Airline CEO letter RE:Oil Futures

[Brett327]

All, I have is an assertion? Well, that's a hell of a lot better than a bunch of posting a bunch of links and not even having the basic ability to understand the definitions that he posts.

Flash is the one talking out of his ass, and he does not even understand the basic vocabulary on the subject.

I don't particularly give a rats ass about what you think of my credibility on the subject, but I did grow up in the oil field. My father is the best horizontal drilling consulting PE in Texas, and he has the paychecks to prove it. My first jobs were in the oil field, and it has been my family business since the 30's. My credibility on the subject, along with my Exxon/Mobile, Texaco Stock, and family's oil and gas royalties will keep me from giving a damn what the pump says for a long time.

I am not going to wast my time doing Flash's research for him. The information is free, all he has to do is step down from his liberal talking points for long enough to find the answers. He has shown his abilities with google. Some key words like "United States" "Oil" and "Trillion" will go a long way for him.

I think all anyone is asking you to do is back up your assertion that the US is sitting on the world's largest reserves of oil. I'm not particularly picky as to how you choose to define your terms, but I think it's going to have to be a bit better than "Because my daddy says so." I think you can understand how people would be curious when you come on here and make statements that are contrary to the conventional wisdom, then suggest that WE are the idiots for not believing you. If what you suggest is indeed factual, then there surely must be readily available data to support what you've said.

Brett

 

[phrogpilot73]

I think all anyone is asking you to do is back up your assertion that the US is sitting on the world's largest reserves of oil. I'm not particularly picky as to how you choose to define your terms, but I think it's going to have to be a bit better than "Because my daddy says so." I think you can understand how people would be curious when you come on here and make statements that are contrary to the conventional wisdom, then suggest that WE are the idiots for not believing you. If what you suggest is indeed factual, then there surely must be readily available data to support what you've said.

Brett

I'm with you on this one, but I can see both sides of the coin. The definition:

Proved reserves are claimed with reasonable certainty (80% to 90% confidence) to be recoverable in future years by specified techniques. To meet this definition, the development scenario must have been defined and use known technology, and the scenario must be commercial under current economic conditions (prices and costs prevailing at the time of the evaluation).

And I think what I bolded is what he's arguing. Everything is based on what we can currently get to be a proved reserve. If you haven't figured out the technology, don't know the techniques to get it, or are thinking of future economic conditions - then it wouldn't be a proved reserve.

For what it's worth (and my google-fu is weak today), if you started talking about these potential reserves in the US (and oil shale is one of them), I read sometime that the LARGEST untapped reserves in the world are in Siberia. I'm guessing that since they don't have the technology, techniques, etc to get that oil, that's why they aren't proved reserves.

Truth be told, I think the supply of light, sweet crude is probably pretty close to being OK. The biggest problem that I think is happening is the lack of refining capability. Katrina didn't help, and after those refineries started coming on line, others were going off line for scheduled maintenance.

However, this is me - talking out of my ass.

 

[Brett327]

Like I said, I don't have a problem with how he wants to define his terms, just the lack of anything to back up his claim. It just stinks of right-wing conspiratorial whining (Jimmy Carter this, Democrat congress that), which is no better than whining of the left-wing variety.

Brett

 

[Bevo16]

Like I said, I don't have a problem with how he wants to define his terms, just the lack of anything to back up his claim. It just stinks of right-wing conspiratorial whining (Jimmy Carter this, Democrat congress that), which is no better than whining of the left-wing variety.

Brett

You guys could not be missing the point by any greater margin if you were talking about Victoria's Secret new line of panties. That would at least be a lot more entertaining.

Yup, I said that the US has the greatest energy reserves of any country, and I didn't post 15 blue links to back it up. Truth is, I am on leave, and I just don't want to spend the time doing it. Even if I did, we could go back and kick the "what is proven, what is not" dead dog.

Forget about what may or may not be recoverable in oil shale/sands. We KNOW that there is 10+ billion in one little spot in Alaska. There are several more billion barrels off the California Coast, and several billion more of the Texas and Florida coast.

Those oil fields with BILLIONS of barrels are the low hanging fruit. Instead of picking it, we are sending the President Of The United States Of America to the middle east to BEG the Saudis to pump 250,000 more barrels of oil per day. This is just plain stupid. The democrats' plan of releasing oil from the strategic reserve is even more stupid. Going into an emergency supply in a situation that is not an emergency, is VERY bad policy. So is turning 30% of the nation's corn crop into fuel, but that's a topic for another thread.

