Crude Falls Below $30 a Barrel for the First Time in 12 Years
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Re: Crude Falls Below $30 a Barrel for the First Time in 12 Years
#2Anyone who knows this stuff care to explain what the consequences of this are likely to be?
Re: Crude Falls Below $30 a Barrel for the First Time in 12 Years
#3is the fact that it's dropping below $30 right now mean that the previous $100+ prices were completely inflated compared to COGS? The massive fluctuations for something that you just need to pump out of the ground doesn't make too much sense to me (compared to, say, price of potatoes)
Re: Crude Falls Below $30 a Barrel for the First Time in 12 Years
#4is the fact that it's dropping below $30 right now mean that the previous $100+ prices were completely inflated compared to COGS? The massive fluctuations for something that you just need to pump out of the ground doesn't make too much sense to me (compared to, say, price of potatoes)
Not an expert, China economy slowed, fracking is up.
Re: Crude Falls Below $30 a Barrel for the First Time in 12 Years
#5Anyone who knows this stuff care to explain what the consequences of this are likely to be?
you could probably write a phd or a book about this topic; cheaper energy benefits advanced economies but hurts resource-based economies - e.g. compare USA and Russia. Russia is suffering quite a bit whereas most of the USA are probably happy. you can also check who are net importers and net exporters of oil, etc., and those would be only the first-order consequences. what happens after the economy feedback loops start being impacted is hard to tell...
Re: Crude Falls Below $30 a Barrel for the First Time in 12 Years
#6How much oil can be stored by producers, and for how long? If you run an operation that gets oil out of the ground at $50, you wouldn't want to sell at $30 (you wouldn't want to take it up at all, but likely need to keep your machines running). Are there producers that sit on lots of oil now, hoping to sell at a higher price, maybe years from now?
Re: Crude Falls Below $30 a Barrel for the First Time in 12 Years
#7Anyone who knows this stuff care to explain what the consequences of this are likely to be?
Domestic political turmoil in the countries whose budget depend largely on the oil price: See e.g. election upset in Venezuela, Russia aggressive in middle east potentially to overshadow news of worsened economy at home, Turmoil in Nigeria etc).
Internationally it means states like Russia won't have the same economical and political clout they had at $100+, so instead will rely on other means to throw their weight around, such as military threat.
Economically it's good: lots of the saved money ends up in the hands of consumers.
Environmentally, it's less good of course. Alternative energy will be less attractive in the near future.
So it's not all rosy, but the downsides are mainly due to a falling oil price, rather than a low one. The volatility upsets budgets, which causes problems.
Re: Crude Falls Below $30 a Barrel for the First Time in 12 Years
#8How much oil can be stored by producers, and for how long? If you run an operation that gets oil out of the ground at $50, you wouldn't want to sell at $30 (you wouldn't want to take it up at all, but likely need to keep your machines running). Are there producers that sit on lots of oil now, hoping to sell at a higher price, maybe years from now?
Relevant Wikipedia article: https://en.m.wikipedia.org/wiki/Oil_reserves_in_the_United_S...
Re: Crude Falls Below $30 a Barrel for the First Time in 12 Years
#9Yukon XL Denali here I come! Seriously though, I thought Saudi and worldwide peak oil was in 2005. Is that a myth or are prices not really constrained by supply until way past the peak?
Re: Crude Falls Below $30 a Barrel for the First Time in 12 Years
#10How much oil can be stored by producers, and for how long? If you run an operation that gets oil out of the ground at $50, you wouldn't want to sell at $30 (you wouldn't want to take it up at all, but likely need to keep your machines running). Are there producers that sit on lots of oil now, hoping to sell at a higher price, maybe years from now?
Iran oil is going to enter the market in the next few months. That would bring down the prices further.
With the production already lot higher than consumption already don't expect the prices to go up anytime soon.
In many oil importing countries where people were getting subsidies earlier those countries have stopped gives subsidies are also charging extra taxes so the prices have not come down dramatically. Which has resulted in little growth in consumption.