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

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

#101

Post by douche »

ambicapter wrote: post #98
dwharrison wrote: post #93

Earlier quoted context omitted.

Tough question. 2-3 years...maybe longer. An awful lot of production capacity has to be sweep out of the North American market (production is actually still going UP!!!). A lot of small to mid-size operating companies will need to go bankrupt...they're the ones keeping production volumes high. They need the cash to cover interest on the bank notes taken out to drill and frack those wells. The other wildcard is how qu…

Why is there an export ban on crude oil?

The 70s oil embargo

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

#103

Post by tsotha »

adventured wrote: post #29
tsotha wrote: post #14

Earlier quoted context omitted.

Whether this is bad from the environmental standpoint depends on why the price is low. The price may be low because demand is off.

Demand had been increasing since the bottom of the great recession. This started last June with the dollar lifting off (pushing commodities down and crashing emerging markets), and the Saudis deciding to try to retain market share and crush the booming US oil production. So now, despite $40-$60 oil, the Saudis are producing the most oil they ever have. US oil companies have managed to constantly reduce the cost of th…

"After mid-2014, the lion’s share of the decline in oil prices has been caused by negative oil-specific demand shocks and, to a lesser extent, by negative aggregate demand shocks. In contrast, the role of the oil supply (understood as the current physical availability of crude oil) has been small."

https://research.stlouisfed.org/publications/es/article/1034...

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

#104

Post by WalterBright »

saryant wrote: post #67
wvenable wrote: post #21

Earlier quoted context omitted.

OPEC is trying to destroy the American shale businesses by making them unprofitable. There was huge investment in shale based on higher oil prices and if they can't recoup that investment OPEC stands to keep their monopoly.

OPEC is no longer a coordinated entity. For decades OPEC's member nations waged economic war on each other by cutting prices to increase marketshare, in violation of OPEC quotas. The Saudis acted as the swing producer, lowering their output to keep crude prices near the OPEC target. Last year the Saudis abandoned that roll and admitted that OPEC had become a a free-for-all.

Cartels are always unstable. It's why they seek forcible enforcement methods.

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

#105

Post by Dylan16807 »

xrange wrote: post #82
Dylan16807 wrote: post #48

Earlier quoted context omitted.

"Peak Oil" just says we stop mining as much oil with a certain graph shape, not that the world ends. Transitioning to a new energy source is compatible and preferable.

>not that the world ends Lexcorvus and I apparently have similar memories, because my recollection is that all the articles discussing peak oil had a mandatory section predicting the eminent demise of Western Civilization (and quite a large percentage were giddy at the notion).

That's just journalism being journalism. Plus, it was harder to see what could replace a significant fraction of oil before solar and battery prices dropped so much, and uncertainty and lack-of-planning is worth some worry.

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

#107

Post by dragonwriter »

dwharrison wrote: post #25

And it will go lower! Canadian crude hit $23/bbl earlier in the week. North America is close to maxing out storage capacity...possibly within 90 days. We've not been this close to max storage capacity in more than 80 years. North American crude oil production currently exceeds demand (meaning what we have capacity to refine) by over 1 million barrels a day. All that extra is getting dumped into storage. And the sprea…

> The USA can't export crude (by law)

That's not entirely true; by law, there are all kinds of special permissions (with different rules depending on what oil -- both by origin and type -- you are exporting, to whom, and whether or not the export of crude is matched by an in-exchange import of crude [usually, of a different grade, otherwise this wouldn't make any sense]) required to export crude, but its not quite banned.

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

#108

Post by lingben »

elektromekatron wrote: post #89

This could screw Russia. They have lost a hell of a lot of revenue already on this. I do wonder if that is the point.

Not just Russia but every single nation that has a major part of their economy in oil production: Venezuela, Iran, Saudi Arabia, Norway, Canada, etc.

Although to be fair, Northern Europeans manage their oil extremely well. Their 'rainy day' fund is now in the trillions.

http://graphics.wsj.com/oil-producers-break-even-prices/

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

#109

Post by nostromo »

lolive wrote: post #80
maerF0x0 wrote: post #75

Earlier quoted context omitted.

There are legion ways to mitigate expelled CO2. But probably the cheapest is just to leave it in the ground.

"There are legion ways to mitigate expelled CO2." Could you please elaborate on this assumption?

One way is to use the self-replicating, solar-powered, biotech carbon sequestration product known informally as "trees."

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

#110

Post by dragonwriter »

pyre wrote: post #84
Frozenlock wrote: post #62

Earlier quoted context omitted.

> And then what? And then the price of the scarce resource will go up, pushing us towards alternative energy sources. And as time passes, we should have more efficient ways of harnessing those.

This line of logic says that it is impossible for us to come to any sort of "cliff" where we are unable to smoothly transition from one energy source to another (where the possible ensuing resource wars could prevent us from ever harnessing those alternative sources). It's basically a "nothing bad can happen because ECONOMICS !" answer.

It does, and to do so it presumes that there will always be some readily available alternatives with smooth supply curves, and neglects transition costs.
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