Texas Railroad Commissioner Fights Back Against Soviet Assault on US Oil Industry

Guest “Cold War jingoism” by David Middleton

Day 7 of America Held Hostage by CHICOM-19

OPEC secretary general invites Texas RRC’s Sitton to Vienna meeting

By JOE CARROLL, GRANT SMITH AND RACHEL ADAMS-HEARD on 3/20/2020

HOUSTON (Bloomberg) –One of the most powerful officials in the biggest U.S. oil state has been invited to OPEC’s inner sanctum in June in a rare rapprochement between two historically antagonistic crude powers.

Texas Railroad Commissioner Ryan Sitton said Friday he was invited by OPEC Secretary General Mohammad Barkindo to attend the group’s summer meeting in Vienna. But even as the surprise announcement reverberated across U.S. and international petroleum circles, Sitton’s proposal to curb Texas crude output for the first time since the 1970s ran into opposition from his own agency.

“While I am open to any and all ideas to protect the Texas Miracle, as a free-market conservative I have a number of reservations about this approach,” Wayne Christian, chairman of the Texas commission that oversees the oil industry, said in a statement. If Texas cuts supply, “there is no guarantee other nations, or even states will follow suit.”

[…]

“We all agree an international deal must get done to ensure economic stability as we recover from Covid-19,” Sitton said in a tweet after his conversation with Barkindo.

Although it remains little more than one man’s radical proposal at this point, the potential consequences of an OPEC-Texas agreement are hard to overstate. The cartel’s primacy over world crude markets is unrivaled; Texas pumps more than 40% of U.S. oil and as a standalone entity gushes more than every member of the cartel except mighty Saudi Arabia.

Such a tie-up would also confront Russian President Vladimir Putin with a formidable and heretofore unimaginable foe in using petroleum as a geopolitical weapon.

[…]

World Oil

While it would be a violation of anti-trust and a host of other laws for oil companies in the US to act as a cartel, and the Federal government has no authority to limit oil production… The Texas Railroad Commission does have rather broad powers to limit oil & gas production at the individual field level, although they have not wielded that power in decades.

Interesting, if nothing else.

Funny thing: The Texas Railroad Commission may have been the blueprint for OPEC.

A Few Notes

To anyone offended by the jingoistic tone of this post:

To anyone who doesn’t know what “jingoistic” means, get a dictionary.

  • I am totally fed up with the debate over what to call the virus/disease, so I will henceforth refer to it as CHICOM-19.
  • I don’t give a rat’s @$$ that the Soviet Union ceased to exist nearly 30 years ago. Stalin is a fracking Putinist… Or is it the other way around?
  • My “America Held Hostage” clock started on Monday, when I started working from home in Dallas, about 3 days before the company strongly urged and then more or less required it.
  • Furthermore, we had to make some very difficult decisions over the past week. And…

We have 19 more packages of toilet paper… Looking to trade all but one for a Lamborghini… Or one of those new Jeep Gladiator pickup trucks, all tricked out like Bill Murray’s in that Super Bowl commercial.

73 thoughts on “Texas Railroad Commissioner Fights Back Against Soviet Assault on US Oil Industry

  1. We should remember in the future what the Russians and the House of Saud did to affect the global economy whilst we are in the grip of panic caused by both the Wuhan Coronavirus and the collapsing price of oil. This is most certainly no coincidence that this happens right when we could afford this oil collapse the most. There would have been an collapse in the price of oil anyway just due to lack of demand, but now everyone will suffer even more due to dumping on global markets all this new oil by Russia and Saudi Arabia, most of it just coming out of stored reserves for immediate impact. The fact that President Trump has said little about the Saudi’s should have them quaking in their boots, since there is only about 2000 House of Sand Royal Family ruling the desert kingdom, and without American protection, all those inbred Saudi Royals will lose their heads.

