AEIdeas

The public policy blog of the American Enterprise Institute

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Discussion: (19 comments)

  1. By special request, some discussion of the profitability of oil production in places like Eagle Ford Shale, with returns of 50-70% and payback of drilling investment within six months.

    1. The Unknown One

      But … but … it’s not real money, it’s … it’s … fake money! Or something. And the wells deplete fast, so it doesn’t count anyway! The return on investment doesn’t count if the wells deplete fast … because … because … just because!

      1. MacDaddyWatch

        GLOBAL WARMING….BIGGEST HOAX EVER!!

  2. The Eagleford depletion rates are close to 50% per year and not very many wells have a 5K bpd IP rate. Nobody disputes that the core areas can be very profitable for the players that stick to them. But what happens in the core areas is not very relevant to the shale formation as a whole, which is the big problem.

    1. Che is dead

      With every passing day “Vag” presents as someone suffering from a mental disorder. Considering his fascination with conspiracy theorists, perhaps it’s Echolalia. His apparent inability to think for himself and his repetitive posting of increasingly discredited arguments from “peak oil” websites would seem to confirm this diagnosis. However, in order to be certain he should seek professional help.

      1. There is no conspiracy. People who are promoting something will sell it in the best way they know and will avoid dealing with the issues. The fact that Texas is producing far less oil today than it was in 1970 is not a secret. And neither is the fact that the shale producers have not been able to self finance non core area operations. Remember Mark’s hype of shale gas? The companies that he was citing are writing off assets or are sitting with massive debts on their balance sheets as they try to reposition themselves as ‘liquids’ players. The same will be true of the shale oil plays that he is touting because 50% per annum depletion rates are material to the discussion.

        1. Benno Bauer

          what is the average income per well that ranchers are getting with 25% royalty per well?

          1. That is the problem for the producers; no matter how much money they lose on their operations the farmers get their share of the production. For the farmers to get rich they don’t need the well to be profitable. How much you earn depends on where you are in the shale formation. In the small core areas everyone makes a pile of money. Outside of those areas the farmer does OK but the companies blow their brains out.

    2. MacDaddyWatch

      GLOBAL WARMING !!

      bullshlt.

  3. Benjamin Cole

    I remember when the world was running out of oil, in 1980, when I graduated from grad school. The Limits to Growth etc. I believed it.

    The price signal and free markets. Wondrous things, will solve any commodities “shortage.” Payback in Year One means gluts soon.

    There are sectors of the economy where free markets do not work. Pollution comes to mind. Some might say health care for the indigent. Criminal law, perhaps.

    It might be time to turn national defense over to the private sector. The chances of invasion are nil anyway, so the less we spend the better.

    An American Foreign Legion, made up of troops who get citizenship after 10 years of service but no lifetime benefits or pensions, is very appealing.

    The free market will work, if we give it a chance.

    1. John Dewey

      Please explain why you would include health care as an example of free markets not working.

      Remember of course, that a free market in health care has not existed in most parts of the U.S. for at least 100 years. Medical licensing boards and the AMA have been restricting the supply of health care practitioners since the late 19th century.

  4. Benjamin Cole

    John Dewey:

    I think it is a tough call when it comes to health care.

    Most people do not like euthanasia. That’s a problem right there. If we feel an obligation to keep some old and terminally ill people “alive” for many months or years, the expense is enormous. I won’t even mention Terri Schiavo (the GOP Congress held a special session to try to “save” her—but who is going to pay to keep her carcass breathing for 30 years?)

    In other cases, there may be children who need health care but their parents cannot afford to pay. The free market does not really address that.

    All that said, I prefer free markets for 80+ percent of the economy.

    1. Most people do not like euthanasia. That’s a problem right there. If we feel an obligation to keep some old and terminally ill people “alive” for many months or years, the expense is enormous….

      Who is ‘we?’ And why would ‘we’ have any obligation to others that we do not know and may not care much about? You are free to keep anyone alive that you choose as long as that person agrees to your efforts. What you cannot do is ask me to pay to keep someone alive if I do not wish to pay for it. The same is true with me. I can use all of my resources as I wish, and that includes keeping someone who I care for alive. What I do not have the right to do is to ask others to use their resources to keep that person alive because they are not my resources.

      This issue becomes very simple if you think of property rights rather than some false obligations.

    2. No one is in favor of euthanasia. By most definitions euthanasia requires a positive action to end a life that if left on its own would continue. Removing artificial life support and letting nature take its course is not that type of action. Obviously the wishes of the patient should be known before they are unable to make their own decisions.

      What should NOT happen is for a government death panel to decide who should live and who should die based on age and or cost.

  5. Benjamin Cole

    Vangel–

    Some people feel a communal ethical, non-economic obligation to keep people alive, especially children, even if that individual’s economic resources are lacking.

    BTW, speaking of property rights, you always run and hide from the Keystone pipeline question.

    Should a rancher be compelled to allow a private, for-profit transitional gas or oil pipeline cross his private property. That is what is happening with Keystone.

    Keystone has power of eminent domain.

    Is it right to force a farmer or rancher to allow a private, for-profit pipeline to cross his private property?

    1. Vangel–

      Some people feel a communal ethical, non-economic obligation to keep people alive, especially children, even if that individual’s economic resources are lacking.

      And they should be free to use their own resources to do the best that they can. What they should not do is to try to pretend to be charitable when they use the resources of other people.

      BTW, speaking of property rights, you always run and hide from the Keystone pipeline question.

      Where did you get that idea. My position is clear. I do not believe in eminent domain.

      Should a rancher be compelled to allow a private, for-profit transitional gas or oil pipeline cross his private property. That is what is happening with Keystone.

      Nobody, including the government has the right to take any property from anyone. Kelo v. City of New London was a travesty of justice that needs to be reversed as quickly as possible.

      Keystone has power of eminent domain.

      Is it right to force a farmer or rancher to allow a private, for-profit pipeline to cross his private property?

      How many times do I have to make it clear. Nobody, including the government has the right to take any property from anyone.

      Where do you stand on that issue? Should the government be able to take land to build a highway? If you say yes than your position on Keystone is similar to the one that the company is taking.

  6. Some people feel a communal ethical, non-economic obligation to keep people alive, especially children, even if that individual’s economic resources are lacking.

    People cannot feel a communal obligation, only a personal one. Those who feel such an obligation, and most of us do, are free to help in any way they wish, but as Vangel wrote, there is no right to steal money from others for that purpose. Think free choice, Bunny. It works so much better than coercion.

    BTW, speaking of property rights, you always run and hide from the Keystone pipeline question.

    Why would he run and hide from such an easy question?

    Should a rancher be compelled to allow a private, for-profit transitional gas or oil pipeline cross his private property.

    No.

    Is it right to force a farmer or rancher to allow a private, for-profit pipeline to cross his private property?

    No.

  7. Joel Rodriguez

    The eagle ford has been a blessing in many ways and there is much work to be followed through. The impact on the communities has been considerable. Displacement of families continues to be an issue due to the increased demand on housing. In time hopefully we will resolve those issues

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