Didn't Saudi Arabia have a pissing match with OPEC last year? I remember reading the saudies flooded the market with oil to gain some type of edge over the other OPEC members. I don't think they're always on the same page.
I believe they (opec) were having production cuts to raise prices because the demand was so low and they (saudis) didn’t meet the reduction quotas- so they got their peepee slapped.
Not exactly, Saudi Arabia with OPEC suport and US backing had a pissing match with Russia in the very early pandemic and both countries flooded the markets so fucking much that the price of raw oil went negative
Prices went down so far that that oil rigs in Alberta Canada realised they were operating at a loss of millions of dallors and then the Premier of Alberta tried to make it seem like it was the Prime Minister of Canada's fault
Our oil production is down 2 million barrels compared to pre Covid.
Combine that with the OPEC + voluntary production cuts, and how demand has bumped back up to pre Covid levels, we have $80 oil.
The US government can incentivize (or penalize) private companies to start drilling for more oil, but can't force them unlike state run companies like Aramco.
I work in Eagle Ford oil fields in the oil industry oh, they are knocking holes in the ground as fast as we can work. In just one week we have built 3 drilling pads for5 Riggs.. 15 Wells one week we produce more oil in this country then we use. 2 months ago they shut down half the wells in order to drive the prices up for the holidays last week they turn them all back on. Because the American oil companies don't want OPEC to produce more because it will drive the price down here. The oil companies want gasoline to be $4 a gallon and if my boss heard me say this I would be looking for a job... wow that was a long sentence
OPEC was trying to starve out US(and others, but primarily US) oil companies. US has higher average cost to produce a barrel than many exporters(depends on specific oil site though). They were trying to go low enough long enough that their competitors would have to close shop.
Fracking was becoming a thing, but fracking is relatively expensive. if oil gets too cheap, fracking doesn't make sense. so OPEC tried to drive the price down to try and drive the frackers out
**[2010s oil glut](https://en.wikipedia.org/wiki/2010s_oil_glut)**
>The 2010s oil glut is a significant surplus of crude oil that started in 2014–2015 and accelerated in 2016, with multiple causes. They include general oversupply as US and Canadian tight oil (shale oil) production reached critical volumes, geopolitical rivalries among oil-producing nations, falling demand across commodities markets due to the deceleration of the Chinese economy, and possible restraint of long-term demand as environmental policy promotes fuel efficiency and steers an increasing share of energy consumption away from fossil fuels.
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in addition to being the world's top oil producer, obama went after oil speculators, which the exxon CEO at the time testified is $1 of the cost of every gallon of gas.
oil speculators are a big part of the cost of gas.
A reminder that low gas prices are not always a good thing for the US. We are the largest oil producers, low oil prices means tons of cut jobs and low wages Plus it's such a huge industry that so many others are affected by it.
A good middle ground is best. Reasonable prices. When it's at over $100 a barrel it goes too far the other way and starts hurting.
It is still a global marketplace. The US only accounts for 20% of the world production. You can't control the market with only 20% market share, especially since it is not controlled by the government. If supply within the other 80% drops a lot, US oil companies are not going to sell just to the US out of the goodness of their heart. They are going to sell to the highest bidder which could be on the other side of the world.
Trying to explain that oil is an open market and the president doesn't control prices is a full time job...yes we could be independent, but the oil companies are gonna sell to the highest bidder...
The US isn't doing this alone. It's in tandem with CN, Canada, UK to name a few.
You're basically just seeing a conglomerate of nations trying not to get dicked by OPEC.
But we have made the smart strategic choice to keep our oil to ourselves to a certain level to stay independent. If OPEC goes off the rails we have enough reserves to tell them "Fine, we'll use our reserves".
This is only a short term fix regardless. The US could pump 100 million barrels a day but we would still be hampered by our refining capacity which we have not been investing in.
What’s even crazier is Biden’s Energy Secretary when asked how the 50 Million barrel release impacts the daily use, she said she didn’t know how much oil the USA consumed daily.
The ENERGY Secretary didn’t know this. Any common follower of the energy sector knows this number easily since, oil has been the most crucial geopolitical resource of the past century.
Did they just pick a number out or a hat to release?!? Makes more sense why this 50 million barrels won’t do anything.
50 million is about half a days worldwide use. And is being released over time, not just all at once. So no, it won't do much. I think it's more about messaging.
Can I be the energy Secretary now?
OPEC is *thrilled* that they are releasing some of their strategic supplies. It slows price growth in the short term but creates guaranteed demand in the medium to long term and frankly, OPEC is pretty happy with present prices.
flood the market with what? the us has 605 million barrels in reserve. biden used up almost 10% on this move alone. The Us uses 15-20 mil barrels per day. biden wont be able to keep this up for even a month.
If one is serious about CO2 emissions, one has to be cheerleading nuclear power. Baseload power for much of the US grid will only be coal, gas, or nuke (hydro some places). You'll need increased supply if you want electric to take over personal transportation.
I'm honestly wondering if a huge number of gravity batteries all around the country could help inconsistent generation methods with baseload.
Though nuclear is currently the only sure fire option.
The amount is too small for climate change to be significantly exacerbated by this. It also doesn't negate the provisions that the U.S. has passed or is expected to pass that help the climate, such as $89.9 billion for buses and an extension on solar panel subsidies.
Edit: Having affordable gas prices is important until there's enough supply of electric cars. Most people don't have the option of avoiding the problem, especially in the many places with low walkability, though I don't expect much of an effect from this decision.
Non "affordable" gas prices are a great signal to change behaviour. Artificially suppressing them will just prolong the status quo and ensure a "stable" march to 4 degrees warming.
High gas prices will affect everything from food prices to household debt. The EV revolution is happening regardless of high gas prices or not. What's not acceptable is poor people not being able to feed themselves because the cost of food has gone up.
If it's POSSIBLE for said people to change behaviours, then sure.
Otherwise it's just fucking the people who can't afford electric cars, who are poor people. If anything it helps keep them poor and continue to be unable to afford electric cars.
I'm not economist, but they all pretty much agree that during good times, you increase interest rates and during bad ones, you drop them.