    • What did the Saudis and Russians do? The Saudis wanted oil prices to go up during the crisis by forcing production cuts. Putin said no. KSA decided to act out and offered oil at much lower prices. Putin laughed and said go ahead. I filled up my tank for 40% less than my cost before this thing began. If that is Putin’s fault, I thank him.

      • You are obviously an unpaid Russian apologist troll. Hundreds of millions of people are suffering economically and this is hitting below the belt during a time of crisis by both the Russians and the Saudi’s. This is part payback for Russian sanctions that the majority of civilized nations agreed with for unacceptable behaviour in Crimea/Ukraine amongst other global mischief. Nobody, including the Russians or Saudi’s are making any money now and is just meant to throw a monkey wrench into the global economy during a global crisis.

        That the Saudi’s go along with this and dump their reserves on the market and increase production to purposely bankrupt North American Shale and Oil Sands producers shouldn’t be forgotten when hostile forces are wanting the heads of the Saudi royals on a pike. Same for the Stalin wannabe. We should tun our backs on Saudi Arabia for a few weeks and see how they fare without our protection. They wouldn’t have much oil infrastructure left, which would surely boost global oil prices. And get rid of that barbaric ‘royal’ family. That would be a twofer.

        • “That the Saudi’s go along with this and dump their reserves on the market and increase production to purposely bankrupt North American Shale and Oil Sands producers shouldn’t be forgotten…”
          Don’t worry, it won’t be.

          • I agree with TomB.

            As my favorite professor used to say, “When you have a bird in the hand, take it.”

        • The Saudi royals won’t survive long without Anglo merc protection, BUT the US $ won’t survive long without Arab oil & gas trade in non U$ currencies. Due to the FEDs endless QE printing dollars are worth less than toilet paper without Arab oil & gas trade back up in US dollars.

          Oil replaced the gold standard from ~1971 on wards for the U$.

      • Sorry. It looked right…and I actually thought about that for 1.5 seconds, and mistakenly thought that this must be one of those times it had to have an apostrophe. There is probably a grammar rule to go along with that. Where is Jeff Alberts when you need him.

  2. If it is ultimately in the interest of the U.S., then I have no problem with limits on Oil production – assuming the in the end more people (in the U.S.) are better off.

    The problem will always (of course) be that political interests and powerful companies that wield more political power will attempt to bend this to their enrichment no matter the impact to the U.S. – so I am always cautious, skeptical, and outright paranoid when the government (any government) tries to exert new control over something so valuable.

    Watch for the creation of a new “committee” full of non-elected bureaucrats. That is the sign that something is being corrupted by political power.

    • So you think it is in your interests to be forced to pay double/treble for something when you shouldn’t have to. WOW!!!!

      • Andy, if you artificially depress the price of a product to below production costs you are going to get less of it. The reason fracking took off was that OPEC controlled the production of oil and drove the price above U$D 100 per barrel. The introduction of fracking, combined with conventional production, says around U$D 5o to 55 per barrel is about right, and the price of products to consumer, adjusted by advances in the distilling/d8stribution services, will settle into the correct price. Here’s the real fact in both the Chinese Virus and Oil Wars combined event: thanks to President Trump the USA economy is best able to survive the economic difficulty while still providing the basics to the population. It won’t be fun, and some human tragedies are occurring, but survive and return to prosperity? Yes.

        • @Ron Long

          “The introduction of fracking, combined with conventional production, says around U$D 5o to 55 per barrel is about right, and the price of products to consumer, adjusted by advances in the distilling/d8stribution services, will settle into the correct price.”

          You do know that the shale sector has destroyed hundreds of billions of capital because it is NOT ECONOMIC, don’t you? The energy input needed to get a BTU of shale energy is greater than a BTU after the royalties are accounted for. That means that no matter what the cost is, shale makes NO SENSE outside of a few tiny core areas where wells are productive.

          As for the “correct price”, the unhampered market gives us that, not me, you, or the government. Note that government subsidies and regulations distort markets.

          • It really is fascinating how some people insist on believing things that are contra-indicated by the facts.

            Shale is so uneconomic, that they people doing it are making millions.

