Yes all that's true at $70ish or so a barrel.
When it gets below $50 all that still you say starts going the other direction.
It might cause contraction in asset prices and in that industry but the overall effects of a 200-250 billion dollar tax cut going disproportionately to those who need it can't really be anything but a net positive I feel like.
And if it gets to $40-45 and stays there for a meaningful amount of time then you are talking about that kind of break.
fair enough. I am all for the free market and capitalism and I don't know what the answer is except I know it was only a few short years ago people weren't really complaining about gas prices. Then almost overnight, it doubled. Not from 4 to 9 but to 100. That to me is bullshit regardless if you want to call it capitalism. Something tells me there is a lot more to this than free market dictating the price of oil.
Yeah, I can agree with you there. I'm just saying $30-$40 oil will have a huge effect on an industry that has contributed something like .3% to GDP growth over the last couple years and until now seemed poised for even greater growth and investment over the next couple of years. I mean you have to admit it's also pretty crazy that employment in oil and gas rose 40% from 07-13 while declining 3% in the US as a whole. I didn't mean to imply it will surely be a net negative.
But the good thing about all this capitalism we've been talking about is the attitude you speak above is the very thing that creates the next bubble of 100+ prices.
Once Scott gets his 20$ oil the oil companies quit exploring , they let their infrastructure get old and out dated, they let the oil reserves deplete without any near term replacements because they had no financial incentive to keep production up.
Then all of a sudden almost overnight the pendulum completely goes in the exact opposite direction when the supply dwindles.
Only problem is for US companies they can't just flip a switch and all of a sudden start meeting demand again. This is what caused the huge spikes.
With 70ish oil everyone is happy.
Scott might get his 20 oil for a while but all it is is the beginnings of the next bubble that's going to go the other direction later.
as opposed to the oil industry being the only winner?
I dunno. Are you positive that it has to be 70-80? Or can it be lower and they still make a healthy profit but maybe not obscene? Of course people in the oil industry will hate what I say but I wonder if we just accept it now like many things? Not to get off the topic, but it ties into my last point, remember when the debt was a trillion? Then 5 trillion, then 9, then 14 and now it 18 trillion. Apparently that's capitalism also. Are we getting desensitized to these kind of things?
or maybe that is what the oil companies will have you believe to justify their massive profits? Maybe they don't have to make trillions in profit each year on the backs of everyone on the planet but maybe, just maybe, they can make a few hundreds billion less? Does greed justify everything when it comes to capitalism?
Most wells not profitable below $50-60
There will be contraction and layoffs if the price stays below $50.
You could say that is just the free market and oil companies got to reap the rewards of peak oil, now they'll have to tighten their belts with oversupply but it doesn't change the fact it won't be good for 1 of the biggest industries we have
how to stimulate? put more cash in consumers pocket
oil industry will be hurt?...um, okay, it'll adapt.......
.
a few 'estimates' below....
[h=1][/h]
ENLARGE
needless to say net exporters who's GDP is tied heavily to oil's price have challengers going forward...
"Prior to the shale revolution model simulations would have suggested a boost of 0.2 to 0.3 percentage points to US growth for every USD 10/bbl decrease in the price of oil," they write. "That estimate is now only 0.1%."
Overall, they estimate that a sustained $10 drop in prices will add about 0.2 percentage points to global GDP."
http://www.businessinsider.com/ubs-gdp-impact-of-10-decline-in-oil-2014-12#ixzz3O6GozALv
didn't GS have oil at $200?.....wow, a bit off...
oil industry will be hurt?...um, okay, it'll adapt.......
. a few 'estimates' below....
[h=1][/h]
needless to say net exporters who's GDP is tied heavily to oil's price have challengers going forward...
"Prior to the shale revolution model simulations would have suggested a boost of 0.2 to 0.3 percentage points to US growth for every USD 10/bbl decrease in the price of oil," they write. "That estimate is now only 0.1%."
Overall, they estimate that a sustained $10 drop in prices will add about 0.2 percentage points to global GDP."
http://www.businessinsider.com/ubs-gdp-impact-of-10-decline-in-oil-2014-12#ixzz3O6GozALv
didn't GS have oil at $200?.....wow, a bit off...
not so sure. Why attack an ally? They have NO army and they live in planet's earth most volatile area. I got a hunch they don't want USA to pull its army out given they have enemies in Iran, Syria and Russia (who arms their enemies)...
. As you said they have DEEEEEEEEEEEEEEEEEEEEEEEEEEEP pockets , can withstand this plunge. I kinda think they're having fun.here's Andrew...is he a kook?
