Post by sharksrog on Nov 25, 2021 19:37:50 GMT -5
I realize the subject line here sounds like sour grapes against Donald Trump. The "headline" is true, but I don't want anyone to think I believe Trump made a mistake here. IMO he made exactly the right decision in April, 2020 when he brokered a deal between Russia and OPEC to cut oil production by 10 million barrels per day. I realize that sounds drastic, but the pandemic had cut a huge gash in gasoline demand, and the oil market was collapsing. Trump's move put stability back in the market. IMO it was the right move.
The problem now is that while oil production has since gone back up, it hasn't gone ALL the way back up -- whereas demand for gasoline has. What determines gas prices? Good old-fashioned supply and demand. Demand is back up to right around pre-pandemic levels, but worldwide oil production is down 3.8 million barrels from where it had been originally. High demand coupled with low supply equals high gas prices, as has virtually always been the case.
To put the 3.8 million barrel shortfall in context, President Biden is now talking about loosening the strategic oil reserve of 50 million barrels. That sounds like a lot, but it would replace a 3.8 million barrel shortfall for less than two weeks. I don't know enough about it to know if freeing the oil reserve right now makes sense or not.
I'm not BLAMING Donald for the high gas prices. I believe he did precisely the right thing when he brokered the deal to cut 10 million barrels a day of oil production. IMO it was just what the market needed, and the market did indeed stabilize. But in the longer term, it started a chain of events that now leave the world with 3.8 million fewer barrels a day being produced, even after demand has gone back up. That is why gas prices are so high.
By the way, I have long thought that OPEC in particular would benefit from not producing so much oil. The world -- and the US in particular -- has become highly dependent on oil, and it is a finite resource. We don't know how much there is, but we do know that it will virtually certainly run out eventually. Economically, when one has a scarce resource, doesn't it make sense to keep it scarce, much as is done with diamonds?
IMO Trump did Russia, OPEC AND THE WORLD a favor with his action. I would say it was one of his greatest accomplishments. But now we're literally paying the price in much higher gas prices.
I'm open to anyone's using facts and logic to poke a hole in my argument.
The problem now is that while oil production has since gone back up, it hasn't gone ALL the way back up -- whereas demand for gasoline has. What determines gas prices? Good old-fashioned supply and demand. Demand is back up to right around pre-pandemic levels, but worldwide oil production is down 3.8 million barrels from where it had been originally. High demand coupled with low supply equals high gas prices, as has virtually always been the case.
To put the 3.8 million barrel shortfall in context, President Biden is now talking about loosening the strategic oil reserve of 50 million barrels. That sounds like a lot, but it would replace a 3.8 million barrel shortfall for less than two weeks. I don't know enough about it to know if freeing the oil reserve right now makes sense or not.
I'm not BLAMING Donald for the high gas prices. I believe he did precisely the right thing when he brokered the deal to cut 10 million barrels a day of oil production. IMO it was just what the market needed, and the market did indeed stabilize. But in the longer term, it started a chain of events that now leave the world with 3.8 million fewer barrels a day being produced, even after demand has gone back up. That is why gas prices are so high.
By the way, I have long thought that OPEC in particular would benefit from not producing so much oil. The world -- and the US in particular -- has become highly dependent on oil, and it is a finite resource. We don't know how much there is, but we do know that it will virtually certainly run out eventually. Economically, when one has a scarce resource, doesn't it make sense to keep it scarce, much as is done with diamonds?
IMO Trump did Russia, OPEC AND THE WORLD a favor with his action. I would say it was one of his greatest accomplishments. But now we're literally paying the price in much higher gas prices.
I'm open to anyone's using facts and logic to poke a hole in my argument.