The Price of Oil Is About to Blow a Hole in Corporate Accounting
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Re: The Price of Oil Is About to Blow a Hole in Corporate Accounting
#2Ask the author this: why did he not ask: "Postphoned the reckoning of _what_???" what is this FEAR he is trying to spread?
Re: The Price of Oil Is About to Blow a Hole in Corporate Accounting
#3Isn't the price being held at an unsustainably low price by OPEC? If so, then any accounting problems would be short lived. Once OPEC cuts supply, the prices will bounce back to ~$100/barrel, I would expect.
Re: The Price of Oil Is About to Blow a Hole in Corporate Accounting
#4In case anyone forgets that it can go too far in the opposite direction: http://en.wikipedia.org/wiki/Enron_scandal#Mark-to-market_ac...
Re: The Price of Oil Is About to Blow a Hole in Corporate Accounting
#5Isn't the price being held at an unsustainably low price by OPEC? If so, then any accounting problems would be short lived. Once OPEC cuts supply, the prices will bounce back to ~$100/barrel, I would expect.
It looks like the reverse; OPEC stopped holding prices up.
Re: The Price of Oil Is About to Blow a Hole in Corporate Accounting
#6Isn't the price being held at an unsustainably low price by OPEC? If so, then any accounting problems would be short lived. Once OPEC cuts supply, the prices will bounce back to ~$100/barrel, I would expect.
Current oil storage is nearing full. With present condition, they will be full sometime in April. It will take some months, maybe a year for storage to empty out enough to support high prices.
http://blogs.wsj.com/moneybeat/2015/03/05/the-newest-commodi...
http://www.forbes.com/sites/christopherhelman/2015/03/04/u-s...
Re: The Price of Oil Is About to Blow a Hole in Corporate Accounting
#7I take it no serious investor makes any decision based on that arbitrary number, do they? So then, why require it?
Re: The Price of Oil Is About to Blow a Hole in Corporate Accounting
#8Isn't the price being held at an unsustainably low price by OPEC? If so, then any accounting problems would be short lived. Once OPEC cuts supply, the prices will bounce back to ~$100/barrel, I would expect.
There's a lot of speculation on OPEC's motives and power. They could be trying to shut down exploration in the US. The Saudis could be doing the US a favour by trying to destabilise russia. They could be trying to sabotage green energy for a while. Their coalition might just be powerless because everyone needs to pump out as much oil as possible, especially at these price levels.
Regarding future price levels the efficient market hypothesis probably holds: nobody without inside information knows which way the oil price is going.
Re: The Price of Oil Is About to Blow a Hole in Corporate Accounting
#9Well, if the stock market reacts by savaging the prices of these companies, sounds to me like a fantastic long-term investment opportunity will be opening up. However large this may be, it's still a transient price drop with a lot of politics in it, and in the long term prices are still only going to go back up. Most of that oil in the ground is still going to be pumped up at much higher prices, and not all that many years from now.
Re: The Price of Oil Is About to Blow a Hole in Corporate Accounting
#10Isn't the price being held at an unsustainably low price by OPEC? If so, then any accounting problems would be short lived. Once OPEC cuts supply, the prices will bounce back to ~$100/barrel, I would expect.
It looks like the reverse; OPEC stopped holding prices up.
Indeed. The theory here is that besides a demand drop due to the general world economy, and the US swimming in oil, the Saudis have decided to stop playing the swing producer game because they've noticed when they tighten the spigot, they permanently lose market share.
The current US inventory issue is akin to this, because it exists in part because refineries are tuned to the types of oil they use, and we've spent quite a bit making a lot of them take heavy, sour crude, and fracking tends to produce light, sweet crude. Which is good stuff, and in high world wide demand, but due to another one of those insane '70s energy policies, no one is allowed to export crude (with I think one exception, to refineries that immediately return the distillates to the US).
E.g. we should have exported a lot of Alaskan oil to Japan, when California was not set up to take all of it, and it would have cost less to transport it to Japan and equivalent oil to the US.