Reply to post: Re: Maybe we've got it all wrong

Re: Maybe we've got it all wrong

I disagree.

The price indicated on a screen has gone up. The cost may be unchanged. So I pump oil or gas in Canada. I need to get that to market. So I build pipelines, storage and distribution to get my product to customers.

So I build KeystoneXL (or NordStream 2) to deliver product to my refinery customers in Texas & Illinois, and storage/distribution in Oklahoma. It's an expensive pipe to build, operate and litigate, but unless buyers collect, it's the only way to get product to market. But there's a finite practical market at the wholesale level. And to finance my pipe, I'd want contracts from refiners to cover costs & make some money. That's the effective price, ie governed by contract, not the number shown on a trader's screen.

So if it's profitable at say $50bbl, it becomes very profitable at $150. Unless you're a small buyer getting product on the market via Cushing, in which case it's time to read ch.11.

But then there's politics. So Obama said no to Keystone. Then Trump said yes. Then Biden says no, and seems confused that US pump prices have rocketed, and is trying to do deals with Venezuela to ship from there.

Meanwhile, Keystone sits idle, yet capable of delivering 600Kbbl per day to US refiners. But that's the kind of insanity that occurs when environment trumps common sense. See also the Texas power cut last year. 'Renewables' suck for delivering cheap, reliable energy. Gas is much better. Gas pipelines neeed electricity for pumping stations. Not a problem, tap some gas, feed that to a turbine, and power your stuff. At least until regulators say that's ungreen, and you have to use electricity. Which then fails, which means no gas for big turbines, and people die.

UK has much the same problem, ie lunatics running the asylum. We don't use much Russian oil or gas, but prices have rocketted for... reasons. Like we produce our own oil & gas for local consumption. Costs of that haven't really changed, only the potential export value. And the UK could be producing more, but politicians are clueless fuckwits. Fraccing is bad!

Strangely, geothermal is green. Just look at the Eden Project in Cornwall. A 5km deep borehole into the hot Cornish rocks that can generate millions in subsidies. Also been in the news, if you can find it, for generating a 1.5 magnitude quake and loud bang. Just like fraccing! Also fun because unlike shale, Cornish granite is fairly radioactive, and geothermal plants recirculate water. Which means the 'green' Eden Project also needs licenses to manage radioactive materials & waste.