Posted on 12/19/2014 12:11:58 PM PST by C19fan
How low can it go — and how long will it last? The 50 percent slump in oil prices raises both those questions and while nobody can confidently answer the first question (I will try to in a moment), the second is pretty easy.
Low oil prices will last long enough for one of two events to happen. The first possibility, the one most traders and analysts seem to expect, is that Saudi Arabia will re-establish OPEC’s monopoly power once it achieves the true geopolitical or economic objectives that spurred it to trigger the slump. The second possibility, one I wrote about two weeks ago, is that the global oil market will move toward normal competitive conditions in which prices are set by the marginal production costs, rather than Saudi or OPEC monopoly power. This may seem like a far-fetched scenario, but it is more or less how the oil market worked for two decades from 1986 to 2004.
(Excerpt) Read more at blogs.reuters.com ...
Makes you wonder, if they can sell it for $50 a barrel now, why couldn’t they 10 years ago?.............
War or massive terrorism before $20/gal.
A geopolitical event will happen before Iran, Venezuela or Russia are taken down. Most likely event is that one of those three countries will cause the geopolitical event.
Well, there is a huge increase in supply, and demand has somewhat decreased. This is not a mystery.
So much volatility everywhere. This can't go on forever. And when it stops going on forever it is going to get really ugly.
$1.75 a gallon here as of today.
Dang I may have to buy a Hemi Challenger......
The oil market is a huge racket, that’s why. It’s as far from a free market as possible.
Let’s do the Fuel-Oil Limbo! How Low Can You Go?
Ping.
I’m going to go fill up all my fuel tanks in the barn this weekend!!
You know cutting the grass a year ago was getting expensive!
We are already feeling the relief from the gas prices.
I travel 120 miles round trip everyday.
Once the demand again outstrips supply for a while, there will be plenty of speculative money to be made by driving the price up again.
I didn't want to run it on any gasohol. The quickest way for me to get some pure gas was to buy a 5 gal. can of the most appropriately blended racing fuel. ~$12/gal.
I now have found a cheaper source, but it is not super close.
“So which of these arguments will prove right: The bearish case for a $20 to $50 trading-range based on competitive market pricing? Or the bullish one for $50 to $120 based on resumed OPEC dominance?”
Simple to find the answer: is OPEC buying American oil rights and companies so they can shut them down?
In my limited knowledge they are not. Norway’s STATOIL seems to be a big buyer of US oil assets and they will want to sell.
We won’t be drilling as much at those prices. The shale wells drop off fast. Without the dollars to pay for sufficient drilling, total production will fall, while cheap prices will increase demand, and the ride back to the top will start again.
Oil demand has increased 9 million barrels a day in ten years.
The real cost of oil for an oil company to remain, is the price to produce the next barrel of oil. If you cannot get the fund to replace reserves and production as time moves forward and you sell what you have, you are going out of business.
Right now, the supply has grown so fast, that the investment is pushed past the demand, combined with a slowing demand growth.
So the folks that just competed a $10 million dollar well in October, may never break even, depending on the length and depth of the price dip.
It was around $40 a barrel in Dec. 2004...
There were all these “fears” of things that could possibly, maybe, happen. Don’t you remember?
It will go low enough, long enough to bankrupt Russia and force them out of Ukraine..... but now low enough to destroy the US economy.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.