Drilling and the price of gas

[Traveler]

The White House has suggested that we talk with exec's in the gas companies to find out why they are not drilling more.  I happen to have two very good sources.  There is a gentleman in my ward that works for Sinclair oil company (a regional oil company in the west - also owns Sun Valley ski resort and Little America hotels) and I have a brother recently retired from Dominion (the natural gas company here in Utah).  I thought to share what I have learned.

Before anyone can drill they must have a drilling permit.  This is part of the right to develop mining and other resources.   The permit is issued by the Federal government offices (BLM).  It may be a surprise to some but if you own property that does not mean that you own all the rights to that property.  You must have BLM permits to drill (water or oil) on your own property or mine for other minerals.  If you were digging in your own backyard and found a giant gold nugget it would belong to the government unless you had the proper permit.  This is important to know in order to understand that if anyone (company) is ever issued a drilling permit - they never let it go even if it does not nor ever has produced a drop of oil or water.  It is also important to know that even permits of private land (thought easier to get) are 100% controlled by the federal government.

As much as someone expect that oil may be somewhere underground they will never know unless they drill and they cannot explorer without a permit.  Along with a drilling permit the government can also control the amount of product a person or company can extract with the permit.  When limits are reached a extension can be requested to extract more.  Companies that exist for the purpose of supplying our domestic product have gotten smarter over the years.  What does this mean?  For example, it is very expensive to develop a drilling site.  Access must be built for heavy equipment.  Expensive specialized equipment must be dedicated to develop and drill a permit site.  It is also interesting to learn that drilling sites are offered in bundles - the smallest bundles are 25 drilling sites.

Those that work for a living in the oil industry have learned that they must partner with a friendly government agency in order to make a profit.  Under the current administration there have been no new permits.  In addition there are many current permits that over the years have quit producing.  But no one wants to ever give up a permit - especially one that once produced.  There is a theory that oil is actually a renewable resource and that the earth is constantly rebuilding used reserves (but this is a whole other debate).   The result is that there are thousands of drilling permits (some with known oil reserves) that are currently not being utilized for the single reason that companies are unwilling to commit any more resources ($$$$) under a hostile government oversite for the simple reason that they do not want to go out or be forced out of business.  

It is very telling to me that even a company (public utility) like Dominion Energy recognizes that the current administration is hostile.  Such companies do not like to speak out in public because they must turn around and deal with the very government agency they criticize and I am told that the current administration is very interested in vengeance.  

I will now say something that is entirely my own opinion in this matter.  I do not believe for a second that carbon is an atmospheric pollutant any more than oxygen - both elements are necessary to maintain life as we know it on this planet.  I also do not believe that carbon ever contributes more than about 2% of the total increase in greenhouse gasses in our atmosphere - nor do I believe that humans are contributing even half of any of the increases in atmosphere carbon over the last 500 years.  If anyone believes otherwise - I would really like to see the data that indicates such.  I also believe that many within a certain political party have deliberately done all within their power to create a domestic shortage of oil and gas (including natural gas).  I will go so far as to suggest that a certain political party is delighted that there is a conflict in Ukraine to give them an excuse to blame Russia for current domestic shortages and costs - and that they are deliberately taking ever advantage they can to increase their political power to reverse the past where citizens thought to control their government bureaucrats and officers.  The proof I offer is simply the cost of a gallon of gas.  Anyone have a better explanation?

 

The Traveler

[NeuroTypical]

2 hours ago, Traveler said:

The result is that there are thousands of drilling permits (some with known oil reserves) that are currently not being utilized for the single reason that companies are unwilling to commit any more resources ($$$$) under a hostile government oversite for the simple reason that they do not want to go out or be forced out of business.

It is very telling to me that even a company (public utility) like Dominion Energy recognizes that the current administration is hostile.  Such companies do not like to speak out in public because they must turn around and deal with the very government agency they criticize and I am told that the current administration is very interested in vengeance.  

