Republican Senators ask Saudis to restrict oil production because cheap oil is now bad. So much for free markets.
sullivan.senate.gov/newsroom/press-releases/u...Posted Mar 16, 2020, 10:25 PM UTC
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sullivan.senate.gov
Idiots. I think Russia/Putin already said now.
Cheap oil is exactly what we need right now.
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How do you know?
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Cheap oil is always what the US needs.
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Cheap oil is exactly what we need right now.
it's certainly not what the economy needs right now
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Cheap energy is good for the broader economy., its just not good for the energy sector.
However everyone will save money filling gas, and that will save everyone money and that money can be spent elsewere
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Saudis can extract oil cheaper than anyone else in the world, likely in the range of $15/bbl.
At that price, not only would US drilling halt overnight, but a lot of US extraction would be money-losing, even for wells that have already been drilled.
States that rely on drilling activity are headed towards a nasty reckoning. Banks that made loans to drillers will be hit hard. Alaska, North Dakota, and the gulf states are not in a good place right now, they're just going to be out-competed for a long while by the Saudis.
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From what i have read its actually far cheaper. $3 a barrel for the sauds. The other consideration is what they budget for selling it at, which is $83 a barrel. Their government is kinda cutting off thier nose to spite their face by flooding the market.
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Their government is kinda cutting off thier nose to spite their face by flooding the market.
No, their government is doing it to piss off Putin, who is pissed off by the shale cowboys in the US.
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Why would fracking in the US bother Putin specifically? Russia and Saudi could not come to an agreement on cutting back production, so Saudi Arabia is just going ham by dumping cheap oil into the European and Asian oil markets. In order to screw Russia and by extension the US production too.
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Why would fracking in the US bother Putin specifically?
because it produces a shit-ton of natural gas, and the US has massive reserves of it (the largest shale-oil fields in the world, IIRC)
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There are many many articles explaining why thought the concept is pretty basic. Why would anyone be unhappy with competition that erodes it's market share and ability to monopolize. Oil/gas isn't just a commodity, it's a necessity and therefore having control of the supply also gives you power.
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The US doesn't need to be competitive with the Saudi's. The Saudi's can't supply the entire world. The US only needs to be below the high cost of the producers who would go out of business first, until global production is brought back in line with global demand.
The UK, Brazil, and Canada are the high cost producers, not the US.
On top of that, the quality of the oil matters. The US produces some of the best oil in the world. Venezuela and Canada produce sludge that no one wants and few refiners can handle. The Saudi's have a mix, but when they start digging deep, the extra that they come up with is sludge that no one wants. They may be stuck with no bidders for the shit they're pulling up.
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I don't understand how cheaper stuff, externalities notwithstanding, can be bad for the economy. I'm reminded of the parable of the broken window.
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Mostly by not letting US drillers be profitable, which will probably cause a lot of small companies to go bankrupt by not being able to sell their production at their expected price point while also having loans to pay off. This has been the nature of oil production for more than a 100 years.
Even if the Saudis claim to only be trying to hurt Russia or whatever they are still going to hurt US production for years to come, not to mention Canadian and Mexican production which the US depends on.
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I'm reminded of bastiat's candlemakers.
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senator from alaska abuses the power of his office to enrich himself and his constituents
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[deleted]
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Oil has never been a free market: too strategic.
If oil was a free market we'd have all bought electric cars a decade ago
If they can’t compete let the invisible hand of the market guide them to bankruptcy or greater efficiency
Markets are great when there are rules. Other countries dont necessarily care about your free market and want to kill you.