It'll never go below $100 a barrel.
It went bellow $100 a barrel for the last few years because as US shale processing came online, opec decided to also keep production high which cut oil prices from $100/barrel to ~$50/barrel where it's roughly stayed for the last decade.
There's not another "new way to extract oil for cheap" technique on the horizon. Israel and Iran are both destroying oil extraction and processing facilities in the gulf region, it'll take years and a huge amount of money just to rebuild those. By the time that's finished, assuming it finishes, inflation will have firmly caused the price of oil to stay above $100.
This is basically a permanent increase. We are sort of at global warming catastrophes now. It's not a question of if it will be bad, it's a question of how long and how intense. The longer this war/military operation/regime change/whatever we are doing goes forward, the worse it will be. And, unfortunately, I don't think there's any specific goal the trump admin is trying to achieve. This is such an obvious F-up and Trump will only pull out if he can somehow make a claim that it isn't.
> Israel and Iran are both destroying oil extraction and processing facilities in the gulf region
This isn't like Katrina where oil infrastructure was being temporarily evacuated, shut down, and taking some water and wind damage.
The oil infrastructure is being blown to smithereens. And not just pumps that are sucking oil out of a hole in the ground. Refineries. Big expensive factories that process oil. Stuff we don't even bother to build in progressive parts of the world because the combination of environmental regulations and concerns about climate change mean it's possible they'll never pay off their massive construction costs.
Ignoring pollution and externalities for the sake of argument this is what is very interesting to me. It’s not clear that the capital markets if left to their own devices would even invest in rebuilding these to begin with due to concerns about being paid back.
The oil industry has went from growth based investments to capturing returns on current deployed infrastructure over the past decade or so. Only very limited and calculated capital is being deployed in this sector these days.
It will certainly be interesting to watch. I’m certain those countries will rebuild via government funds, but I’m wondering how profitable that will end up actually being given how expensive that’s become to build, the insane construct lead times these days, and the overall trend in oil demand. Natural gas is even more interesting since it’s firmly directly linked to renewable energy deployment. Gas usage goes up as we deploy more solar worldwide, at least in the short term.
[1] although the estimate is around $50 per barrel full-cycle cost https://incorrys.com/energy/oil-supply/international-oil-sup...
There are massive reservoirs of expensive oil in Canada and Venezuela. If Canada and Venezuela limit output then the price will go above their cost of production. If not, it will settle at their costs. ($80).
Kind of moot since it will take well over a decade for their production to ramp high enough to satisfy current world demand.
The best for for lower prices in the shorter term is likely lower demand through renewable alternatives.
The west coast is the only part that relies on middle eastern oil. And a spike in prices will just get them in line and connected to the rest of the shale powered system.
I don’t like any of this, but I think the doom and gloom lies elsewhere.
yes
> has the potential to be good for parts of the us energy sector.
No way this is good for anyone other than oil producers. The only potential positive it'll have on the US energy and shipping sectors is this is going to put even more pressure on adopting renewables as fossil fuel cost spikes.
It’s not the knowledge and tech, but manufacturing-of and at-scale-use of renewables that matters here.
We can’t just-in-time install infrastructure a across the entire country in a matter of weeks or months.
The west coast is adopting EVs at a faster pace than the rest of the country. You could just as well see accelerated adoption of EVs in personal and freight transportation, Chinese manufacturers opening up US EV production, and so on.
The answer isn't necessarily drawing shale from Alberta that we can't really process anyways (without mixing it with light crude from Texas anyways).
It’s amazing how much grift and subsidy leveraging the US renewables market has engaged in compared to pragmatic deployments elsewhere like China. Utterly insane and it shows how difficult it’s going to be to fix since it’s an endemic problem with American society at its core.
Californian here. There is no discussion or any desire to build an oil pipeline from TX/LA across NM and AZ to deliver oil to refineries here. Ha, if you think the Keystone XL pipeline was controversial... it'll never happen.
Calif produces about 20% from its own but tired wells. Some oil is imported from the Middle East but larger volumes come by ship from South America and Alaska.
It truly is a great strategy if you want to make a quick buck now before you become irrelevant in five years.
> Why can't you just celebrate this good thing?
reads like <font size=2> /s </font>.
The US getting dragged into Israel’s war does not serve anyone’s interests other than Israel’s.
Do you also think that global nuclear disarmament would be a bad thing because the Doomsday clock has been a few minutes from midnight for 40 years so the risk is obviously overblown and nuclear war will never happen?
I think world peace with everybody holding hands and dancing would be a good thing, but it’s about as likely to happen as global nuclear disarmament.
Ukraine is an excellent contemporary case study of what happens to a nuclear-armed nation with dangerous neighbours that gives up its nukes.
Now we're engaged in a full regional conflict to destroy Iran's nuclear capability that was destroyed last year. The same capability the Iranians were willing to give up via negotiations that were ongoing when the US and Israel took out the country's leadership in a decapitation strike which began the war.
Respectfully, this war virtually guarantees Iran will now develop nuclear weapons. The exact thing Trump thought shooting them would stop is going to come to fruition because of these actions. The exact thing that was barred by a fatwa since 2004.
How do you not see this?
Proof you're wrong is that they had a self-imposed 2000km limit on their missiles but when push came to shove, they changed their mind and shot one 4000km.
> Proof you're wrong is that they had a self-imposed 2000km limit on their missiles but when push came to shove, they changed their mind and shot one 4000km.
The details of this attack are murky, it might not have even occurred. And given the penchant for the Trump administration to lie about this conflict on a daily basis I don't believe it either. Show me some radar tracks, hell, ANY EVIDENCE and I might consider it. Otherwise I'll consider it propaganda.
Same as the doomsday clock doesn't mean we'll have a nuclear war 2 minutes from now.
In my city, we've been "overdue for the big one" (earthquake) for my entire life. In never came but that doesn't mean it won't come in the near future so we still prepare for it.
OK, I have no evidence for those missiles. It doesn't really change things though. Iran clearly can change its mind if it wants. It's not the one country with permanently unwavering integrity that everyone can trust their lives to.
Iran's modern history doesn't suggest this at all. Quite the opposite - they have been continually invaded. To me, theirs seems like an explicitly defensive stance. They have no airforce, navy, or tanks and such to speak of - just missiles and drones. Not a force suited to invading other countries.
You could argue about their support for regional militia's but I still wouldn't concede that indicates any desire to start a war.