Seriously, can anyone out there tell me why the United States cannot establish its own oil market, free from the manipulation of nefarious actors in Russia and Saudi Arabia? Why are we allowing them to control our oil price and drive our domestic producers out of business?
I know coronavirus is all the hysterical rage today, but we have a very serious problem here that could tank our economy if the COVID monster (hoax) doesn’t do it first.
I have emailed former Energy Secretary Rick Perry this question and will update this article with his answer should he have one and be willing to share it.
So, why is it not possible for President Trump, with the stroke of a pen (or several pens, as custom dictates), to declare that effective immediately, the United States is withdrawing from the international oil market and establishing our own market? Why can’t we do that? Someone, please tell me!
Do you think the 2nd Amendment will be destroyed by the Biden Administration?
Our domestic producers can make a profit at $55 to $60 a barrel. Why don’t we simply regulate the barrel price of our own oil at $60 a barrel, guaranteeing our producers a profit with which to explore and produce more?
Establishing our own market means we control the price, not OPEC, our producers and their investors can explore and produce without the fear of foreigners bankrupting them, and our economy, of which oil is a critical part, will hum like West Texas oil pump.
Instead, with the distraction of coronavirus running interference, the Russkies and Saudis are busy glutting the global oil market with crude, clearly to drop the price below the profit point for American producers to drive them into bankruptcy and out of the market. Those American producers have succeeded in not only making the United States energy independent, but they have also begun exporting oil, a call to arms for OPEC and Russia.
Because the cost of production for US producers is considerably higher than that of their Russian and Saudi counterparts, the latter have succeeded in destroying American oil producers who are now cashing in their chips, unable to weather the storm, all because we are allowing it to happen by not isolating and controlling our own market.
One of the largest shale drillers in the country filed for bankruptcy recently as the oil and gas industry deals with a one-two punch of coronavirus fears and Russia’s continued war against U.S. energy producers, reports Daily Caller.
Whiting Petroleum became the first giant shale company to slide into bankruptcy Wednesday as many energy producers meet debt obligations and an oil war between the world’s largest energy producers. Whiting sought chapter 11 protection in Texas amid the strife.
Prices fell into the $30s as the Saudis pushed for a cut in output to prop up prices, while Russia is working to infuse the market with hundreds of thousands of barrels of oil. Moscow is worried that the U.S. will use shale oil to take advantage if Saudi Arabia ease off production.
Bankruptcies are expected to increase as crude production increases while demand plummets, according to Buddy Clark, a co-chair at international corporate law firm Haynes & Boone.
“It’s a dire situation for everyone,” Clark told the Wall Street Journal Thursday, noting that even bankruptcy courts are under pressure as bankruptcy cases explode. “It’s a weird dynamic, but people will want to get into bankruptcy quickly in order to beat the rush.”
Other energy companies will likely experience similar problems.
U.S. drillers could default on $32 billion of debt throughout 2020 if the virus and Russia continue walloping the industry. The default rate is projected to come in at 17%, according to credit-ratings firm Fitch Ratings. Fitch forecasted a 7% default rate before the virus pandemic.
Meanwhile, oil prices rallied Thursday after President Donald Trump hinted that his Russian counterpart, Vladimir Putin, and Crown Prince Mohammed bin Salman told him they might reduce crude production.
Trump said in a tweet that day that he “spoke to my friend MBS (Crown Prince), who spoke with President Putin of Russia, & I expect & hope that they will be cutting back approximately 10 Million Barrels.”
Oil prices pitched upward shortly thereafter. The Dow Jones industrial average jumped more than 500 points after Trump’s remarks. The president’s bold talk provides a reprieve to a beleaguered oil industry, which saw the price of oil fall roughly 60% over the past month.
Natural gas production, for its part, was on the incline for more than a decade before this most recent hiccup. Natural gas producers are highly vulnerable to Russia and Saudi Arabia’s forays as they are indebted — production firms have
Many energy companies that specialize in extraction from shale and fracking are vulnerable because they are highly indebted. Energy production firms have $86 billion of debt coming due over the next four years, so any dip in oil or energy prices makes it difficult to pay down those debts.