Brent crude over $105/bbl

I believe that someone on this site (or maybe it was another site) said the main reason we lost our place as a net oil exporter and became a net importer was not necessarily because of government action. It was because the price of oil became so low that fracking was no longer profitable. The gist was that if we wish to be energy independent, higher oil prices will be required.

Not sure if I agree with that or not, but it does take some of the pain out of hearing that oil prices are going up.
 
JOhnH said:
I believe that someone on this site (or maybe it was another site) said the main reason we lost our place as a net oil exporter and became a net importer was not necessarily because of government action. It was because the price of oil became so low that fracking was no longer profitable. The gist was that if we wish to be energy independent, higher oil prices will be required.

Not sure if I agree with that or not, but it does take some of the pain out of hearing that oil prices are going up.
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I’m not buying that at all.
 
NealRomeoGolf said:
...It doesn't instantly go back into service.
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And even less so in an unfavorable regulatory environment. In college, a buddy tried to get me to invest in an oil well. I don't remember the time frame exactly, but, there was like 1.5+ years before we'd know if the oil well hit and therefore if our investment might return anything. I've used this as an example to people as to why the regulatory environment is so impactful. I didn't invest in the well then and nor would I consider it now for fear of the roadblocks that might arise down the road getting the oil to market etc.
 
Thanks to the Brit we now have more shale than we can shake a stick at.
 
JOhnH said:
the main reason we lost our place as a net oil exporter and became a net importer was not necessarily because of government action. It was because the price of oil became so low that fracking was no longer profitable.
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FWIW: price is a major point of any petroleum exploration/production ops, however, the net import/export figures are a bit more complex to calculate due to other inputs such as consumption, other fuels, finished products, etc. figure into the overall calculation. While we were a net exporter at one time it was only in a very narrow band of products exported and not across the board so to speak. There are several databases, both public and private, that track this data and put out regular reports for review. But what figures more into the equation is how the various companies handle their CAPEX for the coming years. And when West TX crude hit sub-$0 prices in mid-2020 it through the entire domestic petroleum industry into shock. So in reality for us to get back to being a "net exporter" it will take more than just price to get us there.
 
Katamarino said:
That's your problem, it's true. I spent many years working on American shale production.
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It’s not a problem, participation in production doesn’t mean you understand energy markets. To say that nothing is having an influence here other than market prices is myopic. The policies of all the oil producers drive the market.
 
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RussR said:
I have to say that where I live now, depending on your clientele, high oil prices can be very good for pilots and even flight instructors.
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Maybe, but high oil prices generally translate into higher fuel costs, which usually doesn’t benefit the industry. My concern is the potential for being on the brink of a recession.
 
NealRomeoGolf said:
You should. Nobody is going to frac at less than $75 a barrel. All that equipment went offline for 2 years. It doesn't instantly go back into service.
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I’m just saying there is a lot more to it than whether or not we are producing from our frac ground and saying that our energy policies have nothing to do with prices is not accurate. It’s a half truth.
 
RyanB said:
Maybe, but high oil prices generally translate into higher fuel costs, which usually doesn’t benefit the industry. My concern is the potential for being on the brink of a recession.
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The last 5 recessions have been preceded by a spike in energy costs.
 
RussR said:
I have to say that where I live now, depending on your clientele, high oil prices can be very good for pilots and even flight instructors.
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That’s great for you but it will not be a good thing for the economy at large. Typical pilot. Only care about yourself. Lol

just joking by the way.
 
RussR said:
I have to say that where I live now, depending on your clientele, high oil prices can be very good for pilots and even flight instructors.
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Not questioning your conclusion I’m just curious how you came to it. I would think it would be just the opposite.
 
Tarheelpilot said:
That’s great for you but it will not be a good thing for the economy at large. Typical pilot. Only care about yourself. Lol

just joking by the way.
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Hah! Oh I know that.

Morgan3820 said:
Not questioning your conclusion I’m just curious how you came to it. I would think it would be just the opposite.
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I'm no economist or even in the oil business, except indirectly as a pilot with some clients who are. As I understand it, higher oil prices often mean a lot more investment in oil facilities (because it's worthwhile at the higher prices), and a lot more need for all the support industries. Which means a lot more work for people, and a lot more jobs. Which means more flying people to and from, and more people making more money and buying airplanes, or upgrading their existing airplanes, or just learning to fly period.
 
Tarheelpilot said:
It’s not a problem, participation in production doesn’t mean you understand energy markets.
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Maybe not, but project-managing developments where the economics are directly linked to market prices gives one something of an understanding. Or do you think we just randomly build things and hope for the best?
 
Katamarino said:
Maybe not, but project-managing developments where the economics are directly linked to market prices gives one something of an understanding. Or do you think we just randomly build things and hope for the best?
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Sorry. Your post was rude and I was rude right back. Guilty of the same ****dip behavior that ****ed me off in your post. My apologies.
 
Tarheelpilot said:
Sorry. Your post was rude and I was rude right back. Guilty of the same ****dip behavior that ****ed me off in your post. My apologies.
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My apologies too, I was rather abrupt in my initial post.

In recent years, price has directly driven production of shale oil and gas in the US. It has been low enough that new development has not been very economically viable, and existing production has even been turned off or slowed. In that environment, government policy towards new acreage or the lesser-spotted newt has minimal impact, as access to reserves isn't a constraining factor on production.

