Gasoline prices Skyrocketing!

8991XJ said:
I'm saddened by the general public, (50% of which have and IQ below average) believe the pres is the only influence on the gas prices. We enjoyed cheap gas with the pandemic because industry shut down and didn't need fuel leading to oversupply. Now we are in an era of increasing demand and well prices are going up. Then you have the public policies and the 2 pres adding to that. Be nice when putin looses his grip on power and gets his dirt nap.

My neighbor thought that when we went into iraq after the WMDs that didn't exist we owned the country's oil output and should have $2.29 gas for life. Maybe if we had not gone in to take out Sad Damn things would be better today with better response from OPEC about increasing production.

Then we have the previous drop in oil prices that caused thousands of wells in the US to be capped. I'll ask Lee for input on this, but the US required these closed wells be cemented...rendering them essentially dead. Why couldn't they just be capped and able to be put back into production without too much work when the price of oil went back up?

And then we had a pres that slowed moving to alt energy as he courted the coal vote. A good 60,000 jobs in coal vs the 3 million (end of 2020 and shrinking, 3.36M end of 2019. And we all know renewable energy jobs will grow.

I'm not saying we all need a battery car, had em as a kid, take too long to charge. But a thoughtful move to alt energy would leave enough liquid fuels for our cross country trips, pickup trucks and such. Problem is thoughtful...we don't have that in Congress right now we have two armies fighting each other from separated camps and no middle ground to be seen. Sad really.
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We have 3 distinct leases....

Federal---- The Fed's own the minerals under these tracts. It can be public or private surface., A lot of split estate stuff in Wyo, private surface, fed minerals. It used to be we could file for a hardship shut in, file one sheet of paper and you could suspend operations for one year. Not now, you can shut em in for a bit but now they want to know what your plan is . And for each well shut in they up the plugging bond. If you shut em in for more than a few months, you will do an integrity test of the casing, meaning, run a packer on tubing and pressure up the casing. If it does not pass, fix it or plug it. In rare cases you can get a variance. If it does pass they'll give you up to a year. Fed royalty rate 12.5%
State ----- The minerals are owned by the state, usually state surface , rarely private surface. If you are requesting a long term shutin, 10.00 per foot of depth in bonding, for a 10,000 ft well, that's a 100K. That's about what it takes to plug one with no problems or special conditions such as multiple fresh water zones to isolate. The state also requires an integrity test of the casing in addition to the bond. So , many times on a marginal state well they will get plugged. The state can be real dickheads, moreso than the feds lately. A lot of younger folks in the state oil and gas commission than the BLM...getting infiltrated with tree huggers. Sate royalty rate 16.66 %
Private---- The mineral owner is private, the surface can be owned by the same entity or someone different. Private leases are administered by the state but operational aspects can be vastly different in terms and conditions. In most private leases you produce every 30 days or you have lost the lease, but there are often covenants to take payments in lieu of production. A lot of room for different ways to do things, and ya just don't know until lease negotiations are done or in our case reading the lease agreement before buying. A lot of times on private leases the yearly damages and access costs can be exorbitant, depending on the original lease agreement. A lot of times if it was a hot lease prospect with enormous potential the pot was sweetened with increased royalty rates or damages to get the mineral owner to lease. Royalty rate 12.5 to 22%

It used to be easy to shut wells in and weather a low price storm. And each well is unique as to its lease operating expenses. You can have a 50 bblopd well that loses money compared to a 5bbl well that makes money. That 50 bbl well could make 1000 bbls of water that has to go back in the ground so there's another well bore. The 5 bbl well could be one of those sweethearts that makes no water, high gravity sweet crude that keeps running for years with no breakdowns. And everything in between. Different operators can operate cheaper than others due to their overhead being less or more skilled and experienced at curing problem child wells. Nothing is set in stone and profit can be a very fluid target based on a lot of things beyond our control. What we are experiencing now is not really good for oil producers if it goes on too long. Demand destruction, increased costs for goods and services, sometimes ALOT more. A couple three months of 100 oil would be nice and go a long way to healing us up, but this price bump has an inflation component that is going to negate any enduring profit scenarios. On the roller coaster once again.

One thing that has got my attention is the fact that in all other runups like this the deducts would also rise. When oil was 100 back in 2014 the deduct for minnelusa was 45.00, green was 25.00. Today the deducts have been going down every month as the posted prices have been getting ridiculous. That tells me there is indeed a supply problem. Our deducts for March are 2.15 for green and 7.00 for black sour . And the deducts have gone down for 7 months in a row......
 
Filled up the car today… pump shut off at $74. I guess that’s all I was authorized for by the bank.
 
I put $76.00 in the handicap van today to top it off. $3.88
Two weeks ago I filled the 99 Deville @ $3.18
Next is the 85 Bronco & it has a 33 gallon tank near empty.
Once all three are full I should be set for awhile, driving 3 miles to town now and then.
My 77 Coupe Deville wants Ethyl & Will probably just get some fuel stabilizer. I'm starting to question keeping tags & ins on four vehicles when I only drive around a thousand miles a year.
 
