Democratic governor warns against 'echoing Socialist Party lines' and forcing Big Oil

[IsailedawayfromFR]

Not sure what to make of this interview.  He seems to be advocating for a fixed price of oil so as to achieve stability.  That to me is not the marketplace but of socialism we will regret.

Gas prices in the U.S. keep going up and up, and Washington's Democrats have found a convenient scapegoat for the pain inflicted on American drivers — Big Oil.

President Joe Biden says oil companies “shouldn’t pad their profits” while crude oil prices fall. Meanwhile, Democrats are pushing for a windfall tax on oil profits, and industry CEOs may face a grilling in Congress next month.

Democratic governor warns against 'echoing Socialist Party lines' and forcing Big Oil to drill
Ben Werschkul
Fri, March 18, 2022, 8:06 AM
Gas prices in the U.S. keep going up and up, and Washington's Democrats have found a convenient scapegoat for the pain inflicted on American drivers — Big Oil.

President Joe Biden says oil companies “shouldn’t pad their profits” while crude oil prices fall. Meanwhile, Democrats are pushing for a windfall tax on oil profits, and industry CEOs may face a grilling in Congress next month.

But halfway around the U.S., the Democratic governor of an important oil-producing state has a different message: Oil companies might have good reason to be wary of amping up production.

“I have had several informal discussions and many of them tell me they're not planning on changing their plans. What they need for that is a couple of things,” Colorado Governor Jared Polis said in a new Yahoo Finance Presents interview.
First, oil companies need long-term price stability. If a company moves now, it could lose out if prices drop before new oil actually starts flowing. It “could be in six months, it could be in a year,” Polis says of the lag each company has to factor in.

The price of oil has indeed been highly volatile in recent years. When many Americans briefly drove less at the onset of the pandemic in 2020, the over-supply briefly turned oil prices negative. That shook up the industry and led to pullbacks on production we still feel today.

Even this week, the price of crude oil collapsed and entered bear market territory days after record highs.
https://finance.yahoo.com/news/democratic-governor-warns-against-echoing-socialist-party-lines-and-forcing-big-oil-to-drill-130622783.html

[DefiantMassRINO]

The enviro-Stalinists will demand that Colorado Governor Jared Polis be immediately purged from party and imprisoned in a woke re-education camp.

[catfish1957]

Not sure what to make of this interview.  He seems to be advocating for a fixed price of oil so as to achieve stability.  That to me is not the marketplace but of socialism we will regret.

I never reached corporate level status, but gave many presentations to them, and got to know them real well. 

If the Enviro-whackos and their legislative dim toadies do resort to full price fixing, Big Oil, will pull up stakes, and take their corporate governance overseas, and will take force-majeure on all contractual agreements and leases.

And in my voting proxy, I will vote 100% for it.

Selecting specific industries for punitive treatment?  Give it a try.

Hold Your beer after that........ 

[andy58-in-nh]

This is an example of what happens when the government micromanages economic policy. Specifically, businesses cannot make long-term plans because of unpredictable risks and political intrigue.

The "windfall profit" that socialists love to bitch about is nonsense. Oil and gas industries have had their ability to produce curtailed by government fiat, the costs of production and transportation have risen dramatically, and the return on future investment and development is impossible to predict because of price uncertainty and the risk of further disruptions. 

 

[catfish1957]

This is an example of what happens when the government micromanages economic policy. Specifically, businesses cannot make long-term plans because of unpredictable risks and political intrigue.

The "windfall profit" that socialists love to bitch about is nonsense. Oil and gas industries have had their ability to produce curtailed by government fiat, the costs of production and transportation have risen dramatically, and the return on future investment and development is impossible to predict because of price uncertainty and the risk of further disruptions.

Windfall profits taxation at the onset is a sham.  Back in the late '70's and early '80's big oil was diversifying and buying many things and companies that weren't even remotely oil releated.   Much better to take the hit on the balance sheet than waste it on government taxation.

That philosophy pretty much runs true in business, industry, and even n personal finance.   

