Good day all. A funny thing happened on the way to the Arab OPEC nationss ruling the world. America developed the technology to bring shale oil to market cheap, and Donald Trump likes drilling for oil. He also likes Israel better than Saudi Arabia too.
Over the last 10+ years, American oil companies started making discoveries of huge amounts of recoverable oil inside the United States. Of course, this was considered a bad thing by OPEC, (Organization of the Petroleum Exporting Countries), and they’ve been quietly doing their best to get the American oil fields shut down. They’ve had someone in the White House who is a true believe in all the phony Global Warming/Climate Change nonsense, and he put other true believers in charge of agencies that have been busy wrecking the American energy production companies.
OPEC, led by Saudi Arabia, has also been trying to reduce the price of oil on the world markets to below the costs of production in the American oil shale regions. The idea was to drive American oil producers into bankruptcy. Well, it’s not working out to well for them. Here’s a few details from MarketWatch:
The oil market got a stark reminder Tuesday that rising oil production in the U.S. could upend efforts by major producers to bring global supply and demand for crude back in to balance.
Just ahead of the settlement for oil futures prices CLG7, -2.12% on the New York Mercantile Exchange on Tuesday, the Energy Information Administration released a report on drilling productivity—forecasting a monthly rise of 41,000 barrels a day in February oil production to 4.748 million barrels a day.
“That is bearish for oil and a concern for [the Organization of the Petroleum Exporting Countries,” said James Williams, energy economist at WTRG Economics, pointing out that the volume of new oil per rig has climbed because of gains in efficiency.
“If maintained, the expected February production gain means production from the shale plays will be up at least a half million barrels per day by the end of the year,” said Williams.
Recently, the costs of production for the shale fields wasn’t being covered by the price of oil on the world markets. I’m not going into all the economics of drilling in shale, it would take forever. However, what the idiots in OPEC, who desperately need oil prices to remain high so they can keep their populations bribed, (Mostly to not kill everyone running their little Islamic sandboxes), and they basically rigged the price of oil to be cheaper than oil coming from shale formations.
Now, they’ve run out of money to play that game, and have been forced to raise prices. Since the prices, which had been artificially lowered, were now coming back to their natural levels, shale oil production became profitable again. There is also another “Fly in the soup” for the Saudis and other OPEC members.
The American production companies made so much money before the price collapse that they were able to ride out the attempts by OPEC to run them out of business and develop even more efficient, read cheaper, ways to pump oil out of the ground.
There have been concerns that the resulting rise in oil prices would provide incentive for U.S. producers to boost oil output.
Well…DUH!! Of course they want to boost output. It means they make money stupid.
But on Tuesday, speaking at the World Economic Forum in Davos, Switzerland, Saudi Oil Minister Khalid al-Falih played down those worries. He said it would take time for U.S. producers to regain lost ground and that U.S. oil shale players “will find they need higher prices,” in part, because of higher production costs.
“Many of the folks at Davos think shale will kill the rally, but that really cannot replace all of the oil production that was wiped out” by cuts in capital expenditures in the oil market, said Phil Flynn, senior market analyst at Price Futures Group.
Al-Falih has also said he believes that the oil market will rebalance by the middle of the year, suggesting that the glut of oil will be gone in six months—so the market may need the shale oil, said Flynn.
All told, “shale is on the road [to recovery], but it will be a long road,” he said.
I beg to disagree here. The Oil companies have not been sitting on their hands hoping the price of oil increases. They’ve also been looking at ways to reduce costs. They’ve also been doing something that few, if any of the OPEC nations have done. They’ve been investing in upgrades and new technology to produce oil. It’s one of the reasons shale oil is not as expensive to produce as it was 10 or 15 years ago.
U.S. shale production is “a real threat” to OPEC, said Williams.
“At the current level, it is manageable for OPEC, but if price rises another $5-$10, the corresponding increase in U.S. drilling and production would counter most of their cut,” he said. “OPEC is walking a tightrope.”
Here’s the problem for OPEC. They have not been spending a lot of their profits on new technology or research and development. Instead, they’ve been spending it on things like funding Jihad, bribes to politicians, assorted toys and trinkets such as Lamborghini’s, Ferrari’s and custom outfitted luxury jets.
Now, the recoverable oil is starting to run out in the middle east, while proven reserves of recoverable oil in North America is increasing. When I use the words “Proven Reserves”, that only means the oil they know about that can be pumped out cheaply with current technology. A lot of that tech didn’t exist 20 years ago.
This brings us to the major difference between the OPEC nations and the United States oil producers. The OPEC nations tend to think in the moment, and see all that money as their “Allah” given right. Allah will provide as far as they’re concerned, so why spend money on research and upgrades?
American oil companies, like generally all American businesses, live by the mantra, “It takes money to make money”. This means that they invest in new equipment, research and development as well as exploration. They also try to “Lobby” politicians as well, but the oil executives have this thing about prisons. They prefer not to be in them, and so they don’t “Lobby” the way the OPEC nations do.
Now, OPEC has a problem. They’ve done everything they can to kill the American oil producers, and failed. Their last hope was Felonia von Pantsuit, and she was crushed at the polls. Our new president, Donald Trump, believes in America developing our own energy systems, including oil, gas, coal and nuclear. Where Obama did everything he could to shut down oil production, President Trump is going in the opposite direction. His eventual goal, unstated, is to break OPEC and collapse their dreams of, for all intents and purposes, ruling America and the world.
We are, as of this posting, T-Day -2 from the end of the world as OPEC knows it.
Thatisall
~The Angry Webmaster~
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