This is a very knowledgeable and experienced group of individuals. I would like to hear your opinions on WTI and natural gas pricing as a result of the recently proposed tariffs. I sincerely don’t intend this post to turn this forum into a political discussion, but rather a solicitation of the participants’ objective opinions on commodity pricing.
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Just an excuse to raise prices and blame it on Trump!
Lee, This depends on on several factors( including Americas rising need for oil and how much LNG we export to othe countries. However as the Pres himself said we will no longer be importing oil from other countries as Biden did , for America has more oil and natural gas than any country and with more freedom of innovative tech to find and discover oil fields ( as Mother Nature has ways of hiding what beneath even with our most innovation seismic systems currently used) as the owner of the Boring Co has found , along with some of the bigger independent oil men in Texas( hence the need for more wildcatters currently) Most likely outcome will be increase revenue for industry and the mineral owners also in the upcoming future , but this alll has to do either global market demands, geo-political trends and how other countries respond to tariffs . Also Refining cost from Mexico…. Which all have and affect the American Oil producer. However currrent market analysis for Us is higher production and more drilling in the next couple of years. I hope this helps Sir . Thank You and best wishes for us all
Tariffs are one of a dozen price variables … global economic growth, EV adoption, production volume worldwide, pipeline capacity, sanctions, peace in Ukraine, etc. Hydrocarbons are fungible, if China stops buying American, China must buy from others, forcing others to buy American, and China is already in bed with Russia. I doubt tariffs will outweigh fundamental supply/demand factors, unless tariffs trigger a full blown global trade war causing global recession. That said, economists blame American tariffs in 1930 & global trade war as the reason the Great Depression was “great”.
Traders recently attributed a $2-$3 bbl price drop on a combination of China’s economic malaise, looming China tariffs, and rising inventories, but personally I sense China’s economic slowdown is the major factor and Europe seems to be in recession due to expensive gas imports. Possibly, foreign countries might impose tariffs on American LNG, although countries might be reluctant inasmuch as they need our LNG.
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On a macro basis, this creates a protected market. Foreign producers will seek the most economical market for their production regardless of tariffs. This may create disruptions in the US markets due to US producer supply contracts with foreign countries/companies. Mexico and Canada are the dominate importers for the US markets. Market disruptions generally lead to price volatility.
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a couple of thoughts.
(a) my view is that this won’t impact much. oil is a global commodity and price is influenced more by supply and demand vs tariffs. open to being wrong here, as I’m not sure we’ve ever imposed tariffs on imported oil in my lifetime (maybe the 1970’s oil embargo???)
(b) second thought is just a comment responding to @JoeBrent1
However as the Pres himself said we will no longer be importing oil from other countries as Biden did
notwithstanding what our president said, we will continue to import oil. the issue is not one of domestic supply but rather one of crude quality. many of our domestic refineries require heavier crudes than what we produce in the US and so have to import from both Canada and Mexico. so even though the US currently produces enough to be self sufficient we will continue to both import and export crude.
You folks are good! It is my understanding correct that US based refineries were designed and built to process specific grades of crude oil, both light and heavy. If the US were to be energy independent, it would require massive capital investments by oil companies since we primarily produce light crude. That seems to be a factor that would negatively impact consumer prices.
Refineries are built for the available crude supply. If the economics exist, they can be modified for different supplies. Energy independence is a concept, but is it practical? Consumers believe that independence will lower prices, but the opposite is most likely true. US consumption and domestic supply would be very close to attaining a balance with an Independence protocol. Supply has to be maintained and increased by way of CAPEX related to horizontal well development which has a rapid half life. If US crude is limited to only the US market and there are no imports, does that affect the market price volatility? COVID made people much more aware of supply chain and consumption disruption.
mostly heavy - but this is correct.
If the US were to be energy independent, it would require massive capital investments by oil companies since we primarily produce light crude
pretty sure the US has built no new refineries in over 50 years. the regulatory hurdles are very steep, so folks just do expansions. that said, quite a number of older refineries are shutting down due to economics and age of equipment. you may have seen the announcement in the past month or so about the Lyondell refinery in Houston.
America’s last major refinery opened in 1977, Chevron CEO predicted no major refineries will ever be built again in the U.S. (predicted last year before Trump won). The only big new refineries are in China & Persian Gulf, a worrisome trend.
Correct term is “net importer”, U.S. will always import some heavy oil and export light oil. The wonderful thing is we aren’t importing half our needs from countries that hate us.
Bottom line is nobody can predict the future especially commodity prices. Traders label NatGas the “widowmaker trade” because so many experts lost their shirts speculating on gas price.
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@David_Meinert 1977 was the last new refinery.
Most refineries we use are in Mexico