This makes total sense.  I heard Psaki's response of "oil companies have thousands of permits, go ask them why they're not drilling more", and this strikes me as an accurate telling of the rest of the story.  I don't think the administration is interested in vengeance, I think it's interested in forcing oil companies (and everyone else) to accelerate the "green revolution", so it's just raising artificial barriers to additional drilling. 

[Traveler]

7 hours ago, NeuroTypical said:

This makes total sense.  I heard Psaki's response of "oil companies have thousands of permits, go ask them why they're not drilling more", and this strikes me as an accurate telling of the rest of the story.  I don't think the administration is interested in vengeance, I think it's interested in forcing oil companies (and everyone else) to accelerate the "green revolution", so it's just raising artificial barriers to additional drilling. 

Even public utilities do not like to generate excess power.  Currently our power companies are at 90% or more capacity.   If there is a quick change to electric cars our current power compacity could not handle the load and the electrical grid would fail.  In addition, using current methods to generate electricity - it would be more costly to recharge cars than to fill a gas tank.  The only rational to current policy is that there is an effort to destroy the US economy with elements within our country.  I believe it is obvious who is trying to do this.  With all the talk about treason going on in political circles there should be no question where treason lies.  What bewilders me is why there is not more recognition in politics and a seismic shift in party memberships.  If anyone would explain this to me - I would be very interested.

 

The Traveler

[Just_A_Guy]

The way it’s been explained to me is:

1).  Drilling permits are good for ten years.  One of Biden’s campaign promises was to stop issuing new drilling permits.  Although he has not kept this pledge, oil companies fear that he may start doing so in the next year or two.  They have to hold enough permits in reserve to continue operations through the end of a hostile administration; they’re not about to blow all those permits with no assurance that they’ll be able to get more when they need them in 2023 or (should the gods curse us with a second round of Biden/Harris) 2027.

American oil’s current business model has the rare advantage of being both cautious and (given rising prices) insanely lucrative—and we expect them to increase supply (forfeiting their unprecedented short-term profit margins) and endanger their future operations, just to raise the short-term political prospects of a president who is on-record acknowledging that he hates their living, breathing guts and wishes they were all unemployed?

Yeah, no—not gonna happen.

The trouble with spending fifty years whipping up hatred towards a particular group of people is that sooner or later—they start to hate you back; and a few platitudes about “patriotism” at the last minute when the going gets tough typically doesn’t undo half a century of malice. 

2).  It’s not strictly a game of how much oil we can get out of the ground.  Ten or twenty years ago, US oil refiners largely gambled that most of our oil in the future would be “sour” (high-sulfur) oil from overseas; and they tooled accordingly.  North American oil is “sweeter” (lower in sulfur); and even if we pumped/drilled more of it, the capacity to refine it all domestically just doesn’t exist right now.

Edited March 15, 2022 by Just_A_Guy

[JohnsonJones]

The problem right now is not that we are not drilling enough gas, but pure and unadulterated greed.

We EXPORT 8.63 Million Barrels per day.  We IMPORT 8.47 million barrels per day.  Overall, we already drill enough to supply our own oil if we wanted to.

The price of OIL and Natural gas in Europe is being heavily impacted by the War in Ukraine and sanctions.  Those do not have (or should not have) a heavy impact on the US...YET.

The price of Oil and Gas in Europe should be rising astronomically...BUT...the prices in the US should NOT be as they are NOT even really affected by it thus far (well, they've been affected with a 1% change, but compared to the prices we've seen at the pump...that's actually negligible compared to the price increase).

Why has the price of gas risen then?

Simply put...because they can.  Right now, the demand is high enough that as long as they keep raising the price, Americans will buy it...so why decrease it?  They may be using the War as an excuse, but it's not the actual reason the price is rising so quickly.  It really boils down to the CEO's made up an excuse and are using it to jack up the price because they can...because we will pay it regardless..at least thus far.