The oil price drop that has dominated the headlines in recent weeks has been framed almost exclusively in terms of oil market economics, with most media outlets blaming Saudi Arabia, through its OPEC Trojan horse, for driving down the price, thus causing serious damage to the world's major oil exporters – most notably Russia.While the market explanation is partially true, it is simplistic, and fails to address key geopolitical pressure points in the Middle East.
Oilprice.com looked beyond the headlines for the reason behind the oil price drop, and found that the explanation, while difficult to prove, may revolve around control of oil and gas in the Middle East and the weakening of Russia, Iran and Syria by flooding the market with cheap oil.
The oil weapon
We don't have to look too far back in history to see Saudi Arabia, the world's largest oil exporter and producer, using the oil price to achieve its foreign policy objectives. In 1973, Egyptian President Anwar Sadat convinced Saudi King Faisal to cut production and raise prices, then to go as far as embargoing oil exports, all with the goal of punishing the United States for supporting Israel against the Arab states. It worked. The “oil price shock” quadrupled prices.
It happened again in 1986, when Saudi Arabia-led OPEC allowed prices to drop precipitously, and then in 1990, when the Saudis sent prices plummeting as a way of taking out Russia, which was seen as a threat to their oil supremacy. In 1998, they succeeded. When the oil price was halved from $25 to $12, Russia defaulted on its debt.
The Saudis and other OPEC members have, of course, used the oil price for the obverse effect, that is, suppressing production to keep prices artificially high and member states swimming in “petrodollars”. In 2008, oil peaked at $147 a barrel.
Related: OPEC Ministers Decry Price War Conspiracy Theories
Turning to the current price drop, the Saudis and OPEC have a vested interest in taking out higher-cost competitors, such as US shale oil producers, who will certainly be hurt by the lower price. Even before the price drop, the Saudis were selling their oil to China at a discount. OPEC's refusal on Nov. 27 to cut production seemed like the baldest evidence yet that the oil price drop was really an oil price war between Saudi Arabia and the US.
However, analysis shows the reasoning is complex, and may go beyond simply taking down the price to gain back lost marketshare.
“What is the reason for the United States and some U.S. allies wanting to drive down the price of oil?” Venezuelan President Nicolas Maduro asked rhetorically in October. “To harm Russia.”
Many believe the oil price plunge is the result of deliberate and well-planned collusion on the part of the United States and Saudi Arabia to punish Russia and Iran for supporting the murderous Assad regime in Syria.
Punishing Assad and friends
Proponents of this theory point to a Sept. 11 meeting between US Secretary of State John Kerry and Saudi King Abdullah at his palace on the Red Sea. According to an article in the Wall Street Journal, it was during that meeting that a deal was hammered out between Kerry and Abdullah. In it, the Saudis would support Syrian airstrikes against Islamic State (ISIS), in exchange for Washington backing the Saudis in toppling Assad.
If in fact a deal was struck, it would make sense, considering the long-simmering rivalry between Saudi Arabia and its chief rival in the region: Iran. By opposing Syria, Abdullah grabs the opportunity to strike a blow against Iran, which he sees as a powerful regional rival due to its nuclear ambitions, its support for militant groups Hamas and Hezbollah, and its alliance with Syria, which it provides with weapons and funding. The two nations are also divided by religion, with the majority of Saudis following the Sunni version of Islam, and most Iranians considering themselves Shi’ites.
“The conflict is now a full-blown proxy war between Iran and Saudi Arabia, which is playing out across the region,” Reuters reported on Dec. 15. “Both sides increasingly see their rivalry as a winner-take-all conflict: if the Shi’ite Hezbollah gains an upper hand in Lebanon, then the Sunnis of Lebanon—and by extension, their Saudi patrons—lose a round to Iran. If a Shi’ite-led government solidifies its control of Iraq, then Iran will have won another round.”
The Saudis know the Iranians are vulnerable on the oil price. Experts say the country needs $140 a barrel oil to balance its budget; at sub-$60 prices, the Saudis succeed in pressuring Iran's supreme leader, Ayatollah Ali Khamanei, possibly containing its nuclear ambitions and making the country more pliable to the West, which has the power to reduce or lift sanctions if Iran cooperates.
