
The world could soon run out of space to store oil. Prices may plunge below zero - magoghm
https://edition.cnn.com/2020/04/01/business/oil-prices-crash-storage-space/index.html
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BluffFace
I like this:

 _The price is trying to go to a level to force companies to keep the oil in
the ground. If it has to go negative to incentivize that behavior, then it
will._

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foxyv
You are also encouraging people to build storage which will buffer prices in
the future as demand comes up again.

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beerandt
Depends heavily on the location, but just expanding a crude tank farm in the
US is a multi-year design and permitting job, even when you can just throw
money at it. There's also significant ongoing regulatory costs of keeping
them, even if they're just sitting idled.

Plus much of storage that exists isn't really _for storage_ , but is a needed
buffer on the supply line for steady-state infrastructure, like pipelines and
refineries. Some amount of empty is required (both practical and by
regulation) to absorb surplus, like in the event of an emergency refinery shut
down due to fire.

Other cases are for when pipelined supply isn't single product, or is shared
by multiple users... Your plant might need 500k bbl/day, but you only get the
pipeline every other day at 1000k bbl/day. Or you get different products on
different days.

Part of the US strategic oil reserve's purpose is for what's happening right
now, and they've been using it to absorb excess capacity for a few weeks, with
a few more weeks to go before full. And this is filling entire underground
salt domes with oil, at a scale way beyond any manufactured tank capacity.

We'll probably see more tankers and even rail car tankers repurposed for
storage, but I don't see anyone justifying the need to build more fixed
storage, unless there's some existing/ contributing need for storage that was
already permitted and is suddenly cost justified. But even that is at tiny
scales compared to the current surplus.

It's just easier and cheaper to start shutting in the more isolated and/or
expensive wells. Which is just storing it in the ground, anyway.

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johnmarcus
my heart goes out to all Venezuelans right now. Their poorly run government
pretty much bet the entire farm on oil and with the depreciation in recent
years it was already tough living there. At a price close to 0, it can not be
good.

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fragmede
Covid-19 can't be helping things but oversimplifying Venezulea geopolitical
situation as "a poorly run government" ignores the fact that there are
multiple state-level actors (internally and externally) working against their
best interests.

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valuearb
Focusing on external actors instead of internal corruption is missing the
forest for a couple of trees.

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intopieces
Any speculation about what this will mean for electrification efforts?
Specifically for cars. I thought high prices were good for that, but if the
oil market collapses entirely it could drive some suppliers out of business.

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diafygi
Battery and electric vehicle lifetime costs (including electricity) are
rapidly approaching the manufacturing and maintenance costs of internal
combustion engine vehicles. That means that even if the fuel is free, it will
be cheaper to operate an electric vehicle.

Low oil prices can delay that cost intersection, but won't prevent it from
eventually happening because internal combustion vehicles are more complex and
costly to maintain even without taking into account fuel costs. So as long as
EV manufacturing costs continue to decline and electricity continues to get
cheaper from low cost renewables, ICE vehicles will eventually become obsolete
no matter the oil price.

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cityzen
and yet gas prices will remain the same...

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BenjiWiebe
In central Kansas, gas prices are totally plummeting.

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Fjolsvith
Agreed. Every time I fill up, I now save $20. And I fill up 2-3 times a week.

And, this is on top of it happening once before 2 years ago. I'm now pocketing
over $500 a month that I used to spend on fuel.