The BIGGER question I have is whether this will hit us up for a recession.  Generally steep rises in the price of gas and oil is a fore telling of a recession that is incoming.  Last time a really steep incline happened I think was right before the 2008 Great Recession hit. 

Cause and effect...

[Carborendum]

On 3/14/2022 at 1:59 PM, NeuroTypical said:

This makes total sense.  I heard Psaki's response of "oil companies have thousands of permits, go ask them why they're not drilling more", and this strikes me as an accurate telling of the rest of the story.  I don't think the administration is interested in vengeance, I think it's interested in forcing oil companies (and everyone else) to accelerate the "green revolution", so it's just raising artificial barriers to additional drilling. 

With regard to the bolded: Here's what I'd tell Psaki.

• US oil companies are, indeed, drilling.  But they can't drill more than their current permits allow.  Nor can they drill in new locations. And you also can't get milk from a rock.  The rates of extraction are based on what is considered economical.  This is true for any nation, company, or oil find.  Bottom line, even with the "thousands of permits" our current resources are not sufficient to supply our own oil needs.
• One of the factors of "economical" is how much government interference there is.  OSHA and EPA regs are stifling.  While a lot of their rules make all the sense in the world, many of those "common sense" regulations are used as a bludgeon at levels that were clearly never intended.  So, get the wrong administration with the wrong head of EPA or whatever, and you basically make it unmanageable to drill anymore.
• There is also another quirk.  Our oil will not work with our refineries at the level we're talking about.  The types of impurities and the percentages of constituent parts of crude oil in US finds is much different than foreign crude.  The great majority of our refineries are made to separate the parts of foreign oil, but they would not be appropriate for domestic oil.  The only thing increasing our oil drilling would be that we can flood foreign markets with oil, thus reducing the overall price of oil worldwide.  And, yes,  that would affect our oil prices as well.   But don't believe that when we drill, we're somehow increasing the oil that is available for US refineries.  It doesn't happen that way.

Edited March 28, 2022 by Carborendum

[Still_Small_Voice]

On 3/15/2022 at 3:47 AM, JohnsonJones said:

Why has the price of gas risen then?

Simply put...because they can.  Right now, the demand is high enough that as long as they keep raising the price, Americans will buy it...so why decrease it?  They may be using the War as an excuse, but it's not the actual reason the price is rising so quickly.  It really boils down to the Chief Executive Officers made up an excuse and are using it to jack up the price because they can...because we will pay it regardless..at least thus far.

One of my co-workers said it like this halfway serious and halfway joking.  It is the law of supply and demand.  They have the supply and they demand you pay these high prices for it.

But domestic oil production has dropped since Biden came into office because of what he has done and is doing.  This has affected the over all supply of crude oil in the world and that will drive up prices.  (I do agree with you that we are being price gouged right now on gasoline though.)  But when Trump left the office of President crude oil was around $55 per barrel.  Now presently on March 25th 2022 crude oil is priced at close to $113.50 per barrel.

[Traveler]

On 3/15/2022 at 3:47 AM, JohnsonJones said:

The problem right now is not that we are not drilling enough gas, but pure and unadulterated greed.

We EXPORT 8.63 Million Barrels per day.  We IMPORT 8.47 million barrels per day.  Overall, we already drill enough to supply our own oil if we wanted to.

The price of OIL and Natural gas in Europe is being heavily impacted by the War in Ukraine and sanctions.  Those do not have (or should not have) a heavy impact on the US...YET.

The price of Oil and Gas in Europe should be rising astronomically...BUT...the prices in the US should NOT be as they are NOT even really affected by it thus far (well, they've been affected with a 1% change, but compared to the prices we've seen at the pump...that's actually negligible compared to the price increase).

Why has the price of gas risen then?