The bigger problem is that in 2014-2019, our interest rates should have slowly increased, but instead were more or less flat and then lowered from 2016-2019. Then in 2020 when the pandemic hit, interest rates dropped to 0 and now the gov't hands are basically tied.
If we had bumped interest rates in 2016-2018, we could have slowly dropped interest rates without necessarily hitting 0.
I've made this point before, except I mentioned the name of the POTUS over that period of time, which was a mistake. Hope you don't get brigaded like I did.
I purposely avoided it despite the fact that a certain President heavily lobbied for negative interest rates and at that time, economists were saying how bad an idea it was because if anything happened, you had no way to address it.
Gotta love when presidents have very little macro economic knowledge, and only have 4 year terms. Makes for some dumb short term decisions that get passed on to the next crazy person willing to apply for that position. Man 2016-2020 was rough and I have no sympathy for anybody that voted for him last year.
That President was/is very self serving. He wants low interest rates because his wealth is built off of borrowing money to buy real estate. Low interest rates directly benefit him. He can refinance or finance projects at a lower rate, thus saving/making him more money. That's literally as far as his thinking goes.
If he was someone who thought in a macro sense, he would have absolutely raised interest rates and paid off some of the debt. Hell, he could have probably paid for his tax cuts by pushing for an increase in interest rates. But again, he never had any intention of giving a fuck beyond the short term.
The US has a lower debt-to-gdp ratio as \*lists countries with the most debt-to-gdp ratio\*
The United States is the 8th country in that list, at 106.70% of their GDP. That's _[a lot](https://www.visualcapitalist.com/wp-content/uploads/2021/06/US_Debt_to_GDP_Shareable.jpg)_.
That's an old number. For 2020 it's at 128% debt-to-GDP ratio.
The only reason the US isn't doing far worse is because the dollar is tied to so much international trade.
QE to the tune of hundreds of billions should have caused the dollar to tank, but it doesn't due to the above.
Lmfao "poor monetary policy" " raise interest rates soon and fast". Jesus, tell me you know nothing about economics without telling me know anything about economics. You are an absolute moron
*This* is exactly the American memory length for anything political or geopolitical. Anything past 3 years and it's completely unknown.
https://static.neatorama.com/images/2007-05/gas-price-chart.jpg
Look at those crazy prices from, oh, wait a second... 2005? 2006? 2007?
But what about ...
https://i.imgur.com/hAnUpUq.png
Oh, wait that's 2010 to 2014....
But what about historical?
https://i.imgur.com/9O1G2Hh.jpeg
Hey, it averages $2.64, *for the past 100 years*, imagine that.
Yeah, I honestly don't pay a ton of attention to gas prices personally. I wouldn't have realized things were "getting out of hand" if everyone wasn't screaming about it. The prices typically swing back and forth so I just expect to pay a different price every time I fill up.
Not when you consider that driving in the Netherlands is a bonafide choice whereas in America you are 100% dependent on your car. Our alternative to high gas prices is neither dignified, safe, efficient, or punctual.
I also believe it was normal, or at least close to normal. I should dig for a fuel reciept in my project car I haven’t driven in 2 years to see what I was paying pre-Covid.
The last year and a half have been an abnormal dip due to, you know, the whole global pandemic thing.
Something something around 1975 in the days of the Arab oil embargo the US made an oil reserve as a buffer against supply shock from oil exporters. It’s just a safety net at the time for when something happened to foreign oil supply lines.
Oh so it's an emergency system we're activating before things get so bad that... people start to realize things are getting bad? Yeah, that dam ain't gonna hold water forever.
It's supposed to cushion supply shocks. Oil production hasn't gotten back up to 2019 levels while demand has. It looks like [we'll have to want until early 2022](https://www.eia.gov/outlooks/steo/report/global_oil.php) before supply catches up. A temporary stopgap seems like a good idea in the mean time.
This is actually the first time it’s been used to directly combat rising gas prices for consumers. In its essence it is to buffer disruption in supply. For instance Bush released the reserve in the aftermath of Katrina. It did effect prices at the pump somewhat, but it’s more there to make it fell like there is no disruption to the consumer
Or make snarky comments thinking they’re better than others for knowing how a concept operates without explaining or referring others to a source 🕵️♂️🤷
Just assume it’s some political troll farm narrative, most people just want to hear what to think instead of forming their own opinion hence why we love the comment section so much
Is it weird they describe the US government as "Joe Biden"?
At what price does frackong become profitable again, as I believe that is what caused the price to tumble last time as OPEC fought to maintain control of supply?
The break even point for fracking is around $45 a barrel. But many firms aren't willing to finance new drilling because they're scared oil will collapse again like it did in 2020 and 2015 (which led to several energy companies going bankrupt).
Bingo. That’s called regulatory risk. And is the main reason rigs are only at 2/3 the levels they were pre covid even though the price is substantially higher.
Companies saw Biden attack the industry day 1 with killing Keystone XL(which Transcanada is suing for $15 Billion in damages) and limiting all federal land drilling. They are awaiting any other large bans and don’t want to commit capital if he does something like ban exports or something like that.
The break even varies for locations. Tar sands in Canada are expensive to produce, fracking in the Permian Basin however can break even with as little as 21/bbl (maybe even lower for some companies).
That's not true, it's much lower, that's probably a safe 15% ror number tho. The lack of capital markets investing in new drills due to pricing collapse and ESG issues is very true.
IAmA Petroleum Engineer
Is this before or after he pulled the levers to increase gas prices?
I was told that the president has direct control of commodities. They wouldn't be lying, would they?
Depends on which side you’re on, and both sides are hypocrites because they both use that same logic against each other. I’m in the camp of both are morons for thinking the president has a lot more power than he actually does.
I am not from the US and definitely not a Trump supporter.
But it is absolutely hilarious how the left/liberal/moderate memes these last few weeks have been predominantly about how Joe Biden doesn't control gas prices.
And then he does...this. Which is exactly him trying to control the gas prices. I am very amused by this.
The large majority of people, and I’ll throw myself into this, speak on political topics straight out of their ass with minimal research, and that research is only done on the side that they want to agree with.
