Why no refineries are being built -
Gasoline demand in the US has been flat since, well since forever. Current gasoline production in the US is about 10Mb/d - exceeding demand.
It is a bit more complicated than this, there is a world wide drive to larger more integrated refineries for many companies. There are scale economics and feeder streams for lubes/chems also Co-Gen facilities for power generation.
But in the main the US has had flat gas demand and enough refining capacity to supply it.
less than 6 months ago the second or third largest energy producer in the world invaded a sovereign nation. In response, much of the western world passed significant sanctions, changing world energy markets in a matter of days. In will take markets some time to adjust and some of the sanctions are un-economic - adding costs to the system.
You’re right. A prime reason for this is ridiculous and hyperbolic takeaways such as:
Which have no basis in reality from anything that’s been posted.
This is such a spot on statement. All the investment that could be/should be happening right now to ensure long term success, productivity, efficiency, etc. is not happening. As such, we’ll be racking up frequent flyer miles to fist bump with the likes of Saudi Arabia (maybe Venezuela next?) to beg for more production.
If you didn’t get that all of my bullet points as well as @texastanker s addition were sarcastic and at the same time simplifications of the actual arguments we’ve seen here then I can’t help you.
Need to also be accurate, otherwise it’s just trolling.
But accuracy doesn’t make for good sarcasm I suppose.
I’m not trolling. We agree that oil companies invest when the price of crude is high, and less so when the price of crude is low.
We are coming off of lows where investment stalled, even though the administration at that time was decidedly pro-oil. It had nothing to do with the administration and had to do with lagging oil prices due to low demand.
Now we’re beginning seeing renewed investment (offshore anyway) manifested in drilling rig utilization and resultant marginal day rate increases. This is because oil prices are high.
But you seem to state that you believe there is less investment right now because of the current administration’s policies and statements. Here’s the thing though, as I mentioned, new wells can take a decade to enter the market. So it is insane to believe that oil majors are only doing capital planning in four year presidential administration periods. If anything they should be ramping up as we approach halfway through what could be a one-and-done term.
Domestic policy and sentiment is certainly a factor, I won’t deny that. But well planning and funding approvals are based on expected returns, which are based on oil prices. And since there are currently held but undrilled leases, I expect to see renewed development progress if prices remain high. Regardless of rhetoric and hurdles from the current administration.
In my ten years in the offshore drilling industry there was not a single hurdle we didn’t manage to jump over. Even the Macondo moratorium, when everything stopped in the US GOM, we got past it, it just took time. It was followed by a crap ton of drilling, under a Democratic administration.
Trolling, that never happens here does it? 
Agree totally. Low prices will lead to low levels of investment regardless of who’s in charge. I don’t believe I ever said otherwise.
Is it re NEW ed investment or just restorative investment? Based on the rig count chart it looks to me like just getting the count back to what it was prior to the COVID induced demand collapse. Sure investment is investment but I would be interested to see how many NEW projects have been undertaken vice just putting wells that existed previously back online.
Agree totally… Why aren’t they? Might the threat of additional tax on “excessive profits” be playing a factor.
I’m not saying new development will be zero. That would a ridiculous and hyperbolic interpretation. I’m saying as long as there is outright hostile regulation and rhetoric from the ones in charge, new spending on development will be less that it otherwise would be… Which leads to less supply… Which leads to higher prices… My point since the original post in the other thread
Hey @SurveyorIndpndt, how about red lines? Can you see those? Read the words above them:
So it turns out that
actually DOES play a role here…crazy huh?
People conveniently forget that fact so that they can say it’s all Biden’s fault.
The red lines indicate that people with agendas can say whatever the hell they want to try and score political points and the credulous will simple say, “yup must be true”.
Yet the earlier survey from late March tells a different story by gathering and quantifying opinion instead of cherry picking any selected comment, so these comments reflect a minority opinion (<10%) for credulous people to suggest its an overwhelming trend or proof!
The data suggests no adverse impact on a trend of rig count that is steadily going up despite your “From Day One” talk of a paralyzed industry, cowed at the idea of the Federal Government’s mood!:
So much reluctance on display! Thats why the rig count went up steadily, despite all this fear and animosity! When exactly did the Admin policy dent this trend that only went up? So strange…
And how is production going, say, in the Permian? Higher than ever… weird, but, a few people made some comments in a survey of many people?!?
First you said Biden didn’t cancel the pipeline then you said no one cares. Which is it?
Gas prices nationally were @ 3.70 USD per gallon when Russia invaded the Ukraine… quit gas lighting for the President.
Why aren’t they spending? Kinda seems like they are, as not just prior projects continue to come on online, but new ones have been sanctioned in the last 12-24 months. Since oil companies continue to purchase leases, I’d say there are still novel wells in the pipeline. Rig day-rate and utilization are forecast to continue increasing trends (likely in part from fleet retirement parity, and partly from increased demand).
And speaking of investment via lease sales, it was historically high in the mid-2000’s and early 2010’s, then declined to approach lows in the years before the pandemic. (as shown in the graph below trending total GOM lease bids per year in Billion $, overlaid with WTI average at the time of the lease sales in $)
Data compiled from BOEM and macrotrends.
We’ll have to wait for the 2022 lease sale(s) to see where the trend is going now.
As for what the oil companies are saying publicly, they might as well be lobbying firms for themselves, of course they are going to be critical of this administration hindering their development at any opportunity. But based on increased rig utilization, continued lease purchases, development approvals, and record profits, while they may be crying foul in the press, they still seem to be anticipating and spending for production ahead.
A small list of examples in the last two years of an “unfavorable” administration:
It’s pretty clear that there was a global shutdown, demand and prices and production dropped, the shutdown ended and demand resumed before production, and shortly thereafter a war started, effecting global oil supply chain between continents, both contributing to high oil prices globally. So whether or not this administration “supports the oil industry or not”, it seems that the data shows that has little to do with what is actually effecting oil prices or spending currently. Will this administrations policies, if actually implemented, affect prices at the pump in this country in the future, maybe.
Loaded many millions of barrels of refined oil imported from Venezuela to east and gulf coast destinations., Loaded most cargo then in Lake Charles and Texas. You realy think you are geting Exxon, Mobil, Shell or other products ? . Think again. Delivered to many docks sporting those names with the same cargo. Is that market not viable anymore due to “Sanctions”?. Biden is reaching out to many we had problems with human rights in the past. . Funny how things change, And then change back. Now they are saying fuck off .Not my problem then . Hook up and load and go fast as you can.Nothing new here. perhaps some won’t agree, use up their products before ours. We stilll have plenty, don’t give it away. for less than we paid for it to be loaded, Crude was stored and extracted from our national reserves. Profit by doing that goes to who?
As you said previously (and I agree), oil price will always be the prime driver of investment. Right now price is high due to increased demand (COVID recovery) and lowered supply (war in Ukraine), thus there is money being spent.
From infographs posted above, investors are demanding capital discipline at a time of high oil prices in an industry known for spending big in order to get even bigger returns. It is my view that this administration’s actions, rhetoric, and plainly stated goals for this industry (outlined superbly above by @Gruntledemployee ) are a direct cause of this investor sentiment resulting in lower levels of investment relative to what they have been historically and what the conditions warrant.
Is it the only factor? Of course not… But it damned sure ain’t helping.
Thanks for proving my point.
You can tell by the price graph exactly when Russia invaded. Plus, tensions were high for a while before the actual invasion so oil prices were already going up slowly.
