Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

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.

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

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.

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

Increasing production is uneconomical for the companies for all the reasons mention by the poster at 15:54

That's not what that poster was saying. The poster was explaining why the industry isnt jumping and immediately expanding production.

The breakeven price for most shale is, conservatively, $60. Prices greater than $70 are economical. The issue is whether $75+ prices will be sustained over the medium term.

That's what makes it uneconomical. Huge capital expenditure upfront with zero guarantees of being able to recover that investment or turn a profit long term. Also, OPEC countries can increase production and choke shale producers. They'd have to get some guarantees from the Government.

They don't need guarantees from the government. We dont need price controls and subsidies. We need geopolitical stability and unfortunately we are in the midst of a geopolitical inflection point right now.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

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.

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.

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.

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.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

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.

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

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.

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

Increasing production is uneconomical for the companies for all the reasons mention by the poster at 15:54

That's not what that poster was saying. The poster was explaining why the industry isnt jumping and immediately expanding production.

The breakeven price for most shale is, conservatively, $60. Prices greater than $70 are economical. The issue is whether $75+ prices will be sustained over the medium term.

That's what makes it uneconomical. Huge capital expenditure upfront with zero guarantees of being able to recover that investment or turn a profit long term. Also, OPEC countries can increase production and choke shale producers. They'd have to get some guarantees from the Government.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

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.

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

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.

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

Increasing production is uneconomical for the companies for all the reasons mention by the poster at 15:54

That's not what that poster was saying. The poster was explaining why the industry isnt jumping and immediately expanding production.

The breakeven price for most shale is, conservatively, $60. Prices greater than $70 are economical. The issue is whether $75+ prices will be sustained over the medium term.

That's what makes it uneconomical. Huge capital expenditure upfront with zero guarantees of being able to recover that investment or turn a profit long term. Also, OPEC countries can increase production and choke shale producers. They'd have to get some guarantees from the Government.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

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.

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.

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.

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.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

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.

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

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.

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

Increasing production is uneconomical for the companies for all the reasons mention by the poster at 15:54

That's not what that poster was saying. The poster was explaining why the industry isnt jumping and immediately expanding production.

The breakeven price for most shale is, conservatively, $60. Prices greater than $70 are economical. The issue is whether $75+ prices will be sustained over the medium term.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

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.

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.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

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.

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.

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.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

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.

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.

Huh, the price of oil is determined by a global market. Oil company shareholders took a lot of losses from 2018-2021 and companies pivoted to prioritizing paying down debt. That's a good thing. This isn't some conspiracy.

But, I'll tell you what would help. Investing in our electrical grid and infrastructure. Too many of ours are built to use the Saudi/Russian heavy grades of oil. This is because they were built before the shale revolution. We need to be able to use the lighter types that we have and that our allies have. But instead we have our time and money wasted by NIMBYs, "clean coal", ethanol, and the no change brigade etc. Optimize what we have for what we got in the short term and upgrade the grid to enable distributed production, ie: smaller scale wind and solar, for the long term.

As i understand building new refineries to process the kind of oil supply we have takes years and is very expensive.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I'm not sure why so many people are condemning the President when oil companies are raising prices, prioritizing paying dividends to share holders, and raking in huge profits at the expense of the customers.

The President has made a bi-partisanly politically popular decision to ban the import of oil from Russia in response to the Russian invasion of Ukraine. But that, and even the closing of the XL pipeline are not the reasons why the price of gasoline is skyrocketing at the pump. The oil companies should be held accountable, not the President. Most other corporations out there, when faced with rising costs, tighten their belts, decrease their profit margins and lower dividend payouts to shareholders in order to minimize the amount they raise the price of their products. Not oil companies. And the oil companies get to skip off scott free and let the politicians take the blame.

You don't seem to understand market dynamics. The price of oil is not increasing because of rising costs, but because of a shortage in supply (and some speculation too). Oil is traded in commodities market, it's a very transparent process. It's supply and demand that is dictating the current price of oil not these companies. Some could say they should increase production but as already mentioned the economics may not make sense for them. Up to the Government to take action.

I'm not talking about the price of oil. I'm talking about the price of gasoline at the pump. The oil companies do not control the price of the raw product, but they do control the amount of profit they make and the amount of dividends that they pay out to shareholders for the processing of the raw product into the finished product that they sell. I'm not saying that they need to eat all of the cost, eliminate all profit or shareholder dividends, but taking in $46B worth of profits for the corporation and shareholders and buying back shares to cut down on debt should not be done at the same time that the cost of oil is rising.

This reeks of price gouging and the federal government should be looking into more regulation of the oil industry if they are making such huge profits during times of crisis when the international price of oil is rising.

Anonymous wrote:

Anonymous wrote:I'm not sure why so many people are condemning the President when oil companies are raising prices, prioritizing paying dividends to share holders, and raking in huge profits at the expense of the customers.

The President has made a bi-partisanly politically popular decision to ban the import of oil from Russia in response to the Russian invasion of Ukraine. But that, and even the closing of the XL pipeline are not the reasons why the price of gasoline is skyrocketing at the pump. The oil companies should be held accountable, not the President. Most other corporations out there, when faced with rising costs, tighten their belts, decrease their profit margins and lower dividend payouts to shareholders in order to minimize the amount they raise the price of their products. Not oil companies. And the oil companies get to skip off scott free and let the politicians take the blame.

You don't seem to understand market dynamics. The price of oil is not increasing because of rising costs, but because of a shortage in supply (and some speculation too). Oil is traded in commodities market, it's a very transparent process. It's supply and demand that is dictating the current price of oil not these companies. Some could say they should increase production but as already mentioned the economics may not make sense for them. Up to the Government to take action.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

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.

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

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.

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

Increasing production is uneconomical for the companies for all the reasons mention by the poster at 15:54

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

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.

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.

Huh, the price of oil is determined by a global market. Oil company shareholders took a lot of losses from 2018-2021 and companies pivoted to prioritizing paying down debt. That's a good thing. This isn't some conspiracy.

But, I'll tell you what would help. Investing in our electrical grid and infrastructure. Too many of ours are built to use the Saudi/Russian heavy grades of oil. This is because they were built before the shale revolution. We need to be able to use the lighter types that we have and that our allies have. But instead we have our time and money wasted by NIMBYs, "clean coal", ethanol, and the no change brigade etc. Optimize what we have for what we got in the short term and upgrade the grid to enable distributed production, ie: smaller scale wind and solar, for the long term.

Anonymous wrote:I'm not sure why so many people are condemning the President when oil companies are raising prices, prioritizing paying dividends to share holders, and raking in huge profits at the expense of the customers.

The President has made a bi-partisanly politically popular decision to ban the import of oil from Russia in response to the Russian invasion of Ukraine. But that, and even the closing of the XL pipeline are not the reasons why the price of gasoline is skyrocketing at the pump. The oil companies should be held accountable, not the President. Most other corporations out there, when faced with rising costs, tighten their belts, decrease their profit margins and lower dividend payouts to shareholders in order to minimize the amount they raise the price of their products. Not oil companies. And the oil companies get to skip off scott free and let the politicians take the blame.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

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.

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.