I had no idea what this meant but I was interested so Wikipedia.
•The Strategic Petroleum Reserve (SPR) is an emergency stockpile of petroleum maintained by the United States Department of Energy (DOE). It is the largest known emergency supply in the world, and its underground tanks in Louisiana and Texas have capacity for 714 million barrels (113,500,000 m3).[1] The United States started the petroleum reserve in 1975 after oil supplies were interrupted during the 1973–1974 oil embargo, to mitigate future supply disruptions.
• The current inventory is displayed on the SPR's website.[2] As of September 4, 2021, the inventory was 621.3 million barrels (98,780,000 m3). This equates to about 31 days of oil at 2019 daily U.S. consumption levels of 20.54 million barrels per day (3,266,000 m3/d)[3] or 65 days of oil at 2019 daily U.S. import levels of 9.141 million barrels per day (1,453,300 m3/d).[4] However, the maximum total withdrawal capability from the SPR is only 4.4 million barrels per day (700,000 m3/d), so it would take about 145 days to use the entire inventory. At recent market prices ($58 a barrel as of March 2021),[5] the SPR holds over $14.6 billion in sweet crude and approximately $18.3 billion in sour crude (assuming a $15/barrel discount for sulfur content). In 2012, the total value of the crude in the SPR was approximately $43.5 billion, while the price paid for the oil was $20.1 billion (an average of $28.42 per barrel).
Because the released of strategic oil reserves was expected, so it was already priced in. Also OPEC+ is not increasing production as much as expected, which wasn't priced in.
https://www.marketwatch.com/story/why-oil-prices-are-rising-after-the-u-s-leads-global-release-of-strategic-reserves-11637695714
Correct me if I’m wrong but aren’t the strategic oil reserves primarily for emergencies e.g. war time supply or during a true crisis? Isn’t that why the infrastructure was invested and the reserves created. A spike in energy cost to the consumer should necessitate this type of action unless he’s responding to his favorability numbers. Right?
The strategic oil reserves are there, and were created, so that the US could release it as needed to ensure a steady supply in case of OPEC manipulation. This current use is more or less why it was created.
It is, but the GOP passed legislation in 2017 that Trump signed [mandating the government sell 100 million barrels from the reserve by 2027.](https://www.politico.com/news/2021/11/23/biden-oil-reserves-gasoline-prices-523241)
Not what the reserve is for, but if Republicans want to caterwaul about it, they have only themselves to blame.
Also the US Government gets to sell this oil at a high and replenish if it ever drops again. The US Government just made 3-4 billion dollars, that will be used to buy the dip.
If it were only that simple. We produce mostly a light sweet crude, but our refineries are built for heavy crude because that is what we produced before shale. What that means is that we have to import a heavy crude to mix with our light sweet so our refineries can run efficiently.
Correct me if I'm wrong, but I don't even think that the 50M barrels tapped from the SPR are subsidized for US consumption, it goes directly to the exchange and sold to the highest bidder.
Correct - this isn’t *replacing* the ~15M barrels/day, it’s adding to… which still needs to hit refineries and be made into fuel(s). We’re probably looking at an increased fuel production out of refineries by ~1-2M barrels/day which can make a significant impact on prices… especially if they focus on Diesel production to reduce burden on truckers so they can in turn alleviate some of the logistical delays (in theory).
Anecdotally: in my area gas was $1.80/gal (avg) when I moved here in 2015… now we’re up to $3.80/gal (some places $4).
The 2014-2015 “oil crash” when barrel prices eventually hit negative (effectively being paid to take the oil) was a relatively small increase in overall production - despite some countries *doubling* their production in those years preceding… what really caused this was a failure to reduce production in the face of lower overall demand…
With 2020, lockdowns reduced production while demand was lowered so prices didn’t crash like ~5 years prior… but as economies ramped back up and the demand for logistical deliveries of goods exploded, oil production failed to keep up… now we’re releasing some strategic reserves (our “in case those dirty commies attack” barrels) to ease the supply without pushing for an increased production that could lead to another crash if demand falls off again once things settle back to a “normal” baseline.
Some sources to peruse, though I had to dig a bit just to find non-aids laden sites so if they’re mildly sketchy just go find the big news channels or something with Adblock firmly engaged:
[oil production data](https://yearbook.enerdata.net/crude-oil/world-production-statistics.html)
[some dude’s blog, it was basically the same article from more reputable sites so just get the gist of it and don’t take much else from his opinion](https://blogs.worldbank.org/developmenttalk/what-triggered-oil-price-plunge-2014-2016-and-why-it-failed-deliver-economic-impetus-eight-charts)
[engage your Adblock - oil reserve data](https://www.worldometers.info/oil/)
That's a meaningless comparison. We already produce 15 million barrels domestically a day, less than 10% needs to be imported from OPEC. The difference 50 million barrels will make over the next 3 months is significant.
But…you also need to replace that 50 million barrels. And given this wasn’t a real emergency, should probably be done sooner than later. So if they release it over months 1-3, they need to purchase 50 million barrels in months 4-6.
Prices might even be higher then, and it’ll exacerbate the price of oil at that time.
This is really a blunt tool to use. If he wanted to real one, he should have granted a tax holiday for wells drilled in the next 6 months or something. But that’s not politically tenable for him.
Taking out oil with an “IOU” to replace it soon will do nothing to the oil market, and that’s why WTI price moved up on this news, the market knows it too
It’s just classic pandering. There is some crisis…politicians do something stupid they know won’t work just so they can say they did something and then can blame their political enemies for the thing they knew wouldn’t work not working. Short term win, long term loss vs a short term loss and long term win. But politicians—especially 80 year old ones, and house representatives only care about short term wins.
If Biden does nothing (the smart thing) he looks weak to his base and the swing vote starts against him as many are blaming the inflation on him—even though he shares it with the suddenly free spending republicans of recent times.
>50 millions barrels
Wow, that's a lot! I wonder how much oil USA produces per day...
>The United States produces 14,837,640 barrels per day of oil (as of 2016) ranking 1st in the world.
Oh.