Simply put...because they can.  Right now, the demand is high enough that as long as they keep raising the price, Americans will buy it...so why decrease it?  They may be using the War as an excuse, but it's not the actual reason the price is rising so quickly.  It really boils down to the CEO's made up an excuse and are using it to jack up the price because they can...because we will pay it regardless..at least thus far.

The BIGGER question I have is whether this will hit us up for a recession.  Generally steep rises in the price of gas and oil is a fore telling of a recession that is incoming.  Last time a really steep incline happened I think was right before the 2008 Great Recession hit. 

Cause and effect...

You are correct in understanding that when the price of crude goes up (and all other factors remain the same) - those that supply the crude will make more profit.  I am not sure that you understand that the suppliers of crude do not control the demand - only the supply.  And the truth is - that in the USA the suppliers do not control the supply all by themselves.  Their access to the supply is controlled by the Federal Government.

Some facts you may have missed.  Oil companies are not going to spend more $$$$$ to drill than what they are going to make back in the selling of crude.  @Just_A_Guy has an excellent post of why the USA does not just pump more oil.  To do so will cost them significant investment with not guarantee of return - in fact the current administration is hostel towards the oil industry and has made this fact public.  This alone would justify them making as much as they can now knowing that profits will diminish - sort of the same idea Joseph made to Pharaoh about taking advantage of the 7 years of plenty in preparation of the seven years of famine.   Would you say that Joseph was a man driven exclusively by greed?

It is my personal view that there are individuals within the gas and oil business that are driven by greed as there is in just about any business endeavor.   I agree that much of corporate management is driven by greed but I also recognize that many good and honest people make their living working in the gas and oil industry.  If you have any good ideas of how we can as a society remove greed for profitable industries without disrupting the economy and causing declines in supply - I would be most interested.  BTW the part of the oil industry currently being most effected by current government regulations are the small independent operators.  It is likely that before the current presidential term is over there will be not small independent operations.   It is my personal opinion that this single fact - all by itself - should greatly embarrass anyone that voted for the current administration.  My question is - is this what you had in mind when you voted?  If not - has your mind been changed yet?

 

The Traveler

[Carborendum]

On 3/25/2022 at 12:46 PM, Traveler said:

Joseph made to Pharaoh about taking advantage of the 7 years of plenty in preparation of the seven years of famine.   Would you say that Joseph was a man driven exclusively by greed?

You hit the nail right on the head.

I don't really understand this accusation of "Price Gouging" in the context of the oil industry (or most commerce for that matter).  If they gouged today, that is because of greed.  But the lower prices yesterday was also because of greed?

While all commerce can be subject to isolated incidents of price gouging, it simply cannot be sustained on a large scale in the long term.  That's why we have competition in the market.  We open up the market as much as we can to encourage as much fair competition as possible.  This results in the "fair market value" of any good or service.

The only way this mechanism does not work over the long term is that it is not allowed to -- 99% of the time due to government intervention.  They make things "difficult" for big oil, while at the same time putting the little guy out of business.  Thereby ensuring that there is LESS competition, and price gouging is more likely.

Bottom line:  If we want to avoid price gouging, encourage more free competition.

Oil companies (as a percentage) don't really make much money.  It is only because the world consumes SO MUCH oil that the small percentage is quite a bit of total money.  So, that 50 cent increase in gas prices we've been seeing amounts to less than 1 cent of additional profit for the oil companies.

There is a "happy medium" where oil companies make the most money.  A few years ago, it was around $80 to $90 / barrel (Brent).  It was usually trading around $50 to $60 / barrel.  But as prices went above $100, it was not really "rolling in it".  Such tremendous profits are very short lived.

Prices go up, but producers have to ramp up.  That means adding more equipment.  Equipment costs money... yes, COSTS MONEY.  So the profitability is not as high as you'd expect.  Then immediately after all the equipment is bought and paid for, the price goes down again, and the equipment is basically idle.

