Genius strategy by the USA to disincentivize EVs, disincentivize solar and wind, increase dependency on oil & gas, and...start a war that makes oil and gas more expensive for everyone. Markets are now forecasting oil prices will stay above $100 a barrel for multiple years. Best of luck to the economy.
There's a sweet spot in oil pricing that maximizes profits for producers, and $110 a barrel is well over that. If there's a recession then nobody is buying your product.
> Markets are now forecasting oil prices will stay above $100 a barrel for multiple years
It'll never go below $100 a barrel.
It went bellow $100 a barrel for the last few years because as US shale processing came online, opec decided to also keep production high which cut oil prices from $100/barrel to ~$50/barrel where it's roughly stayed for the last decade.
There's not another "new way to extract oil for cheap" technique on the horizon. Israel and Iran are both destroying oil extraction and processing facilities in the gulf region, it'll take years and a huge amount of money just to rebuild those. By the time that's finished, assuming it finishes, inflation will have firmly caused the price of oil to stay above $100.
This is basically a permanent increase. We are sort of at global warming catastrophes now. It's not a question of if it will be bad, it's a question of how long and how intense. The longer this war/military operation/regime change/whatever we are doing goes forward, the worse it will be. And, unfortunately, I don't think there's any specific goal the trump admin is trying to achieve. This is such an obvious F-up and Trump will only pull out if he can somehow make a claim that it isn't.
> Israel and Iran are both destroying oil extraction and processing facilities in the gulf region
This isn't like Katrina where oil infrastructure was being temporarily evacuated, shut down, and taking some water and wind damage.
The oil infrastructure is being blown to smithereens. And not just pumps that are sucking oil out of a hole in the ground. Refineries. Big expensive factories that process oil. Stuff we don't even bother to build in progressive parts of the world because the combination of environmental regulations and concerns about climate change mean it's possible they'll never pay off their massive construction costs.
> Stuff we don't even bother to build in progressive parts of the world because the combination of environmental regulations and concerns about climate change mean it's possible they'll never pay off their massive construction costs.
Ignoring pollution and externalities for the sake of argument this is what is very interesting to me. It’s not clear that the capital markets if left to their own devices would even invest in rebuilding these to begin with due to concerns about being paid back.
The oil industry has went from growth based investments to capturing returns on current deployed infrastructure over the past decade or so. Only very limited and calculated capital is being deployed in this sector these days.
It will certainly be interesting to watch. I’m certain those countries will rebuild via government funds, but I’m wondering how profitable that will end up actually being given how expensive that’s become to build, the insane construct lead times these days, and the overall trend in oil demand. Natural gas is even more interesting since it’s firmly directly linked to renewable energy deployment. Gas usage goes up as we deploy more solar worldwide, at least in the short term.
Additionally, the geology of oilfields is complex. They are like huge sponges made of rock with oil in the gaps. Because the oil production techniques involve injecting fluid into the field to extract the oil, if the oilfield isn’t managed correctly, it’s possible for it to shut down and be difficult to restart production even if you could rebuild the infrastructure.
I also recall in passing that Venezuela has massive oil reserves, but they are in tar sands and are therefore only economic when the oil price is high[1]. And who tried to take effective control of Venezuela’s oil production? Oh…
The price of a commodity is the cost of marginal production. Saudi oil is cheap to produce but there isn't enough to supply the world. Before the war the marginal production was Canadian tar sands, which costs about $60 a barrel to produce.
There are massive reservoirs of expensive oil in Canada and Venezuela. If Canada and Venezuela limit output then the price will go above their cost of production. If not, it will settle at their costs. ($80).
Kind of moot since it will take well over a decade for their production to ramp high enough to satisfy current world demand.
The best for for lower prices in the shorter term is likely lower demand through renewable alternatives.
Well the USA is a net exporter of all oil products since 2019, this will probably make some people very rich and has the potential to be good for parts of the us energy sector.
The west coast is the only part that relies on middle eastern oil. And a spike in prices will just get them in line and connected to the rest of the shale powered system.
I don’t like any of this, but I think the doom and gloom lies elsewhere.
>> The west coast is the only part that relies on middle eastern oil. And a spike in prices will just get them in line and connected to the rest of the shale powered system.<<
Californian here. There is no discussion or any desire to build an oil pipeline from TX/LA across NM and AZ to deliver oil to refineries here. Ha, if you think the Keystone XL pipeline was controversial... it'll never happen.
Calif produces about 20% from its own but tired wells. Some oil is imported from the Middle East but larger volumes come by ship from South America and Alaska.
> has the potential to be good for parts of the us energy sector.
No way this is good for anyone other than oil producers. The only potential positive it'll have on the US energy and shipping sectors is this is going to put even more pressure on adopting renewables as fossil fuel cost spikes.
That's good only for inflation, nothing else. Renewables are included, after inflation and tariffs they won't become more attractive compared to carbohydrates.
> The west coast is the only part that relies on middle eastern oil. And a spike in prices will just get them in line and connected to the rest of the shale powered system.
