Oil is the new gold rush, United States is now the number one producer of oil and natural gas in the world (Yeee Haww)
Advances in drilling technology have allowed us to tap reserves that were previously unreachable
but what does the emergence of "Murica'" as a petroleum super power mean for consumption, geopolitics and the environment.
As we race toward energy independence , will we find ourselves up shale creek without a paddle?
uh oh, uh oh, uh oh
*oil gargled voice* Hit me with my theme music
Let's talk about oil, black gold, Texas tea, light sweet sweet crude
U.S. oil field production soared to a high of 9.4 million barrels a day during september
and is holding steady at 9.2 million barrels for feburary. Oil is more than 50% off its high and global demand is dwindeling.
with the world awash in oil, cash is freed up for increased consumer and corporate spending
and dictator states that need funds from oil are feeling the pinch
Every dollar drop in oil prices equals $2 billion lost in the Russian economy.
I just saw the Kremlin on airbnb
Financial media wants you to believe lower oil prices are simply a matter of Supply and demand
Two words
Supply & Demand
Let's start with Supply
Here in the U.S. when the oil prices started to reach all time highs
In the mid 2000's, americans realized the need for expanding drilling at home
The problems was that a lot of the oil and natural gas was bound up in rocks and minerals like shale
And it was tough to get to, but new technology like fracking and horizontal drilling made it easier
So production oil isn't an issue right now
But what about demand?
In china the economy has taken a turn for the worst
ditto Japan and most of Europe
Slower economies mean slower industrial production and that means countries use less oil
Oil prices don't obey the free market laws of supply and demand
They are manipulated, as they have been for decades, by OPEC
OPEC is like your boss’s son. He doesn’t really do anything around the office, but he’s a legacy so you can’t say anything
Saudi Arabia is waging a price war against America, and they are tapping their $750 billion in cash reserves as an all in bet that our burgeoning shale boom will fail
They’re relying on 40 year old tactics in an ever increasingly innovative market
The oil cartel known as OPEC announced at the November 2014 meeting that they decided not to lower it's production
We are going to produce 30 million
Why are people concerned about our production
OPEC is keeping production at 30 million barrels per day
Assuming that its members often exceed anyway
Cheating since 2011 by producing more each month
OPEc is not set to meet again until June 2015
The Saudi oil minister said they have no plans to cut production even if the price reaches as low as $20 a barrrel
Basically they're telling the world "Deal with it" as they produce as much as oil as they want to keep market share
Could you imagine the seizures some conservative pundits would have if America’s oil profits went to welfare programs?
Oh god, get the defibrillator we’re losing Rush
What was it?
He found out that the surplus went to food stamps…oh god…clear!
Anyways, that’s what happens in OPEC countries
Their state run oil programs finance social programs, build infrastructure and subsidize food and gas
Independent US oil and gas producers have no such burdens
We can in fact get more oil from less rigs
So rig counts are down but oil production is up
Why?
Number 1, Efficiecny
It's mostly older less efficient rigs that are being taken offline
Newer machines, Including horizontal rigs using fracking are doing better
And oil drillers are focusing their remaining rigs on regions that crank up the most oil
Using more oil from fewer rigs
Number 2, Sump Costs
New wells can cost 12 million to drill
Oil companies pay that fee upfront and it takes years to make that money back
For the most part it doesn't make financial sense to stop pumping from wells that have already been drilled
So the pumping continues
US oil is like a real housewife of Beverly Hills
The older it gets, the tighter it gets
US “tight oil” production has lead to 4 million more barrels of oil a day on the global market
Big Oil meets Big Data
Independent oil companies are nimble at renegotiating contracts and seeking better terms
A new well can cost as much as $8 million, while re-fracking costs about $2 million
During a boom everything costs more
Overtime for workers, rig equipment that’s in high demand, workforce housing
Some companies are forced to slash drilling plans, and cut dividends but private equity loves a discount, and they’re betting big on oil
You can't run a company and have your prices drop by 50% and not have issues
Not Exxon and people like that
But you know for the certain decent size billion plus to maybe billion five
Those companies many of them are struggling
Are they willing to make, are they willing to capitulate effectively,are they willing to do the deal that saves
Eric, they don't have a choice
No, are they willing to make the deal that saves the firm even if it's, you know
It's that a gross over generalization like, Is boss hogg open minded
Right, I like that
There you go, hes not
Lets debate that
First of all there not a whole bunch of rednecks
These are smart business man, alright
You can be a smart redneck
Fun fact, boss hogg is open minded. Girlfriend name shequesha
A money for nothing, and your debt for free attitude sent lots of investors searching for better returns in the oil patch
Always bet on black
Smaller producers took on debt, betting their balance sheets that Goldman’s call of a $200 high in oil would happen
They’re feeling the pain, but those who based their business on what’s that thing you’re supposed to use to base decisions on?
Ah, Yes. Actual facts
Those businesses are going to be ok
More than 100,000 industry layoffs have been announced worldwide so far
but in this zero sum game, balance sheet losses are consumer gains
How should we deal with these record low gas prices?
Americans are back to buying SUV's
Sales of the eight passenger Lincoln Navigator up 88%
Yeaaaah baby
SUV's are back
Wohhoo!
