The source of high gas prices

PaoliLion

Well-Known Member
Nov 2, 2003
12,087
6,083
1
oil and gas companies have shown little willingness so far to ramp up production to help reduce costs and the new report, by the government watchdog group Accountable.US, accuses them of “taking advantage of bloated prices, fleecing American families along the way” amid ongoing fallout from the Covid-19 pandemic.

“Americans looking for someone to blame for the pain they experience at the pump need look no further than the wealthy oil and gas company executives who choose to line their own pockets rather than lower gas prices with the billions of dollars in profit big oil rakes in month after month,” said Kyle Herrig, president of Accountable.US.

The analysis of major oil companies’ financials shows that 11 of the group gave payouts to shareholders worth more than $36.5bn collectively this year, while a dozen bought back $8bn-worth of stock. This apparent focus, rather than on further drilling, has caused some frustration within the federal government, with Jennifer Granholm, the US energy secretary, stating that “the oil and gas companies are not flipping the switch as quickly as the demand requires.”

A glut of new oil drilling has made the US awash with oil in recent years, turning the country into a top-level exporter as well as domestic supplier, but this has kept prices low to the displeasure of investors. “A lot of this has been driven by investor sentiment,” said Helima Croft, head of global commodity strategy at RBC Capital Markets, of the current reluctance to expand production. “They don’t want them to spoil the party.”

The situation has left the White House in an awkward position with its commitments to rapidly reduce planet-heating emissions, with environmentalists furious at administration attempts to expand drilling.


 

HartfordLlion

Well-Known Member
Sep 28, 2001
21,858
14,748
1
LOL. Climate activists have have been hammering oil and gas companies for their production of CO2 producing gas and oil. Oil companies are getting hauled into Congress to testify about greenhouse gases by Dems. They show restraint partially because of these activists and being vilified by Dems in Congress, some who have sitting on Exxon's board, and people like you start crying that they are keeping prices high for their own profit. Get the F'k out of here.
 

The Spin Meister

Well-Known Member
Nov 27, 2012
24,290
27,992
1
An altered state
Lots of things in play here. The oil majors set their budgets in Jan so that was way before prices spiked. They are notorious for being slow to react which is why they did poorly in leasing in Pa. Way to much bureaucracy. The more agile independents beat them to the prime locations.

Another is ESG, keep-it-in-the-ground movements, RGGI, and other movements that make it much harder for the independents to get financing. Some of the biggest private equity firms like Carlyle and Black Rock have been under heavy pressure to not finance E&P firms. These firms need to build cash reserves now so they can afford new drilling activities.

Add in other factors like shutting down pipeline construction, cutting leases on federal lands, higher regs on existing facilities, and more drive up prices. Oil and gas are commodities traded on the open market so when there are new policies that will restrict production the price goes up.

Don’t forget some additional supply constraints and associated price pressures from events like loss of production due to Covid last year, the big Texas freeze, several major hurricanes this past summer in the production rich Gulf, and a huge increase in exports to Europe and Asia because of a loss of wind power in Europe and cold weather in Asia.
 
Last edited:

The Spin Meister

Well-Known Member
Nov 27, 2012
24,290
27,992
1
An altered state
So just on the day after Thanksgiving.....when they knew no one is paying attention including the corporate news hacks......the Interior Dept issued its report on drilling and production that was supposed to be released in early summer.

 

bdgan

Well-Known Member
May 29, 2008
61,058
37,474
1
oil and gas companies have shown little willingness so far to ramp up production to help reduce costs and the new report, by the government watchdog group Accountable.US, accuses them of “taking advantage of bloated prices, fleecing American families along the way” amid ongoing fallout from the Covid-19 pandemic.

“Americans looking for someone to blame for the pain they experience at the pump need look no further than the wealthy oil and gas company executives who choose to line their own pockets rather than lower gas prices with the billions of dollars in profit big oil rakes in month after month,” said Kyle Herrig, president of Accountable.US.

The analysis of major oil companies’ financials shows that 11 of the group gave payouts to shareholders worth more than $36.5bn collectively this year, while a dozen bought back $8bn-worth of stock. This apparent focus, rather than on further drilling, has caused some frustration within the federal government, with Jennifer Granholm, the US energy secretary, stating that “the oil and gas companies are not flipping the switch as quickly as the demand requires.”

A glut of new oil drilling has made the US awash with oil in recent years, turning the country into a top-level exporter as well as domestic supplier, but this has kept prices low to the displeasure of investors. “A lot of this has been driven by investor sentiment,” said Helima Croft, head of global commodity strategy at RBC Capital Markets, of the current reluctance to expand production. “They don’t want them to spoil the party.”