          • @Vangel Vesovski (03/22/20 6:09am): you have been bleating this same song since at 2012 over at Bishop Hill till Andrew Montfort got tired of you and here you are 7-8 years later and no one listens to you. As David Middleton pointed out a year or so ago. EROEI is a made up number that has no meaning in the oil and gas business. The only thing that matters is: ” can we drill a well at a cost that enables us to make a profit? ” It reallly is thaat simple!

          • I think Vasovski logic is amusing! Using as little information as he can, he’s come up with an improbable scenario, and then tries to sell it to a gullible audience. News Alert, Vinny: Few of the readers on this site are gullible. If you want results, get on the air with CNN or MSNBC. They eat your line of crap up, and will give you live interviews if you can convince them to not investigate. Use Avenatti as a model.

      • Yes Andy you should. Any crude coming into the USA from the Russkies or the Saudis should have a floating tariff closing the break-in price of our shale oil. Use that money to reimburse shale operators to cover their overhead of operation.

        • anti-dumping tarifs are a classically misguided step. the price is driven by russian and saudi (and others) oil largely satisfying other demands than the US although various refining and transport issues suggest its more economic to sell some US crude abroad and import some even though we have been producing enough for our own needs. flooding the world market with oil will discourage exploration and drilling of new wells and where actual production/transport cost for completed wells falls below market you might see some producers stop pumping and a modest uptick in imports.

          If this were a one way street, I might have more sensitivity to broader plans to stabilize this sector, but this is just the reverse of the premium that such domestic producers captured already when OPEC rei[g]ned in supply. I don’t recall oil producers sending consumers checks while that was going on and I’m not interested in a scheme for us to do the reverse. That isn’t anti-corporate or without sentiments for those caught in this geopolitical squeeze. If anyone from Texas had joined OPEC back in its glory dqys, we would have considered it verging on treason – just as it California’s efforts verge on being an independent state with regards to the Paris treaty and subvert American foreign policy.

          The market is telling us to pump less oil. Price supports for wells that are already producing doesn’t address that the industry has a complex horizontal complexion and that exploration and drilling of new wells is going to all but stop for the time being. The industry has endured booms and busts forever and has the capacity to ramp up and down. There is zero sense to bringing it under the too big to fail banner at this point. Unless you view fracking the way the FDR viewed the CCC we have to ride it out. Already the industry was working overtime on what to do with excess natural gas production. What we could do is stop blocking pipelines and remove stupid regulations that are increasing costs and decreasing margins, not add to our interventions. That has been the genius of this administration although they can hardly have completely untied the Gordian knot in the time they’ve had.

  3. There is speculation that OPEC won’t last much longer. So why get involved with an organization that might not be around much longer?

  4. Hi David. Just my two cents here. Mid teens WTI prices seem inevitable as North American storage fills to max by the end of April. We have to price to export cheaper than highly discounted Saudi oil (US export will drop 70% by the third week or April) or shut in production on an epic scale if we can’t export. Pretty ugly.

    Alberta has shown us that actual production thresholds are hard to implement and SEVERELY damaging on capital inflows (who wants to invest in a producer that can’t grow production because of government imposed caps?). Poorly run producers benefit and efficient quality production pays the price.

    Also, the fact it’s even somewhat likely it happens anyway it amazing.. OPEC+ cuts a deal with Texas or the US to limit production in the face of devastation. If this happens it is an unequivocal massive victory for Saudi Arabia.

    I’d rather look to a well thought out government subsidy than caps. Once you give the capping power you can’t get it back. But dark days regardless. Either way US production looks to be 1-2.5mmbpd lower by 2021… we need to start consuming again.

    • This spot market price is, if only briefly, is within the range of realistic possibilities…

      https://www.youtube.com/watch?v=2V3CfD8TPac

      That said, most oil companies have at least some of their 2020-2021 production hedged at anywhere from the mid-$40’s to high $50’s.

