January Inflation

[JAG]

I can't even begin to guess what the mental conflict he has on drilling in the Gulf. I tend to think it is pretty flexible.

Florida is a cash cow for tourism, and the state's residents fiercely protect their white sand beaches from any potential threat of change.

I personally think if they had a similar restriction as California and drilled out of sight from the beach, it would exponentially escalate Floridian industries related to fish harvests.

 

[SAJ-99]

Prolonged Trade War May Wipe Out 50% Of China’s Oil Demand Growth — Forbes

A prolonged global trade war could have an outsized effect on China's oil demand, according to one research outfit. That would likely mean an oil price slump.

apple.news

@SAJ-99 drop in prices at the pump? Significant reduction in fracking production?

That article talks about 50% drop in demand growth. That could certainly happen. Or if US goes into recession and global demand will certainly drop. If prices go too low, Saudi's may rethink their favor to Trump to lift export limits. The reality of crude oil is that companies (and countries) need to make money and no one is pumping oil at a loss for long. US investors in US oil companies have zero patience for that. Flip side to Global Macro stuff is China has no problem buying Russian or Iranian oil at a discount. Tariffs are just going to strengthen that relationship. The interesting time will come in a few years when the tier 1 assets in Permian start to disappear. The price of oil has to go up and we need to continue on path to EVs.

US's self-imposed restrictions against energy independence.

Sorry JAG. That is myth. There are no restrictions of any type on energy independence. We are pumping a LOT of oil. Americans love cheap gas, so all politicians love cheap gas. I always joked that if you could wave a magic wand and get every barrel of proven reserves out of the ground for $20, Oil company CEO's would sign on in a New York minute, sell it, buy islands and hook up solar and electric, while eventually leaving the average American standing at the pump with nothing to buy. Capitalism.

Good luck in the WY draw.

 

[SAJ-99]

@SAJ-99

Are you in the oil industry?

You always seem to have a very deep knowledge of the oil stuff.

I will add that today you see the price falling 2% and the news is "US/Iran progress". The news explanation is almost comical. You have to believe that 1. Some deal will every get worked out (this one is funny because any new deal is going to look like the one Obama and the rest of the World signed on to and Trump pulled out of in first term) and 2) Iran oil is somehow not hitting market now (also comical because we know China is buying it.)
So yeah, go long oil if you believe headline news. I tend to think it is more "recession is coming" than "talks with Iran".

 

[Sytes]

Thank you @Lostinthewoods for calling out ALL involved in the b.s. antics while those pandering innocence at the expense of one with a differing position.

With that, to those extremes involved in your collective pom pom cheering / hyped, anti like-minded, closed to opposing opinions, keep your blue thumbs to yourselves - I'm not part of your clique nor have interest in your doomsday, closed minded key stroking. UNLESS you're interested placing your $ where your key stroking mouth yammers.

This applies towards ONLY the extremes that many hunt talk members identify reading though lack interest posting due to the menacing behavior of the vocal key stroker club kids.

A few quality opinions shared, even amidst the clique's assault on the opposing opinion shared, based on views I may disagree though hold reasoned thought.

I'm not a fan of this admin's sweeping action though in many regards it's working. New trade deals made that have, for a long while, been ignored at the expense of competitive reciprocal trade.

I'm not a fan of this admin's action towards Canada. That's a period - end of sentence. This could have and should have been managed as neighboring partners at the negotiating table.
My period, end of senetence, lags with Mexico as we've extended beyond reciprocal though again, as with Canada and strong allies, should have been at the negotiating table.

I'm not a fan of the rhetoric of the admin though it has shaken many to realize the emphasis of carrying a big stick... wish this admin had the speak softly portion Theodore Roosevelt claimed in his quote, though even he was quite boisterous so...

Meh,

People say they are losing mass $... yes - to those who fail in the mid/long term objective.

If you're death is imminent in the next year or two... maybe you're taking a hit - then again, buh-bye regardless.

If you're living beyond the next couple years and financially intelligent to work within a retirement portfolio, you're fine JUST AS YOU WERE AFTER COVID.

 If you live by the seat of your pants with your life's investments playing the market... you reap what you sow.

Best to all!

Edit: a friendly PM noted I noted the incorrect moderator. Hah! Nice catch. Thanks for the PM. corrected.

