High Oil Prices Aren’t Necessarily Bad
by Robert Rapier (Energy Today) ... As U.S. exports increase, high oil prices are turning into less of an economic negative for the country. If the current trends continue, high oil prices may turn into a net positive for the U.S. economy.
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First off, it is no longer true that there is still record amounts of oil “all over the place.” A couple of years ago, global inventories were indeed at record highs. There was also a tremendous amount of oil in floating storage — the “fully loaded ships at sea.”
That’s no longer the case.
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Oil country is Trump country and most of the top oil-producing states like high oil prices. Rising oil prices have enabled U.S. shale oil production to rebound from the decline it suffered in 2016.
Low oil prices have historically devastated economies in states like Texas, which delivered more electoral votes to Donald Trump than any other state. READ MORE
This Is How Big Oil Will Die (Energy Today/NewCo Shift)
The Saudis Won’t Prevent The Next Oil Shock (OilPrice.com)
One Casualty of Trump's Tough Iran Stance? U.S. Pump Prices (Bloomberg)
Saudis' Biggest Oil Surge in 5 Years Barely Steadies OPEC (Bloomberg)
Excerpt from Energy Today/NewCo Shift: Big Oil is perhaps the most feared and respected industry in history. Oil is warming the planet — cars and trucks contribute about 15% of global fossil fuels emissions — yet this fact barely dents its use. Oil fuels the most politically volatile regions in the world, yet we’ve decided to send military aid to unstable and untrustworthy dictators, because their oil is critical to our own security. For the last century, oil has dominated our economics and our politics. Oil is power.
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Oil drilling will cease, as existing fields become sufficient to meet demand. Refiners, whose huge capital investments are dedicated to producing gasoline for automobiles, will write off their loans, and many will go under entirely. Even some pipeline operators, historically the most profitable portion of the oil business, will be challenged as high cost supply such as the Canadian tar sands stop producing.
A decade from now, many investors in oil may be wiped out. Oil will still be in widespread use, even under this scenario — applications such as road tarring are not as amenable to disruption by software. But much of today’s oil drilling, transport, and refining infrastructure will be redundant, or ill-fit to handle the heavier oils needed for powering ships, heating buildings, or making asphalt. And like today’s coal companies, oil companies like TransCanada may have no money left to clean up the mess they’ve left.
Of course, it would be better for the environment, investors, and society if oil companies curtailed their investing today, in preparation for the long winter ahead. Belief in global warming or the risks of oil spills is no longer needed to oppose oil projects — oil infrastructure like the Keystone XL will become a stranded asset before it can ever return its investment.
Unless we have the wisdom not to build it. READ MORE
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