      The Texas Railroad Commission already has the power to limit production. It hasn’t used that power since the 1970’s for oil production. I remember from when I worked East Texas back in the 1980’s, that the Railroad Commission frequently curtailed natural gas production.

      • If one were to purchase oil at a negative price and finance that purchase at a negative interest rate, it seems like one ought to be able to make a profit.

        • That is my thinking also. Canada and the USA should quadruple the Strategic Petroleum Reserve with massive physical storage and be buying all this cheap oil at $25-$30 a barrel, and then selling it at $60 in the future to maintain a range that no cartel or single nation can mess with. North America could achieve this mainly alone, and if Venezuela could be brought back into the hemispheric doctrine, then we could set a global benchmark price that ensures a stable domestic industry while being in control of the majority of the worlds oil reserves, and not subject to the whims of dictators and despots.

    • Nonsense. The TRC mostly went away when American production peaked in the early 1970s and producers were allowed to sell all that they could. We don’t need the government to rob consumers or taxpayers by initiating tariffs or subsidy programs. What next; subsidize avocado farming because the Mexicans can produce them cheaper?

      • The Texas Railroad Commission regulates all oil & gas activities within the State of Texas and its offshore state waters. All wells drilled and produced have to be approved by the TRCC. They also establish allowable production limits for all producing units. They have more regulatory power within the State of Texas than any federal agency has over federal leases.

      • Vangel, for several years in the 70’s, the governments of the US and Canada collaborated to fix the price of North American oil at $30/bbl to prevent collapse of the the industry, and windfall-taxed the profit away from importers, plus filled the national reserve using tax dollars, which is the only action announced so far. A little totalitarian to some folks, but stabilized industry, energy costs, and the economy. That went away when the world price rose above $30 again. Where are those prescient thinkers today?

    • Why should we do either?
      If some of the energy companies end up going bankrupt, it’s not as if the wells and equipment evaporate.

  5. It seems to me that Putin’s position in all this is not that strong. Russia’s economy (I understand) depends very heavily on oil. Putin tried to make Saudi pay the whole price for excess supply, but Saudi wouldn’t bear the whole brunt and hit back. Yes it does hurt US producers, but just maybe Putin will have to blink first?

    • Sorry, Mike but you got the story wrong. The Saudis wanted a higher price by making Russia cut its production. Putin said no and had no problem with the market setting the price. The Saudis blinked and cut prices well below the cost of marginal production. That means too little revenue to fund the social welfare programs and likely political turmoil in the future. MBS will lose support and is likely to be replaced at some point in the future. If there is a successor that the public accepts and if SA survives that successor will owe Putin. But even if there isn’t, the Petrodollar Standard is now on the brink and the US may be looking at the UK model after Bretton Woods. Say goodnight Gracie. Lying about the shale miracle did not work out too well.

      • The Saudis blinking would have been to curtail production to prop up the price, without Russian support. This was definitely not blinking, but doubling down that the Russians need oil money more than the Saudis. Either way, Texas will produce less oil because the uneconomic wells will be shut down for a while.

        • The oil industry has always been boom or bust. Used to be as oil went so the Texas economy went, but that has been gradually changing because of the fast pace of growth of other industries in the state over the last 20-30 years.

          • >> The oil industry has always been boom or bust.

            Feast or famine always seems to be the case for any type of manufacturing.
            Sometimes sales will be just right.

  6. Do any of you have any idea just how much oil Russia has?
    Or how big Russia is?
    They may be a shambolic third rate country.
    But playing ‘dare’ with them on the oil front is plain silly.

    • Charles,.

      The Russians are more vulnerable than you think. About 1/2 of Russia’s total GDP comes from the sale of “fossil fuels”. Over 1/2 of the total revenue the Russian government takes in comes from those sales. Anything that cuts down on profit from the sale of “fossil fuels” Directly effects the Russian government. Without fossil fuel sales Russia would be truly a third world sewer.

      The added benefit is pushing the Russian and Chinese ally, Iran, ever closer to the brink.