 

[JAG]

The interesting time will come in a few years when the tier 1 assets in Permian start to disappear. The price of oil has to go up and we need to continue on path to EVs.


Sorry JAG. That is myth. There are no restrictions of any type on energy independence. We are pumping a LOT of oil. Americans love cheap gas, so all politicians love cheap gas. I always joked that if you could wave a magic wand and get every barrel of proven reserves out of the ground for $20, Oil company CEO's would sign on in a New York minute, sell it, buy islands and hook up solar and electric, while eventually leaving the average American standing at the pump with nothing to buy. Capitalism.

Good luck in the WY draw.

View attachment 369281

That's a neat chart; it nicely illustrates the increase in US Field production and how it's increased. The US is still barely a net exporter of oil. What about the ANWR? It is perceived to be the largest reserve the US has.

It's not a myth, it just reveals how little I've been paying attention since 2005. Just now paying attention. Frankly, I've only been tracking renewables and EV RD production with an unsurprising and convenient departure from oil dependence. The fireside chats with my Dad mostly happened before he retired in 2008. One of his frequent points of tension was the industry's knowledge of the US's vast oil reserves, but restricted access because of moratoriums.

Since then, technological advances (fracking) and improved access (horizontal drilling) appear to be the reason for the increased non-offshore extraction. I apologize for boring you with my catch-up summary.

The US's independence, while it achieved net export status in 2020, reverted in 2022 due to dependence on Canada for 52% of its petroleum, 10% from Mexico & others.

This was a fun read/detour (for me) into how the US has manufacturing capability to refine heavy, gloopy oil, but less infrastructure for refining less viscous oil that happens to be easier to refine.

What would you say are the barriers to energy independence and export capacity? Costs to build infrastructure to refine our less-viscous oil? It seems like we still need Canada, Mexico, and Venezuela for the heavy oils?

I'm starting to see a perspective where energy independence may be an overly naive and detrimental idea. You may like this essay since many of your points concur with the author's positions:

US Oil Security and the Oil Import Tariff Question​

As I ask, would a shift in infrastructure upgrades cause another spike in gas prices and a reciprocal focus on EVs and renewables?

 

[JAG]

I just learned a lot tonight and took the time to even reread the earlier posts in this thread. I now understand more of the points/objections made than I did a month ago. The knowledge you all have shared has been helpful, thanks.

Even re-reading my post above this one, I realize that some of my questions are simplistic and perhaps too revealing of how much I have to learn.

Money does come back to the US. It comes in the form of foreign investment in US through financial assets. Hence we have an huge industry that focuses on how to play with money, and it employs a lot of people.

For example, this post here from SAJ-99. I play with money, but I don't make a living doing it, and I didn't get a degree that helps me understand how to.

 

[SAJ-99]

The US is still barely a net exporter of oil. What about the ANWR?

Arctic Refuge Lease Sale Yields No Interest | U.S. Department of the Interior

The Department of the Interior today announced that the Bureau of Land Management received no bids for the congressionally mandated oil and gas lease sale for the Coastal Plain of the Arctic National Wildlife Refuge (Arctic Refuge). The deadline to submit bids was Monday, January 6

www.doi.gov

It’s about the cost.

What would you say are the barriers to energy independence and export capacity? Costs to build infrastructure to refine our less-viscous oil? It seems like we still need Canada, Mexico, and Venezuela for the heavy oils?

Yes. Refining capacity is a problem and has been for years. Oil is imported from Mexico, refined and exported back. It is complicated market. Not all oil is the same. Refineries that refine heavy crude (sour) can’t be easily switched to light-sweet WTI. Mostly every independence is a political talking point.

 

[mevertsen]

Arctic Refuge Lease Sale Yields No Interest | U.S. Department of the Interior

The Department of the Interior today announced that the Bureau of Land Management received no bids for the congressionally mandated oil and gas lease sale for the Coastal Plain of the Arctic National Wildlife Refuge (Arctic Refuge). The deadline to submit bids was Monday, January 6

www.doi.gov

It’s about the cost.


Yes. Refining capacity is a problem and has been for years. Oil is imported from Mexico, refined and exported back. It is complicated market. Not all oil is the same. Refineries that refine heavy crude (sour) can’t be easily switched to light-sweet WTI. Mostly every independence is a political talking point.

Same issue is with gold.

