“Running the government like a business” is a phrase we have heard ad nauseam from Republicans for decades. That’s why people elected George W Bush.
Remember that other war for oil? No, not that one, the other one. That “cakewalk” that was going to pay for itself with cheaper gas?
How much worse could it be when you elect a guy who managed to bankrupt 6 Casinos?
The administration seems to be promising that US oil companies are going to invest 100s of billions into decrepit oil facilities, to recover oil at a cost that is higher than what the global market is currently paying, and that somebody is going to back some oil tankers up to the dock in Puerto Miranda , load ’em up and bring ’em back to Houston, with no one in the still-intact government of Venezuela raising a question.
And that’s going to lower the price of oil below what is profitable for frackers in the Permian Basin, without impacting employment in that oil patch, and lower gas prices for the rest of consumers, in time for them to show their gratitude in the mid-terms.
Explain it to me like I’m five.
President Donald Trump said he believes the U.S. oil industry could get expanded operations in Venezuela “up and running” in fewer than 18 months.
“I think we can do it in less time than that, but it’ll be a lot of money,” Trump told NBC News in an interview Monday.
“A tremendous amount of money will have to be spent, and the oil companies will spend it, and then they’ll get reimbursed by us, or through revenue,” he said.
If successful, the plan could effectively give the U.S. stewardship of most of the oil reserves in the Western Hemisphere, when factoring in deposits in the U.S. and other countries where U.S. companies control production. It could also fulfill two of the administrations’ primary goals: to box Russia and China out of Venezuela and to push energy prices lower for U.S. consumers.
Trump has repeatedly raised the prospect of lowering oil prices to $50 a barrel, his preferred level, two senior administration officials said.
But oil prices are already low, with the U.S. benchmark hovering around $56 a barrel Wednesday, and Trump has struggled to persuade U.S. oil-and-gas producers to crank out more crude and help him accomplish his political goals. Many companies see $50 a barrel as a threshold below which it becomes unprofitable to drill, and a sustained period of low oil prices could decimate the U.S. shale industry, which has been a key backer of the president.
Energy Secretary Chris Wright said at a Goldman Sachs investor conference in Miami that the U.S. will sell blockaded Venezuelan oil “indefinitely.”
“We’re going to market the crude coming out of Venezuela—first this backed up, stored oil, and then indefinitely, going forward, we will sell the production that comes out of Venezuela into the marketplace,” Wright said at the conference. Trump is scheduled to meet with oil executives from Chevron, Exxon and others at the White House on Friday.
The administration’s actions amount to an expansion of its “drill, baby, drill” mantra well beyond U.S. borders. Trump has long viewed increased production and lower oil prices as an economic boon and has made that a priority throughout his second term. The initiative has taken on more urgency as voters continue to express anxieties about affordability and Trump’s polling numbers decline ahead of pivotal midterm elections.
Financial Times (paywall):
Years of under-investment have left facilities and networks in tatters. Chronic maintenance failures have led to fires, explosions and leaks.
Analysts at Kayrros said some facilities were in a “catastrophic state”, citing disrepair, under-investment and “cannibalisation of equipment”.
Further satellite imagery and analysis suggest similar degradation across other sites.
At the industrial port and oil terminal of Puerto La Cruz, four large storage tanks have remained unfinished and have not been used for years, despite the country’s growing need for storage capacity as a result of the US blockade on Venezuela’s crude exports announced in December.
They’ll also need investment — and the US oil industry, which has lost billions in Venezuela before, doesn’t see the country as quite the immediate gold-rush opportunity that Trump does. It’s not yet clear which companies will heed Trump’s call to action or what guarantees the US taxpayer may end up having to provide.
“Immediately following the successful arrest of narcoterrorist Maduro, the president brokered a historic energy deal to further strengthen America’s national security in the Western Hemisphere and help restore Venezuela as a responsible, prosperous ally of the United States,” said Taylor Rogers, a White House spokeswoman, in a statement. “President Trump continues to broker good deals on behalf of the American people.”
Trump has signaled he was in touch with energy bosses even before giving the final order to seize Maduro. But executives have told the administration they’re wary of the scale of work required in Venezuela, where they’d confront decades of abandoned rigs, leaky pipelines and fire-ravaged equipment. No one wants to tell Trump no, said one industry insider. But he shouldn’t hold his breath.
Over the past year, with oil prices languishing, companies including Chevron and ConocoPhillips have cut thousands of jobs, with more likely ahead. Chevron said it would trim as many as 8,000 employees by the end of 2026. ConocoPhillips said it would cut its workforce by 25%, or roughly 3,000 jobs. Nationwide, the number of employees in oil-and-gas extraction has dropped to 121,000 in November, down from nearly 200,000 in January 2015, U.S. data show.
As of this month, the number of drilling rigs working in Texas has fallen for three years as companies, pressed by falling prices, have grown more efficient at pumping more oil with fewer rigs and workers, said Karr Ingham, an economist and president of the Texas Alliance of Energy Producers.
“Every month, that rig count is going down,” Ingham said. “So the market, even before this [Venezuela] event, was signaling to oil-and-gas producers, ‘You can bring me a little less of this stuff.’”
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Even our most advanced AIs are glitching when prompted to capture the stupidity.
Just a heads up: Per Mr. Global (Matt Randolph), you shouldn’t be fooled by any appearance of oil companies doing things to appease Trump. It’s just diplomatic theater. Some oil person may travel to Venezuela and look thoughtful, but they ain’t got no interest in sinking real money in. (He does note that they might grab it to keep it out of other hands, like bidding on leases they never intend to drill.)
Crude has dipped below US$60 per barrel, and even this price is too low for oil companies to justify upgrading any infrastructure in Venezuela. Unlike Trump and his cronies, the oil people are not just a bunch of real estate people.