19 thoughts on “The Politics Of Shale Oil”

  2. Why would the Republicans want to develop domestic sources of oil? The development of domestic sources would require the oil companies to RISK some of their profits on capital investments. With the current system they have little risk, only profit. That’s why they favor the “free trade” policies the Republicans currently embrace. These policies give the oil companies a double incentive not to explore domestic sources. If they did, and they found oil, or found they could extract oil from sands or shale, the lack of tariffs would allow our good buddies in OPEC to dump oil on the market, dropping the price and killing our domestic industry. You know, the way they did when the first Bush was president. I know, I know, just because OPEC is a foreign trust organized by states that hate the US doesn’t mean they’d ever follow other than “free market” trade policies. What was I thinking?

  3. And yet, those evil oil companies keep trying to develop domestic sources, such as oil shale and the like. They keep trying to drill in ANWAR.

    And, I note that you don’t have to be one of the existing big oil companies to develop domestic sources. You just have to be willing to risk the money.

    Interestingly enough, evil oil companies seem to be the only ones who will take those risks, while “good” people sit around and complain.

    Disagree? Feel free to put your money into domestic sources.

  4. Yeah, the oil companies really want to drill in ANWAR. They’d much rather do that than import oil, because drilling for oil is so much fun, especially in a balmy tropical paradise like that. They’d much rather do that than buy oil that’s already been found and pumped out of the ground from OPEC. Keep playing Democrats vs. Republicans and you’ll keep getting the wrong answers.

  5. Dfens, did you even read the article about which you’re commenting? Let me quote, you four-square idiot:

    Ken Salazar, D-Colo., … has emerged as the Senate’s leading oil shale opponent. Salazar inserted the aforementioned moratorium into an omnibus spending bill last December, and in May he proposed a new bill that would extend the moratorium another year.

    Salazar’s efforts have essentially pulled the rug out from under Shell and other oil companies which have invested many, many millions into oil shale research since the passage of the Energy Policy Act of 2005, which established the original framework for commercial leasing of oil shale lands. (Last year, oil shale represented Shell’s single biggest R&D expenditure.)

    Got that? Shell, an oil company, has invested millions of dollars of their own money — not taxpayer’s money — in developing oil shale, and they’re ready to get to work, and what’s stopping them? A freshman Democratic Senator, that’s what. And why? He doesn’t say. He can’t point to any specific problem. He’s just worried that we might be going “too fast” in developing this resource, which I, personally, have heard about as a major oil resources since 1975. Whoa! A mere 33 years…don’t want to go too fast, now…

    Geez, get a clue, would you? Try to put your brain in first gear, at least, before you open your mouth.

  6. So it sounds like the Democrats have gone with a strong anti-carbon stance. I wonder how it will play in the coming months. I get the impression that the people who are tend to be most in favor of halting development of future oil sources are the ones who spent a lot of time and money in reducing their need for oil. It’s like demanding a nuclear war because you went through the trouble of building a bomb shelter.

  7. Wow, who knew freshman Senators could be so powerful? Way more powerful than big oil companies. After all, those companies have spent millions. Wow, millions, investing in oil shale. Yet even so, they’ve managed to make record profits in the billions of dollars. How do you think they did that? Golly gee, I wish I were smarter. Then I might be able to figure that out for myself. Of course, why do that when I can always turn to my Democrat or Republican talking points?

    It shouldn’t take too much longer before the oil companies decide that drilling for oil is way too risky and expensive and turn to the US taxpayer to fund their efforts. Natually the Democrats will want a government agency to do the drilling, but the Republicans will say, “we need a private sector solution,” and instead will insist we pay “private” companies to drill holes in the Earth. They will get paid for process, just like aerospace companies do, so it won’t matter if they hit oil or not just as it doesn’t matter if an aerospace company builds a rocket that works or not, they will still make a profit. Some would say that profit without risk is not capitalism, but their voices will never be heard.

  9. Wow, who knew freshman Senators could be so powerful? Way more powerful than big oil companies.

    Actually, he is. He’s with the government, which has the backing of force.

  10. “A freshman Democratic Senator, that’s what. And why? He doesn’t say.”

    One of the only reason I always here over and over from the Dem’s is that, “it will take 10-15 years to utilize, that doesn’t solve our problems NOW!” When in fact they have been saying that for 10 years now and if we’d just started right off we’d have that oil now or very soon.

  11. Note that the “good people” are adding risk. In addition to the chance that they couldn’t make shale oil work, oil companies also have to account for the entirely artificial risk imposed by govt.

    If we actually want more oil, why are we doing things to make it more expensive?

    BTW – The reason that oil companies made billions (albeit less than they paid in taxes) is that demand is increasing faster than supply. Supply being the thing that govt is impeding.

    If Dfens really doesn’t want oil companies to make a lot of money, he/she wants to dramatically increase the supply. I’m still waiting to hear how Dfens is risking his/her money to do so.

  12. I think that oil companies should make a profit. I have no problem with them looking out for their own interests. I am merely suggesting the we as taxpayers should also look out for our interests, which are not served by reliance on foreign oil, which is the whole point in discussing shale oil, right?