Several gold mines around here. Only a couple main companies have bought the mines.

All kinds of different ore is trucked up to a couple hundred miles to go to a proper mill. Each type of ore requires a specific mill.

That is cheaper to truck it than to build a new mill on site at $2B.

I see lots of gold go by my house every day.

Sorry. Off topic, just a neat note on how complex all the minerals are.

 

[Cap’n Crunch]

Thank you @Lostinthewoods for calling out ALL involved in the b.s. antics while those pandering innocence at the expense of one with a differing position.

With that, to those extremes involved in your collective pom pom cheering / hyped, anti like-minded, closed to opposing opinions, keep your blue thumbs to yourselves - I'm not part of your clique nor have interest in your doomsday, closed minded key stroking. UNLESS you're interested placing your $ where your key stroking mouth yammers.

This applies towards ONLY the extremes that many hunt talk members identify reading though lack interest posting due to the menacing behavior of the vocal key stroker club kids.

A few quality opinions shared, even amidst the clique's assault on the opposing opinion shared, based on views I may disagree though hold reasoned thought.

I'm not a fan of this admin's sweeping action though in many regards it's working. New trade deals made that have, for a long while, been ignored at the expense of competitive reciprocal trade.

I'm not a fan of this admin's action towards Canada. That's a period - end of sentence. This could have and should have been managed as neighboring partners at the negotiating table.
My period, end of senetence, lags with Mexico as we've extended beyond reciprocal though again, as with Canada and strong allies, should have been at the negotiating table.

I'm not a fan of the rhetoric of the admin though it has shaken many to realize the emphasis of carrying a big stick... wish this admin had the speak softly portion Theodore Roosevelt claimed in his quote, though even he was quite boisterous so...

Meh,

People say they are losing mass $... yes - to those who fail in the mid/long term objective.

If you're death is imminent in the next year or two... maybe you're taking a hit - then again, buh-bye regardless.

If you're living beyond the next couple years and financially intelligent to work within a retirement portfolio, you're fine JUST AS YOU WERE AFTER COVID.

 If you live by the seat of your pants with your life's investments playing the market... you reap what you sow.

Best to all!

Edit: a friendly PM noted I noted the incorrect moderator. Hah! Nice catch. Thanks for the PM. corrected.

@Sytes would you explain to me a little more about your hard stance on Canada and your ideas about Mexico? Feel free to PM me if you prefer.

I like @JAG am trying to better understand all sides of each topic whether I agree or not.

 

[406dn]

Speaking to the oil refining, the refinery that I retired from was designed to handle heavy sour crude. This was the type of crude most available, when the refineries in the northern US were first brought on stream. There are advantages to running heavy sour crude. That type of crude is less expensive than lighter, sweeter crude. The discount was generally even wider, since Canadian and northern US crude, is essentially land locked, and can't reach the world market.

A refinery's crude tower fractionates the crude. The crude comes into the unit at the bottom and is boiled. The lighter components rise the highest into the tower before condensing back into liquid. This is where the bottleneck occurs, with lighter crude. That part of the tower becomes flooded with more product than it can handle. This causes a unit upset, and you have to cut the crude feed rate, to clear that portion of the tower.

Every refinery has an individual ability to handle its crude slate. There is some ability to adjust, but there is always a bottleneck, to be managed.

There have been almost no new refineries built in forever. The preference is to enlarge, existing refineries. When a bottleneck hinders a sufficiently profitable opportunity, the company engineers a solution for it.

Oil refineries are an incredibly complex operation, from both the operating side and the business side. The fact that everyone assumes there will be product, whenever they need it, is proof it is most often well executed by oil companies.

 

[noharleyyet]

 

[SAJ-99]

Some good news, although not much detail.

Bessent told people he sees de-escalation with China at JPMorgan private event | Forexlive

Bessent spoke in Washington at a JPMorgan client event that was closed to the media

www.forexlive.com

 

[JAG]

Same issue is with gold.

Several gold mines around here. Only a couple main companies have bought the mines.

All kinds of different ore is trucked up to a couple hundred miles to go to a proper mill. Each type of ore requires a specific mill.

That is cheaper to truck it than to build a new mill on site at $2B.

I see lots of gold go by my house every day.

Sorry. Off topic, just a neat note on how complex all the minerals are.

It's related. Inflation is a big button with a ton of wires attached to it.