Edited March 27, 2022 by Carborendum

[Carborendum]

On 3/25/2022 at 11:49 AM, Still_Small_Voice said:

But domestic oil production has dropped since Biden came into office because of what he has done and is doing.  This has affected the over all supply of crude oil in the world and that will drive up prices.  (I do agree with you that we are being price gouged right now on gasoline though.)  But when Trump left the office of President crude oil was around $55 per barrel.  Now presently on March 25th 2022 crude oil is priced at close to $113.50 per barrel.

Both Democrats and Republicans have a keen interest in selling US oil abroad and purchasing foreign oil for domestic use.  The only reason the current administration is making it difficult for domestic oil producers is NOT because of the environment.  It is because they want to strengthen the dollar abroad.

[Traveler]

11 hours ago, Carborendum said:

You hit the nail right on the head.

I don't really understand this accusation of "Price Gouging" in the context of the oil industry (or most commerce for that matter).  If they gouged today, that is because of greed.  But the lower prices yesterday was also because of greed?

While all commerce can be subject to isolated incidents of price gouging, it simply cannot be sustained on a large scale in the long term.  That's why we have competition in the market.  We open up the market as much as we can to encourage as much fair competition as possible.  This results in the "fair market value" of any good or service.

The only way this mechanism does not work over the long term is that it is not allowed to -- 99% of the time due to government intervention.  They make things "difficult" for big oil, while at the same time putting the little guy out of business.  Thereby ensuring that there is LESS competition, and price gouging is more likely.

Bottom line:  If we want to avoid price gouging, encourage more free competition.

Oil companies (as a percentage) don't really make much money.  It is only because the world consumes SO MUCH oil that the small percentage is quite a bit of total money.  So, that 50 cent increase in gas prices we've been seeing amounts to less than 1 cent of additional profit for the oil companies.

There is a "happy medium" where oil companies make the most money.  A few years ago, it was around $80 to $90 / barrel (Brent).  It was usually trading around $50 to $60 / barrel.  But as prices went above $100, it was not really "rolling in it".  Such tremendous profits are very short lived.

Prices go up, but producers have to ramp up.  That means adding more equipment.  Equipment costs money... yes, COSTS MONEY.  So the profitability is not as high as you'd expect.  Then immediately after all the equipment is bought and paid for, the price goes down again, and the equipment is basically idle.

 

10 hours ago, Carborendum said:

Both Democrats and Republicans have a keen interest in selling US oil abroad and purchasing foreign oil for domestic use.  The only reason the current administration is making it difficult for domestic oil producers is NOT because of the environment.  It is because they want to strengthen the dollar abroad.

Over the last few decades something interesting has happened to the oil industry.  To explain what has happened I will tell a little history story that is true.  Oil put Texas on the map and many thought that Texas has been over drilled for oil that the once rich oil reserves depleted.   One of the most productive  oil producing parsecs of land quit producing and the city of Dallas built an airport on top of it.  Two very bright engineers that had worked for years in the oil industry got together and started talking.  Together they came up with two very brilliant ideas.  In order to understand how brilliant their ideas were it is important to understand that drilling for oil is very expensive.  One of the problems was that once oil was found many holes had to be drilled to get the oil.  This is why when you pass a field producing oil you could see hundreds of this monster things rocking back and forth sucking the oil out of the ground.  Keep in mind each hole drilled goes down thousands of feet - sometimes as much as 20,000 feet (which is about 4 miles).   The pressure at that depth is a lot and requires specialized equipment.

The two brilliant ideas was first what is called directional or lateral drilling.   This allowed one deep hole to be drilled and from that single hole many sideway drilling to take place.  So that the many rocking things could all be replaced by one getting the oil of many - and in some cases hundreds.  The other idea is something called fracking.  I would guess that 90% of the citizens of this country have no clue what fracking is.  I will try to explain.  Crude oil does not sit deep in the ground in large underground lakes.  The earth's strata is not such to support underground lakes of oil.  Rather it is like a potato chip spread out thin over a large area with many levels (sometimes spread out in fingers).  As oil is removed from part of the area (or finger) the enormous pressures in the deep regions of the crust close off the various layers and fingers.