    All I did was to point out that domestic oil companies made a big investment in domestic oil production in the ’80s that did not work out well. OPEC dropped their prices and put a whole bunch of people who worked in the oil industry out of jobs. OPEC was able to do this because neither a Republican president nor a Democrat controlled congress were willing to protect our domestic production capability. Now you wonder why the oil companies (and me) have not invested heavily in a new technology that by all past reports should be quite profitable with oil at $140/barrel? Apparently you think something has changed in the political landscape that will, this time around, protect that investment. I’d be interested in finding out what that is.

    The oil companies are making record profits with the current arrangement with much less risk than it takes to extract oil from shale, but you think that adds up to some magical desire on their part to implement new technology? Good luck with that. Good luck to us all. If the talking points don’t address the situation I bring up, feel free to insult me further. After all, that is the approved approach, right?

  13. After all, those companies have spent millions. Wow, millions, investing in oil shale. Yet even so, they’ve managed to make record profits in the billions of dollars. How do you think they did that? Golly gee, I wish I were smarter. Then I might be able to figure that out for myself.

    Defens, I wish you were smarter too. Here’s the problem with your viewpoint. As I see it, most of the profit comes from refineries not oil extraction. Hence, if they’re investing in future revenue growth, then they’d probably be better off spending more on refineries than on oil extraction. Further, it’s very foolish to claim that they aren’t taking considerable risks merely because they aren’t dumping all of their profits into a single roll of the dice.

  14. Dfens comments are odd. I think s/he is right that oil companies are benefitting just fine from the current system, and the oil companies are taking a risk by going after shale oil because OPEC can drop the price of oil on them. The problem is, OPEC need not do anything, since the US government is sufficient to increase risk beyond the potential of profit. After that, I’m lost on what Dfens is trying to suggest.

    In his last post, the first paragraph doesn’t fit the next paragraph. How do the American taxpayers look out for their own good by supporting politicians who block access to domestic sources of oil? The discussion need not be only about shale oil, but all sources of domestic oil. I don’t think the political landscape has changed, but I think that is the problem. However, electing a Democrat President to run a Democrat controlled Congress sounds like the same political landscape of the late 1970s, which was the last time the US government devastated domestic oil companies.

  15. spacy, you can be sure the exact investment figures are a closely-held corporate secret. They’re not idiots. They don’t broadcast that figure any more than the US Navy broadcasts how fast its submarines can go, and for similar reasons. Here is an article from last November from CCN/Fortune that puts the investment at more than $200 million.

    Wow, who knew freshman Senators could be so powerful?

    How about…anyone who understand the difference between government and business? Between the power of the gun and the power of the dollar? Anyone over the age of 12?

    Way more powerful than big oil companies.

    Correct. Well done!

    they’ve managed to make record profits in the billions of dollars. How do you think they did that?

    By selling “record” amounts of gasoline, because the population of the US has reached “records” levels, and people are driving a “record” number of miles because duh the population of the US and the size of the economy grow every year? Do even the basic facts of modern economic life escape you?

    It shouldn’t take too much longer before the oil companies decide that drilling for oil is way too risky and expensive and turn to the US taxpayer to fund their efforts.

    It’s remarkable how you bullshit about stuff about which you haven’t the slightest clue. Do you have any idea how dangerous and expensive offshore drilling is? Which has been pursued avidly by oil companies for decades, in the face of stiff opposition by, yup, once again, Democratic party politicians?

    All of the dangerous, risky, costly exploration for oil has always been done by oil companies, at their own considerable expense. Not a penny of government money in it — which is way more than you can say for, say, computer companies, or dot.com companies, or solar-power companies, et cetera, who are often whining about the risky nature of R&D and the “necessity” for public assumption of that risk.

    Oil R&D is one of the few complete free-market success stories in terms of a fantastically expensive, high-tech industry that is nevertheless totally self-supporting, with zero need for government pump-priming. (The other is arguably big pharma, but there’s a lot of indirect support in terms of NIH money to researchers at universities.) If LEO space access worked as well as oil R&D, we’d have twice-daily private flights to orbit right now.

    Of course, rather than realize that this lucky model might well be studied and duplicated, idiots like you (and social parasites like Democratic politicians) are going to look at the massive amounts of money flowing through the system and, rather than see it as the healthy “blood supply” of an economic system that works, see it as a potential source of wealth for your pet projects that you can siphon off. The fact that this bloodsucking mosquito behaviour will ruin the system and result in fantastic future energy costs, rationing, the whole nine yards, escapes you.

    I think that oil companies should make a profit.

    That’s good, because without oil companies making a profit, you don’t get gasoline, or food from across the country, or clothes made in China instead of on your own loom, and all the other things transportation brings you. You get to scratch in the dirt with a stick to try to raise enough vegetables to make it through the winter. The only thing standing between you and the short, nasty existence of a Neanderthal in 40,000 BC is not government — which creates not a single product — but modern well-capitalized companies, including oil companies.

    I have no problem with them looking out for their own interests. I am merely suggesting the we as taxpayers should also look out for our interests,

    How about we as customers looking out for our interests, which means we want lower prices for our gasoline, which means getting the fucking government off the back of the companies that can provide it to us?