The situation has left the White House in an awkward position with its commitments to rapidly reduce planet-heating emissions, with environmentalists furious at administration attempts to expand drilling.


It sounds like you want the federal government to take over the oil and gas industry.
 
  • Like
Reactions: Hotshoe and m.knox

lurkerlion

Well-Known Member
Aug 2, 2011
1,203
2,108
1
With the current politics:

1) institutional investors are prevented from investing in oil due to social scoring
2) banks are discouraged from lending in oil due to fed policies
3) major companies are required to invest in green to improve their social score
4) pipeline construction is a pipedream (pun intended)
Result: investment in drilling has been slowed down and production falls as wells decline just like liberal policy wants

2nd result: since oil is priced by international markets, our reduced production helped to increase prices. Since American companies are discouraged from reinvesting in drilling, they are are showing big profits by selling old oil at new prices. BUT no new drilling means the future of those companies shrinks—just like AOC and the Green Weenies want. BUT it also means ever increasing oil prices and dependence on OPEC.

Is the new normal or do we vote the crazies out? Rational transition to green will take decades not months.
 

2lion70

Well-Known Member
Gold Member
Jul 1, 2004
16,813
5,804
1
It sounds like you want the federal government to take over the oil and gas industry.
Just one of the primary reasons gas prices went up.
Gaqsbuddy is showing a decline in gas prices over the last month. That trend is likely to continue.
 

junior1

Well-Known Member
May 29, 2001
6,067
6,367
1
oil and gas companies have shown little willingness so far to ramp up production to help reduce costs and the new report, by the government watchdog group Accountable.US, accuses them of “taking advantage of bloated prices, fleecing American families along the way” amid ongoing fallout from the Covid-19 pandemic.

“Americans looking for someone to blame for the pain they experience at the pump need look no further than the wealthy oil and gas company executives who choose to line their own pockets rather than lower gas prices with the billions of dollars in profit big oil rakes in month after month,” said Kyle Herrig, president of Accountable.US.

The analysis of major oil companies’ financials shows that 11 of the group gave payouts to shareholders worth more than $36.5bn collectively this year, while a dozen bought back $8bn-worth of stock. This apparent focus, rather than on further drilling, has caused some frustration within the federal government, with Jennifer Granholm, the US energy secretary, stating that “the oil and gas companies are not flipping the switch as quickly as the demand requires.”

A glut of new oil drilling has made the US awash with oil in recent years, turning the country into a top-level exporter as well as domestic supplier, but this has kept prices low to the displeasure of investors. “A lot of this has been driven by investor sentiment,” said Helima Croft, head of global commodity strategy at RBC Capital Markets, of the current reluctance to expand production. “They don’t want them to spoil the party.”

The situation has left the White House in an awkward position with its commitments to rapidly reduce planet-heating emissions, with environmentalists furious at administration attempts to expand drilling.


so why is biden asking foreign producers to increase production?
 

wilbury

Well-Known Member
Feb 19, 2005
2,753
1,860
1
Just one of the primary reasons gas prices went up.
Gaqsbuddy is showing a decline in gas prices over the last month. That trend is likely to continue.
Because demand is dropping. Which is also one of the primary reasons Oil and Gas companies aren't keen on increasing production right now.
 

Sullivan

Well-Known Member
Nov 24, 2001
16,951
12,984
1
oil and gas companies have shown little willingness so far to ramp up production to help reduce costs and the new report, by the government watchdog group Accountable.US, accuses them of “taking advantage of bloated prices, fleecing American families along the way” amid ongoing fallout from the Covid-19 pandemic.

“Americans looking for someone to blame for the pain they experience at the pump need look no further than the wealthy oil and gas company executives who choose to line their own pockets rather than lower gas prices with the billions of dollars in profit big oil rakes in month after month,” said Kyle Herrig, president of Accountable.US.

The analysis of major oil companies’ financials shows that 11 of the group gave payouts to shareholders worth more than $36.5bn collectively this year, while a dozen bought back $8bn-worth of stock. This apparent focus, rather than on further drilling, has caused some frustration within the federal government, with Jennifer Granholm, the US energy secretary, stating that “the oil and gas companies are not flipping the switch as quickly as the demand requires.”

A glut of new oil drilling has made the US awash with oil in recent years, turning the country into a top-level exporter as well as domestic supplier, but this has kept prices low to the displeasure of investors. “A lot of this has been driven by investor sentiment,” said Helima Croft, head of global commodity strategy at RBC Capital Markets, of the current reluctance to expand production. “They don’t want them to spoil the party.”

The situation has left the White House in an awkward position with its commitments to rapidly reduce planet-heating emissions, with environmentalists furious at administration attempts to expand drilling.



