RIGHT Big_Country01. My point exactly.

Cochise, BOBO, and DannyB, I have something to chew on now. It might still be dim, but the light is beginning to shine. I still haven't hit on my ultimate understanding point yet, but your posts help.

I would of never guessed it would go this high this quick. But there is no one at the top publicly trying to do anything about it either

This is from TX’s top moderate House Rhino. The former Seal is saying a lot with out saying much

And neither is he going to the border!

Let's be honest he doesn't even know he is Texas

Very true

Speaking as an old oil trader, the source of the large bounce in crude price is most likely the New York Mercantile Exchange. Had I been trading presently, when crude headed upward I’d have bought wet and futures just like most all the traders would have. All the computer driven trading systems would have you going long in futures. Where the hedge would be is a mystery though, but probably outer months on the Merc. Anyway, the Merc drove prices up hard and fast.

When I was trading, I had no care about where the price was, as long as I had value.

I need to discuss this with my youngest daughter, who is also a former oil trader, to see how she views the market and where it’s going and how far. She used to have her own company that sold market information and projections.

So, you ask, how does this work. Well, the Merc (thanks to guys like me) drive the price straight up, which includes prompt month crude and products, and outer months as well. Some of that buying is speculation and some is based on fear of being caught short (not enough crude to run the plant). A refiner buying crude will have to pay the price to get the crude to make the gas and diesel, and they pass the increase on to you. This particularly impacts the refiner/marketers that don’t have their own exploration supply, they are forced to buy at the high prices or shut down. This type action bids the market upwards rapidly. The refiners that have their own captive supply raise prices because they can.

This could all be corrected if the idiot in the White House allowed or influenced an increase in production. Just the knowledge that production was going to actually increase would cause the traders to ease their buying in the fear of being caught long in a falling market. At the moment, this is a market where you want to be long on supply. The moment that psychology changes, prices will fall as fast as they rose. Unfortunately, there isn’t any market info at present or on the horizon that would suggest that you don’t want to be “long”.

People say that it’s all supply/demand. Well, it’s more complicated than that. I always said that 3 things rule market price - fundamentals (true supply versus demand), technicals (what the computers say), and psychologicals (what the traders think). Right now, I think psychologicals are driving price.

Traders make a lot of money if they are good, but pay a price for it. Stress drove me finally to a different livelihood, on the advice of my doctor.

603 I think this is the lightbulb I've been looking for. Thank you.

that's why when pasky says restarting the xl pipeline won't do anything for prices she is dead wrong. it would have and immediate effect.

Cochise in his first post line two, got the process correct, politics are delivered to the American people. cause and effect...... Biden got ahold of the playbook from Obama and the Clintons.

We Americans have enough oil and gas under our feet and have the know how to produce it to make us energy independent and not dependent on another country but we are being held hostage by an administration that is hell bent on converting us to green energy. What has changed in the past year? The oil and gas is still there that hasn’t changed it seems obvious to me we are being played.

Be cause liberals would give up sovereignty for a prettier view. Our energy, our food, everything... Hi NAFTA

I think there is truth in what you believe. I think the reason for allowing gas prices to rise long term was to push us toward electric vehicles. Russia’s actions accelerated the price increase unexpectedly, but this just benefits the administration’s not so secret plan. However, the law of unexpected consequences just might come back and bite them on the butt. Even the liberals are unhappy with inflation and extreme fuel prices. If we get the House and Senate back, we can stop further damage, but whatever new rules they come up with will have to be signed by Mr Liberal Potato Head in the White House.

Unless a 2/3 majority shoves it where the sun dont shine.

But money can be made at $60 a barrel.

I am in the business of finding oil. Companies hire us to figure out where to drill. I have been doing this since 1994. 2019 was our best year ever. 2021 was our worst year ever. The phones still are not ringing like I would expect them to be with the current prices. Most people I talk to attribute the problems to be lack of capital. The money guys that funded all these projects gave up on oil and are putting their money elsewhere.

From what I heard today all of these are unexplored leases, so the 9000 comment is meaningless. One has to ask why haven't the leases been bid on already? That should tell the story.

And that's exactly what they did.

They are going to [censored] us on this deal is all that really needs to be said.

Remember when Bush said he was going to open Anwar and end the ban on off shore drilling in 2008? Oil was at 145 dollars a barrel and crashed to 35 by January 2009. Word can make a difference.

I can offer up my experience with federal OGL’s in New Mexico. I owned and operated several leases (some on fed, some on state and some on fee ground) before selling them off about 5 years ago. I still continue to participate in wells over there, but it’s too tedious from a regulatory perspective for a small guy like me to operate anymore.

Eddy/Lea/Chavez County (I’m only using these because that’s where my direct experience is)

1- Federal leases only need to be nominated, then recognized by the BLM, and sold in an auction style sale. They are 10 year term leases. Additionally, even if the whole section is federal lands, typically they won’t let you buy a section at a time (even if you nominate the whole section) They’ll break it into 1/4 or 1/2 sections. My guess is where the “90,000 unused leases) comes from is a combination of multiple “leases” inside a fed section, federal that were speculatively leases over the last 100 years and not drilled, leases with plugged wells and leases with dry holes. I can 100% promise you there aren’t 90,000 unused leases in “oil country” or in places where we could drill commercially viable wells.

2- The Current Administration and Fed Lands- when oil and gas operators saw Biden’s disastrous energy policy in the campaign speeches, then saw he had a real chance to win, they/we went to work permitting wells. They permitted 5+ years of inventory, because the statutes wouldn’t apply to leases with ongoing operations (permits included). When Biden’s crew got in, they went to work countering this move by shutting down infrastructure, gathering pipeline systems, SWD’s, fresh water sourcing are now almost impossible to get permitted from the state or fed. They also have jurisdiction over much of this on fee land through their required permitting process. This means basically you can’t drill/complete new wells in any place this infrastructure isn’t in place. What is in place is stressed, and there is more demand for its use than there is available capacity/supply.

It’s impossible to drill a well in Eddy or Lea counties (the prolific counties) without having state or fed direct influence, and we know how that influence is being thrown around.

Yelp it's that simple.

Very educational thread. Thanks all!

Lots of good info. Thanks to all.

This is the biggest issue with domestic production being slow to respond to higher prices. These huge horizontal wells are expensive to drill and it is a lot harder to get funding to do it than before. For public E&P's they are no longer rewarded for high growth projects, they are still being pushed by the market to stay within cash flows and reduce leverage. Oil prices are cyclical and the last couple bust cycles are still fresh in the memories of the investors and lenders who lost their rear ends from some of those highly leveraged players.

We are seeing increases in rigs, but its much more measured this time. Lots of fear from the markets about over leveraging to chase the boom only to have OPEC open up and crash prices again like Bobo pointed out.

When oil is found in new areas it must be moved to refineries. This administration is anti pipelines so the doubt of new ones being built contributes to the lack of new exploration.

Biden policies are encouraging lending institutions from providing money to oil companies.

Biden canceled ANWAR exploration, drilling on federal lands, and offshore drilling.

Raising taxes on oil companies, and threatening throwing oil executives in jail also has an effect.

Despite Biden’s words, his administration is doing everything it can to slow oil production.