The Good of High Oil & Gas Prices (1 Viewer)

AsaPW

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I didn't read the article, but I don't think Louisiana has much Oil & Gas activity going on right now compared to other states in the Appalachian Region. There is alot of exploration being done in the East and Northeast parts of the country. Texas, of course, also has a lot going on. Louisiana, eh...some, but not so much. I could be wrong though.
 

blackadder

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This is why high prices are good for the Company and Louisiana or other states that are rich in the petroleum resources. Read and understand how the Oil market works in this article. It is very interesting.


http://www.houmatoday.com/article/20080113/BUSINESS03/139119117/1026

If oil prices spike further you really risk a much broader economic dislocation. Additional activity in our relatively small oil sector will not be enough to offset the broader damage to economy. There is not much room left for oil price increases before you see more negative economic impact.

Whatever revenue windfall the state enjoys from further oil price increases will largely be eaten up by increased outlays for unemployment benefits and by the corresponding fall in tax revenue from other business sectors in a slowing economy.

Moderation and stability in energy prices are what is in the best interest of the economy as a whole.

Only someone who actually has a direct financial stake in oil production, like yourself, would try to float the idea that expensive energy is a good thing for the economy as a whole.
 
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varanook

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I didn't read the article, but I don't think Louisiana has much Oil & Gas activity going on right now compared to other states in the Appalachian Region. There is alot of exploration being done in the East and Northeast parts of the country. Texas, of course, also has a lot going on. Louisiana, eh...some, but not so much. I could be wrong though.

I have a good idea of the refining side.

La. has a lot of upgrades going on or that are on the books. High oil prices mean pay raises for anyone working in the plants/oil and gas in the state. Plus there is a huge shortage of skilled craft out there in general making pay rates higher. But there is a shortage due to the work nationwide, not just here.

So yes, high oil and gas prices are good for many in this state and the state as a whole.

Wasn't Blanco trying to get a Kuwaiti refinery built at one point?

Exploration wise I don't have any clue though.
 
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Diabolik The Saint

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I have a good idea of the refining side.

La. has a lot of upgrades going on or that are on the books. High oil prices mean pay raises for anyone working in the plants/oil and gas in the state. Plus there is a huge shortage of skilled craft out there in general making pay rates higher. But there is a shortage due to the work nationwide, not just here.

So yes, high oil and gas prices are good for many in this state and the state as a whole.

Wasn't Blanco trying to get a Kuwaiti refinery built at one point?

Exploration wise I don't have any clue though.
She did try.
 

varanook

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If oil prices spike further you really risk a much broader economic dislocation. Additional activity in our relatively small oil sector will not be enough to offset the broader damage to economy.

Whatever revenue windfall the state enjoys will largely be eaten up by increasedoutlays for unemployment benefits and by the corresponding fall in tax revenue from other business sectors in a slowing economy.

Moderation and stability in energy prices are what is in the best interest of the economy as a whole.

Only someone who actually has a direct financial stake in oil production, like yourself, would try to float the idea that expensive energy is a good thing for the economy.

While I somewhat see the overall picture on how high energy could affect the entire economy in the state and the nation theere are other factors BA.

I also see the need for the money so the refineries and plants can make badly needed expansions, repairs and upgrades. It wasn't so long ago (the 90's) where the oils were consolidating and shutting down refineries due to profit loss. Jobs were lost/unable to be found and now there is a lack of skilled labor nationwide because for years the oils did not have the profits (or in some cases choose not to) to do anything but run off skeleton crews and bare bones maintenance.
It is not Americas right to have cheap oil and gas. It not big oil's fault that America is so addicted to oil either. It is also not big oils fault that America lives a pay check to pay check lifestyle.
I personally want to see oil rise further so that alternative energy will become a nation priority.
 

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If oil prices spike further you really risk a much broader economic dislocation. Additional activity in our relatively small oil sector will not be enough to offset the broader damage to economy. There is not much room left for oil price increases before you see more negative economic impact.

Whatever revenue windfall the state enjoys from further oil price increases will largely be eaten up by increased outlays for unemployment benefits and by the corresponding fall in tax revenue from other business sectors in a slowing economy.

Moderation and stability in energy prices are what is in the best interest of the economy as a whole.

Only someone who actually has a direct financial stake in oil production, like yourself, would try to float the idea that expensive energy is a good thing for the economy as a whole.


Agreed. It's amazing how much my grocery bill has gone up in conjunction with the increase in the price of oil. The school systems are starting to feel a pinch in terms of gasoline costs for the school busses...so do we increase school taxes or cut programs? Just a couple of thoughts that came to my mind in terms of how these constant increases in energy costs are affecting more than just my wallet at the gas pump.

Varanook, I understand your point, but at this point oil companies cannot claim profit loss as a reason to delay repairs/expansions of the refineries. But the money is there now, at least as I see it, since we keep hearing about record profits over the last couple of years. If the money isn't there for these upgrades, then I'd like to know what's happened with these "record profits".
 
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blackadder

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It is not Americas right to have cheap oil and gas. It not big oil's fault that America is so addicted to oil either. It is also not big oils fault that America lives a pay check to pay check lifestyle.
I personally want to see oil rise further so that alternative energy will become a nation priority.

