
U.S. Oil Production Is 23 Years Ahead of Schedule - petethomas
https://www.bloomberg.com/news/articles/2019-01-24/u-s-oil-production-is-only-23-years-ahead-of-schedule-eia-says
======
lenticular
Wow, if you told me just 10 years ago the US would become a net exporter of
petroleum, I'd have laughed at you. The long-term prospects of oil in the US
are poor, however. In the next 2-3 decades, renewables and electric cars will
start exerting significant downward pressure on prices. US producers,
especially frackers, are high-cost. Fracked oil usually costs $50/barrel or
more. For this reason, fracking has only become widespread in the last decade,
despite the fact that fracking has was invented in 1947.

Saudi makes oil for less than $10 a barrel. They and other low-cost producers
are the only ones that will be able to compete after significant demand
destruction occurs.

~~~
Diederich
Break even prices for the Permian basin:

[https://bioage.typepad.com/.a/6a00d8341c4fbe53ef022ad3566378...](https://bioage.typepad.com/.a/6a00d8341c4fbe53ef022ad3566378200c-popup)

Some of them are in the low $20s.

On the other hand, Saudi Arabia needs oil to be >$80 in order to balance its
budget: [https://www.reuters.com/article/us-saudi-arabia-imf/saudi-
ar...](https://www.reuters.com/article/us-saudi-arabia-imf/saudi-arabia-needs-
oil-at-85-87-a-barrel-to-balance-budget-imf-official-idUSKBN1I30H7)

~~~
enraged_camel
The main issue with shale oil is that many (most?) refineries in the US can’t
refine it, so it _has_ to be exported, basically. Whereas Saudi oil is “sweet”
and pretty easy to refine.

~~~
howlingfantods
That's patently untrue. Saudi crude is primarily heavy or medium and sour
(high in sulfur), the complete opposite of what you're saying.

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dekhn
People who are curious how we got to this state should read The Prize and The
Game by Daniel Yergin. Pretty much all modern oil politics is explained in
those two books (the latter covers more energy more generally).

Interesting especially since the first oil production occurred in the US and
we played a big role in funding many of the big producers.

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itissid
US mideast policy had been affected for the as long as I can remember by oil
and weapons exports. Especially on oil in the 80's with the Oil Shortages[1].
After 2015 congress voted to remove restrictions on Oil production in the US
and the boom began. Now that US policy is largely only about the weapons
export will we see a different/better middle east situation in the next 25-30
years?

[1][https://en.wikipedia.org/wiki/1970s_energy_crisis](https://en.wikipedia.org/wiki/1970s_energy_crisis)

~~~
AbrahamParangi
According to wikipedia: "Since the 1990s, the [US] oil market has been free of
most regulations."[1] My understanding was that the US oil boom was caused by
technological advances that enabled better exploitation of shale oil deposits.
Also according to this graph[2], the boom really starts around 2011-2012, not
2015.

[1]
[https://en.wikipedia.org/wiki/Petroleum_in_the_United_States...](https://en.wikipedia.org/wiki/Petroleum_in_the_United_States#cite_note-
Energy_Regulations-29) [2]
[https://en.wikipedia.org/wiki/Petroleum_in_the_United_States...](https://en.wikipedia.org/wiki/Petroleum_in_the_United_States#/media/File:Monthly_U.S._field_production_of_crude_oil_\(January_1920-August_2018\)_\(45664259591\).png)

~~~
totablebanjo
I think the above poster, itissid, was referring to the US domestic oil export
ban which was lifted at the end of 2015.

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jlev
And we only have a decade left to save the planet. Time to stop extracting
fossil fuels and emitting ancient carbon into the atmosphere.

~~~
ethbro
... And go back to the stone ages.

Fundamentally, there's nothing wrong with burning oil. There are certain
applications where it will continue to be the best energy choice.

More important is (a) taxing oil consumption to offset the negative
environmental effects & (b) transitioning away from oil _where it makes
sense_.

~~~
dylan604
>More important is (a) taxing oil consumption to offset the negative
environmental effects

And do what with the money raised with those taxes? I don't trust the people
in charge to do what's needed to be done. The only positive thing from taxing
oil consumption, would be to make it so expensive that people seek
alternatives. When US gas prices were near $5/gallon, people sold their gas
guzzlers and switched to fuel efficient choices. Once gas went back down, cars
were sold off and guzzlers became the choice again. If Americans paid the
similar prices to EU prices, things would be a lot different.

~~~
mikecb
Usually, Pigouvian taxes like the one OP was proposing are calculated to cover
the complete externalized costs of the item being taxed. So in this case, it
would include the costs of adjusting to climate change. This would make
alternatives relatively cheaper, as well as raising revenue to support
research and construction of new energy infrastructure, as well as point
addressing of specific projects identified to reduce the impacts of climate
change. Of course, this is all if you believe that the current political
climate (not only in the US, but in large middle income economies as well) can
support such taxes. And then you have to decide what the tax should be!
Ultimately, cap and trade turn out to be far easier.

~~~
princeb
one benefit of pigovian taxes is increased revenue to ameliorate the
externality, but it's not the main goal of the tax. the cost itself reduces
demand to the socially optimal level. the government could well burn the tax
revenue (or in this case, recycle the paper) and still achieve the objectives
of the tax.

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heyjudy
Keep it in the ground. Tax carbon heavily to pay for CCS.

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gregorymichael
Anyone remember peak oil? What happened?

~~~
learc83
The same thing that always happens. People make extrapolations assuming that
something will continue to grow at it's current rate. They forget that there
are dynamic systems and feedback mechanisms at play.

"Ebola is spreading at an exponential rate. There will be 200 million deaths
by next year."

"Soviet GDP is growing 10% per year. Their economy will be the largest in the
world in 15 years."

"Japanese GDP is growing 7% per year. Their economy will be the largest in the
world in 20 years."

"The world's population increases at 2% per year. We'll have 50 billion people
in 2100."

~~~
zaroth
And what do you have to say about those global average temperature charts?

~~~
learc83
Feedback loops aren't always negative, and even if there is a small chance for
a positive feedback loop with respect to increasing temperatures, we should
take action now and attempt to reduce carbon emissions.

I also think that if there is a reinforcing temperature feedback loop, this
isn't likely to happen to happen fast enough--at least through behavior
changes. So we should focus most of our resources on developing better methods
of energy production, increasing energy efficiency, and developing
technology/methods to mitigate the damage of rising temperatures to human
civilization.

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Eire_Banshee
I assume due to fracking?

~~~
ars
Shale, and higher prices leading to higher production.

