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Oil Falls Below $40 for First Time Since 2009 as Glut Grows

bloomberg.com

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Re: Oil Falls Below $40 for First Time Since 2009 as Glut Grows

#4

Post by throwaway12309 »

One one hand, I'm a bit worried as I know various folks that are dependent on the oil industry and this will probably mean more layoffs/companies closing, on the other hand, I'm really happy to see this (helps many economies as well as ordinary folks) and it seems some of the changes from oil to other sources of energy are finally showing some results (I hope)

Re: Oil Falls Below $40 for First Time Since 2009 as Glut Grows

#6

Post by api »

lexcorvus wrote: post #2

I remember ten years ago when worrying about Peak Oil was all the rage. You don't hear too much about that nowadays…

It's more a misunderstanding of economics.

Conventional "stick a tube in the ground" oil may well have peaked or may peak soon, but there's more oil around than that.

It's also not entirely clear that peak oil would mean "oil prices will always go up." If anything, it could lead to successive rounds of demand destruction. I think the most likely scenario would be a "sawtooth wave" price on the way down the peak as rising costs lead to substitution (gas, EVs) and demand destruction (recessions, people moving closer to where they work) which in turn causes price declines. The ultimate demand destruction would be large-scale investment in public transit, which has to some extent been spurred by crazy gas prices.

Re: Oil Falls Below $40 for First Time Since 2009 as Glut Grows

#8

Post by WaxProlix »

throwaway12309 wrote: post #4

One one hand, I'm a bit worried as I know various folks that are dependent on the oil industry and this will probably mean more layoffs/companies closing, on the other hand, I'm really happy to see this (helps many economies as well as ordinary folks) and it seems some of the changes from oil to other sources of energy are finally showing some results (I hope)

You're kidding right? This is a move by oil capital to use the market to squash competitors in the short term, undermine their investments, and ensure a relative monopoly in the long term.

Re: Oil Falls Below $40 for First Time Since 2009 as Glut Grows

#9

Post by droffel »

varelse wrote: post #3

And yet gas is still over $3 a gallon. Funny that...

Well, gasoline production consumes oil, which means that the price should theoretically lag behind oil's price for a period of time at least equal to the time it takes to go from crude to a final product.

In addition, most gas stations will buy gasoline futures a few months out to stabilize their costs, and when oil price falls, the cost of the underlying gas purchased is still at the negotiated futures contract price. So it makes sense that the price wouldn't fall in tandem with crude prices.

Re: Oil Falls Below $40 for First Time Since 2009 as Glut Grows

#10

Post by trhway »

throwaway12309 wrote: post #4

One one hand, I'm a bit worried as I know various folks that are dependent on the oil industry and this will probably mean more layoffs/companies closing, on the other hand, I'm really happy to see this (helps many economies as well as ordinary folks) and it seems some of the changes from oil to other sources of energy are finally showing some results (I hope)

>I'm really happy to see this (helps many economies as well as ordinary folks)

it is like decreasing price of cigarettes (or vodka in Russia). Does "help" in a short term.

>and it seems some of the changes from oil to other sources of energy are finally showing some results (I hope)

Lower oil prices make investment into other sources less attractive unfortunately.

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