Dumb article. Even you should have higher expectations for yourself.
 

lurkerlion

Well-Known Member
Aug 2, 2011
1,203
2,108
1
OPEC isn’t stupid. They set price targets, not too high, not too low. Their goal is to maintain control of the market which sometimes you increase to prevent the US from drilling. Then you decrease and the rollercoaster scares off drilling here. The shale boom disrupted their control because drilling costs were low enough to ignore OPEC manipulation.

However right now we are just shooting ourselves in the foot without OPEC helping.
 

Sullivan

Well-Known Member
Nov 24, 2001
16,951
12,984
1
Lots of things in play here. The oil majors set their budgets in Jan so that was way before prices spiked. They are notorious for being slow to react which is why they did poorly in leasing in Pa. Way to much bureaucracy. The more agile independents beat them to the prime locations.

Another is ESG, keep-it-in-the-ground movements, RGGI, and other movements that make it much harder for the independents to get financing. Some of the biggest private equity firms like Carlyle and Black Rock have been under heavy pressure to not finance E&P firms. These firms need to build cash reserves now so they can afford new drilling activities.

Add in other factors like shutting down pipeline construction, cutting leases on federal lands, higher regs on existing facilities, and more drive up prices. Oil and gas are commodities traded on the open market so when there are new policies that will restrict production the price goes up.

Don’t forget some additional supply constraints and associated price pressures from events like loss of production due to Covid last year, the big Texas freeze, several major hurricanes this past summer in the production rich Gulf, and a huge increase in exports to Europe and Asia because of a loss of wind power in Europe and cold weather in Asia.

Yes, to most everything you said. However, many of the companies are ramping up production more than they are willing to admit. It's going to take several more months before much of it comes online.

Personally, I don't believe that many of the companies are showing enough discipline.
 

The Spin Meister

Well-Known Member
Nov 27, 2012
24,290
27,992
1
An altered state
Yes, to most everything you said. However, most of the companies are ramping up production more than they are willing to admit.
Just read that early indications are. 19% increase in shale oil and gas drilling budgets for next year. With prices this high they will do more drilling which will bring prices down. The question is how well will the balance production with a reasonable price point??
 

Sullivan

Well-Known Member
Nov 24, 2001
16,951
12,984
1
Just read that early indications are. 19% increase in shale oil and gas drilling budgets for next year. With prices this high they will do more drilling which will bring prices down. The question is how well will the balance production with a reasonable price point??

Although I haven't read any articles on it, that number sounds about right. The rig count has increased somewhat in recent weeks. I expect a bounce over the next month. Many of these wells will go online in the second and third quarter of next year.
 
Last edited:
  • Like
Reactions: The Spin Meister

bdgan

Well-Known Member
May 29, 2008
61,058
37,474
1
so why is biden asking foreign producers to increase production?
Paoli doesn't think costly regulations on oil companies should alter their behavior. He thinks they should just suck it up and accept lower profits.
 
  • Like
Reactions: Sullivan

bdgan

Well-Known Member
May 29, 2008
61,058
37,474
1
oil and gas companies have shown little willingness so far to ramp up production to help reduce costs and the new report, by the government watchdog group Accountable.US, accuses them of “taking advantage of bloated prices, fleecing American families along the way” amid ongoing fallout from the Covid-19 pandemic.

“Americans looking for someone to blame for the pain they experience at the pump need look no further than the wealthy oil and gas company executives who choose to line their own pockets rather than lower gas prices with the billions of dollars in profit big oil rakes in month after month,” said Kyle Herrig, president of Accountable.US.

The analysis of major oil companies’ financials shows that 11 of the group gave payouts to shareholders worth more than $36.5bn collectively this year, while a dozen bought back $8bn-worth of stock. This apparent focus, rather than on further drilling, has caused some frustration within the federal government, with Jennifer Granholm, the US energy secretary, stating that “the oil and gas companies are not flipping the switch as quickly as the demand requires.”

A glut of new oil drilling has made the US awash with oil in recent years, turning the country into a top-level exporter as well as domestic supplier, but this has kept prices low to the displeasure of investors. “A lot of this has been driven by investor sentiment,” said Helima Croft, head of global commodity strategy at RBC Capital Markets, of the current reluctance to expand production. “They don’t want them to spoil the party.”

The situation has left the White House in an awkward position with its commitments to rapidly reduce planet-heating emissions, with environmentalists furious at administration attempts to expand drilling.


Now you're blaming oil and gas executives? Last week you were blaming covid.
 
  • Like
Reactions: Sullivan

bdgan

Well-Known Member
May 29, 2008
61,058
37,474
1
No, it can stay private, but production should be regulated, just like the Fed overnight rate.
The government should tell private companies what to produce, how to produce it, and how much of it to produce? You really like the Venezuela model.
 
