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The global oil market is broken, drowning in crude nobody needs

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Re: The global oil market is broken, drowning in crude nobody needs

#221

Post by computerex »

AnthonyMouse wrote: post #216
0xff00ffee wrote: post #174

Earlier quoted context omitted.

This is exactly why "fair trade" products like coffee and chocolate exist. There is an agreement to have an absolute minimum purchase price to prevent a big corporation from clobbering the competition by taking a loss, then jacking up the price. See also: rideshare. VC pumps in billions so that Lyft & Uber can be cheaper than taxis at a HUGE loss -> taxis go out of business -> Lyft & Uber jack up their prices because…

> See also: rideshare. VC pumps in billions so that Lyft & Uber can be cheaper than taxis at a HUGE loss -> taxis go out of business -> Lyft & Uber jack up their prices because they own the market. Did the rideshare companies actually jack up their prices at any point? How would they do that when they're still in competition with each other and the barrier to entry to the market remains low? Any attempt to raise pric…

Uber rides are subsidized. Uber loses money on each ride. The self-driving R&D is what will presumably save Uber. Their biggest expense (the drivers) will go away.

Re: The global oil market is broken, drowning in crude nobody needs

#222

Post by AnthonyMouse »

computerex wrote: post #221
AnthonyMouse wrote: post #216

Earlier quoted context omitted.

> See also: rideshare. VC pumps in billions so that Lyft & Uber can be cheaper than taxis at a HUGE loss -> taxis go out of business -> Lyft & Uber jack up their prices because they own the market. Did the rideshare companies actually jack up their prices at any point? How would they do that when they're still in competition with each other and the barrier to entry to the market remains low? Any attempt to raise pric…

Uber rides are subsidized. Uber loses money on each ride. The self-driving R&D is what will presumably save Uber. Their biggest expense (the drivers) will go away.

> Uber loses money on each ride.

How is that even possible? They get a percentage of the fare and their unit cost is only a tiny bit of server utilization.

Re: The global oil market is broken, drowning in crude nobody needs

#224

Post by mattmanser »

AnthonyMouse wrote: post #222
computerex wrote: post #221

Earlier quoted context omitted.

Uber rides are subsidized. Uber loses money on each ride. The self-driving R&D is what will presumably save Uber. Their biggest expense (the drivers) will go away.

> Uber loses money on each ride. How is that even possible ? They get a percentage of the fare and their unit cost is only a tiny bit of server utilization.

As far as I have heard, when they enter a market, they pay the driver more than they're getting from the user.

Plus marketing. You think Google let Uber put an advert on every Google Maps search for free?

There's actually a whole article about it on crunchbase: https://news.crunchbase.com/news/understanding-uber-loses-mo...

Re: The global oil market is broken, drowning in crude nobody needs

#225

Post by hutzlibu »

vikramkr wrote: post #215
hutzlibu wrote: post #211

Earlier quoted context omitted.

Your answer and the others reinforce why I allways avoided everything with economics in university. The definitions and models are (mostly) just weird. I would intuitively define a free market, as a (virtual) place, where people can trade freely (goods or labour) without restrictions. And they profit, if they are better off with the trade, than without. The more free the market, the less restrictions. Why so complica…

It's actually too oversimplified to be a great model for most things. Extend your intuition to imagine that you have perfect competition where there are infinitely many identical goods all competing to the lowest price either no differentiation, and people will price at zero profit. To extend that to the real world requires more and more complications like the time value of money etc

"Extend your intuition to imagine that you have perfect competition where there are infinitely many identical goods all competing to the lowest price either no differentiation, and people will price at zero profit. "

But this is not reality. I doubt doing abstractions like these are helpful in understanding anything, when the base is so far off.

Re: The global oil market is broken, drowning in crude nobody needs

#226

Post by AnthonyMouse »

mattmanser wrote: post #224
AnthonyMouse wrote: post #222

Earlier quoted context omitted.

