This isn’t my thread, but I would love to first establish whether cheap oil is bad for the economy on net before we start bashing people who want higher or lower prices. Once we have agreement on whether cheap oil really is good or bad overall for the US, then let’s ascribe all the motives we want to whoever.
For example, let’s posit that cheap oil really is bad overall – then those pushing for higher oil prices are doing a social good, even if it does line their pockets. But, we can’t make that judgement until we figure out whether it’s good or bad.
One could argue that it’s better in the short run, but more damaging in the long run because of the ecological damage that will follow very cheap oil. But, I really have no cites to back that up, so I’m happy to try to understand the short-run effects.
EIA only has numbers through January. Which shows a net export of 19 million barrels if you include finished products. To put that in context, we produced about 400 million barrels of crude in January. So like I said, barely.
From a purely dollars in vs dollars out perspective, that’s fewer dollars in at a first order. However, that discounts secondary effects (e.g. trade of goods that use oil for production.) And does not value working Joe’s gas money any differently from XOM’s balance sheet.
English may not work the way you demand it to. The US is also a next exporter of soybeans. The number of people who are confused and think it’s not mostly private entities trading is approximately zero.
The number of people who don’t realize the rest of the oil producers don’t work this way is quite high. Saudi Arabia is a net exporter of oil, it is owned by the nation, which is owned by a king. We don’t operate that way. So perhaps English is not the problem here.
My position is that it’s bad for the economy because it does long-term damage to the environment. There has been a tendency to separate the environment from the economy over the years, but there is a reckoning that’s coming, one that will eventually far outweigh whatever short-term benefits cheap fossil fuels provides us with now.
So what? It’s still propaganda. Calling the US a net exporter of petroleum in the same context as Saudi Arabia has no clarity. You can say that the country of Saudi Arabia exports it’s oil because they do, they own it. The United States of America does not export oil, private oil companies located here do. Can you understand the difference? The phrase you defend is intentionally meant to mislead.
It has clarity to the net effect on the US economy, which is what this thread is about. Whether I sell it or the Department of Whatever sells it, it’s still part of the US economy as much as Aramco’s sales are part of SA’s.
Nobody is confused. Nobody is misled. You are demanding that English work in a way that it doesn’t. A country being an im/exporter of X simply does not address what entities in the country are doing the trade. It is true for oil and the US, and it is true for oil and SA.
You got the first part right. After that the economic effect on the US and Saudi Arabia are extremely different. I don’t care in the least about the economic effect in Saudi except for the eventual disaster that occurs in a country that can’t survive with oil money, although the current situation means that disaster may not be all that far in the future. But in the US, artificially inflated oil prices only benefits the oil companies. We will simply pay extra for gasoline to provide government mandated profits for oil companies. Our import/export status, comparing apples and oranges or not, has nothing to do with that.
Ask him. I’m not arguing semantics. I’m explaining that the artificially inflated cost of oil will be paid for by US citizens buying petroleum products. Ruken obviously understands that being a ‘net exporter’ even in his own terms means we export slightly more oil than we import, which means an increase in the price of exports is an insignificant addition to the US economy. But the retail sales of these products are all to US citizens who are paying more for gasoline simply to give money to the oil producers who can’t seem to make a profit pumping liquid gold out of the ground.
And the pension funds who own their stocks. And the oil companies’ employees. And their suppliers’ employees. And the suppliers’ that supply the suppliers. And the property owners. And the sand miners. And the guar bean farmers. And the machinery manufacturers. And everywhere they shop. I’m not valuing their economic activity over anyone else’s, but it’s all on the balance sheet along with Joe and his afformentioned gas money.
Generally cheap oil is good for the economy because it costs less for trucks to ship items to your town, cheaper for you to drive to work, cheaper for you to fly or drive to a vacation destination, cheaper for just about everything.
The problem now is that the economy is only tanking due to the virus and with shutdowns and fears in place, the economy won’t get any better no matter how cheap oil is. I am not going to get on a plane to Las Vegas this week, even if the flight was free, because there isn’t anything to do there now.
It’s still used in shipping and trucking, and in plastics. So, anything that has to be trucked from one part of the country, or sent by rail, or by boat from overseas, plus anything plastic, should have some downward cost pressure if oil is cheaper.
So, food in NY that comes from California, Mexico, or Europe will be cheaper. I still have to eat food, even during the crisis, so this will make the Trump checks go just a little further, right?
That’s a fair point. Large sectors of the economy are still open, but I’ll admit that I am unsure how much low oil prices will help these industries. It’s better than a hard kick in the teeth for sure.
This is pure nonsense. Oil fracking dropped the price of oil in the US by a substantial amount. The current reduction in prices are a direct result of Russia and Saudi Arabia dumping oil on the market in an attempt to destroy fracking and regain the ability to control prices.
Oil fracking is supported for 2 reasons: 1) it makes money locally for workers/investors, and 2) It makes the US independent of oil cartels.
It wasn’t that long ago when gas sold for $3.75 a gallon. When fracking came about it dropped the price over a dollar a gallon. The reason the price dropped is because the OPEC could no longer control prices through production limits.
Oil prices are a symptom of the state of the economy more than something that causes the economy to improve or decline. Demand is very inelastic with respect to price. If you need something moved, you’re probably going to pay the going rate for it. Only at the very margins of the economy are people making decisions based on the price of shipping something. It may have more of an effect on petroleum products other than fuel, but my understanding is that fuel for transportation is the largest source of demand for oil, and other types of demand are secondary. If the economy is doing well, people need to move more stuff, and if it requires more fuel than can be made, prices will spike until enough people cut back on their economic activity. Thus, high prices are bad for the economy, but for a given constant supply they’re really simply a sign that the economy is going stronger than anticipated. Taking the inverse, a crash in oil prices is sorta good for the economy, but it’s more of a sign that demand is severely for the given supply, and that’s more of a sign of a worsening economy.