Posted on 11/27/2014 10:13:07 AM PST by blam
In my best Joe Friday voice, 'just the facts, ma'am'.
Russian Oil Tycoon: US Shale Boom Is 'On-Par' With Dot-Com Bubble
Oil prices are plunging on Thanksgiving in the US as the latest OPEC meeting saw the oil cartel announce that it will not cut production.
Below is a link to a calculator estimating the price of a gallon of gas for a selected price on a barrel of crude oil. Note that it takes a barrel price of $30 to make a gallon of gas (without taxes) equal $1.
What is really weird is that up until 3 years ago the price per litre in cents used to mimic the price of a barrel of oil in dollars. What happened?
Generally, shale production needs a break-even oil price of about $75 per barrel. Lower figures have often been published for the purpose of trying to prevent the Arabs from extending the glut, shale producers/refiners to continue getting loans in return for projections and for other reasons.
Saudi’s are I understand from numerous articles attempting to, and apparently succeeding in driving down the cost of crude (to $65.00, or less per barrel) for the specific purpose of causing the American oil producers in fracking out of business by making the costs too low to be worthy of the process.
IOW another assault by an alleged ally (no Islamist is an ally) on our economy, and of course fully supported by Obama, and Co. who will reward them soon I’m certain with military items, or other.
$2.00 a gallon for gas soon?
At some point, oil companies will stop production in the US because it will not be profitable to drill. Low gasoline prices won’t matter much if oil companies start laying off workers.
We’ve been there before, oil prices will rebound, but before that happens, Obama plans to keep the gas prices artificially high by adding more taxes. In WA State, they considering adding $1.17 to the price of gasoline. Fuel for seven western states is produced in WA, that would also pay that tax and other states would follow.
Oil is down because the strength of the dollar is way up!
Hardeharhar.
I think you’re right, Pearls. Sustained low prices might trigger a shakeout in shale oil production, but not a collapse. Weak producers will fail while stronger producers will survive, and innovation will eventually lower shale oil production costs for all. The Saudis can try to crush American competition but increased capacity is the new reality, and the Saudis are also hurting many of their OPEC allies who are living on the economic edge.
As I understand it, we (America) are at an all time for exports(?). I am trying to learn more about this market; very, very intricate with lots of implication abroad as well as at home.
I thought I had read too that “OPEC” was selling to Asia at a higher price than they were selling to “us” which to me would mean OPEC is trying to kill off the American market. I don’t know why we don’t just by at the lower prices then turn around and sell to Asia for a profit. (I think someone answered that already, but the answer escapes me).
My hope and prayer is that the oil fracking industry will survive this virtually unscaved.
Hoping that there will be a “ eureka “ moment that will save the day of someone coming up with some way to frack oil even at a cheaper cost but still make a profit and do it efficiently.
I hope this “ eureka “ moment comes soon and finally put a dagger into the heart of OPEC.
The fracking industry has found ways to drill, and produce more efficiently in the last 5 years.
Here in metrowest Massachusetts gas is below $3.00. In fact, yesterday I saw it for sale at $2.89.
I would like tariffs and a nrst replace income taxes altogether.
It was a mistake for the politicians to humor natural gas interests in shutting down so much coal production, too (coal-fired power plants going to natural gas). When the incomes of most people go down, and costs, up, real markets begin to fall. Proud fake markets (recirculating debts) prepare a currency for a fall.
What puzzles me is oil price is declining while pundits tell us the economy is on fire. How does one square that?
Most economies in the world have weakened well beyond ours, it’s not really a US strength and Oil price relationship anymore.
My little corner of Central TX has wally world gas for $2.41. I will jump out there and predict $1.99 or less by 2015.
By the way, Rush Limbaugh nailed this over a week ago, explaining that the Saudis are targeting USA shale oil production, flooding the already glutted oil market by maintaining their current (high) levels of production. I think all of this present gloom omits one key and ever present factor in the Middle East: Chaos and War. Like the weather in Florida, things will soon change.
Tick for tick lower with crude... at WTI tests as low as $67.75
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