> Uber loses money on each ride. How is that even possible ? They get a percentage of the fare and their unit cost is only a tiny bit of server utilization.

As far as I have heard, when they enter a market, they pay the driver more than they're getting from the user. Plus marketing. You think Google let Uber put an advert on every Google Maps search for free? There's actually a whole article about it on crunchbase: https://news.crunchbase.com/news/understanding-uber-loses-mo...

That's not unit cost. Companies spend money on advertising when they're new because it pays dividends for decades. It's not inherently loss-making, it's just investment that hasn't returned its full yield yet.

Re: The global oil market is broken, drowning in crude nobody needs

#227

Post by akiselev »

wyxuan wrote: post #115
bpsh wrote: post #79

Earlier quoted context omitted.

Unfortunately the goal is to drive out US Shale ...

No. This is a nice benefit but this war just isn't about shale like the 2012 flooding was. This conflict originated from a spat between Russia and Saudi Arabia and will end when they settle their differences.

A large part of that spat is that Russia still thinks it can drive out the US shale producers whereas Saudi Arabia is done fighting for now. Moscow has a $150 billion warchest whereas Riyadh is bleeding money and risking the biggest IPO in history.

Re: The global oil market is broken, drowning in crude nobody needs

#228

Post by TooSmugToFail »

mordymoop wrote: post #103
hackeraccount wrote: post #92

Earlier quoted context omitted.

I'm unclear how that's supposed to work. Oil goes below $30 for an extended period of time. So long that all the shale producers go bust. So long that no one buys up all those assets but instead just lets them go fallow. After all that time Saudia Arabia now lets the price rise. How much time will it be over $30 before the shale producers start up again? Will it really pay off compared to the amount of time they had…

“ How much time will it be over $30 before the shale producers start up again?” I work in this field, and the answer to your question is “instantaneously.” The largest operators will not go out of business because they have sufficient exposure to non-shale assets; they will simply immediately drill the wells they had planned to drill when the crisis hit. Capital will rapidly find its way into the hands of the people…

Two questions:

— I thought US shale break-even is between $45 and $55, is that correct?

— What's your opinion on how long until the debt starts imploding with the US shale producers?

Cheers, S

Re: The global oil market is broken, drowning in crude nobody needs

#229

Post by syshum »

vikramkr wrote: post #125
syshum wrote: post #102

Earlier quoted context omitted.

Who would that be?

OPEC et al. Oil is a classic cartel controlled industry.

I figured that would be the response, and the current price drops proves that the be wrong as the it is not just falling demand that is causing the price collapse, not that started long before COVID, it is a price war between 2 (of many) large suppliers,

This idea that OPEC controls everything in oil is simply false

Re: The global oil market is broken, drowning in crude nobody needs

#230

Post by syshum »

wyxuan wrote: post #119
syshum wrote: post #104

Earlier quoted context omitted.

Only if you have a 5th grade understanding of Geo-Politics, and Macro-Economics do you believe that is a Win-Win. US Production of Oil and Nat Gas provides for the opportunity to the US to be less dependent on Mid East oil, which is WONDERFUL for Global Peace. Also because the value of the Dollar is tied to Oil being traded in Dollars, reliance on Mid East oil puts the US in a HUGE economic Liability. So sure from a…

The Petro dollar isn't necessarily a bad thing. It doesn't necessarily require us to continue our presence in the middle East, and it ( among other things) ensures that that the dollar system is the most important system. Global dollar system is what allows the us to print so much money: there isn't any alternative safer currency.

>>It doesn't necessarily require us to continue our presence in the middle East

History Proves that to be wrong

>ensures that that the dollar system is the most important system. Global dollar system is what allows the us to print so much money: there isn't any alternative safer currency.

That is not really a good thing. We can print those larges amounts of dollars because they never really get circulated. At some point the music will stop on this moronic policy and the current economic disaster will look like a fun time

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