      When it comes to geopolitics many Americans have no clue at all. They think that when we put our Navy to patrolling in the Straits of Hormuz and the gulfs that we’re just sending Iran a message. Reality is we’re also sending the oil dependent Chinese a message also.

    • Do any of you have any idea just how much oil Russia has?
      Or how big Russia is?

      Not as big as the Middle East or North America, in terms of petroleum resource, and they have a higher breakeven price:

      Breakeven prices and resource bases. Source: Rystad Energy (Click to enlarge)

      Russia’s average operational breakeven price is $13/bbl higher than U.S. “shale”. Furthermore, their resource base (width of the bars in Figure 2) is much smaller than the Middle East and U.S. “shale”.

      In order to balance their national budget, Russia needs >$40/bbl.  The Saudis need anywhere from $70-$100/bbl to balance their national budget.  The Saudis’ greatest strength here is their ~3 million bbl/d excess production capacity.

      The US has no national breakeven price.  As a nation, we aren’t dependent on oil export revenue.  Although, most US oil companies will struggle if oil prices remain below $50/bbl for more than a year.

  7. MBS is playing a dangerous game. Saudi total foreign reserves will be gone in less than 2 years at these prices. If the House of Saud can no longer afford to pay the masses in Arabia not to work, the masses will be looking for him with a rope in their hands.

    At this point there is really nothing OPEC, Russia or the Texas RRC can do to support prices. The demand destruction is simply too high. The only way life for producers improves is when the world gets back to normal. Its anyones guess when that happens.

  8. It’s kind of interesting that OPEC invited Sitton to speak. He’s a lame duck. He lost his Texas primary election on March 3.

    Why not invite former Texas Governor and former Department of Energy Secretary Rick Perry? Perry probably has more stroke with the Trump administration and would be a better liaison to the US.

  9. While Putin is trying to reassemble the Soviet empire, and his policies often resemble those back in the USSR, he is still president (possibly for life) of the Russian Federation. So might want replace “Soviet” in the title with “Russian”.

  10. The US shale industry is dead. Massive layoffs and bankruptcies are going to happen. Trump and Perry launched an all out attack on OPEC, and won. But what have they won? They devastated themselves!

    I’m sorry to say it, but Trump and Perry caused a shale oil version of the financial crisis. (cheap money, no oversight)

    The is every reason to think the stock market will go back to 2010 levels. Bedsides, a virus caused depression is likely on top of the oil issue. Only the anti malaria drugs can stop it.

    If the Dems could recruit Gov Cuomo, Trump and the Repubs would be tossed out. Shale has been the grossest mismanagement in history. Perry and Trump declaring war on middle eastern states, and Russia, and not expecting a fight is stuuuupiidd. It is not a game for them, it is survival.

    OK, the USA could withdraw its Patriot missiles and allow Iran’s proxies to wipe out SA oil production. That’s the old fashioned way.. start a war.

    • EdB,
      How is becoming energy independent some how disastrous? This coronavirus hiccup will pass. The entire event is unfortunate, but the USA will survive. This event was and is a wake-up call to our political class, the elites and the globalists. Although not a conspiracy type, the Chineses behavior in this entire mess was reprehensible and deliberate in their delay in informing the world of what was happening in their country. This was their attempt to undermine our economy and to ruin the Trump Administration. This event exposed weaknesses across our society which our government at the state and federal level must correct. China will come out of this event weaker, because it will be time for the USA to decouple from China and bring “strategic” manufacturing and the supply chain back home. China is no friend a strategic enemy. We ought to treat them as such. Rewarding won’t improve their behavior contrary to what was said years ago, “China behavior will change and become freer, friendly and part of the world community.” Those were comments made by politicians who favored “favored nation status” for the chicom’s.

      • “Those were comments made by politicians who favored “favored nation status” for the chicom’s”

        Because they failed to read Michael Pillsbury’s “The Hundred-Year Marathon” subtitled “China’s Secret Strategy to Replace America a the Global Superpower”.

