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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Unknowingly? Wasn’t that the whole point of Biden’s entire energy policy? Basically refusing to develop the oil industry?

Unknowingly? Really? When they have used legal measures at every level to prohibit growth leaving only the big companies? And discouraged all loans for further exploration?

They knew what they were doing, and in the slim chance they didnt, ignorance is no excuse. If you try to say politicians, and their teams, didn't have the foresight to see the consequences of their decisions, then they are not fit to make those decisions on behalf of all of us...

Unknowingly...lol...lol..lol

Unknowingly my ass!!

Lol that was the plan the whole time. Stop

Unknowingly?!?!

It’s a good analysis, but while “unknowingly” may be true for our geriatric in chief, it’s no excuse for his advisors who’ve failed to listen to the energy sector at every opportunity.

He purposely cut oil out of America and all liberals were totally happy with this. This was not on accident

Intentional, to create a market that isn’t ready for prime time.

Hilarious headline! 🤣

“Unknowingly” 🤣🤣🤣🤣🤣

Unknowingly my ass!

Riiiiiiight...'unknowingly' lmao...

Poor oil industry 😔

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