How Politicians Unknowingly Hurt The Oil Industry

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Political actions often impose costs on the oil industry and consumers that are not obvious.

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e"war profiteering," taking aim at businesses' record profits as households grapple with soaring inflation. One of the dumbest political soundbites was President Obama saying, about a bridge, “You didn’t build that.” His basic argument was sound: government not business provides public goods like infrastructure.

Politicians—like most of the population—generally have no sense of economics, let alone business, and frequently take steps that are economically irrational because they don’t perceive the costs being inflicted on companies. Most egregiously, setting regulations and then canceling them means that companies are forced to make investments to satisfy them, and then write them off as losses.

But also, if governments take steps that interfere with project developments, the delays add to costs but again, in a manner that isn’t very transparent. A company that buys a lease in the Gulf of Mexico and then finds drilling or development delayed because of a government interdiction is bearing a significant cost—the interest payments on the money spent for an idle project. And if production is postponed, the net present value of the investment drops, sometimes significantly.

In the figure below, I compare the discounted present value of an income stream from a stereotypical shale oil well . In the first case, the well is drilled and brought on line in a couple of years and then production and revenue start and decline abruptly, as is typical for such wells.

 

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Oil industry is essential in our economy.. the politicians are hurting the economy by making it bad for global warming. Green energy can not replace it anytime soon. Oil

Unknowingly.....!?

Unknowingly

Yea. Those poor companies are hurting so bad

It wasn’t “unknowingly”

Unknowingly? STOP JOKING!!!

Unknowingly? Biden campaigned on ending the oil industry

Follow the money! Career politician like Joe Biden doesn't wipe his a****** unless there's money involved

he did it on purpose, he knew it

They knew

Won’t someone think of the billion dollar companies that are actively destroying the planet?

This dude unknowingly eats his foot on a daily basis.

Unknowingly

Joe Biden said he was going to wage war on fossil fuels in the POTUS debates and that is exactly what he did

Oh come on....

They know exactly what they are doing, don't be a fool.

How about an article on how the oil industry infiltrates and controls politicians, all the wars over oil. NoMoreBloodForOil

Politician?

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