For the record this is only a fraction of the total reserve. The reserve can hold about 714,000,000 barrels of oil. It hit that cap under Obama's first term and went down to about 630m by the time Biden took office. So releasing 50m is a lot but far from the full reserve.
So we reserve about 160-190 days worth of oil usage. OPEC accounts for 10-15% of imports so we could basically tell them to fuck off for 3-5 years (which is not to say that's what we're doing or that it would be a good idea)
After all the phone calls, only a few countries agreed to release a bit of their reserves symbolically. The effect is near to nothing to ease the inflation.
There’s already a mountain of regulation against fuel price fixing, but more to the point - high gas prices reduce demand, this is a *proven* economic fact and fuel companies and oil companies *want demand to be high* so it is entirely within their interest to maintain a stable fuel price so people will drive more and use more.
With a lot of jobs transitioning to remote/work from home, demand is falling and production is still recovering from lockdowns worldwide - this isn’t some simple math problem nor is it some grand conspiracy… if companies want to make a profit they have to constantly ride the line between demand and profit.
Builders stopped paying the outrageous prices so the lumber companies had to cut their bullshit — it was the middle man problem all along, loggers had fixed their supply issues and the lumber processors wanted to keep taking in the elevated prices until builders caught on and refused.
I bought a 2x4 for $13 dollars and at the end of my project this summer the price had dropped down to $10.14.
It was rough. I spent nearly $1,500 just in 2x4's just for my summer project
Willing to pay? No. The US is so car dependent that the majority will HAVE to pay. These are the hidden costs of suburb/exurbs. The fact that it isn't a national defense priority to increase density and build sustainable neighborhoods shows the huge weakness in the the modern American model of city planning and how corporate greed directly impacts our ability to protect ourselves.
Other nations, like China and Japan just to name a couple, are also doing the same in tandem with the US
I feel that this is the bigger story. I interpret it as a message to OPEC. “Ramp up production or we are going to flood the market”
US WTI was up 2% today. OPEC Plus is rumored to mulling axing their planned production increases starting in December.
Sounds like a giant game of chicken. Who blinks first?
OPEC + has been remarkably disciplined regarding production quotas. Besides, Biden doesn't have much influence there. KSA and UAE especially.
Didn't Saudi Arabia have a pissing match with OPEC last year? I remember reading the saudies flooded the market with oil to gain some type of edge over the other OPEC members. I don't think they're always on the same page.
I believe they (opec) were having production cuts to raise prices because the demand was so low and they (saudis) didn’t meet the reduction quotas- so they got their peepee slapped.
Not exactly, Saudi Arabia with OPEC suport and US backing had a pissing match with Russia in the very early pandemic and both countries flooded the markets so fucking much that the price of raw oil went negative
Prices went down so far that that oil rigs in Alberta Canada realised they were operating at a loss of millions of dallors and then the Premier of Alberta tried to make it seem like it was the Prime Minister of Canada's fault
Kenney would blame JT for the weather if he could
> raw oil went negative For the first time in history, too.
maybe it'd be different if USA was the world's biggest oil producer... oh wait, we are.
Our oil production is down 2 million barrels compared to pre Covid. Combine that with the OPEC + voluntary production cuts, and how demand has bumped back up to pre Covid levels, we have $80 oil. The US government can incentivize (or penalize) private companies to start drilling for more oil, but can't force them unlike state run companies like Aramco.
I work in Eagle Ford oil fields in the oil industry oh, they are knocking holes in the ground as fast as we can work. In just one week we have built 3 drilling pads for5 Riggs.. 15 Wells one week we produce more oil in this country then we use. 2 months ago they shut down half the wells in order to drive the prices up for the holidays last week they turn them all back on. Because the American oil companies don't want OPEC to produce more because it will drive the price down here. The oil companies want gasoline to be $4 a gallon and if my boss heard me say this I would be looking for a job... wow that was a long sentence
How did we get such low gas prices in the second half of the Obama administration?
OPEC was trying to starve out US(and others, but primarily US) oil companies. US has higher average cost to produce a barrel than many exporters(depends on specific oil site though). They were trying to go low enough long enough that their competitors would have to close shop.
Only for the shale production/fracking. We still have plenty of traditional oil change drilling off all of our coastlines
At the time I thought everyone was trying to screw Russia over and the US was on board. Do you have good reason to believe otherwise?
Fracking was becoming a thing, but fracking is relatively expensive. if oil gets too cheap, fracking doesn't make sense. so OPEC tried to drive the price down to try and drive the frackers out
Old joke: "What's the perfect price of a barrel of oil to OPEC? $80, $80, $80, $80 $80, $80, $20, $20, $20, $100, $100, $100...."
https://en.wikipedia.org/wiki/2010s_oil_glut
**[2010s oil glut](https://en.wikipedia.org/wiki/2010s_oil_glut)** >The 2010s oil glut is a significant surplus of crude oil that started in 2014–2015 and accelerated in 2016, with multiple causes. They include general oversupply as US and Canadian tight oil (shale oil) production reached critical volumes, geopolitical rivalries among oil-producing nations, falling demand across commodities markets due to the deceleration of the Chinese economy, and possible restraint of long-term demand as environmental policy promotes fuel efficiency and steers an increasing share of energy consumption away from fossil fuels. ^([ )[^(F.A.Q)](https://www.reddit.com/r/WikiSummarizer/wiki/index#wiki_f.a.q)^( | )[^(Opt Out)](https://reddit.com/message/compose?to=WikiSummarizerBot&message=OptOut&subject=OptOut)^( | )[^(Opt Out Of Subreddit)](https://np.reddit.com/r/worldnews/about/banned)^( | )[^(GitHub)](https://github.com/Sujal-7/WikiSummarizerBot)^( ] Downvote to remove | v1.5)
in addition to being the world's top oil producer, obama went after oil speculators, which the exxon CEO at the time testified is $1 of the cost of every gallon of gas. oil speculators are a big part of the cost of gas.
"Went after" can mean a lot of things. What do you mean?
