ROCKMAN wrote:As a seller of petroleum I fully support your efforts. But you should try to drive more. LOL.
ROCKMAN wrote:BTW the excess consumption of petroleum by affluent Americans is a significant portion of the reason those needy folks need financial help given the resultant higher cost from our glutinous consumption. Also a shame those same needy folks aren't benefiting from the economic growth provided by all that ff consumption.
ROCKMAN wrote:looker - Which is my point about my MADOR protocol: Mutually Assured Distribution Of Resources. Just like the MAD protocol of the potential nuclear war days. Those economies that have the financial ability to dominate the ff market will do just that. But it does not serve their mutual interest to battle (either financially or militarily) each other: like MAD there's really no winner. Those powerful economies will instead take an even larger portion of future energy resources...to the detriment of weaker economies. Just as it happens today...just as it always has.
One can judge that situation as unfair but short of a truly effective communistic designed global commerce how can it be otherwise? Those strong economies might try to offer some minimal assistance to the weaker. But the obligation of each govt is to conduct iitself primarily for the benefit of its citizens. In a democracy a govt will have to do so or suffer being replaced by its voters. Venezuela is a good example of that NOT HAPPENING.
But consider the current US export profile. And not focusing on oil exports which have never actually been banned. Those are relatively small compared to refinery products. Products made from almost 5 million bopd. A fact many Americans are unaware of. The US has become THE refinery for the world. Which is OK with the voters...today thanks to relatively low motor fuel prices.
But what when those prices double...or triple? Given such a potential political weapon it's difficult to imagine politicians not using a potential ban (or at least limits) of such exports. The same can be said for any country exporting products. Consider the top 5 countries that account for more then 40% of those exports:
United States: $64.1 billion (12.7% of total refined oil exports)
Russia: $46 billion (9.1%)
Netherlands: $37.4 billion (7.4%)
Singapore: $36.1 billion (7.2%)
India: $27 billion (5.3%)
Not only will those exports become political issues they'll also become potential leverage to use against importing nations. Consider the EU which has been losing refinery capacity for years. Folks can appreciate oil embargoes but I don't many have contemplated product embargoes...and which countries, like the US, that would have the upper hand in such a dynamic.
And here's an indication of how little anyone is paying attention to potential product embargoes compared to restrictions of oil imports: while there are dozens of compilations of oil imports by country on the web I could not find a single one for refinery products. IOW which are the top 5 importers? And how susceptible are they to future restricted US exports? Sure, one could search each country individually. But interesting that perhaps no one has thought that to be worthwhile. And not just the big importers are of interest: what about small countries that import 70% or more of the products the consume? Countries that product exporters, like the US, would see little value in supplying during a future crunch time.
BTW: In 2015 the UK’s reliance on imported oil products reached its highest level in 32 years as rising demand for fuels continued to outstrip what domestic refineries produce.
Subjectivist wrote:At this point I fully support finding more cheap oil, it certainly improves my standard of living.
ROCKMAN wrote:"As a consumer of oil, and not a producer..." First, there is (and never has been) "cheap" oil.
Rockman wrote:There is economic and uneconomic oil.
Rockman wrote: For the last couple of years the Rockman et al have been busting their asses looking for conventional oil shore oil prospects to drill. And $50/bbl is a good enough price to make such prospects economics...even if they have only 50,000 bbls of net recoverable reserves. That would be $2.5 million in revenue vs a $750,000 +/- total well cost.
The problem isn't the price of oil: it's the lack of prospects left to drill.
onlooker wrote:But that is the point Ralfy, these growth trajectories cannot continue. Given that as the competition for limited resources continues it makes sense what Rockman is saying that the focus will be on eliminating competition and that means the lesser modern economies to just leave the most potent standing. Of course to me this is just rearranging chairs on the Titanic as the whole Industrial civilization endeavor is compromised from lack of cheap energy going forward and from overpopulation relative to resources.
ROCKMAN wrote:Adam - So what is the price range of "cheap oil"?
From 1980 the price of oil dropped from $37.42/bbl to
$29.02/bbl in 1983. And at that lower price it still wasn't "cheap oil" as indicated by the fact that the world consumed 1.4 BILLION bbls less in 1983 then in 1980 when the price was 25% higher. Same thing happened in 2009 when the world consumed less $60/bbl oil then it consumed of much higher priced oil in 2008.
Rockman wrote:Also I think you missed my point: I was referring to exploration of conventional oil prospects.
Rockman wrote:"It was your industry that destroyed the credibility of peak oilers (again)." A different perspective: it was my industry that confirmed the credibility of peak oil: it took much higher oil prices to increase US oil production from resources that were known to contain recoverable oil decades ago.
