
U.S. oil production to be equal to Russia plus Saudi Arabia by 2025 - chb
https://www.reuters.com/article/us-usa-iea-idUSKCN1OK0SJ
======
mogadsheu
>ISTANBUL (Reuters) - Total oil production in the United States will be nearly
equal to that of Russia and Saudi Arabia combined by 2025, the head of the
International Energy Agency (IEA) said on Friday.

Fatih Birol made the comment in an interview with Turkey’s state-owned Anadolu
news agency.

Shortest article ever?

In all seriousness I don’t think this is the worst thing for any of the three
countries. Most new US production is higher cost (fracking), so the drop in
market share is at least met with a stronger price floor for all.

~~~
pavpanchekha
The cost of US fracking continues to drop; $40 oil is plausible in the near
future. The issue for Russia and the KSA is that their budgets aren't solvent
at a $40 or $50 oil price

~~~
Arnt
What's the KSA? Saudia Arabia? Doesn't Ghawar produce at around a lowish
single-digit cost?

[https://en.wikipedia.org/wiki/Ghawar_Field](https://en.wikipedia.org/wiki/Ghawar_Field)

~~~
hokkos
He talks about SA budget, they sure earn money, but not enough to subsidize
their citizen like they used to.

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2sk21
This will only happen as long as investors are willing to throw money at
fracking without expecting returns. The economics of the fracking industry are
dubious at best. See for example:
[http://knowledge.wharton.upenn.edu/article/will-fracking-
ind...](http://knowledge.wharton.upenn.edu/article/will-fracking-industry-
debts-set-off-financial-tremors/)

~~~
shookness
Fracking companies are facing a ticking time-bomb of debt:

[http://www.artberman.com/wp-
content/uploads/HGS-11-SEPT-2017...](http://www.artberman.com/wp-
content/uploads/HGS-11-SEPT-2017-Presentation.pdf)

[http://www.artberman.com/alternative-facts-about-opec-u-s-
sh...](http://www.artberman.com/alternative-facts-about-opec-u-s-shale-from-
the-wall-street-journal/)

~~~
njarboe
Along with the US national government. About $17 trillion not owed to itself.
Added 0.7 trillion in 2017.

Cost to finance $17T per year at various interest rates (today's average rate
on the US debt is about 2%):

rate, cost($B), % of 2017 Fed income

2%, 340, 15%

3%, 510, 22%

5%, 850, 37%

8%, 1360, 59%

10%, 1700, 74%

As you can see by this chart (sorry about the formatting), the Fed has to keep
interest rates low or the US will have little choice but to default on the
debt.

I think a lot of people who ponder such things have concluded that the Fed
will keep the interest rates low and the US will/are fudge/fudging the
inflation numbers so that the Fed can still claim they are hitting their 2%
target even though asset prices go through the roof. Who knows what the end
game on such a plan will be, but some form of hyperinflation is not out of the
question. All those people who are too scared of losing value on investments
and just parking their savings in cash, will be very disappointed and confused
if that happens.

~~~
rrggrr
Does this include state and muni debt? I imagine not.

~~~
adventured
US state & muni debt is comparatively mild versus the federal debt. About $1.2
trillion in state debt, versus roughly $1.9 trillion in tax revenue (the US
Govt is at $21/$22 trillion in debt and ~$3.6 trillion in tax revenue).

Muni / local debt is about $1.8 trillion, with around $2 trillion in tax
revenue.

The US Government's ratio of tax revenue to debt to be maintained, is about
10x worse than the states. States would have to boost their debt from $1.2t to
$12t to match it.

US state and muni debt is also not particularly increasing. There hasn't been
a jump in state debt since the great recession. Many of the states have to
keep balanced budgets by law, or close to that. Mostly the only time they
plunge into the red, is when their budgets explode for a few years during /
after a recession (then they go back to trying to balance their budgets, and
usually don't do a good job of paying down the recently acquired debt). States
obviously don't have the luxury of doing a stealth tax on income & wealth via
the currency to meet their funding needs.

~~~
njarboe
Do your figures include unfunded retirement debt? That is a number that is
hard to find and/or calculate. The Fed has relatively small amounts of this
debt (if you don't count social security, laugh/cry). The states and munis,
much more.

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cronix
What we should be doing is pushing towards green power by 2025. Put more money
into battery, generation and related research. It seems a good deal of our
problems are due to our dependence on oil (major world pollution, wars), and
we need to become independent and shift energy usage. That would be a win-win
for everybody, except the massive oil companies who are running the show,
which is why it won't happen, especially under current leadership who is
actually rolling back regulations and standards for efficiency. We're going
backwards here, and the result won't be good except for a relatively few
people.

~~~
cjhanks
I think the market has decided, America is going green independent of federal
regulations.

Oil independence means the US will never again need to ally with despots to
support domestic needs.

IMO this is a huge step forward.

------
DeonPenny
The U.S. knows there's an obvious oil glut coming around 2025. So they are
offloading large oil stores. Smart for them to do it now since it won't be
worth much in the longer term.