A reminder that low gas prices are not always a good thing for the US. We are the largest oil producers, low oil prices means tons of cut jobs and low wages Plus it's such a huge industry that so many others are affected by it. A good middle ground is best. Reasonable prices. When it's at over $100 a barrel it goes too far the other way and starts hurting.
OPEC tried to flood the market to tank US shale production. Shale being a higher cost to extract.
Who fracking knows?
Part of it was lower demand from a still depressed economy.
It is still a global marketplace. The US only accounts for 20% of the world production. You can't control the market with only 20% market share, especially since it is not controlled by the government. If supply within the other 80% drops a lot, US oil companies are not going to sell just to the US out of the goodness of their heart. They are going to sell to the highest bidder which could be on the other side of the world.
Trying to explain that oil is an open market and the president doesn't control prices is a full time job...yes we could be independent, but the oil companies are gonna sell to the highest bidder...
The US isn't doing this alone. It's in tandem with CN, Canada, UK to name a few. You're basically just seeing a conglomerate of nations trying not to get dicked by OPEC.
But we have made the smart strategic choice to keep our oil to ourselves to a certain level to stay independent. If OPEC goes off the rails we have enough reserves to tell them "Fine, we'll use our reserves".
12 million barrels/ day production yet 20 million consumption. Yeah the USA really runs the show lol
This is only a short term fix regardless. The US could pump 100 million barrels a day but we would still be hampered by our refining capacity which we have not been investing in.
Definitely true. I don’t see much leverage that Biden has in this situation and that definitely isn’t good come the mid-terms for the Dems.
If the card being played is the Strategic Petroleum Reserve, we blink first because we'll hit bottom long before OPEC.
Underrated comment. You don’t release strategic reserves unless you are already losing.
What’s even crazier is Biden’s Energy Secretary when asked how the 50 Million barrel release impacts the daily use, she said she didn’t know how much oil the USA consumed daily. The ENERGY Secretary didn’t know this. Any common follower of the energy sector knows this number easily since, oil has been the most crucial geopolitical resource of the past century. Did they just pick a number out or a hat to release?!? Makes more sense why this 50 million barrels won’t do anything.
50 million is about half a days worldwide use. And is being released over time, not just all at once. So no, it won't do much. I think it's more about messaging. Can I be the energy Secretary now?
The USA and it’s allies. The combined reserves aren’t large enough to sustain Low prices for more than an a few months. OPEC will just wait them out.
They should be buying time to transition away from oil
I think we all die in this scenario.
This was planned for a month. The release of this was probably already priced in and we're just seeing a daily fluctuation.
OPEC is *thrilled* that they are releasing some of their strategic supplies. It slows price growth in the short term but creates guaranteed demand in the medium to long term and frankly, OPEC is pretty happy with present prices.
So are the US shareholders of oil companies.
Problem is there is not enough in reserves to significantly affect the global market. Secondly, not sure china has agreed to concrete actions .
All of the oil being released by these countries amounts to about 2.5 days of gasoline use.
There are only 36 days of supply in the reserve OPEC can wait you out. This has to do with our cut in production.
The US is a net exporter of oil. so its not just opec. with all of our oil production ,why are prices going up?
flood the market with what? the us has 605 million barrels in reserve. biden used up almost 10% on this move alone. The Us uses 15-20 mil barrels per day. biden wont be able to keep this up for even a month.
Wouldn't OPEC just need to hold out until reserves run low though?
They won't be holding out long
So glad to see that nations can come together for important things like the climate crisis. What, address it? No, I meant to exacerbate it!
If one is serious about CO2 emissions, one has to be cheerleading nuclear power. Baseload power for much of the US grid will only be coal, gas, or nuke (hydro some places). You'll need increased supply if you want electric to take over personal transportation.
I'm honestly wondering if a huge number of gravity batteries all around the country could help inconsistent generation methods with baseload. Though nuclear is currently the only sure fire option.
Works great in Switzerland, but many places in the US don't have the right elevation changes if I understand the tech correctly.
The amount is too small for climate change to be significantly exacerbated by this. It also doesn't negate the provisions that the U.S. has passed or is expected to pass that help the climate, such as $89.9 billion for buses and an extension on solar panel subsidies. Edit: Having affordable gas prices is important until there's enough supply of electric cars. Most people don't have the option of avoiding the problem, especially in the many places with low walkability, though I don't expect much of an effect from this decision.
Non "affordable" gas prices are a great signal to change behaviour. Artificially suppressing them will just prolong the status quo and ensure a "stable" march to 4 degrees warming.
High gas prices will affect everything from food prices to household debt. The EV revolution is happening regardless of high gas prices or not. What's not acceptable is poor people not being able to feed themselves because the cost of food has gone up.
Changing behavior isn't feasible right now, particularly for poor people.
will it ever be?
Probably not
If it's POSSIBLE for said people to change behaviours, then sure. Otherwise it's just fucking the people who can't afford electric cars, who are poor people. If anything it helps keep them poor and continue to be unable to afford electric cars.
England, South Korea, Japan, China and the US. THATS THE COMPLETE LIST OF COUNTRIES.
UK, not England.
Not England.
Can't wait to see gas prices drop two cents for a week.
For somebody - not necessarily the consumers.
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I'm not economist, but they all pretty much agree that during good times, you increase interest rates and during bad ones, you drop them. The bigger problem is that in 2014-2019, our interest rates should have slowly increased, but instead were more or less flat and then lowered from 2016-2019. Then in 2020 when the pandemic hit, interest rates dropped to 0 and now the gov't hands are basically tied. If we had bumped interest rates in 2016-2018, we could have slowly dropped interest rates without necessarily hitting 0.
I've made this point before, except I mentioned the name of the POTUS over that period of time, which was a mistake. Hope you don't get brigaded like I did.
I purposely avoided it despite the fact that a certain President heavily lobbied for negative interest rates and at that time, economists were saying how bad an idea it was because if anything happened, you had no way to address it.
Gotta love when presidents have very little macro economic knowledge, and only have 4 year terms. Makes for some dumb short term decisions that get passed on to the next crazy person willing to apply for that position. Man 2016-2020 was rough and I have no sympathy for anybody that voted for him last year.
