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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

#21

Post by tptacek »

aikah wrote: post #13
matt4077 wrote: post #8

Earlier quoted context omitted.

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 eff…

I read a lot about the subject and couldn't come up with a satisfying answer as to why the Saudis are doing that. All I know is they are playing a very dangerous game and Washington is letting them do it. People say,there will be no consequences for USA,but oil prices will go up again sooner or later. What then ? I don't believe shale oil is an explanation.

You don't believe shale oil is an explanation... why? Have you looked at the barrels/day production figures for shale oil? They are gargantuan.

Re: The Price of Oil Is About to Blow a Hole in Corporate Accounting

#22

Post by JosephHatfield »

imaginenore wrote: post #14
jerf wrote: post #9

Well, 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…

You don't know that. The world is really on the way of getting rid of oil. Electric cars, bioplastics, solar panels getting exponentially cheap. From my point of view the only thing that stops us all from switching to electric cars is the battery technology. When it comes to the industrial use of solar energy, we already have the technology of storing energy - flywheel (google Beacon Power).

I would switch to an electric car immediately if I had some place to plug it in. That's a bigger problem for me than the number of miles I can get on one charge. I need about 25 miles a day from my car. More than that is gravy.

Re: The Price of Oil Is About to Blow a Hole in Corporate Accounting

#23

Post by adventured »

imaginenore wrote: post #14
jerf wrote: post #9

Well, 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…

You don't know that. The world is really on the way of getting rid of oil. Electric cars, bioplastics, solar panels getting exponentially cheap. From my point of view the only thing that stops us all from switching to electric cars is the battery technology. When it comes to the industrial use of solar energy, we already have the technology of storing energy - flywheel (google Beacon Power).

The largest impediment to everyone switching over to electric cars, is grid and supply, not storage.

We can do the battery storage right now, it's just not as great as what we'd like.

If you switched all cars over to electric tomorrow, the grid would melt down in every country that attempted it. There is not even remotely enough power available to handle it. Most first world countries are running their national power grids with a very modest buffer (and for countries sub first world, forget about it, they're still dealing with routine rolling blackouts).

By the time all autos are switched to electric in 30 years, hopefully self-driving cars have wiped out at least half of all vehicles in the first world.

Re: The Price of Oil Is About to Blow a Hole in Corporate Accounting

#24

Post by adventured »

aaron_m04 wrote: post #3

Isn'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 isn't only OPEC.

The US dollar shaved at least 20%+ off the price of oil, and likely instigated this crash (the world was swimming in oversupply of oil for quite some time before the crash).

The US dollar began skyrocketing, due to the end of QE, at exactly the same time oil began crashing. Not a coincidence, given oil is priced in dollars and the US dollar is on its greatest one year run in decades.

Look at July 1st

USD http://finviz.com/futures_charts.ashx?t=DX

Oil http://finviz.com/futures_charts.ashx?t=CL

Re: The Price of Oil Is About to Blow a Hole in Corporate Accounting

#25

Post by caseysoftware »

imaginenore wrote: post #14
jerf wrote: post #9

Well, 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…

You don't know that. The world is really on the way of getting rid of oil. Electric cars, bioplastics, solar panels getting exponentially cheap. From my point of view the only thing that stops us all from switching to electric cars is the battery technology. When it comes to the industrial use of solar energy, we already have the technology of storing energy - flywheel (google Beacon Power).

Even if a perfect battery was introduced tomorrow it would still take at least 10 years before it made a serious dent in the car market. The Prius was introduced in the US in 2000 and it took about 11 years for them to sell the first million.[1]

The vast majority of people don't buy a brand new car more than once or twice in their life. They simply don't have the money. The rest of the people buy a car used and drive it until they sell it to someone else to buy another used car. Cars can last 200+k miles which is often 15-20 years in the life of most vehicles.

[1] - http://en.wikipedia.org/wiki/Toyota_Prius

Re: The Price of Oil Is About to Blow a Hole in Corporate Accounting

#26

Post by greglindahl »

JosephHatfield wrote: post #22
imaginenore wrote: post #14

Earlier quoted context omitted.

