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Crude Falls Below $30 a Barrel for the First Time in 12 Years

bloomberg.com

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Re: Crude Falls Below $30 a Barrel for the First Time in 12 Years

#81

Post by toomuchtodo »

TheOtherHobbes wrote: post #75
tonyedgecombe wrote: post #61

Earlier quoted context omitted.

Yes, it's going to be interesting to see how this unfolds politically, particularly in Saudi Arabia.

The IMF thinks Saudi has cash reserves to cover five years - which is more than competing countries have. So they can play white knuckle poker and out-wait everyone else, then jack up prices again around 2019/20 - just in time to kill any recovery that might be happening by then.

> So they can play white knuckle poker and out-wait everyone else, then jack up prices again around 2019/20 - just in time to kill any recovery that might be happening by then.

The rest of the world better move off of oil quickly then.

Re: Crude Falls Below $30 a Barrel for the First Time in 12 Years

#82

Post by fratlas »

Andaith wrote: post #79
wingsonfire wrote: post #25

Countries that export crude are having recession.. To name few Canada, Russia, Brazil, Nigeria, Venezuela, Australia (commodities not just crude), at the same countries like India who import and depend heavily on crude are having good times (relatively). So finally is it crude that runs all economies and everything else is overrated.. That scenario if true is so scary!

Australia has managed to avoid recession so far. I know that's only technically true, but that's the best kind of true. (We had a lot of defense spending in one quarter that pushed us over the line between contracting/expanding.) It'll be interesting to see how Q1 2016 goes. Even if it is a recession, it's not a normal one, since unemployment is going down.

Do you think we (Aus) will in 2016?

Re: Crude Falls Below $30 a Barrel for the First Time in 12 Years

#83

Post by tamana »

danmaz74 wrote: post #65
cpursley wrote: post #17

Interesting perspective: Oil Limits And The End Of The Debt Supercycle http://davidstockmanscontracorner.com/2016-outlook-oil-limit...

> Ultimately, diminishing returns with respect to human labor–what some of us would call falling inflation-adjusted wages of non-elite workers–tends to bring economies down. The article doesn't show at all that there are diminishing returns from human labor. What we have, instead, is that even if technology is making labor ever more productive, these gains in productivity are going more and more towards companies and…

You are making arbitrary choices as to which people get the credit for productivity that is generated by machines not people.

Re: Crude Falls Below $30 a Barrel for the First Time in 12 Years

#84

Post by tamana »

jazzyk wrote: post #69
iofj wrote: post #51

Earlier quoted context omitted.

There's a second effect. Companies that are near 100% indebted (and a dropping oil price will seriously lower their expected value, therefore getting them far closer to their debt limits even if they don't actually loan anything). Such companies, how do they respond to price shocks ? You have capital invested, and debt to pay back. But capital is a sunk cost, the debt won't disappear because you stop pumping. Therein…

Thanks for the thoughtful comment. However, I respectfully disagree with the statement "price of oil will of course go back up at some point". I don't think it will ever go back to $80+ for two reasons: - more producers (US, Iran's embargo over, other countries exploring shale) - other sources of energy (solar, , etc)

* developed world population (demand) doubling, repeatedly

* easy to harvest oil exhausted

Re: Crude Falls Below $30 a Barrel for the First Time in 12 Years

#85

Post by danmaz74 »

danbruc wrote: post #68
danmaz74 wrote: post #65

Earlier quoted context omitted.

> Ultimately, diminishing returns with respect to human labor–what some of us would call falling inflation-adjusted wages of non-elite workers–tends to bring economies down. The article doesn't show at all that there are diminishing returns from human labor. What we have, instead, is that even if technology is making labor ever more productive, these gains in productivity are going more and more towards companies and…

[...] these gains in productivity are going more and more towards companies and investors (mostly thanks to the competition from Chinese laborers) instead of (western) non-elite workers. This seems illogic to me - if you have to compete with cheap labour you have to cut your costs in one way or another, pay less to your work force, make them more efficient, accept smaller profits or what have you. Putting more money…

It's not the "capitalists" that have to compete with cheap labour, it's the labourers. Big brands can move their production where cheap labour is, keep their prices up, and pocket higher profits. This won't work forever, but it works for now.

Re: Crude Falls Below $30 a Barrel for the First Time in 12 Years

#86

Post by EliRivers »

ck2 wrote: post #54
liveoneggs wrote: post #31

Earlier quoted context omitted.

"become"?

Well it's been pretty quiet from there since 9/11 I mean the USA made more than 15 domestic terrorists since 9/11 I'm just wondering what happens when the comfortable over there have to give up their luxuries - do they take it in stride or does their belief system go to extremes to compensate?

Well it's been pretty quiet from there since 9/11

It's not on CNN [1] so you just don't hear about it.

[1] etc.

Re: Crude Falls Below $30 a Barrel for the First Time in 12 Years

#87

Post by sospep »

toomuchtodo wrote: post #81
TheOtherHobbes wrote: post #75

Earlier quoted context omitted.

The IMF thinks Saudi has cash reserves to cover five years - which is more than competing countries have. So they can play white knuckle poker and out-wait everyone else, then jack up prices again around 2019/20 - just in time to kill any recovery that might be happening by then.

> So they can play white knuckle poker and out-wait everyone else, then jack up prices again around 2019/20 - just in time to kill any recovery that might be happening by then. The rest of the world better move off of oil quickly then.

is there a way to move off oil quickly?

Re: Crude Falls Below $30 a Barrel for the First Time in 12 Years

#88

Post by toomuchtodo »

sospep wrote: post #87
toomuchtodo wrote: post #81

Earlier quoted context omitted.

> So they can play white knuckle poker and out-wait everyone else, then jack up prices again around 2019/20 - just in time to kill any recovery that might be happening by then. The rest of the world better move off of oil quickly then.

is there a way to move off oil quickly ?

Provider greater incentives for electric vehicles, place a carbon tax on petroleum fuels.
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