What fracking does is take very small but strong particles with lubricant and pumps these particles into the oil potato chip that keeps the rock formations from closing - allowing the crude oil to continuously flow.  As a side note and if it is not obvious I can explain in more detail why fracking is very unlikely to soil the water table or cause earth quakes -- any more than say a butterfly landing on a rock of the earth's crust surface. My only point here is that there is a lot of fear that can be generated from ignorance.

So what happened and the Dallas airport???  In a nut shell - a lot of unobtained crude oil was found - even more than what was initially discovered and all of can be extracted without touching the airport with directional drilling and fracking.  But there is a caveat - the equipment needed is very expensive.  So expensive that no one wants to drill unless they are very sure there is a lot of crude to pay for it.  As a side note - there is so much crude in old oil fields that some are suggesting that crude (poly carbons) may be naturally renewable.  We may never run out and the understanding and use of such resources may be necessary if we are ever to be able to reach a type or level I  Kardashev civilization.  

I am not sure how weaking a US industry that utilizes our natural resources strengthens the dollar domestically or abroad.  Perhaps @Carborendum can explain this.

But the US oil industry is only one industry being handicapped by our own ridiculous regulations.  It is very expensive to build a semiconductor fab.  I did most of my consulting with the few remaining 200 millimeter fabs.  300 millimeter fabs are much more productive and profitable so no one is building any new 200 millimeter fabs.  The technology (robots and tools) are all old and outdated.  But the processors for automobiles are all manufactured in 200 millimeter fabs.  These are the processors that are currently is short order holding up the supply chain for new cars.  Because of past and present government regulations - 80% of the 200 millimeter fabs in the USA have shut down as well as all the tech companies the make the robots and tools for 200 millimeter fabs.  Existing fabs are currently very profitable but it is almost impossible to build new without government support and tax incentives.  The salaries in such tech companies is very high - even for non-college skilled labor - which is a 6 figure income.  But without government support these jobs are all being shipped overseas.  The rhetoric and blame is mostly corporate greed.  Which in reality is a lie that is being told to the American public and I do not know why - and I also do not know why anyone is so gullible to believe it -- especially those that think of (or call) themselves as "liberal".

 

The Traveler

  

Edited March 28, 2022 by Traveler

[Carborendum]

A lot of stuff you said was correct.  I'd like to correct a few things that are either wrong or partially wrong.

16 hours ago, Traveler said:

fracking is very unlikely to soil the water table or cause earth quakes -- any more than say a butterfly landing on a rock of the earth's crust surface.

Fracking can actually cause earthquakes -- in California.  In Texas, it has been known to cause "earth movements" that are noticeable by neighboring parties.  But by the geological definition an earthquake, in Texas, that simply doesn't happen.

Fracking can theoretically soil the water table.  But there are regulations about what substances they can use in areas "close to" an aquifer.  I'm not sure of the details in that area.  But there are safeguards.

Quote

there is so much crude in old oil fields that some are suggesting that crude (poly carbons) may be naturally renewable.  We may never run out and the understanding and use of such resources may be necessary if we are ever to be able to reach a type or level I  Kardashev civilization.  

"May".  "Renewable".  Words mean something.

1) We really don't know how much oil we have.  The mechanism of "renewal" is that the earth is like a sponge.  We drain one portion of the sponge, and over time, the oil from other areas of the sponge permeate the recently voided space in the strata.  (omitting a longer-winded explanation of how this happens).

2) There is some finite limit.  But some theorize that the true untapped resources may be so massive that ... "there is enough and to spare."  But it only leaks out in economical quantities over time. 

3) If it is truly renewable, I could theorize how that could be (it very well may be).  But I'm not aware of someone who actually knows what they're talking about who has discovered such a mechanism in action.

