Reply to $7/gallon gas is coming

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][twitter]https://twitter.com/Acyn/status/1501973289937563650?s=20&t=HuBMXKHEEw5EynU5o5Wurg[/twitter][/quote]

Was mentioned several times upthread, the investments to expand production are uneconomical to companies like Shell. It would take either some sort of regulation or incentive by US gov for these companies to expand production.[/quote]

That is not true production is expanding and is extremely profitable at current price points.  The problem, as it were, is more that companies are not convinced that this price spike isn't just temporary.  Investments in production capacity take at least a year to start seeing a return.  They are holding back because of how hard many companies got hit by debt issues from 2018-2020 and not having a clear idea where the price of oil will be a year from now.  Investors want financial discipline and dividends over growth.  The market will take some time to adjust but it will.  The oil guys also want a pat on the head and a belly rub[/quote]

That's how the oil industry has always worked. Certain wells are always profitable, as the prices rise, other sources like shale and deeper water become profitable, as the price falls, those rigs are taken off line.

[/quote]

Of course, it's basic economics.  I'm just pushing back on the assertion that increasing production is uneconomical.[/quote]

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