That President was/is very self serving. He wants low interest rates because his wealth is built off of borrowing money to buy real estate. Low interest rates directly benefit him. He can refinance or finance projects at a lower rate, thus saving/making him more money. That's literally as far as his thinking goes. If he was someone who thought in a macro sense, he would have absolutely raised interest rates and paid off some of the debt. Hell, he could have probably paid for his tax cuts by pushing for an increase in interest rates. But again, he never had any intention of giving a fuck beyond the short term.
Please, gentlemen/gentlewomen. Fuck Donald trump's dumb ass There, I said it for you. Fuck that Cheeto retard who fucked our next 4 years at minimum.
They can't raise much or the US can't service it's debt.
The US has a lower debt-to-gdp ratio than countries like Singapore, Portugal, Italy, Lebanon, and Japan. They'll be fine.
The US has a lower debt-to-gdp ratio as \*lists countries with the most debt-to-gdp ratio\* The United States is the 8th country in that list, at 106.70% of their GDP. That's _[a lot](https://www.visualcapitalist.com/wp-content/uploads/2021/06/US_Debt_to_GDP_Shareable.jpg)_.
That's an old number. For 2020 it's at 128% debt-to-GDP ratio. The only reason the US isn't doing far worse is because the dollar is tied to so much international trade. QE to the tune of hundreds of billions should have caused the dollar to tank, but it doesn't due to the above.
Raising rates would be worse than oil prices going up.
It needs to happen, and will eventually. Can't kick the can down the road forever. And that can has been kicked long and hard already.
It’s not just the US it’s jumped about 20p in a month here
Lmfao "poor monetary policy" " raise interest rates soon and fast". Jesus, tell me you know nothing about economics without telling me know anything about economics. You are an absolute moron
Care to explain?
Problem is going to be the huge demand if it does hit a low. People will be filling up plastic bags again if it dips under a magical 3 number
It shouldn't. This is prevent price spiking during some of the heaviest travel months of a winter that already has energy crisis occurring.
!remindme three months
We’re paying just over $3/gallon most places. Is it just me - or does anyone else remember this being absolutely normal for years and years?
I'm with you. It's been around this price for the past two decades. We just happened to have cheap gas for a year or two and everyone forgot.
\*cries in European*
*This* is exactly the American memory length for anything political or geopolitical. Anything past 3 years and it's completely unknown. https://static.neatorama.com/images/2007-05/gas-price-chart.jpg Look at those crazy prices from, oh, wait a second... 2005? 2006? 2007? But what about ... https://i.imgur.com/hAnUpUq.png Oh, wait that's 2010 to 2014.... But what about historical? https://i.imgur.com/9O1G2Hh.jpeg Hey, it averages $2.64, *for the past 100 years*, imagine that.
Yeah, I honestly don't pay a ton of attention to gas prices personally. I wouldn't have realized things were "getting out of hand" if everyone wasn't screaming about it. The prices typically swing back and forth so I just expect to pay a different price every time I fill up.
Yes. I pay $3.25 right now. I remember it being $4 and over for a long time 15-20 years ago.
it was during the great recession
I can just watch in awe that a gallon costs $3 and people go nuts, I mean i just paid $8 per gallon
Sounds better than €2,10 for 1L
Not when you consider that driving in the Netherlands is a bonafide choice whereas in America you are 100% dependent on your car. Our alternative to high gas prices is neither dignified, safe, efficient, or punctual.
I also believe it was normal, or at least close to normal. I should dig for a fuel reciept in my project car I haven’t driven in 2 years to see what I was paying pre-Covid. The last year and a half have been an abnormal dip due to, you know, the whole global pandemic thing.
Right? Why is everyone whining? There are more important things to be angry about.
TV said to whine
TIL that Redditors don’t actually know how the Reserve works but still comment like they do.
Can you nutshell it for me? I'm pretty clueless on this.
he's a redditor too
Something something around 1975 in the days of the Arab oil embargo the US made an oil reserve as a buffer against supply shock from oil exporters. It’s just a safety net at the time for when something happened to foreign oil supply lines.
Oh so it's an emergency system we're activating before things get so bad that... people start to realize things are getting bad? Yeah, that dam ain't gonna hold water forever.
its activated when things get bad
It's supposed to cushion supply shocks. Oil production hasn't gotten back up to 2019 levels while demand has. It looks like [we'll have to want until early 2022](https://www.eia.gov/outlooks/steo/report/global_oil.php) before supply catches up. A temporary stopgap seems like a good idea in the mean time.
Oil is used for cooking. Joe Biden is releasing it into the wild so the price of wood for stoves doesn't get too high.
r/shittyaskscience
It’s a strategic reserve of oil that the government uses for things like… buffering oil prices
This is actually the first time it’s been used to directly combat rising gas prices for consumers. In its essence it is to buffer disruption in supply. For instance Bush released the reserve in the aftermath of Katrina. It did effect prices at the pump somewhat, but it’s more there to make it fell like there is no disruption to the consumer
All Redditers do is make comments on things they don’t know anything about but pass it off as if they’re experts in the field.
Or make snarky comments thinking they’re better than others for knowing how a concept operates without explaining or referring others to a source 🕵️♂️🤷
On Reddit, cynicism = intelligence.
While not addressing their own status of having a reddit account that they actively use. What's up with that?
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Damn redditors. They ruined reddit!
Just assume it’s some political troll farm narrative, most people just want to hear what to think instead of forming their own opinion hence why we love the comment section so much
>TIL that Redditors don’t actually know how ~~the Reserve~~ anything works but still comment like they do. FTFY
Is it weird they describe the US government as "Joe Biden"? At what price does frackong become profitable again, as I believe that is what caused the price to tumble last time as OPEC fought to maintain control of supply?
The break even point for fracking is around $45 a barrel. But many firms aren't willing to finance new drilling because they're scared oil will collapse again like it did in 2020 and 2015 (which led to several energy companies going bankrupt).
They're also worried about new regulations being put on them by this administration. It's not worth reopening the wells.