Quote

I am not sure how weaking a US industry that utilizes our natural resources strengthens the dollar domestically or abroad.  Perhaps @Carborendum can explain this.

I'm not sure either.  I never said that.  Here's what I said.

Quote

...have a keen interest in selling US oil abroad and purchasing foreign oil for domestic use.

That has to do with the "petrodollar".  Look it up.

 

And, I don't know anything about the semiconductor industry.  So, I'll take your word for it.

Edited March 28, 2022 by Carborendum

[Vort]

19 hours ago, Traveler said:

The other idea is something called fracking.  I would guess that 90% of the citizens of this country have no clue what fracking is. 

I do! It's one of my go-to Wordle guesses.

[Traveler]

7 hours ago, Carborendum said:

A lot of stuff you said was correct.  I'd like to correct a few things that are either wrong or partially wrong.

Fracking can actually cause earthquakes -- in California.  In Texas, it has been known to cause "earth movements" that are noticeable by neighboring parties.  But by the geological definition an earthquake, in Texas, that simply doesn't happen.

Fracking can theoretically soil the water table.  But there are regulations about what substances they can use in areas "close to" an aquifer.  I'm not sure of the details in that area.  But there are safeguards.

"May".  "Renewable".  Words mean something.

1) We really don't know how much oil we have.  The mechanism of "renewal" is that the earth is like a sponge.  We drain one portion of the sponge, and over time, the oil from other areas of the sponge permeate the recently voided space in the strata.  (omitting a longer-winded explanation of how this happens).

2) There is some finite limit.  But some theorize that the true untapped resources may be so massive that ... "there is enough and to spare."  But it only leaks out in economical quantities over time. 

3) If it is truly renewable, I could theorize how that could be (it very well may be).  But I'm not aware of someone who actually knows what they're talking about who has discovered such a mechanism in action.

I'm not sure either.  I never said that.  Here's what I said.

That has to do with the "petrodollar".  Look it up.

 

And, I don't know anything about the semiconductor industry.  So, I'll take your word for it.

Thank you for responding.  Hopefully our discussion will draw some interest and bolster this website.  I am not a geological expert and must rely upon experts.  I will try to be both brief and yet supply sufficient to encourage research beyond political expediency.   It is believed that the carbon of this planet is central to life as we understand it.  Crude oil is a carbon based compound.  It was thought that all crude oil comes from organic carbon - or carbon that was once a particle of life (plant or animal).  You are correct no one has successfully charted the process from which crude oil is developed.  The process is theoretical. 

The earth by nature is quite active - the average number of earthquakes per day as about 36 or about 13,000 per year according to geological data.  Generally crude is found in areas with above average geological activity.  A number of experts believe this activity is necessary to trap and pressurize carbon to create crude oil.  There is a problem to prove that fracking is the cause of any earthquakes.  Even if earthquake activity increases in a place where fracking is taking place is not of itself prof that fracking is "THE CAUSE" of the quake. 

I will try to explain fracking a little better.  What happens is that a special lubricant (with particles) is pumped into the deep areas of the earth crust under very high pressure (in effort to match the pressure of the depth in the crust).  The lubricant keeps the pressure from collapsing the strata and preventing the crude reserves from being trapped in certain areas as the crude is removed from other areas.  For truth fracking should cause less deep geological activity than old fashion drilling (non fracking) or mining of anything.

As for soiling the water tables - it is much more likely that the drilling will harm water tables (which are only fractions as deep as the crude) more than the fracking itself.  And since fracking is a technology that requires far less drilling than the old fashion means - fracking is a much better way to obtain crude if someone intends to preserve water tables. A non political environmentalist should be cheering the advance of fracking and directional drilling.  Please note that both fracking and directional drilling is necessary to advance the industry - and yet no one hears a peep about directional drilling - I wonder why that is????

 

As for foreign trade and "petrodollars".  I think I agree but if that is the case (in essence trade balance) then we need to deport much more petro and import much less (or none) to offset our enormous trade imbalance in other economic areas.  Again I am not economist - but trying to make sense of the problem.

