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Oil's Collapse Is a Geopolitical Reset in Disguise

bloomberg.com

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Re: Oil's Collapse Is a Geopolitical Reset in Disguise

#31

Post by 0xddd »

fspeech wrote: post #6
irjustin wrote: post #3

I really appreciate this piece as there's a lot of the world of oil I don't understand. One thing I don't understand is, why is it favorable for OPEC not to cut supply? Is it they want to crush all non OPEC based producers? Or are their buyers forced to buy at a particular price so they don't care if they keep producing?

Because individually it does not work. If you cut and oil price does not go up as much as your cut percentage wise you actually lose revenue. And your competitors who don't cut benefit from any price rise. It is not easy to maintain a price cartel.

Sounds like a great real-world example of a prisoner's dilemma

Re: Oil's Collapse Is a Geopolitical Reset in Disguise

#32

Post by csours »

xiphias2 wrote: post #12
mbreese wrote: post #10

Earlier 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).

Sure but how will that make money for the well operator? I understand what you're saying, but what actual legal/political/economic framework are we talking about?

Re: Oil's Collapse Is a Geopolitical Reset in Disguise

#34

Post by redis_mlc »

rckoepke wrote: post #29
xiaolingxiao wrote: post #23

Earlier quoted context omitted.

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 aut…

All oil and gas exporters become dependant on that revenue. It's human nature to spend it all.

Re: Oil's Collapse Is a Geopolitical Reset in Disguise

#35

Post by 0xddd »

swimfar wrote: post #26
Pfhreak wrote: post #18

Earlier quoted context omitted.

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.

And what better way to find out who wrote it than to scan the comments after reading the article? In all seriousness, I don't see how wilful ignorance on the first-read through is some ideal analytic strategy.

Re: Oil's Collapse Is a Geopolitical Reset in Disguise

#36

Post by texasbigdata »

xiaolingxiao wrote: post #13

I 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…

Many basins or producers in the US don't "work" below $32 either.

Re: Oil's Collapse Is a Geopolitical Reset in Disguise

#37

Post by ggm »

The shift from coal catapulted.. it took years. First, technology had to shift to oil as a commodity beyond oil bunkers for battleships. Second, the nation states had to get out from ruinously bad national oil deals which also led to the Pahlavi regime, hatred of the British in Iran, the CIA and other bodies. This was not a catapult. It was a long slow dangerous and corrupt slide.

Re: Oil's Collapse Is a Geopolitical Reset in Disguise

#38

Post by AnthonyMouse »

birdyrooster wrote: post #5
irjustin wrote: post #3

I really appreciate this piece as there's a lot of the world of oil I don't understand. One thing I don't understand is, why is it favorable for OPEC not to cut supply? Is it they want to crush all non OPEC based producers? Or are their buyers forced to buy at a particular price so they don't care if they keep producing?

I think they see this is their last chance to shake off the light crude people in the US.

The light crude people in the US are the main reason the US doesn't have a revenue-neutral carbon tax or similar. I kind of doubt they want the implications of them going away -- though everybody else might.

Re: Oil's Collapse Is a Geopolitical Reset in Disguise

#39

Post by balladeer »

voz_ wrote: post #2

Additional detail: The author was one of the architects for major pieces of the Iraq war, including the surge. https://en.wikipedia.org/wiki/Meghan_O%27Sullivan

> endured some harrowing experiences while in Iraq, including escaping from a terrorist attack by scaling a building ledge ten stories up

This is fascinating :)

https://www.washingtonpost.com/wp-dyn/content/article/2007/0...

Re: Oil's Collapse Is a Geopolitical Reset in Disguise

#40

Post by kmonsen »

Pfhreak wrote: post #18
JackFr wrote: post #11

Earlier 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.

Also adds to it to see where the author have been wrong before. Doesn’t mean they are wrong this time, but a piece of data.
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