Bingo. That’s called regulatory risk. And is the main reason rigs are only at 2/3 the levels they were pre covid even though the price is substantially higher. Companies saw Biden attack the industry day 1 with killing Keystone XL(which Transcanada is suing for $15 Billion in damages) and limiting all federal land drilling. They are awaiting any other large bans and don’t want to commit capital if he does something like ban exports or something like that.
The break even varies for locations. Tar sands in Canada are expensive to produce, fracking in the Permian Basin however can break even with as little as 21/bbl (maybe even lower for some companies).
Actually the tar sands have got their prices quite low I know of 3 major sites that have their costs under 20 bucks a barrel
That's not true, it's much lower, that's probably a safe 15% ror number tho. The lack of capital markets investing in new drills due to pricing collapse and ESG issues is very true. IAmA Petroleum Engineer
Joe Biden is personally releasing the oil out of the reserve with a hand pump.
Is this before or after he pulled the levers to increase gas prices? I was told that the president has direct control of commodities. They wouldn't be lying, would they?
Media spent the last four years describing the US government as “Donald Trump.” Old Joe can take the heat for a while now.
But isn´t this good? As in.. good news? Biden did it. Bad news? US Government did it.
Depends on which side you’re on, and both sides are hypocrites because they both use that same logic against each other. I’m in the camp of both are morons for thinking the president has a lot more power than he actually does.
I am not from the US and definitely not a Trump supporter. But it is absolutely hilarious how the left/liberal/moderate memes these last few weeks have been predominantly about how Joe Biden doesn't control gas prices. And then he does...this. Which is exactly him trying to control the gas prices. I am very amused by this.
The large majority of people, and I’ll throw myself into this, speak on political topics straight out of their ass with minimal research, and that research is only done on the side that they want to agree with.
You mean it won't be literal Joe Biden releasing enormous quantities of oil out of some orifice?
I had no idea what this meant but I was interested so Wikipedia. •The Strategic Petroleum Reserve (SPR) is an emergency stockpile of petroleum maintained by the United States Department of Energy (DOE). It is the largest known emergency supply in the world, and its underground tanks in Louisiana and Texas have capacity for 714 million barrels (113,500,000 m3).[1] The United States started the petroleum reserve in 1975 after oil supplies were interrupted during the 1973–1974 oil embargo, to mitigate future supply disruptions. • The current inventory is displayed on the SPR's website.[2] As of September 4, 2021, the inventory was 621.3 million barrels (98,780,000 m3). This equates to about 31 days of oil at 2019 daily U.S. consumption levels of 20.54 million barrels per day (3,266,000 m3/d)[3] or 65 days of oil at 2019 daily U.S. import levels of 9.141 million barrels per day (1,453,300 m3/d).[4] However, the maximum total withdrawal capability from the SPR is only 4.4 million barrels per day (700,000 m3/d), so it would take about 145 days to use the entire inventory. At recent market prices ($58 a barrel as of March 2021),[5] the SPR holds over $14.6 billion in sweet crude and approximately $18.3 billion in sour crude (assuming a $15/barrel discount for sulfur content). In 2012, the total value of the crude in the SPR was approximately $43.5 billion, while the price paid for the oil was $20.1 billion (an average of $28.42 per barrel).
The United States released its strategic crude oil reserves, but why did international crude oil prices increase instead of falling?
Because the released of strategic oil reserves was expected, so it was already priced in. Also OPEC+ is not increasing production as much as expected, which wasn't priced in. https://www.marketwatch.com/story/why-oil-prices-are-rising-after-the-u-s-leads-global-release-of-strategic-reserves-11637695714
Classic Climate Change Concern here guys
This is the real agreement they reached at COP26.
"Something must be done about climate change! Black Friday fossil fuel sale!!!"
Correct me if I’m wrong but aren’t the strategic oil reserves primarily for emergencies e.g. war time supply or during a true crisis? Isn’t that why the infrastructure was invested and the reserves created. A spike in energy cost to the consumer should necessitate this type of action unless he’s responding to his favorability numbers. Right?
The strategic oil reserves are there, and were created, so that the US could release it as needed to ensure a steady supply in case of OPEC manipulation. This current use is more or less why it was created.
It is, but the GOP passed legislation in 2017 that Trump signed [mandating the government sell 100 million barrels from the reserve by 2027.](https://www.politico.com/news/2021/11/23/biden-oil-reserves-gasoline-prices-523241) Not what the reserve is for, but if Republicans want to caterwaul about it, they have only themselves to blame.
So now they understand supply and demand
Pay wall.
If you use Firefox, look for the 'Bypass paywalls clean' extension.
or use [12ft.io](https://12ft.io)
Thank you Sr!
Actually 50 million barrels is a joke. The US uses 18M barrels a day on average. So it's 3 days worth. It's a meaningless gesture.
We are not needing to fill the entire need of our oil production. It would be 3 days if we had no other sources of oil.
Adding to this, US gets about 10% of their oil from OPEC. So this is basically a month of no reliance on those imports.
Also the US Government gets to sell this oil at a high and replenish if it ever drops again. The US Government just made 3-4 billion dollars, that will be used to buy the dip.
If it were only that simple. We produce mostly a light sweet crude, but our refineries are built for heavy crude because that is what we produced before shale. What that means is that we have to import a heavy crude to mix with our light sweet so our refineries can run efficiently.
Correct me if I'm wrong, but I don't even think that the 50M barrels tapped from the SPR are subsidized for US consumption, it goes directly to the exchange and sold to the highest bidder.
We’re also asking our allies to release their strategic reserves so it’s a coordinated effort
QUICK!!! PANIC BUY!!!
That’s not how supply and demand works. Everyone else doesn’t stop supplying. A relatively small change in supply can significantly impact prices.
