

37. We need to increase the motor fuel tax, so that income taxes don't subsidize the highways

For that matter, our property taxes subsidize all of the county and municipal roads. Those local roads get zero motor fuel taxes.

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Response to Omaha Steve (Original post)

Wed Oct 24, 2012, 10:19 AM

38. Drill Baby Drill!!!

Fracking frack

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Response to Omaha Steve (Original post)

Wed Oct 24, 2012, 02:09 PM

39. Scientists discovered that cracking the earth into tiny bits produces vast amounts of oil...


Exxon Chief Geologist said "The best thing we could have in terms of oil production is a meteor to collide with earth that is large enough to shatter the crust and reach the mantle where billions of gallons of crude oil are locked. Once the crust is ejected into space drilling the once unreachable depths will be a breeze."

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Response to Omaha Steve (Original post)

Wed Oct 24, 2012, 02:41 PM

42. And if oil prices ever drop below $75/barrel, it all shuts down

From the article:

But Saudi oil is cheap to tap, while the methods needed to tap U.S. oil are very expensive. If the price of oil falls below $75 per barrel, drillers in the U.S. will almost certainly begin to cut back.


Just as the peak oil theorists have long predicted: the era of cheap oil is over. If they flood the market with oil to drop prices below $75/barrel, they'll have to shut down rigs, which will send the price shooting back up again. Short of a global recession/depression, we're stuck with paying $3-$4/gallon gas.

And, as conventional (read cheaper) oil sources are exhausted, the overall price of a barrel of oil will actually go UP despite increased drilling, as a greater proportion of the the world's oil will come from expensive fracked oil like this.

Fun times indeed.

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