Quote:
Originally Posted by spence
Right now the domestic producers are shutting down rigs and laying off tens of thousands. How does more oil into the market help?
More oil into the market brings the price of oil down. What is the point of keeping the cost of energy high? Doesn't lower energy cost translate into lowering the cost of all things that depend on energy? Wouldn't lowering overall costs help to "stimulate" the "economy" and make cheaper goods available to those who cannot afford the higher prices? Isn't that sort of pumping a better, freer, way to redistribute wealth, rather than pumping inflationary fiat money into the hands of the already wealthy who therefor have no incentive to redistribute into the rest of our hands?
A few bigger factors here. Fracked and tar sands production is expensive and was made possible by cheap credit. The Saudis by contrast have more efficient production and continue to flood the market.
Hurray for cheap credit! You got something against cheap credit? Do you prefer your credit to be expensive? And we Americans have this stupid way of making our labor and production more costly by stifling free market forces, thus depending on other countries with lower costs to produce for us those things we could produce for ourselves--and for the rests of the world as well.
The Saudis can produce oil at lower costs than us because the government (the Saud family) doesn't regulate itself out of the market and doesn't hamper itself with labor disputes. It doesn't allow disputes. And it floods the market only to keep the price low enough to make a stupid American self-imposed, over-regulated, expensive anti-market system too expensive. Once the unnecessarily expensive fracking is shut down due to uncompetitive cost, the Saudi oil will rise to needlessly inflated costs, and energy will be more expensive, and the economy will shrink or stagnate in comparison to what it would be with lower energy costs.
But, as long as the potential for fracking exists, the Saudis can only go so far. So fracking is, at least in potential, a constraint on Saudi price. And if Canada's production is not shut down, that is another bit of constraint. So, it would seem to me, we should support the Canadian enterprise.
That we have become, at least temporarily, the leading oil producer, has created the necessary competition to bring prices down. If we remove that competition, we revert to the monopolies we supposedly hate. And most of those monopolies are not as friendly to us as is Canada.
Really, unless the global economy creates a surge in demand and raises prices back, more oil is just going to continue to crush US energy employment.
Get ready Texas, the party is over.
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If there is no demand for oil, that, in itself is enough to crush oil based energy employment here. And if the price of oil rises in conjunction with less demand (which is an economic contradiction), then the demand will shrink even more. And, gee, isn't that sort of exactly what the green movement wants? Why hide behind an economic smoke screen. Isn't the object to totally shut down oil production?
And, do I detect a sort of glee in your declaration that the Texas party is over? But isn't Texas drawing other businesses to it with economically friendlier policies?