~~~
tpfour
Oil glut? The analyses I've read point to an oil _crunch_. Are you being
sarcastic?

~~~
hguant
Nope - just a few weeks ago the largest oil reserve in the US was announced by
the US Geological Survey.

[https://www.abqjournal.com/1254493/usgs-permian-oil-gas-
rese...](https://www.abqjournal.com/1254493/usgs-permian-oil-gas-reserves-
largest-ever-found-in-u-s.html)

~~~
iheartpotatoes
I love this part:

"The USGS said its estimates are for “continuous unconventional oil,” meaning
it’s spread throughout the Wolfcamp and Bone Spring formations rather than
concentrated in one place. It said the reserves are “undiscovered,” meaning
they have yet to be produced, and that they’re “technically recoverable” with
current technologies."

Key phrases:

* continuous unconventional

* undiscovered

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onetimemanytime
For how long? Surely we can't go toe to toe with them, especially SA. IIRC,
oil is very cheap there to get out too.

Also, looks like USA decided that oil is a has-been, otherwise we'd be keeping
it in reserves (Gov drilling policies ensure that.) Or maybe just wants to
bankrupt OPEC and then stop?

~~~
hangonhn
It mainly puts a price ceiling on oil. Fracking can be turned off or on on
relatively short notice. Anytime the price dips too low, those rigs can be
idled. If OPEC raises prices above breakeven for fracking, the rigs turn back
on and pushes the price back down.

~~~
hnnh44
Can you provide a source for how this works? AFAIK the u.s. doesn't operate
the oil rigs, and oil companies will operate in their own self interest.

Does the u.s. government pay oil companies to suspended operation?

------
zackmorris
U.S. global climate change contribution to be equal to Russia plus Saudi
Arabia by 2025 (reuters.com)

~~~
gruez
it hasn't already?

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Findeton
And how much of that production is going to actually produce it?

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patagonia
This is inline with climate goals how..?

~~~
ancorevard
Well, instead of daily transporting all the oil US is consuming half way
around the globe with all the emissions that entails from these tankers,
producing locally would seem like a better idea.

~~~
patagonia
Are you suggesting non US production will be reduced in kind? Are you
suggesting ocean transportation will be reduced overall? Are you suggesting US
oil / gas will not be sold overseas where it will need to be delivered via
tankers?

~~~
ancorevard
I feel your pain brother!

The US is almost at parity in oil consumption and production. This mean lesser
need for oil to be transported from around the world for US consumption. That
is a good thing.

"Thing global, buy local".

~~~
gramstrong
It doesn't seem that much has changed in terms of local consumption. We've
reduced our crude oil imports by almost the same amount that we've increased
our crude oil exports. At least that is what I'm lead to believe by the EIA
website.

~~~
adventured
By 2002-2011 US crude oil production was down to averaging about 5.5 +/\-
million barrels per day.

It's now at 11.6 million. A gain of roughly six million barrels per day.

US crude oil exports will average around two million barrels per day for 2018.

Net difference for 2018 is at about four million barrels per day, of less oil
imported versus ~2011 and prior. We're importing a lot less oil than a decade
ago, while we're simultaneously at a tipping point where oil consumption is
about to begin declining (previously we had already dramatically expanded our
economy while using far less oil per inflation adjusted dollar of GDP output;
next we'll press downward on actual oil consumption). The US isn't using much
more oil than what it was in 1978 approximately (most of the growth is
population growth based). The per capita use has declined considerably and is
back to about where it was 50 years ago.

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zachguo
How would this change geopolitics?

~~~
DeonPenny
Allows the US to flush the world with cheap oil making people like venezula
dictator look foolish.

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newnewpdro
Great news, climate!

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elvirs
how? thru fracking? say bye to drinking water.

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elvirs
the guy is Erdogan's puppet and has to say things to undermine Saudi Arabia
soooo im guessing since he is 'head of energy' he had to improvise a little
using energy terms.

~~~
drpgq
Well Turkey benefits from low oil prices since they basically have none.

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hourislate
I think Big Oil sees the writing on the wall. Pump it now or risk leaving it
in the ground as alternative energy continues to expand in all areas from EV's
to Solar/Wind Generation. It would be great if we only used oil for other
products instead of Gasoline/Diesel/Kerosene.

There are estimates that a barrel costs anywhere from $30-50 to pump in the
Permian. I figure with technology it will be sub $20 in the next year or two.
If you remove storage from the cost with additional pipe lines it makes it
even more cost effective.