This has been fun, and I look forward to what you guys have to say. I am going to spend the rest of the day driving a combine and helping my father in law get his corn crops out of the field. At 8$ a bushel, there is no time to waste.

 

[Brett327]

This has been fun, and I look forward to what you guys have to say. I am going to spend the rest of the day driving a combine and helping my father in law get his corn crops out of the field. At 8$ a bushel, there is no time to waste.

^^ Bizarre non-sequitur.

Dude, you are all over the map.

Brett

 

[eddie]

You guys could not be missing the point by any greater margin if you were talking about Victoria's Secret new line of panties. That would at least be a lot more entertaining.

Yup, I said that the US has the greatest energy reserves of any country, and I didn't post 15 blue links to back it up. Truth is, I am on leave, and I just don't want to spend the time doing it. Even if I did, we could go back and kick the "what is proven, what is not" dead dog.

Forget about what may or may not be recoverable in oil shale/sands. We KNOW that there is 10+ billion in one little spot in Alaska. There are several more billion barrels off the California Coast, and several billion more of the Texas and Florida coast.

Those oil fields with BILLIONS of barrels are the low hanging fruit. Instead of picking it, we are sending the President Of The United States Of America to the middle east to BEG the Saudis to pump 250,000 more barrels of oil per day. This is just plain stupid. The democrats' plan of releasing oil from the strategic reserve is even more stupid. Going into an emergency supply in a situation that is not an emergency, is VERY bad policy. So is turning 30% of the nation's corn crop into fuel, but that's a topic for another thread.

This has been fun, and I look forward to what you guys have to say. I am going to spend the rest of the day driving a combine and helping my father in law get his corn crops out of the field. At 8$ a bushel, there is no time to waste.

Is this you and your Dad? "I can be drilling in three days time..."

You sound like someone who would know how to answer my question, "from the hip." How long would it take to stand up refineries, rigs, (get it to the pump, more or less) AT these prices, if certain areas got opened up. How different would that rate of construction be if oil was only $65 a barrel (from what I understand, what it is actually worth at more "reasonable" output)?

I'm not saying it's a bad idea to up our ability to produce, but I also tend to believe its a long term solution to a short term problem. These prices, I tend to believe, are about politics, not proven reserves. Thoughts?

Screw ethanol and the corn lobby.

 

[eddie]

This poll should be public...

 

[Hozer]

You sound like someone who would know how to answer my question, "from the hip." How long would it take to stand up refineries, rigs, (get it to the pump, more or less) AT these prices, if certain areas got opened up. How different would that rate of construction be if oil was only $65 a barrel (from what I understand, what it is actually worth at more "reasonable" output)?

I'm not saying it's a bad idea to up our ability to produce, but I also tend to believe its a long term solution to a short term problem. These prices, I tend to believe, are about politics, not proven reserves. Thoughts?

Screw ethanol and the corn lobby.

The offshore rigs are actually quite portable and once in place, can be extracting material in a matter of weeks (depth dependent naturally) . Total sidebar, even though you can't have rigs off of Florida's coast, there are dozens of rigs in and around Mobile Bay. "Tradr" checkpoint is a NG platform in the Bay.

 

[MasterBates]

When I was watching the news 2 days ago, I think it was Cavuto, the Senator he had on kept on screaming "but the oil companies have xx Million acres to drill in now".

But the Senator would not listen to the following:
1- A lot of those acres are in low/no yield places. If oil could be recovered economically there, it would be pumping now.
2-CHINA is drilling closer to FL (45-90mi) than congress is refusing to allow our guys to drill (125nm).

 

[pourts]

^^ Bizarre non-sequitur.

Dude, you are all over the map.

Brett

I feel like I am taking crazy pills here from what I read in this thread.

What Bevo said made sense, using Flash's definition. Congress making laws that prohibit drilling in certain locations meets the criteria for "existing operating conditions" that prevent oil reserves from being considered "proven." Basically, if its illegal to drill it, then it's not proven-- just like if its too expensive to be drilled out, it also isn't proven.

Also, the proven reserves data is from 2005 and 2007 (not Flash's fault, its recent enough), when a barrel of oil never went over $80. You could say that oil at $150 is probably not viable long term, and you would be right, but it likely won't go below $100 anytime soon. That helps the US out in its "proven reserves" vice countries in the Middle East, since their oil is of the easy to extract variety, and ours is more expensive (tar sands, shale, etc).

And the corn comment is quite applicable too, as it's another stupid national energy policy that creates a net loss of energy, since it costs more energy to the corn than we get from the resulting ethanol. Probably won't be able to change that policy as long as the Iowa Caucus is so influential in the presidential primaries.