The west coast is adopting EVs at a faster pace than the rest of the country. You could just as well see accelerated adoption of EVs in personal and freight transportation, Chinese manufacturers opening up US EV production, and so on.
The answer isn't necessarily drawing shale from Alberta that we can't really process anyways (without mixing it with light crude from Texas anyways).
The west coast also has some of the highest priced electricity in the nation, with apparently projections on it getting even worse somehow.
It’s amazing how much grift and subsidy leveraging the US renewables market has engaged in compared to pragmatic deployments elsewhere like China. Utterly insane and it shows how difficult it’s going to be to fix since it’s an endemic problem with American society at its core.
Oregon and Washington state do not have expensive electricity. California does, but they also have light heating and AC needs so whatever. It is still much cheaper to charge an EV in California than to gas up a car in Texas (on a mileage per cost basis).
Secure all the oil of one country, while bombing another so prices rise dramatically. Make everyone pay higher prices while they dramatically speed up their move away from oil (buying all the equipment from your biggest enemy) and hate you in the process.
It truly is a great strategy if you want to make a quick buck now before you become irrelevant in five years.
War with Iran was inevitable - either US/Israel starts it or Iran starts it - when they get the upper hand. And that war was bound to disrupt oil supply. Don't forget their goal is death to America and Death to Israel. That's what they've been arming themselves for for decades. That's what they're trying to build nuclear bombs for. They had to be stopped eventually and that was always going to be uncomfortable for whoever did it, but the sooner the better. Why can't you just celebrate this good thing?
Preventing another country getting nuclear weapons is a very good thing. That's Trump's stated aim for this war. How can all these people replying not see the value in? Two weeks away could turn into "never" if he succeeds. I don't understand this belief that if we just leave the festering wound that is Iran's Islamic Republic alone, it'll never get any worse.
Do you also think that global nuclear disarmament would be a bad thing because the Doomsday clock has been a few minutes from midnight for 40 years so the risk is obviously overblown and nuclear war will never happen?
If the status quo really remains status, then sure, Iran wasn't really directly doing much harm to its neighbors. But the danger of status quo is that it would eventually make nuclear weapons. From your last sentence, it sounds like that's what you want. Is it?
We destroyed the nuclear capability of Iran last year during the 12 day war. Trump said so himself.
Now we're engaged in a full regional conflict to destroy Iran's nuclear capability that was destroyed last year. The same capability the Iranians were willing to give up via negotiations that were ongoing when the US and Israel took out the country's leadership in a decapitation strike which began the war.
Respectfully, this war virtually guarantees Iran will now develop nuclear weapons. The exact thing Trump thought shooting them would stop is going to come to fruition because of these actions. The exact thing that was barred by a fatwa since 2004.
You want Iran to forever be a short step away from completing their project of making of nukes but never quite doing it because of its own internal decision and integrity at keeping its promises? No, that's naïve. They will obviously do it if they think they can get away with it. To be safe, they have to be physically prevented from doing it even if they want to.
Proof you're wrong is that they had a self-imposed 2000km limit on their missiles but when push came to shove, they changed their mind and shot one 4000km.
For the vast majority of entire life Iran has been weeks away from having a nuke. I'm nearly 50. And yet you believe that they're now "two weeks away" because that's what politicians told you. Who's being naive here? How old are you?
> Proof you're wrong is that they had a self-imposed 2000km limit on their missiles but when push came to shove, they changed their mind and shot one 4000km.
The details of this attack are murky, it might not have even occurred. And given the penchant for the Trump administration to lie about this conflict on a daily basis I don't believe it either. Show me some radar tracks, hell, ANY EVIDENCE and I might consider it. Otherwise I'll consider it propaganda.
"2 weeks away" means they have the technical capability do it soon if they decide to and can get away with it without their equipment being bombed. It obviously doesn't mean they will do it soon and it isn't literally 2 weeks. They can be delayed by international pressure or internal decisions, or whatever. So yeah, I do believe that, interpreted correctly instead of maliciously literally.
Same as the doomsday clock doesn't mean we'll have a nuclear war 2 minutes from now.
In my city, we've been "overdue for the big one" (earthquake) for my entire life. In never came but that doesn't mean it won't come in the near future so we still prepare for it.
OK, I have no evidence for those missiles. It doesn't really change things though. Iran clearly can change its mind if it wants. It's not the one country with permanently unwavering integrity that everyone can trust their lives to.
> either US/Israel starts it or Iran starts it - when they get the upper hand
Iran's modern history doesn't suggest this at all. Quite the opposite - they have been continually invaded. To me, theirs seems like an explicitly defensive stance. They have no airforce, navy, or tanks and such to speak of - just missiles and drones. Not a force suited to invading other countries.
You could argue about their support for regional militia's but I still wouldn't concede that indicates any desire to start a war.
The ruling class of Iran is still in place but more radicalized, global supply of oil is distupted, and nearly 200 schoolgirls are dead. This is a good thing how?