George S. said:
Lee, are deducts the "depletion allowance" and set by the IRS?
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No George, those apply to tangible and untangible drilling and completion costs . Certain costs are amortized over 10 years while others can be written off immediately.
Deducts are what are subtracted from our crude sales based on the monthly average on the New York Mecantile exchange. Take the daily closings, add em all; up divide by the days of the month, gives the average daily price, then minus the DEDUCTS, then minus 6% SEVERANCE tax, minus 5% ad valorum tax, minus the royalty rate , that's what we get. Then we have lease operating expenses, and income tax after that....
 
Who Can Claim a Depletion Allowance?
If you have an economic interest in mineral property (which includes royalty income), you can take a deduction for depletion. You have an economic interest if both of the following apply:
  • You have acquired by investment any interest in mineral deposits
  • You have a legal right to income from the extraction of the minerals to which you look for a return of your capital investment
Cost Depletion
With cost depletion, a taxpayer recovers the actual capital investment throughout the period of income production. Each year, the taxpayer deducts a portion of the original capital investment, less previous deductions, that is equal to the fraction of the estimated remaining recoverable reserves that have been produced and sold that year. The cumulative amount recovered under this method can never exceed the taxpayer's original capital investment.

Percentage Depletion Allowance
Under percentage depletion, the deduction for the recovery of one’s capital investment is a fixed percentage of the gross income (sales revenue) from the sale of the oil or gas. For oil and gas royalty owners, percentage depletion is calculated using a rate of 15% of the gross income based on your average daily production of crude oil or natural gas, up to your depletable oil or natural gas quantity. An attractive element of percentage depletion is that the cumulative depletion deductions may be greater than the capital amount spent by the taxpayer to acquire the property.
Taxable Income Limit
There is a taxable income limit for oil and gas royalty owners. Your annual deduction for percentage depletion is limited to the smaller of the following:
  • 100% of your taxable income from the property figured without the deduction for depletion
  • 65% of your taxable income from all sources, figured without the depletion allowance.
More specific details on this topic can be found in IRS Publication 535.
 
George S. said:
I was able to get a "classic" tag for my 67 Jeep that never expires and then get reduced insurance cost because I drive it so little. Your 77 Caddy may be a candidate.
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I've had the forms for a couple years . One of the requirements is that you can not drive it more than 1000 miles per year. Even though my wife is homebound & we rarely go anywhere. I have a hard time giving up. I'd like to do some of Route 66 in it. I still hope we can go Gold mining again too some day . Still have all the gear & lifetime memberships to claims.
Like I say, it's just hard giving up.
 
J!m said:
Nothing to do but get in and drive…
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8991XJ said:
Classic tags in PA gives me no more inspections and permanent tag. Shoulda done it 5-7 years ago.
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That's what Missouri is also. And for a few more dollars you can have a cute name put on it. I've had no luck on a good idea for that. You can put down three choices I believe. Not enough spaces for Bradrock or Cadrock.
I've had the same handle on every forum since 95 & it's my name minus a few.
Just not very creative.
 
Bradrock said:
That's what Missouri is also. And for a few more dollars you can have a cute name put on it. I've had no luck on a good idea for that. You can put down three choices I believe. Not enough spaces for Bradrock or Cadrock.
I've had the same handle on every forum since 95 & it's my name minus a few.
Just not very creative.
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Drop the vowels?
 
What are "Beach Fries"?


Update:

"Served on the boardwalks of Atlantic beaches, these simple fries are a taste of summer. The starting point is a basic french fry that is crisp on the outside and fluffy in the middle. This is the fry perfected in street stands for over two centuries in Belgium and France. Master this fry and you’ll have no problem finding friends.–Zac Williams"

Beach Fries.png
 
I've had the slight smell of gas at times in my ride. Not enough to make me go out in the cold and look for it or pull out a big light and hunt for it with the car in the garage but the other day while dropping a preamp off at FedEx for a trip to Tulsa the sun was bright and I thought I'd take a look.

Not many places, mostly the hose-pipe junctions and although a couple are deep and hard to reach I found a wet junction in the line going to the cold start valve off the fuel rail. Popped the trunk, opened the standard toolkit attached to the boot lid and grabbed the big screwdriver. A couple tweaks and it should be good. I haven't checked it yet, nice weather coming, but the hose clamp felt a bit loose, experience and comparison to the feed line to the rail which was adjacent.

Nice to have that feature, the tools, in the car and readily accessible even if the trunk is full as the kit drops from the lid. This '85 ride has almost enough tools to rebuilt the car, not like the cars from this century. The newer models have the same arrangement just fewer tools/smaller kit. I call it a tow hook and 800 number.

It might finally be time to get serious about changing the rest of my fuel lines. I've worried about that cold start valve line since that same hose in my other car sprang a leak wasting a couple gallons in a 5 mile drive. This during a previous high fuel prices time when gas reached $2.59 or so. It was more than a decade ago.

Dang my rides are getting old and I've had em a long time.

Least I'm not just pumping gas into the atmosphere.
 
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