How is it possible to talk of the future of oil and ignore the elephant in the room?
Oil's Collapse Is a Geopolitical Reset in Disguise
21–30 of 221 posts
Re: Oil's Collapse Is a Geopolitical Reset in Disguise
#22How is it possible to talk of the future of oil and ignore the elephant in the room?
Like you just did?
Re: Oil's Collapse Is a Geopolitical Reset in Disguise
#23I found this part really interesting: "For dozens of oil producers, the plunge in oil prices is devastating. No major oil producer can balance its budget at prices below $40; according to the International Monetary Fund, with the exception of Qatar, every country in the Middle East requires at least $60, with Algeria at $157 and Iran at a whopping $390. The average Brent price of oil over the past month has been a ha…
> the cost of extracting oil is so high in Iran I think you might be reading that wrong. It isn’t that the cost of extracting the oil is so high, but that the budgets of these countries depends on the price of oil being high. When the price drops, they can no longer cover their entire budget and will need to borrow or reduce their spending. These numbers aren’t related to the cost of extraction (which is a different…
Ah, so does this mean Iran is particularly dependent on oil to finance itself?
Re: Oil's Collapse Is a Geopolitical Reset in Disguise
#24Earlier quoted context omitted.
ArsTechnica / Wired has a good article out about just that question. One reason that isn’t economic (and there are many economic factors a play here too) is that if you stop pumping oil, you can potentially damage the well. This would make it more difficult to reopen the well in the future when the prices improve. This also tends to affect smaller producers with fewer wells and thus more risk of one of them is damage…
Isn't another solution to just let the oil go into the ground, and stop worrying about destroying earth? I can imagine Trump getting rid of all environmental regulations. How likely is that? (I'm on the environmental regulations side of course, but I'm quite worried that this will be the logical next step).
Exactly!
Re: Oil's Collapse Is a Geopolitical Reset in Disguise
#25I found this part really interesting: "For dozens of oil producers, the plunge in oil prices is devastating. No major oil producer can balance its budget at prices below $40; according to the International Monetary Fund, with the exception of Qatar, every country in the Middle East requires at least $60, with Algeria at $157 and Iran at a whopping $390. The average Brent price of oil over the past month has been a ha…
Iran's oil is not expensive to extract. These aren't marginal break-even prices on each barrel of oil...rather they're how much their current oil production would have to be sold for in order to balance their national budget, which includes defense and healthcare and whatnot.
79% of Iran's exports are unrefined crude oil: https://commons.wikimedia.org/wiki/File:Islamic_Republic_of_... (edited to 2017)
Countries typically "go bankrupt" in a practical sense (with very noticeable real-world effects on the local citizens) when their foreign reserves run out.
Re: Oil's Collapse Is a Geopolitical Reset in Disguise
#26Earlier quoted context omitted.
What is your point?
It's useful to understand the biases of an author when reading an article. We all have them, and no media is free from them. It contextualizes a piece, and it's information I found useful to my understanding of the piece.
I agree, but at the same time, it could also introduce a bias and prejudice into your perception of the article. This would be especially true if you already had strong feelings and opinions about the author. Maybe the ideal way would be to read it without any knowledge of the author. And then go back and reread it after knowing who wrote it.
Re: Oil's Collapse Is a Geopolitical Reset in Disguise
#27Earlier quoted context omitted.
What is your point?
It's useful to understand the biases of an author when reading an article. We all have them, and no media is free from them. It contextualizes a piece, and it's information I found useful to my understanding of the piece.
It might, but a given tidbit is only so much context.
A random bit of context with no obvious connection isn't much context. Context is more than a single given fact.
Re: Oil's Collapse Is a Geopolitical Reset in Disguise
#28Re: Oil's Collapse Is a Geopolitical Reset in Disguise
#29Earlier quoted context omitted.
> the cost of extracting oil is so high in Iran I think you might be reading that wrong. It isn’t that the cost of extracting the oil is so high, but that the budgets of these countries depends on the price of oil being high. When the price drops, they can no longer cover their entire budget and will need to borrow or reduce their spending. These numbers aren’t related to the cost of extraction (which is a different…
Ah, so does this mean Iran is particularly dependent on oil to finance itself?
Indeed: https://commons.wikimedia.org/wiki/File:Islamic_Republic_of_... (edited to 2017)
79% of their exports is unrefined crude oil. While exports are not always the whole story, in this case it is extremely relevant.
If Iran's economy was 99% domestic and 1% trade, (essentially autarkic) then it wouldn't really matter at all what the price of oil is, as Iran makes everything it needs for itself, whether that be automobiles, medical equipment, financial services, concrete, etc.
However, Iran is not autarkic and trade is about 50% of its GDP. In order to complete international trade it requires foreign currency. At the start of the year, Iran had $85B in foreign reserves, according to FRED anyways. It was expected to lose $15B this year, but that was supposed to be while exporting $30B of crude oil. If that $30B is now only $10B, then Iran could lose $35B of foreign reserves this year.
They can reduce domestic spending (potentially lowering quality of life for citizens), or they can spin up domestic industry to replace imports, or they can figure out how to increase the $$ value of their exports (potentially by refining the crude oil into higher value products, for example).
If they don't do anything, and the trend continues in a straight line, they'd run out of foreign reserves within 3 years. At that point, it would be very difficult for them to buy any of the imports they need and they'd face a venezuela-style situation where citizens would find it impossible to get whatever goods used to be imported.
For Iran, this is food, cars, durable goods & machinery, electronics, and textiles: https://atlas.cid.harvard.edu/explore?country=107&product=un...
Re: Oil's Collapse Is a Geopolitical Reset in Disguise
#30Earlier quoted context omitted.
What is your point?
You know the expression let the chips fall where they may? Well this is just stating "here are the chips." i.e the author is knowledgeable in the field and either is offering expert opinion or expert manipulation.
Not sure why you are being modded.
A third option, which I consider most likely, is that this piece is doing both. The author most likely believes in what they are saying and are trying to manipulate things in a certain direction. There is noting wrong with this, and I think understanding the bias is merely a more effective way to gain more from reading this.