Why have $90 dollar a barrel oil when shale oil is so abundant?

analysis by genuine-friend.com

While there are indications of robust shale oil production in the US, the factors, such as the distinction between crude oil and shale oil, market reactions to potential supply disruptions, production costs, and the increase in drilling rigs, do not definitively suggest an oversupply of shale oil.

It's important to consider the complexities of the oil industry, including global demand, production costs, and geopolitical events, when analyzing the supply and demand dynamics of shale oil. These factors play a significant role in determining whether there is an oversupply of shale oil in the market.

To prove that politics, rather than technology, is keeping shale oil production in the US low, we can analyze the following points:

Political decisions and regulations can significantly impact shale oil production in the US. If there are strict regulations or policies in place that hinder the expansion of shale oil production, it can limit the growth of the industry.

Delays in obtaining permits for drilling and exploration activities can be influenced by political factors. If the permitting process is slow or restrictive due to political reasons, it can impede the development of shale oil resources.

Political decisions regarding subsidies and incentives for the oil and gas industry can affect the profitability of shale oil production. If there are changes in government policies that reduce or eliminate these incentives, it can deter investment in shale oil projects.

Political debates surrounding environmental issues related to shale oil production, such as fracking and water contamination, can lead to restrictions or bans on certain practices. These political considerations can impact the overall production levels of shale oil in the US.

Political decisions regarding trade agreements and tariffs can also influence the export and import of shale oil and related products. Changes in trade policies can affect the market dynamics and demand for US shale oil.

While it's true that US crude oil production fell by 150,000 barrels per day and overproduction was 680,000 barrels per day, this doesn't necessarily indicate an oversupply of shale oil. It's important to distinguish between crude oil and shale oil. Shale oil is a subset of crude oil, and these figures could be referring to crude oil in general, not specifically shale oil.

The fears of declining US oil production and outages in other countries can indeed push oil prices higher. However, this doesn't directly correlate to an oversupply of shale oil. These are market reactions to potential supply disruptions, not evidence of current oversupply.

Comparative inventories can be reliable indicators of oil-price change, but they are not the only factor. Other factors such as geopolitical events, changes in demand, and technological advancements can also significantly impact oil prices.

The cost per barrel of oil in the US is indeed higher than in Saudi Arabia. However, this doesn't mean there's an oversupply of shale oil. It simply means that it's more expensive to produce oil in the US, which could actually lead to less production if the prices are not high enough to cover the costs.

The increase in US oil drilling rigs could indicate the competitiveness of US shale oil, but it doesn't necessarily mean there's an oversupply. The addition of new rigs could be in response to increased demand or anticipation of future demand.

The prediction that US oil production will be the largest contributor to global oil supply growth over the next five years is a forecast, not a current fact. It's based on various assumptions and can change with shifts in market conditions, policies, and technologies.

In the context of the London oil trade and the influence of the IMF gas tax needs on oil prices exceeding $90 a barrel

The London oil trade is a major hub for global oil trading, with significant volumes of crude oil and oil products being bought and sold on various exchanges. Traders in London often react to supply and demand dynamics, geopolitical events, and market speculation, which can impact the price of oil.

The International Monetary Fund (IMF) may propose or implement gas taxes as part of environmental policies to reduce carbon emissions and combat climate change. If the IMF imposes higher taxes on gas consumption, it could lead to increased costs for oil and gas companies, potentially affecting the price of oil in the market.

If the IMF gas tax needs result in higher operating costs for oil companies, they may adjust their pricing strategies to maintain profitability. This could lead to an increase in the price of oil to cover the additional expenses incurred due to the gas taxes. As a result, oil prices could rise above $90 a barrel to offset the impact of the IMF gas tax requirements on the industry.

The London oil trade, being a key player in the global oil market, would reflect these changes in pricing based on supply and demand fundamentals, geopolitical factors, and regulatory influences. Traders and market participants in London would react to the IMF gas tax needs and their implications on oil prices, potentially driving the price of oil to remain above $90 a barrel.