    How about we as taxpayers wanting to minimize the amount of taxes screwed out of us to go towards the salaries of parasites in government who don’t bring a single gallon of oil out of the ground, but who reduce the productivity of those who do?

    How about we as owners of 401k’s not wanting the profits from our investments in oil companies — which will pay for our retirement — taxed away by short-sighted greedy Senators so they can buy their re-election with a bridge to nowhere or some other futile folly?

  16. I don’t know what the refineries have to do with this. Oil is oil regardless of where it comes from. It’s all pretty much refined the same way. Refinery capacity is not what’s driving the price of oil right now. The cost of crude oil is, hence this topic.

    The reasons why no one is extracting oil from shale, as I see it, is also related to why no one is investing heavily in alternate forms of transportation. There are at least a few other energy technologies that make sense at $140/barrel oil but no one is investing heavily in any of them. It’s not because they don’t want to go up against big oil, it’s because they don’t want to go up against OPEC. Given that our government is not going to protect any new technologies against oil price cuts by OPEC, we are at their mercy. You simply cannot make a good business case for any significant investment in domestic energy production, alternate or otherwise, if your own government won’t support you.

    So instead of developing a serious domestic energy policy, the Dems and Repubs are using this as yet another political football. Each accusing the other of negligence. Each sounding great to their established constituencies. Each saying everything would be great if not for the other. Neither doing a damn thing. The oil companies are making record profits with minimal risk, so they’re all for the status quo. Everyone is happy except those of us at the bottom of the food chain who have to buy the gas and pay the taxes. As long as we continue to vote for the same people with the same tired answers over and over again, things won’t get better.

  17. I don’t know what the refineries have to do with this. Oil is oil regardless of where it comes from. It’s all pretty much refined the same way. Refinery capacity is not what’s driving the price of oil right now. The cost of crude oil is, hence this topic.

    Well there you go again. It’s not all refined the same way. Just in the US and just considering gasoline, one of many products that come from a barrel of oil, there are a number of blends (perhaps many dozens, I don’t keep count) depending on location, regulation, and time of year. In addition there are thousands of products that eventually come out of a barrel of crude oil.

    Also, while oil has grown to become most of the cost of gasoline, historically it has ranged between 40-50% of the total cost of gasoline (rather than the current 70%). Refineries remain a significant portion of the overall cost especially considering there are tax incentives to shift costs from refinery to crude oil. This apparently can be done by increasing the price paid for the initial crude (assuming it is bought from another branch of the business) and partly refined products from other refineries owned by the business.

    I will step back from claiming that oil refineries are the majority of profit for oil companies. The figures indicate that currently refinery costs are a seventh as big as crude oil for gasoline and a third as big for diesel fuel. But I see two effects pushing down the perceived share of profits from refineries, namely that much of oil is imported and hence some of the profits from crude oil sales go overseas rather than to the big oil companies. Second, there is the tax incentive above to hide refinery revenue.

    So where am I going with this? You are focusing on profit from oil production and claiming based on flimsy evidence that oil companies are risk adverse and somehow manifesting the collective will to cut back in order to enjoy the current high price of oil. I don’t buy that. A simpler explanation is that demand is higher while US regulation has done much to hinder the expansion of US oil infrastructure. The higher price of oil products like gasoline are natural outcomes.

  18. Carl,
    read the Rand report I posted on top.

    1 Shell is the only one doing this, they are taking a gamble. (good for them)

    2 I think electric cars (like musk’s company tesla)
    will be a better solution. price will come down
    with scale.

    3 The water problem. I think Shell under estimates this.

    4 The production rate is not certain, and after 30 years seems kinda small, for such a large deposit.

    5 $90 barrel oil is still $3 gas at the pump. At least.
    Too rich for my blood.

    6 The carbon sequestration is untested and an unknown cost.

    I think the sooner we get off oil, the better.
    bridge the gap with bio-, hybrids, LP gas, electric.

  19. > All I did was to point out that domestic oil companies made a big investment in domestic oil production in the ’80s that did not work out well. OPEC dropped their prices and put a whole bunch of people who worked in the oil industry out of jobs.

    So what? The goal is cheap energy, not full employment for roughnecks. (In other news, employing teachers should not be the goal of the public education system.)

    We got some new sources of oil that kept prices down for quite a while. No, they didn’t keep prices down permanently. Nothing does.

    > The oil companies are making record profits with the current arrangement with much less risk than it takes to extract oil from shale, but you think that adds up to some magical desire on their part to implement new technology?

    No. I think that it’s self-interest. The foreign sources can squeeze them out. And, there’s nothing magic about the existing oil companies. If they don’t develop shale oil, someone else will.

    Unless, of course, govt stops everyone.

    Which reminds me – Dfens seems to think that govt should do shale oil for us. What previous govt energy programs suggest that govt will succeed at this endeavor? (Yes, oil companies are perfectly happy to waste govt money on boondoggles. That doesn’t let govt off the hook – it actually argues against govt spending because there’s always someone happy to take the money.)

Comments are closed.