Adding credence to this theory, Iranian President Hassan Rouhani told a Cabinet meeting earlier this month that the fall in oil prices was “politically motivated” and a “conspiracy against the interests of the region, the Muslim people and the Muslim world.”
http://oilprice.com/Energy/Oil-Prices/Did-The-Saudis-And-The-US-Collude-In-Dropping-Oil-Prices.html
[h=1]Osborne: 'Let families benefit' from low oil prices[/h]
The price of oil has fallen to a new five-and-a-half year low, with Brent Crude now below $52 a barrel
Chancellor George Osborne has warned that it is "vital" for the fall in oil prices to be passed to consumers.
Mr Osborne tweeted that they should feel the benefit not only in pump prices but utility bills, heating oil and airline tickets.
He raised the issue at Cabinet, saying the government should watch the industry "like hawks" to ensure savings were passed on.
The Treasury said it was examining whether any action was needed.
A spokesman said officials were conducting studies into whether industries are passing on the fall in oil prices to consumers.
The price of Brent crude oil has fallen to $51.12 per barrel, its lowest level since March 2009 - six months ago it cost $115.
Supermarket cuts
All four big UK supermarkets have announced further fuel price cuts, bringing petrol ever closer to £1 a litre.
Tesco, Morrisons, Sainsbury's and Asda have reduced prices by 2p a litre on both petrol and diesel.
Mr Osborne's tweet noted that the price of oil was at its lowest in five years and added: "Vital this is passed on to families at petrol pumps, through utility bills and air fares."
Energy UK chief executive Lawrence Slade insisted cuts in the wholesale price of gas were being passed on to consumers.
"When people shop around they can easily find deals that are over £100 cheaper than this time last year and in line with cuts in wholesale energy prices," he said.
BBC political correspondent Ross Hawkins said politicians were keen to be seen fighting for lower prices.
Last year, Liberal Democrat Chief Secretary to the Treasury Danny Alexander wrote to all the main fuel suppliers and distributors, calling on them to pass on the benefit of falling prices as soon as possible.
Mr Alexander told ITV News that falling oil prices are a "benefit to most of the UK economy" provided that the savings are passed on "at the pumps, in the cost of holidays and in the cost of heating homes".
He also said more support was needed for the North Sea oil and gas sector which, as the biggest industrial investor in the UK, is "adversely affected" by falling prices. "So, that is why we are also putting in place a more beneficial tax environment," he added.
Labour shadow energy secretary Caroline Flint said the Conservatives had done "absolutely nothing" to address firms' failures to pass on reductions in wholesale costs.
"We need action, not another inquiry," Ms Flint said, and repeated calls for the regulator to have the power to force energy companies to pass on savings.
Chancellor George Osborne has warned that it is "vital" for the fall in oil prices to be passed to consumers.
Mr Osborne tweeted that they should feel the benefit not only in pump prices but utility bills, heating oil and airline tickets.
He raised the issue at Cabinet, saying the government should watch the industry "like hawks" to ensure savings were passed on.
The Treasury said it was examining whether any action was needed.
A spokesman said officials were conducting studies into whether industries are passing on the fall in oil prices to consumers.
The price of Brent crude oil has fallen to $51.12 per barrel, its lowest level since March 2009 - six months ago it cost $115.
Supermarket cuts
All four big UK supermarkets have announced further fuel price cuts, bringing petrol ever closer to £1 a litre.
Tesco, Morrisons, Sainsbury's and Asda have reduced prices by 2p a litre on both petrol and diesel.
Mr Osborne's tweet noted that the price of oil was at its lowest in five years and added: "Vital this is passed on to families at petrol pumps, through utility bills and air fares."
Energy UK chief executive Lawrence Slade insisted cuts in the wholesale price of gas were being passed on to consumers.
"When people shop around they can easily find deals that are over £100 cheaper than this time last year and in line with cuts in wholesale energy prices," he said.
BBC political correspondent Ross Hawkins said politicians were keen to be seen fighting for lower prices.
Last year, Liberal Democrat Chief Secretary to the Treasury Danny Alexander wrote to all the main fuel suppliers and distributors, calling on them to pass on the benefit of falling prices as soon as possible.
Mr Alexander told ITV News that falling oil prices are a "benefit to most of the UK economy" provided that the savings are passed on "at the pumps, in the cost of holidays and in the cost of heating homes".
He also said more support was needed for the North Sea oil and gas sector which, as the biggest industrial investor in the UK, is "adversely affected" by falling prices. "So, that is why we are also putting in place a more beneficial tax environment," he added.
Labour shadow energy secretary Caroline Flint said the Conservatives had done "absolutely nothing" to address firms' failures to pass on reductions in wholesale costs.
"We need action, not another inquiry," Ms Flint said, and repeated calls for the regulator to have the power to force energy companies to pass on savings.