The Lincoln Navigator, Chevy Suburban, the Cadillac regret
Gas savings is a tax cut worth $125 billion dollars
Saving middle class Americans about $750 a year
The US consumes 178 million gallons of gasoline a day
We love to drive, but our highways, bridges, and airports are in trouble
The Federal Highway Trust Fund is spending 55 billion a year but it's only raising 39 billion a year
We need to fill that gap
Maybe we should hold a garage sale for all that crap we left in Iraq
Tank…barely used
Buy one cruise missile get 2 free
Our national infrastructure is rated 16th in the world, with an overall grade of a D+
Behind Barabados in one survey
Barbados where I once saw a dog push a pig in a wheelbarrow
He had the right away
The federal gas tax hasn't increased in two decades, but tennesse Senator Bob Corker saids
Theres a huge gap in funding for our highways and we need to pay for it
Tennesse Senator Bob Corker want you to pay 12 cents more at the gas station
That means you'll pay an extra 30 cent a gallon just in federal taxes
Corker claims the money will go towards filling a multi-billion dollar gap in the highway trustfund
Some drivers say they're ok with the hike as long as gas prices don't skyrocket
"As long as you know the oil companies don't jack their prices up at the same time"
You all need to know. The value of our 18.4 cent tax has actually gone down 39% since 1993
The Texas Transportation Institute estimates that the average cost to drivers of bad roads and idling in traffic, which eats up gas is about $800 a year
A 12 cents increase would cost the average driver about $140 a year
But fixing our roads isn’t the only controversy that cheap oil is courting
With all the benefits of cheap oil, shouldn’t we be doing everything possible to keep the taps on?
America wants to be the best at laying the pipe
First, lets talk Tar Sands
They can be found all over the world, but are heavily concentrated in Canada
It's a mix of clay, sand, and molasses oil that can be extracted
The worlds most prominent climate scientist called it a carbon bomb
He warns exploiting tar sands will be game over for the climate
From the tar sands to your car tank
This oil produces 17% more green house emission than regular oil
The keystone excel pipeline will carry this oil from Alberta,Canada all the way down to the Gulf of Mexico
The oil industry said's it's the safest and most advanced piepline
At least one company is having doubts because extraction is so expensive oil prices need to stay over $100 bucks a barrel to even make it worth it
President Obama has vetoed the Keystone pipeline, but that doesn’t mean it’s the end
Hundreds of gallons of water, toxic chemicals, and destruction of natural forests just to get a few barrels of oil and only 35 permanent jobs will be created
We’re approaching a human centipede scenario about our environmental impact
We’re like well, at least we’re in the front
At current price levels, the economic argument for tar sands just doesn’t work out
Did you know increased tar sands production, due to keystone, would be like opening 6 new coal fired power plants
If keystone is approved, we’re looking at several more decades of dependence of fossil fuels
America’s abundance of oil has lead to problems in transporting it
Welcome to the pain train
The breaking news quickly dominated the local headlines
The 109 cart train was carrying oil from North Dakota to Virginia
It went of tracks near Mount Carbon in West Virginia
Some of those carts were carrying cuide oil, ahh spilled into the river
With oil in the river water treatment facilities downstream quickly shut off their intake valves and warn residents not to drink their water
2014 was a record year for oil spills involving trains
Last year there were a record 141 unintentional releases around the country
It's the highest level since record keeping started back in 1975
Nearly 70% of oil from North Dakota’s bakken fields reaches refineries by rail
The oil that comes out of ground in North Dakota is a mixture of oil and natural gas liquids like methane and propane
During the trip to the refinery the gases separate from the liquids and you have a blanket of propane sitting on top of the oil
Any breach to that rail car causes an instant explosion
The oil producers in North Dakota are the ones who own the rail cars, so the burden of upgrading the rail cars is on them, and they don’t want to do it because money
All recent accidents have involved voluntary upgrades to what the industry deemed were safer cars
They’re not working
If we don’t adjust our consumption we’re all on a fast train to our lives becoming a real life Michael Bay movie
Humans currently produced 35 billion tons of carbon dioxide every year
If we continue the current trajectory
by the time our children reach middle age the levels of atmospheric CO2 will reach that of our planets long time natural levels
That is why we are directly seeing the temperature increase
And were already seeing the consequences
4% more moisture in the atmosphere above the ocean is enough to transition to a New Normal
Dramatic weather events, floods, storms, droughts, fires
They're all happening at a frequency and intensity that we've never experienced throughout human history
In other words climate change
America is an energy island, emboldened by an abundance of shale gas and oil
Gas is cheap, our enemies are being punished, but are we past the environmental tipping point?
Here’s how to fix everything
Number 1, Give a damn. Seriously. Care about your carbon footprint.
Not sure where to start?
There’s a bunch of videos out there, but mostly stop being an asshole to the earth
Walk
Fat Ass
Number 2
A carbon tax. It would be transparent and easily understandable
Make the worst corporate offenders pay
Literally
Number 3
Re-investment in green and alternative energy
Tax credits and cash grants for renewable energy projects and startup incubators
Seriously, let this man do whatever he wants..to the earth, and my body.
We shouldn’t squander this opportunity we’ve been given to meld innovation and technology to help us reach a more sustainable future
Conservation and innovation will help us prevent the next crude awakening
Nailed It
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