  • Like
Reactions: Sullivan

PaoliLion

Well-Known Member
Nov 2, 2003
12,087
6,083
1
The government should tell private companies what to produce, how to produce it, and how much of it to produce? You really like the Venezuela model.

Have you ever heard of OPEC hayseed?
 

PaoliLion

Well-Known Member
Nov 2, 2003
12,087
6,083
1
That's your model?

No, but American oil companies are more closely aligned with OPEC than the American economy. That’s exactly why they don’t want to ”drill baby drill”. When they were small and insignificant, they sought to drill as much as possible, now they actually move a significant amount of oil and they’ve realized that OPEC is their friend. Frankly, all of the oil they’re selling belongs to the American people (for the most part) and the American people would be much much better off if the industry was not as unregulated as it is today.
 

bdgan

Well-Known Member
May 29, 2008
61,058
37,474
1
No, but American oil companies are more closely aligned with OPEC than the American economy. That’s exactly why they don’t want to ”drill baby drill”. When they were small and insignificant, they sought to drill as much as possible, now they actually move a significant amount of oil and they’ve realized that OPEC is their friend. Frankly, all of the oil they’re selling belongs to the American people (for the most part) and the American people would be much much better off if the industry was not as unregulated as it is today.
A year ago we were energy independent. Plenty of supply and low prices. But in the 11 months since Biden became president U.S. oil companies aligned themselves with OPEC???

Regardless, just build a few more windmills and you don't have to worry about oil. Right Paoli?
 

lurkerlion

Well-Known Member
Aug 2, 2011
1,203
2,108
1
No, but American oil companies are more closely aligned with OPEC than the American economy. That’s exactly why they don’t want to ”drill baby drill”. When they were small and insignificant, they sought to drill as much as possible, now they actually move a significant amount of oil and they’ve realized that OPEC is their friend. Frankly, all of the oil they’re selling belongs to the American people (for the most part) and the American people would be much much better off if the industry was not as unregulated as it is today.
Small and insignificant? Do you mean before John D Rockefeller and Standard Oil were bigger than almost every country in the world? Before they broke Standard Oil up into Exxon, Mobil, Chevron, and others? Now their capitalization is lower than Tesla, google and the like.

I don’t even know how to respond to this post as it pretty much backwards.
 

PaoliLion

Well-Known Member
Nov 2, 2003
12,087
6,083
1
A year ago we were energy independent. Plenty of supply and low prices. But in the 11 months since Biden became president U.S. oil companies aligned themselves with OPEC???

Regardless, just build a few more windmills and you don't have to worry about oil. Right Paoli?

What country do you live in - nothing’s changed in the past year
 

PaoliLion

Well-Known Member
Nov 2, 2003
12,087
6,083
1
Small and insignificant? Do you mean before John D Rockefeller and Standard Oil were bigger than almost every country in the world? Before they broke Standard Oil up into Exxon, Mobil, Chevron, and others? Now their capitalization is lower than Tesla, google and the like.

I don’t even know how to respond to this post as it pretty much backwards.

You must be in in a coma. US oil production hit a multi-decade low under bush, declining to 5MM barrels a day in 2008 and then we hit a new peak at 13MM bpd in 2019. During rockfeller, we produced about 2MM bpd.
 

lurkerlion

Well-Known Member
Aug 2, 2011
1,203
2,108
1
You must be in in a coma. US oil production hit a multi-decade low under bush, declining to 5MM barrels a day in 2008 and then we hit a new peak at 13MM bpd in 2019. During rockfeller, we produced about 2MM bpd.
I am still puzzled by your assertions but I guess that is your intent. Katrina caused natural gas to go above $12 dollars in 2005. Companies discovered that they could produce oil and gas out of shale cheaper than buying overseas. This perfect storm produced the drill baby drill of the next ten plus years.

Since domestic production became cheaper than overseas, OPEC felt squeezed and started to play a different game. In fact the cartel was fractured with no discipline. Biden takes office and domestic production is immediately riskier than overseas.
 

PaoliLion

Well-Known Member
Nov 2, 2003
12,087
6,083
1
I am still puzzled by your assertions but I guess that is your intent. Katrina caused natural gas to go above $12 dollars in 2005. Companies discovered that they could produce oil and gas out of shale cheaper than buying overseas. This perfect storm produced the drill baby drill of the next ten plus years.

Since domestic production became cheaper than overseas, OPEC felt squeezed and started to play a different game. In fact the cartel was fractured with no discipline. Biden takes office and domestic production is immediately riskier than overseas.

That was the most non-sensical post I’ve read all day
 

Latest posts