Rockman wrote:Had we seen US oil production surge with $35/bbl oil it would have given your perspective much more credibility. Or do you want to present a case that the US would have seen the same oil boom had oil stayed at $35/bbl?
Rockman wrote:Of course there's also the vastly different production profile of a well in a large conventional oil reservoir then that of a well in a fractured shale reservoir that has a much higher decline rate that also needs to be considered.
ROCKMAN wrote:From 1980 the price of oil dropped from $37.42/bbl to
$29.02/bbl in 1983. And at that lower price it still wasn't "cheap oil" as indicated by the fact that the world consumed 1.4 BILLION bbls less in 1983 then in 1980 when the price was 25% higher. Same thing happened in 2009 when the world consumed less $60/bbl oil then it consumed of much higher priced oil in 2008.
ROCKMAN wrote:"...it's just like rearranging chairs on the Titanic" I think a better analogy would be rearranging the life boat assignments on the Titanic: that determined who survived and who died. It might be difficult to envision but one day when global oil production drops 50% there may be some companies (my bet ExxonMobil and/or Shell Oil) could be making a very nice profit. Remember the Rockman made a huge ROR drilling NG wells iin the late 80's when prices were the lowest the had been in 15 years. Profitability is never determined by the price of oil/NG. It's determined by the difference between the price and what it cost to get it out the ground. For instance that first NG field I discovered in the 80's: sold it for $0.90/MCF but got it developed for a total of $0.12/MCF.
And oddly enough the big oil price drop is fermenting a significant modification of lifeboat seating assignments as the business undergoes perhaps the largest petroleum wealth transfer in history. And oddly enough some of the new seats are being taken by creditors including bankers. This is happening thru Chapter 11 bankruptcy settlement. For instance the former Halcon creditors now own 96% of the company and the former owners only 4% of its reserves. And in the case the drilling contractor Ocean Rig the former shareholders now own less the 1% of a fleet of modern DW drill rigs. Without contracts those rigs are not generating much revenue today. But when drilling picks up again they could be generating $BILLIONS in annual revenue. From bust to boom I've seen those rates go from $250k/day to $800k/day in 2-3 years. That can add $180 MILLION/year in revenue PER RIG.
Outcast_Searcher wrote:ROCKMAN wrote:From 1980 the price of oil dropped from $37.42/bbl to
$29.02/bbl in 1983. And at that lower price it still wasn't "cheap oil" as indicated by the fact that the world consumed 1.4 BILLION bbls less in 1983 then in 1980 when the price was 25% higher. Same thing happened in 2009 when the world consumed less $60/bbl oil then it consumed of much higher priced oil in 2008.
Oil usage is highly inelastic (i.e. it isn't impacted much by price changes, even big ones, in normal times.) This is something the vast majority of people don't seem to get.
People tend to consume the oil products they think they NEED. Their perception of need changes as fuel efficiency changes and their perceptions of the economy (i.e. economic confidence).
In 1983, vs 1979, fuel efficiency had just undergone a huge increase percentage wise. After the three big scary price spikes in the previous decade, no wonder. Just looking at how the US fleet fuel economy increased during that time (link follows) gives an indication of the scale. People burned less because they needed less, even though it was cheaper.
http://www.pewtrusts.org/en/research-an ... el-economy
In 2009, the global economy had shrunk, and the fear of a possible global DEPRESSION was huge. (I still remember how it felt, having retired less than 2 years prior and wondering how my timing could have been worse). In 2009 people burned less oil because they were afraid to spend money (a rare event, I know). This was in spite of the fact that oil in 2009 was DRAMATICALLY cheaper than it was in 2008, on average.
(I've seen the following chart a bunch of times on this site. Sorry for the long link, but copying/pasting it to a browser seems to work for me).
https://www.google.com/imgres?imgurl=ht ... IQ9QEIKjAA
ROCKMAN wrote:BTW the Rockman is thinking about buying 1,000 shares of Ocean Rig...that would only cost $250. LOL
Ocean Rig May Issue Up To 1 Trillion SharesOcean Rig has recently published the results of its annual shareholder meeting. The shareholder meeting approved the increase in the company's authorized share capital to ONE TRILLION (1,000,000,000,000) common shares. As of December 31 2016, the company had roughly 161 million common shares with 78 million shares classified as treasury stock. Thus, the company may issue 6211 times more stock than it has now.
The takeaway for common Ocean Rig shareholders is that they will receive next to nothing in the upcoming restructuring. Shares of Ocean Rig have recently been flat around 25 cents per share, but even this looks optimistic given the looming dilution. Ocean Rig shares are not suited even for gambling at this point.
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