You don't know that. The world is really on the way of getting rid of oil. Electric cars, bioplastics, solar panels getting exponentially cheap. From my point of view the only thing that stops us all from switching to electric cars is the battery technology. When it comes to the industrial use of solar energy, we already have the technology of storing energy - flywheel (google Beacon Power).

I would switch to an electric car immediately if I had some place to plug it in. That's a bigger problem for me than the number of miles I can get on one charge. I need about 25 miles a day from my car. More than that is gravy.

It's common on Hacker News for every mention of electric cars to have a complaint from people who can't charge at home. That's not an actual problem: if only the people who could charge at home bought them, that's still a huge % of the market.

Re: The Price of Oil Is About to Blow a Hole in Corporate Accounting

#27

Post by greglindahl »

adventured wrote: post #23
imaginenore wrote: post #14

Earlier quoted context omitted.

You don't know that. The world is really on the way of getting rid of oil. Electric cars, bioplastics, solar panels getting exponentially cheap. From my point of view the only thing that stops us all from switching to electric cars is the battery technology. When it comes to the industrial use of solar energy, we already have the technology of storing energy - flywheel (google Beacon Power).

The largest impediment to everyone switching over to electric cars, is grid and supply, not storage. We can do the battery storage right now, it's just not as great as what we'd like. If you switched all cars over to electric tomorrow, the grid would melt down in every country that attempted it. There is not even remotely enough power available to handle it. Most first world countries are running their national power…

"If you switched all cars over to electric tomorrow" is not a useful scenario. In reality, the shift will take decades, and that's enough time for changes in the grid to happen.

Re: The Price of Oil Is About to Blow a Hole in Corporate Accounting

#28

Post by rcarrigan87 »

I bought some shares in an oil ETF a fews weeks ago my investment rationale was:

1. If the price stays low I win because my gas will be cheaper (essentially hedging my gas costs). If the price rises my cost at the pump will increase but will be offset some by gains on the ETF.

2. Geopolitical flares up typically drive oil prices higher. Low oil prices destabilize a lot of countries and increase the probability of these issues. It's almost like low oil prices will inevitably lead to high oil prices.

Of course, this is all speculative (mostly for fun for me although it is real money). I would never invest money I couldn't lose based on this loose reasoning. But now I get to call myself an "oil man."

Re: The Price of Oil Is About to Blow a Hole in Corporate Accounting

#29

Post by adventured »

greglindahl wrote: post #27
adventured wrote: post #23

Earlier quoted context omitted.

The largest impediment to everyone switching over to electric cars, is grid and supply, not storage. We can do the battery storage right now, it's just not as great as what we'd like. If you switched all cars over to electric tomorrow, the grid would melt down in every country that attempted it. There is not even remotely enough power available to handle it. Most first world countries are running their national power…

"If you switched all cars over to electric tomorrow" is not a useful scenario. In reality, the shift will take decades, and that's enough time for changes in the grid to happen.

Of course. The parent said this however:

"From my point of view the only thing that stops us all from switching to electric cars is the battery technology."

My obvious point was that, in fact, that is not even remotely the only thing stopping us from switching to electric cars. My scenario was extremely useful in highlighting the fact that we do not have the capacity to switch to an all-electric car approach, and not primarily due to batteries.

We can do the battery tech and manufacturing in the present, to build very effective electric vehicles. Building up the grid to support ~500 million cars in the first world would cost tens of trillions of dollars and take decades. It makes the battery challenge look hilariously minuscule by comparison.

Re: The Price of Oil Is About to Blow a Hole in Corporate Accounting

#30

Post by protomyth »

aaron_m04 wrote: post #3

Isn'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.

Its more like Saudi Arabia is not reducing production and certain countries such as Russia and Venezuela cannot survive at that price. I think they're trying to force closure of US fracking sites, but they can go down lower than a lot of countries.
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