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I live in Texas, and specifically the Houston area so we always get a backend bonus from high oil prices. But hopefully demand doesn’t fall off the cliff from this price hike.
Despite what some people want to believe, the lowest prices for gas were during President Obamas 8-year term. They began rising during the Trump presidency and then crashed toward the end. Regardless, it had little to do with whoever was president at the time or their policies. Tar sand and shale oil was a money loser for most oil companies when the world price crashed to a point that it cost more to produce and deliver it than they could sell it for on the market. Demand destruction, the 2008 meltdown, COVID WFH behavior and an oversupply due to overproduction led to low prices at the pump during the past 12 years. Oil producers have cut output since 2020 and now we have a war disrupting oil. It's not "The Libs", Let's go Brandon, or killing the Keystone. It is a war, a significant wage shortage, and a global supply chain disruption resulting in inflation. Oil producers say that input costs for production of new wells are up 30% compared to pre2020 levels. They are reluctant to bring new wells on line because history has shown them that a 9 month lead-time coupled with spiking oil prices is a huge risk since it is highly likely that the prices will crash by the time the new wells are ready to bring product to market. The 30% premium to produce is not worth the risk to the companies. If oil producers are asked to increase production, I am sure they will be looking for some backstops from the US government the same way that the semiconductor manufacturers were looking for a support of supply if they build foundries here. As much as people want the government to stay out of things, when the market sets a price they don't like they are looking for the government to solve the problem.
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