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Fracking - A National Security Interest


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#1 George Rowell

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Posted 19 June 2019 - 12:29 AM

The break even cost of fracking is anybodies guess which is alarming since America has overtaken Saudi Arabia and Russia in oil production. Trump has destabilized and largely removed Venezuela from the equation and has the stated aim of cutting Iran's export to zero.

American national security needs fracking to limit the progress of Russia whose main income is oil. While the oil price cannot be allowed to get too high, it cannot be allowed to get too low either, because of fracking fundamentals and of course Saudi Arabia who are reported to have a break even price point of $46. There is a lot of obscuration, misinformation and mistaken information about the real cost of fracking but can something so vital to national security be allowed to die? I doubt it very much. Maybe Trump will eventually openly find a way to fund fracking.

My feeling is that if the price of oil goes below $55 a barrel something unpleasant could happen in the World and the price of oil will surge and this will support fracking. I also see a scenario where fracking gets Federally funded - that would not surprise me at all. On the other hand if the price of oil goes above $75 Saudi will start pumping until it eases again, targeting a range of $55-$75. In the short term if Trump does start a war then the oil price is bound to surge past this range for a period. Given the Dump administrations current rhetoric and being BFF with Israel, I reckon oil stocks are good for a gamble right now. ET Energy Transfer and XOM Exxon look well placed. If President Dump does start a war then at least it will be bitter sweet.
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#2 George Rowell

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Posted 19 June 2019 - 12:47 AM


"Rystad Energy estimates in its latest cost of supply curve update that the average Brent Crude breakeven price for tight oil is now US$46 a barrel, just four dollars above the average $42 per barrel breakeven oil price for the giant onshore fields in Saudi Arabia and other Middle Eastern countries.

To compare, in 2015, North America’s shale ranked as the second most expensive resource in Rystad Energy’s global liquids cost curve, with an average breakeven price at $68 per barrel.

In 2019, onshore Middle East leads the cheapest source of supply, followed by North American shale, offshore shelf with average breakeven price of $49 a barrel, deepwater with a $58 breakeven price, and Russia onshore with $59 a barrel breakeven;

https://oilprice.com...Oil-Supply.html

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#3 Rich T Bikkies

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Posted 19 June 2019 - 02:21 AM

View PostGeorge Rowell, on 19 June 2019 - 12:47 AM, said:


"Rystad Energy estimates in its latest cost of supply curve update that the average Brent Crude breakeven price for tight oil is now US$46 a barrel . . . .

I always immediately think of that obtrusive American oil billionaire, Brent S. Crude III.
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#4 George Rowell

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Posted 19 June 2019 - 03:52 AM

View PostRich T Bikkies, on 19 June 2019 - 02:21 AM, said:

I always immediately think of that obtrusive American oil billionaire, Brent S. Crude III.
You have an evil mind. But I like you.
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#5 baw1064

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Posted 19 June 2019 - 08:16 PM

You can always just impose tariffs, so the breakeven price only matters to the extent you allow it to.
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#6 George Rowell

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Posted 20 June 2019 - 12:23 AM

View Postbaw1064, on 19 June 2019 - 08:16 PM, said:

You can always just impose tariffs, so the breakeven price only matters to the extent you allow it to.
The US is a net exporter of oil and gas, where would you put the tariffs?
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#7 LFC

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Posted 24 June 2019 - 11:43 AM

View PostGeorge Rowell, on 19 June 2019 - 12:29 AM, said:

My feeling is that if the price of oil goes below $55 a barrel something unpleasant could happen in the World and the price of oil will surge and this will support fracking. I also see a scenario where fracking gets Federally funded - that would not surprise me at all.

This would require the free market Republicans, the same ones screeching about a single federal dollar going to renewable energy, to turn their backs on their free market principals to "pick a winner" and completely distort the market. I simply can't believe they'd ever do this. [/snark]
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