Earlier quoted context omitted.
> Saudi Arabia extracts "light" oil and it's a frickin' desert, so the environmental impact of that extraction is quite a bit lower all things considered. Wait, what? A desert is just as much an ecosystem as a rainforest or a city.
Are you seriously claiming that, say, the sand of the Sahara (or the ice at the south pole) is as rich as, say, the Amazonian rainforest? Sure I guess technically anything is an ecosystem, but some clearly support far more life (and variety of life, and sometimes exclusive life) than others. They obviously have different ecological "value". Also pumping oil in the desert doesn't lead to the local residents being able…
The global oil market is broken, drowning in crude nobody needs
191–200 of 303 posts
Re: The global oil market is broken, drowning in crude nobody needs
#192Earlier quoted context omitted.
If you have to ask how to do this on HN, you're too late. Pricing has already been set by Black-Scholes, and unless you have a seat on the CBOE you're better off going to Vegas.
Come on now reddit wallstreetbets is up there with Vegas now for gamblers looking for a fix
I think /r/wallstreetbets is the modern version of interactive fiction, or perhaps even the evolution of fireside-storytelling that civilization has had for 10,000 years. "The mammoth was THIS BIG! //extends neanderthal arms for affect//"
Re: The global oil market is broken, drowning in crude nobody needs
#193Earlier quoted context omitted.
From...economics? Profit is market inefficiency, whether due to missing information or inadequate competition. Perfect efficiency drives prices down to the marginal cost of a good or service. Micro 101 stuff.
"Profit is market inefficiency" Profit is motive to do something. No profit = no motive. "perfect efficiency" means "no market" in this definition. It's a make believe process that will literally never happen. Companies that work with perfect efficiency close their doors.
Yep. Perfect markets dont actually exist in any realistic way, and the US constitution itself deliberately breaks perfect markets by providing for patents.
Re: The global oil market is broken, drowning in crude nobody needs
#194Earlier quoted context omitted.
That depends on what you define as a market that isn't broken. In a perfect free market the oil producers make zero profits and this is a move towards fixing the market
"in a perfect market producers make zero profits" In what world would any company make zero profits in a "perfect" sense? Companies exist to make profit...
Perfect here refers to the mathematical model of a perfect market and perfect competition, not an external normative sense of the word as some societal ideal.
Re: The global oil market is broken, drowning in crude nobody needs
#195Earlier quoted context omitted.
In a perfect free market for a commodity price is the marginal cost: in other words if there is demand for N barrels of oil per day at the market price, that market price is the cost of production for the Nth most cheapest production cost. Anybody whose cost of production is cheaper makes money. For a long time that marginal cost was Canadian oil sands oil, which cost about $40 a bbl to extract and $10 to ship. The S…
Most definitions of perfect free markets include some element of perfect competition. The math essentially assumes there are an infinite number of saudis producing at $10 a barrel that compete with eachother down to marginal cost. Obviously these aren't realistic assumptions and pretty much everyone has some form of monopoly power, such as the saudis in your case which have monopoly power coming from lower cost of go…
> Obviously these aren't realistic assumptions and pretty much everyone has some form of monopoly power, such as the saudis in your case which have monopoly power coming from lower cost of goods.
That's not what "monopoly" means. Monopoly power isn't just a fancier word for market power. Monopoly power is power derived from the fact that nobody else is selling what you're selling.
Note that in this example, the Saudis can't raise the price of oil above $50 / barrel. Setting a price of $60 would send their sales to 0 rather than to whatever the level of demand is at $60. They can't do it because they don't have monopoly power.
(If you expand the example a little, saying that world oil demand exceeds the amount Canada can produce, then you can claim that Saudi Arabia has monopoly power by virtue of being able to sell oil that Canada can't sell. But in the model where Canada can produce any amount of oil at $50 / barrel and Arabia can produce any amount at $20 / barrel, there is no monopoly power anywhere.)
Re: The global oil market is broken, drowning in crude nobody needs
#196It's not crude "nobody needs". It's just storage being too expensive to expand infinitely. If it weren't, it'd be a great opportunity to stock up, because the need will be there for decades.
Re: The global oil market is broken, drowning in crude nobody needs
#197I know this is the wrong attitude but with no ties to the oil industry that I am aware of I personally am enjoying watching the market crash and my cost of gas go way down. However my understanding of the economy is poor. Does this negatively effect the average joe or mainly oil producers?
What if the price of advertising or SAS apps was forcibly cut by 70% or more?
Great for consumers. Not so good for Google and SAS companies and thus their employees.
(but I'm not crying for oil either).
Re: The global oil market is broken, drowning in crude nobody needs
#198Earlier quoted context omitted.
Most definitions of perfect free markets include some element of perfect competition. The math essentially assumes there are an infinite number of saudis producing at $10 a barrel that compete with eachother down to marginal cost. Obviously these aren't realistic assumptions and pretty much everyone has some form of monopoly power, such as the saudis in your case which have monopoly power coming from lower cost of go…
> Obviously these aren't realistic assumptions and pretty much everyone has some form of monopoly power, such as the saudis in your case which have monopoly power coming from lower cost of goods. That's not what "monopoly" means. Monopoly power isn't just a fancier word for market power. Monopoly power is power derived from the fact that nobody else is selling what you're selling. Note that in this example, the Saudi…
Pricing power is a better word that monopoly power in this case then, should have been more precise in wording. They arent price takers is the point. They have price making power and a downward sloping demand curve until 50 bucks a barrel
Re: The global oil market is broken, drowning in crude nobody needs
#199Earlier quoted context omitted.
From...economics? Profit is market inefficiency, whether due to missing information or inadequate competition. Perfect efficiency drives prices down to the marginal cost of a good or service. Micro 101 stuff.
"Profit is market inefficiency" Profit is motive to do something. No profit = no motive. "perfect efficiency" means "no market" in this definition. It's a make believe process that will literally never happen. Companies that work with perfect efficiency close their doors.
Well, sorta but um no. If no profit includes a situation where everyone involved is paid at least enough that they are willing to do the work, then there is by definition motive to do the work.
These economic models are simplistic to the point of stupidity. But motivation to do the work can be totally priced in to the equations as a cost of doing business. Profit beyond that is what must, in the models, end up at zero to be efficient.
Re: The global oil market is broken, drowning in crude nobody needs
#200Or, to shift perspective, we are also in a class-war position of a general strike.