        • Because they failed to read Michael Pillsbury’s “The Hundred-Year Marathon” subtitled “China’s Secret Strategy to Replace America a the Global Superpower”.

          Or they did read it and decided to join the ChiCom’s side, thinking that they would get in on the ground floor and ride it all the way up.

          Arrogance.

          • You’re right! It’s always pissed me off to see American corporations move their production to China. I’ve always considered them traitors.

      • “How is becoming energy independent some how disastrous? ”

        I never said that did I?

        I said that too much growth led to forcing cuts in SA and Russia. The mad Texans thought they could export more and more and cut into SA production.

        Now they reap the whirlwind. To find the most stupid CEOs in the world, go to the US shale oil industry. SA costs per bbl are what, $8? Did the Texans ever take math?

  11. Some people here should lighten up on loosing the heavy hand of government when the silent hand of the market will take care of things quite effectively. Long before oil demand collapsed With the COVID-19 overreaction, the oil markets were oversupplied and many shale drillers were over leveraged awaiting the grim reaper. These zombie companies will be swallowed up.

    Time is inexorable. The COVID crisis will pass, the economy will sputter back, demand will pick up and most importantly, we just might learn something from this grotesque event.

  12. Jingo-Dave, Jingo-Dave, Jingo all the way.
    Oh what fun it is to laugh at what you say.
    .
    regards, King Salman

  13. Russia is lightly explored.

    For that reason, is it not reasonable to think its hydrocarbon reserves are greatly understated?

  14. It is increasingly clear that the Saudis did it, and why.
    In particular, MBS is concerned now that Trump won’t get re-elected – meaning he’ll no longer have any major allies in the world. He has to get everything in order before the November election – principally getting officially seated on the Saudi throne. Note the arrests of his rivals occurred right before the OPEC+ meeting.
    But it seems you aren’t concerned with geopolitical details as opposed to jingoism.

  15. We cannot let a crazy price war between Russia and Saudi Arabia destroy our domestic production.
    We need a tariff on imported oil equal to half the delta between $50/bbl and the listed price of Brent crude. With Brent crude currently around $27.50/bbl, that would mean a tariff of $11.25. That would lift the WTI price above $30/bbl. $30/bbl is much better for our domestics producers (and their employees) than less than $20, yet still represents an historically low price for consumers.
    We need something similar for natural gas – set a floor price by creating an excise tax equal to $2.00 minus the current price.

    • A price war can’t destroy our domestic production.
      It may cause a few companies to go bankrupt, however the wells and infrastructure still exist.
      They will be bought by somebody and life will go on.

      • It will tank our production until prices rise to levels that justify drilling. We will very quickly become more dependent on imports from OPEC+ nations.

        • Dependent????? that presumes that we couldn’t ramp production in the US when the price rises. where is your evidence for that David?

    • The problem is that nearly half of our gross crude oil imports come from Canada and Mexico. A better short term strategy would be to prohibit imports from OPEC+ nations for 6 months to a year.

      • “A better short term strategy would be to prohibit imports from OPEC+ nations for 6 months to a year.”

        I spent 20 minutes reading these comments and finally, someone said it! What took so long, folks?

        Thanks David M.

      • A better short and long term strategy would be to do nothing. Low oil prices benefit the US economy as a whole because energy is an input into virtually everything we buy. If we become net importers again it just means that we can buy oil from someone else cheaper than we can produce it. Yet, we know that we can readily become self sufficient again when the price rises. Canada and México will always sell us their oil because we are the closest customer. The government does not need to worry about low prices or high prices. The cure for low prices is low prices. Likewise, the cure for high prices is high prices. Low prices may cause some companies to go out of business, but when prices rise someone else will buy the assets at a discount and produce the oil.