Environmental policy was actually even less of a factor for us, as we developed to higher standards than the minimums in order to maintain a solid relationship with landowners. It's no good trashing the landscape in line with lax regulations if it upsets the landowners and they deny you access.

Once prices rise high enough that everything is switched back on, and all existing acreage is fully developed, that kind of policy would certainly have a larger share of the impact. I don't think we're at that point but we're certainly getting closer to it.
 
Maybe high gas prices will result in aircraft prices crashing back down to a more reasonable level.
 
RussR said:
Hah! Oh I know that.



I'm no economist or even in the oil business, except indirectly as a pilot with some clients who are. As I understand it, higher oil prices often mean a lot more investment in oil facilities (because it's worthwhile at the higher prices), and a lot more need for all the support industries. Which means a lot more work for people, and a lot more jobs. Which means more flying people to and from, and more people making more money and buying airplanes, or upgrading their existing airplanes, or just learning to fly period.
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I admire your optimism.
 
Katamarino said:
My apologies too, I was rather abrupt in my initial post.

In recent years, price has directly driven production of shale oil and gas in the US. It has been low enough that new development has not been very economically viable, and existing production has even been turned off or slowed. In that environment, government policy towards new acreage or the lesser-spotted newt has minimal impact, as access to reserves isn't a constraining factor on production.

Environmental policy was actually even less of a factor for us, as we developed to higher standards than the minimums in order to maintain a solid relationship with landowners. It's no good trashing the landscape in line with lax regulations if it upsets the landowners and they deny you access.

Once prices rise high enough that everything is switched back on, and all existing acreage is fully developed, that kind of policy would certainly have a larger share of the impact. I don't think we're at that point but we're certainly getting closer to it.
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It’s easy to be abrupt here…

Edit: thanks for the additional info
 
I have two friends both have Fracking sand and fluids companies…actually competitors as well…they have done just fine with $50.00 plus oil although with cost increases for them they say $60.00 is the new $50.00…I have done okay in life..but those guys define rags to riches…there is plenty of other things that have killed off production from subscription costs to regulations…
 
NealRomeoGolf said:
You should. Nobody is going to frac at less than $75 a barrel. All that equipment went offline for 2 years. It doesn't instantly go back into service.
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Not quite true. Every producer has different levels depending on what shale play they are in. In the Permian, there were plenty of companies drilling at $40/oil during down years because it was easier to drill there and the result was a better product. Drilling in the Utica (Ohio), Marcellus (Pennsylvania), and Bakken (North Dakota) won't be extremely profitable for most until you pass a much higher threshold ($60/bbl) due to greater well depths and lesser quality of oil. The thing that really slows with low oil prices is the E&P side, where they aren't bothering with buying up new leases and drilling exploratory wells. As you mentioned, there is a lot of equipment that got stacked during the pandemic, and lots of roughnecks who were laid off and found other employment since then. Getting rigs out of mothball, and repairing all of the equipment that was robbed of parts to keep other rigs running takes a lot of time (and significant financial capital). Most oil producers have also switched their financial philosophies from being highly leveraged in the 2010-2016 era to having a more stable balance sheet. They aren't as likely to take on large debt loads for short-term oil runs, and they don't want their stock market ticker to take a hit.

Add to that the continued push politically to ban fracking and otherwise curtail the O&G industry, there is always reluctance as to how quickly they will act to restore balance with increased production. I think a lot of the oil companies are perfectly happy to ride it out slow-n-steady rather than race to throw as many rigs into the mix as they can.
 
Morgan3820 said:
I admire your optimism.
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Perhaps, but it's not unwarranted, and is based on watching it happen. Yes, it's totally a subset of the larger economy and just because things are good for oil companies (and local pilots) doesn't mean it's good for the economy as a whole. I get that. But it's like if you're selling a house and a bidding war starts - good for you, but bad for the buyers.

Oil under $40 a barrel hurts companies in this area. Planes were being sold and pilots were looking for work. The last time oil was $140 a barrel, they were living large, and so were the pilots.

Are the conditions the same now? I have no idea. I'm a pilot, not an economist. But I am certainly ready and willing to help any companies find places to spend their profits...
 
So…. Are we selling oil?
 
SoonerAviator said:
….Most oil producers have also switched their financial philosophies from being highly leveraged in the 2010-2016 era to having a more stable balance sheet. They aren't as likely to take on large debt loads for short-term oil runs, and they don't want their stock market ticker to take a hit.

Add to that the continued push politically to ban fracking and otherwise curtail the O&G industry, there is always reluctance as to how quickly they will act to restore balance with increased production. I think a lot of the oil companies are perfectly happy to ride it out slow-n-steady rather than race to throw as many rigs into the mix as they can.
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Bingo for the publicly traded companies.
 
RyanB said:
Maybe, but high oil prices generally translate into higher fuel costs, which usually doesn’t benefit the industry. My concern is the potential for being on the brink of a recession.
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You say recession like its a bad thing.
 
RyanB said:
Maybe, but high oil prices generally translate into higher fuel costs, which usually doesn’t benefit the industry. My concern is the potential for being on the brink of a recession.
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I don’t see how to avoid a recession now. Oil and real estate bubble. Double whammy.
 
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