We are between a rock and a hard place. The American consumer is leveraged to the hilt. The economy is slowing because consumers are squeezed, in large part by energy costs. Squeeze them with further energy cost rises at a time when home equity is falling and incomes are stagnating??

Consumption accounts for 75% of economic activity. While I agree with your above statements, the reality is that we have built such a debt-fueled house of cards of an economy that the kind of sustained increase in the price of oil that would make it economical to start tapping all these other energy sources -- or at least investing alternative technologies over loner period of time -- might also be enough to cause the consumer to retrench significantly further, which will result in a protracted period of slower or negative growth.

This could set in motion all kinds of scary economic scenarios in the wider US economy outside the LA oil and gas sector. Individuals with energy interests will get a windfall while the average consumer gets pinched. The results will alo be decidely mixed for governments because tax revenues from other sources, including income, will drop and entitlement spending will surge as employment slows.

In the long run some sort of "adjustment period" like this is probably unavoidable barring some miracle cold fusion breakthriough, or some similar technological leap. But we need to understand the significant risks of higher energy costs.

Diabolik is just shilling for his industry here. Since his personal livlihood is tied to oil he's perfectly happy with the idea of $5 a gallon gas. But it's not as black and white as he paints it.
 
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varanook

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Diabolik is just shilling for his industry here. Since his personal livlihood is tied to oil he's perfectly happy with the idea of $5 a gallon gas. But it's not as black and white as he paints it.

Yeah, I realized that plus I am an oil and gas guy too. I work in the plants though not on the exploration side.

might also be enough to cause the consumer to retrench significantly further, which will result in a protracted period of slower or negative growth.

Isn't this part of an up and down cycle normal to American economics? We need some downtime. I know it is going to hurt folks but better now than later, right?


I was just adding that high oil and gas is not all bad and there are good things to come out of it in addition to the really bad.
 

blackadder

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Yeah, I realized that plus I am an oil and gas guy too. I work in the plants though not on the exploration side.



Isn't this part of an up and down cycle normal to American economics? We need some downtime. I know it is going to hurt folks but better now than later, right?


I was just adding that high oil and gas is not all bad and there are good things to come out of it in addition to the really bad.

Up and down is normal, a business cycle is normal.

But these times are looking unique. The cumulative effect of past policies of trying to manage the economy and counter the normal fluctuations through Keynesian spending policies and aggressive interest rate cutting (we were at zero or negative real interest rates several years back, which ignited the housing bubble) have built up enormous imbalances in the economy in the US and worldwide.

The support of these imbalances has fallen to the American consumer. He/she is expected to increase consumption at a rate of least 3-4% annually in order to keep the Ponzi scheme going. If he does not, the foundation of the whole thing cracks.

What's new in the last 4-5 years is that consumer households have basically stopped saving in order to continue consuming and to service existing debt loads (the remnant of past consumption). We are in a precarious postion to endure anything more than a normal brief slowdown.

Check it out:

http://www.msnbc.msn.com/id/16922582/

http://www.cbsnews.com/stories/2006/02/07/business/main1293943.shtml

Latest statistics showed a US household savings rate of essentially Zero in Dec 2007. If you go back 15 years, that figure was 10%.

http://business.theage.com.au/bernanke-bush-fight-losing-war/20080225-1ulf.html

So, we are in new territory with extremely vulnerable consumer living paycheck to paycheck. If something happens to spike oil further, like somebody in the White House attacking Iran, the economic fallout could be severe, to say the least, because the price of oil will increase household costs across the board and there is no cushion to absorb the shock.
 
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Bless U Boys

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Exploration in the gulf is at an all time high. Go down to Houma and see the facility BP is building. Chevron has a major reservoir south of NO called Jack that is one of the largest ever in the gulf. Houston & NO energy related fields are only limited by lack of natural resources and qualified personnel. Like it or not, South LA and Coastal Texas are energy driven, and the current oil prices are great for the region. (and my wallet;) )
 

blackadder

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Exploration in the gulf is at an all time high. Go down to Houma and see the facility BP is building. Chevron has a major reservoir south of NO called Jack that is one of the largest ever in the gulf. Houston & NO energy related fields are only limited by lack of natural resources and qualified personnel. Like it or not, South LA and Coastal Texas are energy driven, and the current oil prices are great for the region. (and my wallet;) )

At this level, or ideally a little lower.

But if the price goes significantly higher, your job security may increase but your income may not keep place with the inflation that will result.

Individuals tied to oil will see a windfall, many many others will be hurt. For government finances, this would have very mixed result.

If you are hoping for oil prices to keep going up, be careful what you wish for because most people are already bumping up against the limit of their capacity to absorb more energy cost increases.

It's already starting to cause some serious problems in less well off coUntries:

http://www.nytimes.com/2008/02/25/w...y.html?_r=2&ref=world&oref=slogin&oref=slogin
 
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Bless U Boys

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I hope things stabilize, but with India, China, and countless others increased demands, I don't see how or why oil prices will fall. I just think this area has more to gain from the current situation than any other in the US. Which in the short term could help.
 

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