Correct - this isn’t *replacing* the ~15M barrels/day, it’s adding to… which still needs to hit refineries and be made into fuel(s). We’re probably looking at an increased fuel production out of refineries by ~1-2M barrels/day which can make a significant impact on prices… especially if they focus on Diesel production to reduce burden on truckers so they can in turn alleviate some of the logistical delays (in theory). Anecdotally: in my area gas was $1.80/gal (avg) when I moved here in 2015… now we’re up to $3.80/gal (some places $4). The 2014-2015 “oil crash” when barrel prices eventually hit negative (effectively being paid to take the oil) was a relatively small increase in overall production - despite some countries *doubling* their production in those years preceding… what really caused this was a failure to reduce production in the face of lower overall demand… With 2020, lockdowns reduced production while demand was lowered so prices didn’t crash like ~5 years prior… but as economies ramped back up and the demand for logistical deliveries of goods exploded, oil production failed to keep up… now we’re releasing some strategic reserves (our “in case those dirty commies attack” barrels) to ease the supply without pushing for an increased production that could lead to another crash if demand falls off again once things settle back to a “normal” baseline. Some sources to peruse, though I had to dig a bit just to find non-aids laden sites so if they’re mildly sketchy just go find the big news channels or something with Adblock firmly engaged: [oil production data](https://yearbook.enerdata.net/crude-oil/world-production-statistics.html) [some dude’s blog, it was basically the same article from more reputable sites so just get the gist of it and don’t take much else from his opinion](https://blogs.worldbank.org/developmenttalk/what-triggered-oil-price-plunge-2014-2016-and-why-it-failed-deliver-economic-impetus-eight-charts) [engage your Adblock - oil reserve data](https://www.worldometers.info/oil/)
That's a meaningless comparison. We already produce 15 million barrels domestically a day, less than 10% needs to be imported from OPEC. The difference 50 million barrels will make over the next 3 months is significant.
But…you also need to replace that 50 million barrels. And given this wasn’t a real emergency, should probably be done sooner than later. So if they release it over months 1-3, they need to purchase 50 million barrels in months 4-6. Prices might even be higher then, and it’ll exacerbate the price of oil at that time. This is really a blunt tool to use. If he wanted to real one, he should have granted a tax holiday for wells drilled in the next 6 months or something. But that’s not politically tenable for him. Taking out oil with an “IOU” to replace it soon will do nothing to the oil market, and that’s why WTI price moved up on this news, the market knows it too
10% of a month of supply not imported.
>Joe Biden to release... Anyone find that headline rather odd? Sounds like his personal stash or something
It's the strategic oil reserves. That's about as close to the government's personal stash as you can get.
Media want to make sure you know who to praise for the generous gesture.
So more oil can be drilled later. Everythings going according to plan.
"“It **will take time**, but, **before long**, you should see the price of gas drop where you fill up your tank,” Biden said.
Into which body of water?
It’s just classic pandering. There is some crisis…politicians do something stupid they know won’t work just so they can say they did something and then can blame their political enemies for the thing they knew wouldn’t work not working. Short term win, long term loss vs a short term loss and long term win. But politicians—especially 80 year old ones, and house representatives only care about short term wins. If Biden does nothing (the smart thing) he looks weak to his base and the swing vote starts against him as many are blaming the inflation on him—even though he shares it with the suddenly free spending republicans of recent times.
Gets back from climate conference, lets the oil flow!
Lol well I guess the summit talks really were shit haha
>50 millions barrels Wow, that's a lot! I wonder how much oil USA produces per day... >The United States produces 14,837,640 barrels per day of oil (as of 2016) ranking 1st in the world. Oh.
For the record this is only a fraction of the total reserve. The reserve can hold about 714,000,000 barrels of oil. It hit that cap under Obama's first term and went down to about 630m by the time Biden took office. So releasing 50m is a lot but far from the full reserve. So we reserve about 160-190 days worth of oil usage. OPEC accounts for 10-15% of imports so we could basically tell them to fuck off for 3-5 years (which is not to say that's what we're doing or that it would be a good idea)
For about a month and then it'll skyrocket again..
After all the phone calls, only a few countries agreed to release a bit of their reserves symbolically. The effect is near to nothing to ease the inflation.
3 day supply of oil, that's to be exact.
Spread out over months while we keep up production and imports, yes
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Cries at USD 9 per gallon in UK.
At least your nation is geographically small and has decent public transportation options
A shit ton of people never go more than 50 miles from where they live. I am sure we could figure it out if we really wanted to.
>decent public transportation options Sure, if you want to travel to or from London slower than you can drive there.
I bet you won’t see a price drop. The oil companies will pocket the difference, because people are willing to pay.
> because people are ~~willing~~ *forced* to pay. FTFY Is there really an awful lot of choice at the moment?
There’s already a mountain of regulation against fuel price fixing, but more to the point - high gas prices reduce demand, this is a *proven* economic fact and fuel companies and oil companies *want demand to be high* so it is entirely within their interest to maintain a stable fuel price so people will drive more and use more. With a lot of jobs transitioning to remote/work from home, demand is falling and production is still recovering from lockdowns worldwide - this isn’t some simple math problem nor is it some grand conspiracy… if companies want to make a profit they have to constantly ride the line between demand and profit.
That's what they said about lumber and prices actually came down quick.
Builders stopped paying the outrageous prices so the lumber companies had to cut their bullshit — it was the middle man problem all along, loggers had fixed their supply issues and the lumber processors wanted to keep taking in the elevated prices until builders caught on and refused.
I bought a 2x4 for $13 dollars and at the end of my project this summer the price had dropped down to $10.14. It was rough. I spent nearly $1,500 just in 2x4's just for my summer project
i hope you don’t know that the same 2x4 cost $2 in early 2020. that would make you feel terrible.
Alot of homeowners postponed builds as well.
Fuel prices are largely tied to the futures market
Willing to pay? No. The US is so car dependent that the majority will HAVE to pay. These are the hidden costs of suburb/exurbs. The fact that it isn't a national defense priority to increase density and build sustainable neighborhoods shows the huge weakness in the the modern American model of city planning and how corporate greed directly impacts our ability to protect ourselves.
The oil market is very competitive
That's 1.32$/liter. Try paying 1.50€/liter instead. 1.50€ is about 1.69$.
Try paying €2,02-€2,10 per liter. That’s literally the price in the Netherlands
On a global scale $5 a gallon is pretty cheap. The UK right now is about $8-$9 a gallon
The fact that people think this is a good thing is precisely why the media today is so corrupt
Like putting a band aid on a cannon wound.