  16. To students of Russian History. It is the Soviet Union that was the departure from the archetype. That is Ivan Grozny (Ivan the Terrible). A Russia that is imperialistic, autocratic, xenophobic, and paranoid is the norm that Ivan established 450 years ago. The Soviet Union was a rotation of elites, and a bunch of cosmetic changes imposed by the Westernizers but not a fundamental change in the structure of Russian life. Putin is a reversion to the the older type. So he is continuous with Stalin in that sense, but both of the traveled on tracks laid down by Ivan, Peter, and Catherine.

  17. Jingoism? See Base Commander Jack D. Ripper (Dr. Strangelove) :
    Mandrake, do you recall what Clemenceau once said about war? … He said “War is too important to be left to the generals.” When he said that, fifty years ago, he may have been right. But today war is too important to be left to the politicians. They have neither the time, the training, nor the inclination for strategic thought. I can no longer sit back and allow Communist infiltration, Communist indoctrination, Communist subversion, and the international Communist conspiracy to sap and impurify all of our precious bodily fluids.
    Mandrake, come over here, the Redcoats are coming!

    The insanity in the US about Russia is close to ex-British Prime Minister May idea that the Russians Novichok nerve agent got into their precious bodily fluids!

    I am beginning to think that fracking petroleum is a precious bodily fluid?

    That’s taking petrochemical engineering a bit too far, what?

    Now Wall Street’s “loosey-goosey” financial policies reported by Wolf Street, might be more about “precious bodily greenbacks”, but that is stretching an already stressed narrative, what?

  18. Last Thursday Russia blinked. They precipitated this oil price crash by refusing to cooperate with the Saudis, so they knew the exact timing, probably shorted the shares of energy companies in the west, made a fortune, and now want to get their oil revenues back to normal.

    They probably also bought back in at the bottom of the market and will make another fortune as shares goes back up.

    When you know what is going to happen and when, you can make a lot of low-risk money.

    Regards, Allan

    Posted Thursday March 19, 2020
    https://wattsupwiththat.com/2020/03/17/an-effective-treatment-for-coronavirus-covid-19-has-been-found-in-a-common-anti-malarial-drug/#comment-2941340

    KREMLIN SAYS RUSSIA “WOULD LIKE TO SEE CRUDE PRICES HIGHER”
    By Dina Khrennikova, Ilya Arkhipov and Olga Tanas on 3/18/2020
    https://www.worldoil.com//news/2020/3/18/kremlin-says-russia-would-like-to-see-crude-prices-higher
    [excerpt]

    “We’re very closely monitoring the situation on global oil markets, analyzing the situation, trying to make forecasts for the near- and mid-term future,” Peskov said. “Russia will form its position on any potential new cooperation with OPEC depending on the outcome of the analysis”, he said.

    I ran an oil project in the Former Soviet Union that was later sold to the Chinese for US$4.2 billion. Let me translate the above Russian political statement into English:

    “Ve are losing our a$$es and ve vill do anyzing to get higher oil prizez!!!”

    In short, Russia just blinked. They precipitated this oil price crash by refusing to cooperate with the Saudis, so they knew the exact timing, probably shorted the shares of energy companies in the west, made a fortune, and now want to get their oil revenues back to normal.

  19. That the TRRC could again do what they did in the past is a fact.

    As I remember, Texas wasn’t the only state that prorationed. Louisiana did it under the guise of ‘allowables’. Potential tests were the starting point for allowed daily production but there were field wide limits as to daily production, no matter what they would make. Call it ‘field rules” or call it “curtailment to manage well-head prices”, call it whatever you want, but it was still prorationing.

  20. This country was built on cheap energy.

    I hated it when the Media and Wall Street was all giddy when oil hit $100/barrel.
    All heavy manufacturing starts with energy and raw materials.
    The more expensive the commodities, the more expensive the product after
    4-5+ tiers of production.

    They don’t seem to get that high energy prices hurts everyone else.

  21. This is hilarious. Putin reviled for being a communist for behaving, correctly, like a good free market capitalist. I Approve of this comment, mine, because I’m a wild free-marketeer.

    Wouldn’t it have been improper to deliberately restrict production in order to raise the price. Sounds illegal to me as well as immoral.

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