 

[FrankTheTank]

Just for fun... All these mofos are making their coin...

 

[Bevo16]

You sound like someone who would know how to answer my question, "from the hip." How long would it take to stand up refineries, rigs, (get it to the pump, more or less) AT these prices, if certain areas got opened up. How different would that rate of construction be if oil was only $65 a barrel (from what I understand, what it is actually worth at more "reasonable" output)?

I'm not saying it's a bad idea to up our ability to produce, but I also tend to believe its a long term solution to a short term problem. These prices, I tend to believe, are about politics, not proven reserves. Thoughts?

Screw ethanol and the corn lobby.

The top of this problem can be knocked off really quickly. As soon as legislation is passed to open up oil fields, that will seriously kill any price run up due to speculation. Even though speculators are not the the primary cause, they may be adding a little "fuel to the fire". Like I said in my first post, just a 1-2% increase in worldwide production would be a big help in the short term. Anyone here that took and passed Economics 301 should remember that supply and demand curves are not linear. When demand is higher than supply, the shortage causes prices to skyrocket. The extra demand had to be bought back from the market a huge price. Petroleum markets have historically shown that it takes about a 10% price increase to buy back 1% of demand (those are rough numbers, but you can see them for yourself at the pump).

The length of time that it takes to get an oil well or field on production has a number of variables. If the "pay" areas are large and shallow, you can get a well producing in a matter of a couple of months. If they are deep, under several layers of hard rock (slower drilling) and the pay areas are smaller and require a lot of horizontal drilling and more casing shoots, then it is going to take a lot longer. Drilling in northern Alaska is going to have challenges that you don't have in East Texas. Weather, and a complicated supply chain could stretch time lines. A distribution network would also have to be built (pipelines and/or seasonal oil terminals). I think that from the word "go" it would take about a year to see significant production from new fields in Alaska. For new offshore drilling, it could be on line in 1/3 of that time.

Refineries are a whole different ball of wax. We need more of them for several reasons. The biggest reason is that our capacity is not what it needs to be. Our plants are running just about wide open all of the time. The second biggest reason is the location of many of these plants on the gulf coast leaves them exposed to hurricanes. If you want to see 6-8$ gas, just wait until a hurricane trolls along the gulf and makes landfall near Houston. That would cause a large number of off shore production platforms to have to be shut down for the storm, and refineries to close for precaution and then repair. We need new refineries just to give our nation a margin of error against this kind of situation.

Industry experts have speculated that 80% of the time that it would take to get a new refinery built would be spent in the permit and litigation process prior to breaking ground. That is the reason that we have not had any new refineries built in 3 decades. No oil company wants to spend 100 million on legal fees and land deals, and court costs, etc. etc. just to try to build a refinery and risk losing a final court hearing and not be able to build. If that red tape could be cut, a new refinery the size of the Sun refinery in Tulsa could be built and at full capacity in about 2 years.

 

[Bevo16]

^^ Bizarre non-sequitur.

Dude, you are all over the map.

Brett

Yea, it was strange. If you could read my thoughts, the point that I was trying to make was that I was not going to be able to check any replies until late. I am on leave for a family reunion, but my FIL needs some help so I am pitching in. There have been some storms in the area, and he needs to get his maize out of the fields before it all gets blown over.

If you think that I am all over the map, you should hear him talk about fuel prices. He is happy about the ethanol nuts running the price of corn up, but the fuel costs have set him back so far that he is not going to end up ahead in the long run. He thinks that fuel prices are going to be nothing when the corn shortage hits later this year. Some of the flood losses are going to be made up by increased yield in areas that got better than average rain, but it's not going to be enough.

It's going to be interesting to watch, that's for sure. I am willing to bet that a lot more people will be taking advantage of their commissary when prices really start going nuts.

 

[squorch2]

2-CHINA is drilling closer to FL (45-90mi) than congress is refusing to allow our guys to drill (125nm).

Er, no.

 

[BoaisyJon]

As another who grew up a non-rev passenger (UAL), I can only say that the only thing that will help the airlines is (Drumroll please)........free-market capitalism (applause)

Once again, those who run the airlines have dropped the ball. The last time they were squeezed, they screwed over their employees, and now they're being squeezed again. The airlines have planned to fail, and they continue to want to pass the buck. The only way to fix the problem that the airlines have is to fix their pricing structure and cut total seats in the air. That bodes poorly for many, but it's also reality.