31–40 of 88 posts
So is Saudi Arabia going to (also) become a terrorist factory once they have to cut all the massive handouts they do and implement heavy austerity? I mean the amount of income in the middle-east is going to severely drop over the next few years - the wealthy won't be affected, just annoyed but the people who have to work for a living are going to be out of jobs, starving and homeless and extreme belief systems often…
is 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)
Yes, a barrel of oil brought up by fracking costs around $62 (Canadian oil sands cost $74) per barrel(according to NPR below). Though that is total cost, marginal cost of pumping after you drill and frack the well is around $35. Oil demand tends to be fairly inelastic. Almost all of oil pricing is supply driven. OPEC decides on a target price and produces to meet that price. The current price has happened because Sau…
Earlier quoted context omitted.
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 ar…
Economically not all good. Oil companies depending on higher prices (most of them), will start having to reduce number on employees, or, worst case, go bankrupt and take financial institutions with them (because of debt).
So is Saudi Arabia going to (also) become a terrorist factory once they have to cut all the massive handouts they do and implement heavy austerity? I mean the amount of income in the middle-east is going to severely drop over the next few years - the wealthy won't be affected, just annoyed but the people who have to work for a living are going to be out of jobs, starving and homeless and extreme belief systems often…
Anyone who knows this stuff care to explain what the consequences of this are likely to be?
Yukon 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?
Prices are set by supply and demand. A worldwide depression has a way of pushing the price down, even with restricted supply. And not that decreasing oil supply is supposed to cause it some of the times, leading to huge price instability, not simple price increases.
TLDR, this price is much more a gauge of our current depression than anything else.
Interesting perspective: Oil Limits And The End Of The Debt Supercycle http://davidstockmanscontracorner.com/2016-outlook-oil-limit...
That said, about half the article could be summed up in "commodity prices are falling because demand from most of the global working class is falling".
Yukon 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?
I'd like to hear about this from anyone more qualified than me (which would really be anyone).
Countries that export crude are having recession.. To name few Canada, Russia, Brazil, Nigeria, Venezuela, Australia (commodities not just crude), at the same countries like India who import and depend heavily on crude are having good times (relatively). So finally is it crude that runs all economies and everything else is overrated.. That scenario if true is so scary!
How 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?
You can not pump it (with some risks of losing your capital), but you'll still need to pay interest on the money you spent creating your wheels, thus companies tend to pump it and sell even when they can't recover their investment, and pump faster the cheaper oil becomes.