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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The oil industry does just fine and always has. Too fine.

They hurt the oil industry on purpose - nothing accidental about it in my opinion

Lol who you kidding? They knew, this has all been planned for 20 years already..

This was done on purpose.

“Unknowingly”?

Does Joe even know what an oil industry is?

Hunter Biden hurt the whole art industry 😏

'Unknowingly'

😂 unknowingly? Really? You think they didn't know? They've only been attacking the oil industry for control for decades. DemocratsHateAmerica

Unknowingly is a weird word to use here...

Look my new 🔞video in profile🔥

Definitely a ridiculous excuse. Everything has skyrocketed in price and will only get worse as the demand for oil and gas picks back up. It’s the one multifaceted problem,causes inflation to erode away at people’s earnings and paychecks and just as hindered on a company’s growth

I think they know they are hurting the oil industry but they don’t care because it doesn’t affect them.

The Americans are taking Europe to perdition..and the Europeans are angry and want separation = this is what is published in the world's newspapers and the Internet

They know but it was planned

assuming we are idiots again lol

Another Biden cover up by the MSM.

It was intentional.

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Unknowingly?

Oh POTUS knows what he is doing… unfollow

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