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

About a dozen or so pages back I was lectured for pointing out the problem here, but I’ll try again:

1.  Drilling for oil is a technically complex operation. You’re trying to extract a molecule thousands of feet beneath the surface of the earth. You’re drilling into asymmetric geological formations. Those formations will determine the success of your venture. You can’t actually put your eyes on the molecule until it is extracted.  There is a reason why Petroleum engineers are amongst the best paid on the planet.

2.  Drilling for oil is a capital intensive business. Most of your costs are upfront before you start to collect revenue. The economics on any particular well are typically based on 30+ years of production from that well.  Investing in a new well is inherently a very long term commitment.

3.  Even under ideal circumstances, assuming you have a lease to drill on, first planning to first production takes about 180 days. Typically, it is much longer. Presently, it would be even longer due to labor and supply shortages.

4.  EVEN BEFORE COVID, the oil business in North America was going through a historic reorganization with record bankruptcies filed. COVID further supercharged the process. Numerous big time investors flat out declared they would never invest in the space again. Politicians all over the globe have stated a desire to phase out oil sometime between 2030 to 2050.

5.  EVEN BEFORE RUSSIA ATTACKED UKRAINE, the price of oil was steadily marching upward as demand was outstripping market forecasts. Just like COVID accelerated what was already a badly declining price environment, Russia’s actions accelerated what was a badly increasing price environment.

Now, a bunch of politicians who as recently as three weeks ago were openly cheering on/trying to legislate the end of the oil industry, have a SHORT term problem. They want oil companies to deploy expensive LONG term solutions to solve the problem.       I don’t know what the solution is and there are probably a thousand more wrinkles to this problem I’ve left out from this post. [/quote]

Still doesn’t mean the windfall should be paid out to shareholders rather than invested in more efficient energy sources or somehow used to soften the price increases on consumers. The message to consumers is that the companies and the shareholder are happy with inflation. They making out like robber barons at their consumers’ expense. [/quote]

These are not Nationalized companies, they are private, for profit - of course profits are passed on to shareholders as is the duty of the company to do so. It's up to the US government to take countermeasures or regulate the industry more heavily due to implications to national security and interests.[/quote]

That isn’t how capitalism is supposed to work. If it was a truly competitive market they couldn’t all pocket all the money because some competitors would be more efficient, more productive, or higher quality and use those competitive advantages to increase their market share. Competition dries innovation, efficiency, and productivity. We don’t have that kind of competition. It’s an inherently corrupt industry. [/quote]

This is a faulty interpretation of the facts. Oil is not a standardized widget. Standardization occurs at the refinery after the oil has been extracted. So while oil is a global commodity, it isn’t as simple as a barrel from West Texas replacing one from Russia or Canada or Venenzuela.

Additionally, producing oil is incredibly risky. The most technically challenging wells in North America are deep water wells in the Gulf of Mexico. Those are drilled in about 1000 feet of water with a target drilling horizon about 30,000 feet below the seabed floor. You’re literally drilling for something that is over 5 miles away from the nearest human being. You’re doing this based on geological surveys that can easily be misread. And you’re doing it from a floating platform and dealing with insane temperatures that deep into the earth. A TEST well out there costs well north of $100 million just to drill and can take up to a decade to plan.

We haven’t even gotten to how you get the oil back to dry land. Or making sure you optimize production (produce too fast and you’ll damage the well, produce too slow and you can damage the well).

I get that people want this to be a simple problem to solve with simple explanations.

Obviously this is but one example and there are less technically challenging projects, but you’d be surprised at the technical challenges in all fields. You probably have no idea what waxy Utah oil is, but you should Google a picture. As the name would imply, it is a waxy oil that is solid at surface temperatures. Yet that supplies most of the oil products for the Utah area. California oil is a completely different production profile than west Texas. Etc….[/quote]

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