[IsailedawayfromFR]

Windfall profits taxation at the onset is a sham.  Back in the late '70's and early '80's big oil was diversifying and buying many things and companies that weren't even remotely oil releated.   Much better to take the hit on the balance sheet than waste it on government taxation.

That philosophy pretty much runs true in business, industry, and even n personal finance.

It was worse than simply oil companies investing in non-oil related ventures.

I was an engineer during those times and I recall vividly "Old" oil vs "New" oil.  The feds thought encouraging investments into areas were "New" production could be gained would be rewarded vs existing "Old" oil production.

I plotted production graphs of our major producing fields and any oil below an extrapolated decline line were considered "Old" oil and that oil could only be sold at very low $/b prices whereas "New" oil above the line was rewarded with market prices which were significantly higher.

It was a nightmare to administer as one can imagine.  And it caused companies, in order to increase the per b profitability of its operations, to cease investments into existing fields in favor of looking for newer fields, causing an accelerated decline in the bulk of the production of those companies due to lack of investment.

It was disastrous and had the reverse effect that the feds wished it would by decreasing overall oil production, not increasing it.

The feds also did this for natural gas in a different way by a ceiling on gas prices that could be charged for gas fields dedicated to the interstate gas market,  Intrastate gas, or gas produced and sold wholly in Texas, was unaffected and could realize market price.  I recall sales prices of only 57 cents for interstate vs $1.80 intrastate.

Gas production from interstate fields suffered greatly as their declines accelerated as investments were directed to make more money in the intrastate markets.  In Texas, this caused astronomical price increases in gas supplied to cities and industries which hurt the state.

One can imagine how angry Texans were in having to buy artificially price-inflated gas and forced to sell to other states mandated low-price gas.

We have not forgotten our mistreatment by DC.

[catfish1957]

It was worse than simply oil companies investing in non-oil related ventures.

I was an engineer during those times and I recall vividly "Old" oil vs "New" oil.  The feds thought encouraging investments into areas were "New" production could be gained would be rewarded vs existing "Old" oil production.

I plotted production graphs of our major producing fields and any oil below an extrapolated decline line were considered "Old" oil and that oil could only be sold at very low $/b prices whereas "New" oil above the line was rewarded with market prices which were significantly higher.

It was a nightmare to administer as one can imagine.  And it caused companies, in order to increase the per b profitability of its operations, to cease investments into existing fields in favor of looking for newer fields, causing an accelerated decline in the bulk of the production of those companies due to lack of investment.

It was disastrous and had the reverse effect that the feds wished it would by decreasing overall oil production, not increasing it.

The feds also did this for natural gas in a different way by a ceiling on gas prices that could be charged for gas fields dedicated to the interstate gas market,  Intrastate gas, or gas produced and sold wholly in Texas, was unaffected and could realize market price.  I recall sales prices of only 57 cents for interstate vs $1.80 intrastate.

Gas production from interstate fields suffered greatly as their declines accelerated as investments were directed to make more money in the intrastate markets.  In Texas, this caused astronomical increases in gas supplies to cities and industries which hurt the state.

One can imagine how angry Texans were in having to buy artificially price-inflated gas and forced to sell to other states mandated low-price gas.

We have not forgotten our mistreatment by DC.

Thanks, I had no upstream production experience, but what you covered sure makes a lot of sense.  Seems the economic game betweem Oil and Government has been a high stakes game of Rock-Paper-Scissors for as long as I can remember, and at least as long as the early '70's oil embargos.

[IsailedawayfromFR]

Thanks, I had no upstream production experience, but what you covered sure makes a lot of sense.  Seems the economic game betweem Oil and Government has been a high stakes game of Rock-Paper-Scissors for as long as I can remember, and at least as long as the early '70's oil embargos.

Here's one of the bumper stickers I recall seeing on cars back then. The head of Western Company, Eddie Chiles, made tv commercials blasting the Easterners.


If you had heard of Eddie Chiles, he was one colorful individual.
https://www.csmonitor.com/1980/0710/071060.html