SocraticGadfly: "Poor me" in the oil patch: stop me if you've heard this

July 15, 2020

"Poor me" in the oil patch: stop me if you've heard this

Texas Monthly has a long read about the details of the latest oil bust and why this one's going to be bad.

Yeah, it may be, but I've heard this stuff before.

First, I'm old enough to remember $10/bbl oil just before the turn of the century, and how that lasted a long time.

And, adjusted for inflation, per the chart below, WTI was below $40/bbl for SEVEN YEARS, setting aside that brief blip just above the $40 mark in 1995.

Crude Oil Prices - 70 Year Historical Chart

So, let's stop this nonsense, Texas Monthly. Surely somebody on your editorial staff is old enough to know better.

What's changed is that the fracking revolution led MANY companies like Pioneer Energy to be formed, or if on the books as small companies, to greedily expand. Hey, Scott Sheffield, Pioneer Energy CEO and Texas Monthly's fracking whisperer? Nobody forced you to make yourself into the Aubrey McClendon of the oil patch, including, just like him, Ponzi-scheming yourself on leases that you have to drill or lose.

Indeed, a year ago, DeSmog Blog caught Scott Sheffield in either huge self-delusion or else huge fibbing when he claimed fracking was profitable at $30/bbl.

You're right that there is no such thing as a free market, not just in the oil patch but elsewhere. BUT ... until Railroad Commission chairman and nutbar-in-chief Wayne Christian refused to bail you out with proration, I don't recall you saying that the lack of a free market was a problem.

As for the whys of Wayno fighting proration? I'll take him at his word, discounted the 50 percent he normally should be. North Dakota, New Mexico and other states that have also had fracking-related oil booms may have found it difficult to adopt proration in their states. They may also, to the degree their state budgets have become more oil-dependent than Texas', decided they didn't want to, or didn't think they could afford to, prorate. In any case, whether or not Wayno tried that hard, he couldn't get a proration deal. And, within the US, the oil production world has changed since 1970.

In addition, Texas Monthly should be asking how big of a polluter whining Pioneer is. Hell, even the New York Times can ask that of frackers in general, along with other questions.

Yes, Texas is still the biggie. But states 2-10, combined, produce as much oil as it does. Just five years ago, though, New Mexico was way lower, and Colorado and Oklahoma a fair amount lower. Seven years ago, North Dakota was way lower.

Long long ago? In the 1980s, in a situation like this, per graph at this site, Texas only had to worry about Alaska. In the 1990s and 2000-oughts, then offshore production was an issue. And, though it's declined again, especially after the Deepwater Horizon, offshore drilling has two other issues. One, it's federally controlled, so Wayno has no control over it, nor do 49 other states. Second, offshore wells? You won't shut them down, period.

LONG long ago? The misty mythic 1930s? Contra Sheffield, and contra the Texas Monthly reporter who didn't call him out on it, everybody who knows anything about Texas crude knows that the RRC largely failed to control production then. People pumped and sold hot oil and laughed at the state. It took the feds and force to accomplish anything.

If this DOES change everything? It won't be by itself. Per Sheffield, it will be the rise of cars, plus, we hope to doorknob, real climate change legislation that includes a carbon tax and carbon tariff at the federal level, plus, we hope to doorknob, states and third parties winning lawsuits against Big Oil.

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