 

The Traveler

Edited March 28, 2022 by Traveler

[Carborendum]

1 hour ago, Traveler said:

The earth by nature is quite active - the average number of earthquakes per day as about 36 or about 13,000 per year according to geological data. 

Just to clarify for other readers -- Fun facts:

• The 13,000 number is based on how many are large enough to be felt within the region of the epicenter. 
• Sufficient to worry about endangering lives and property is much less (around 2,000 per year). 
• And the number of ANY level of earthquake that can be detected by today's seismic instruments is over 1 million.

1 hour ago, Traveler said:

Generally crude is found in areas with above average geological activity.  A number of experts believe this activity is necessary to trap and pressurize carbon to create crude oil.  There is a problem to prove that fracking is the cause of any earthquakes.  Even if earthquake activity increases in a place where fracking is taking place is not of itself prof that fracking is "THE CAUSE" of the quake. 

Again, some clarification:

    The organisms are usually trapped in sedimentary rock.  Then that organic matter is "cooked" by metamorphic action (usually tectonic activity).   But that has already happened millions of years ago.  Since then, the oil reservoirs could have moved into wide variety of geologic conditions today.

1 hour ago, Traveler said:

I will try to explain fracking a little better.  What happens is that a special lubricant (with particles) is pumped into the deep areas of the earth crust under very high pressure (in effort to match the pressure of the depth in the crust).  The lubricant keeps the pressure from collapsing the strata and preventing the crude reserves from being trapped in certain areas as the crude is removed from other areas.

That's part of it.  But there's more to it than that.  The high pressure is also used to crack rock. 

The following links provide a wide variety of conclusions about the environmental impact.  But all of them agree on what fracking actually is.

https://www.vox.com/2014/4/14/18076690/fracking

https://www.power-technology.com/features/what-is-fracking/

https://www.ipaa.org/fracking/

https://www.nrdc.org/stories/fracking-101

1 hour ago, Traveler said:

For truth fracking should cause less deep geological activity than old fashion drilling (non fracking) or mining of anything.

I disagree.  There are several different things going on in the activity.  And some of them have the ability to set off a fault.  However, the "releases" tend to be much milder than the big earthquakes we hear about.  And it may very well be (the jury's still out) that the small releases could prevent larger earthquakes in the future.  But this is only in areas of high seismic activity to begin with (like California).

In areas of low activity (like Texas) it is just the shaking of the earth by a very different mechanism than actual seismic activity.  And it would rarely do any real damage to property.

1 hour ago, Traveler said:

As for soiling the water tables - it is much more likely that the drilling will harm water tables (which are only fractions as deep as the crude) more than the fracking itself.  And since fracking is a technology that requires far less drilling than the old fashion means - fracking is a much better way to obtain crude if someone intends to preserve water tables. A non political environmentalist should be cheering the advance of fracking and directional drilling.  Please note that both fracking and directional drilling is necessary to advance the industry - and yet no one hears a peep about directional drilling - I wonder why that is????

I'm sure you'd agree that the entire green movement is not about the environment at all, but about government control over private corporations.  While it has done some good in creating a cleaner environment with some very common sense type measures, the continued push is going beyond reasonable levels of government intervention and public hysteria.

1 hour ago, Traveler said:

As for foreign trade and "petrodollars".  I think I agree but if that is the case (in essence trade balance) then we need to deport much more petro and import much less (or none) to offset our enormous trade imbalance in other economic areas.  Again I am not economist - but trying to make sense of the problem.

It does appear to be a little bit like robbing Peter to pay Paul, or a shell game.  But the underlying financial mechanisms are more about psychology than math.  And when we consider that mechanism, it means that the dollar is artificially held up as the world's most stable currency.

If it weren't for the petrodollar, we might have to do such unreasonable things as (gasp) balance our budget.