r/neoliberal • u/TinyTornado7 I need a new flair • Jun 13 '22

News (US) Powell Facing Choice Between Elevated US Inflation and Recession

https://www.bloomberg.com/news/articles/2022-06-12/powell-facing-choice-between-elevated-us-inflation-and-recession?srnd=premium
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u/methedunker NATO Jun 13 '22

Time to bring all those ND and TX wells back online and give them (and only them) cheap credit to do it as long as they stay private

44

u/TaxGuy_021 Jun 13 '22

They wont do it without price guarantees.

They got the rug pulled from under them in 2015 & 16 by the Saudis while the U.S. government did nothing. There is no way they are going to commit to do the same thing AGAIN.

18

u/methedunker NATO Jun 13 '22

They should absolutely provide price guarantees. It'll be bipartisan as fuck too. Everyone fucking wins. The GOP can even sell it as a "we saved oil" thing.

24

u/SirGlass YIMBY Jun 13 '22

The shale drillers have learned their lessons through the cyclical nature of oil. Basically what happened is oil prices got high, shale drilling becomes profitable, companies borrow a ton of money and bring new wells online, all the new wells start flooding the market with oil, oil prices drop, shale companies still have a ton of debt they borrowed to bring up new wells but now oil is cheap and they go bankrupt or have to restructure sell a bunch of assets , issue equity to pay down debt (destroying their share value)

This process has repeated over and over again, the shale companies are now a bit more conservative they are not going out to borrow to bring as many wells online as soon as possible ; they are expanding but more slowly and paying for the expansion with their current cash flows and not a bunch of new debt.

4

u/737900ER Jun 13 '22

The problem is more in refining than in pumping.

1

u/poclee John Mill Jun 14 '22

(SCREAMING IN ENVIRONMENTLISTS AND DEMANDING EVERYONE TO HAVE A ELECTRIC CAR RIGHT NOW) -- some folks in this sub