Posted on 01/07/2015 4:09:06 AM PST by thackney
Top Five Factors Affecting Oil Prices In 2015
http://www.realclearenergy.org/articles/2015/01/05/top_five_factors_affecting_oil_prices_in_2015_108196.html
1. China’s Economy
2. American shale
3. Elasticity of Demand
4. OPEC’s Next Move
5. Geopolitical flashpoints
Points explained at link
I’m buying when the price drops another 5-10%.
What are you buying? Oil futures?
The stock plunge is partly due to petroleum-related companies, but mostly due to rumors and suspicions of a rise in interest rates. Seems unlikely that rates will rise, and other than oil, probably a buying opportunity. Thanks RACPE.
“Back in the bad old days of unbridled capitalism, John D. Rockefeller...” Not true at all. Those were the good old days of unbridled capitalism that saw prices drop year after year. Rockefeller saved the whales through excellent business practices. His competitors didn’t like competition.
Some socialist teacher taught you about the “robber barons”. She was only half right. It was the crony capitalists of that era that were robbers, not guys like Rockefeller.
You’d love this book: http://www.amazon.com/Myth-Robber-Barons-Business-America/dp/0963020315/ref=sr_1_1?s=books&ie=UTF8&qid=1420638303&sr=1-1&keywords=myth+of+the+robber+barons
When oil was at $109, I did not begrudge the drillers a single penny of what they were making. When it's at $50, I don't expect them to come crying for protection, either.
This down turn kinda scares me after being thru a bunch of them since ‘49, happened faster than any I can remember and is pretty deep.
One healthy independent has parked 4 rigs and yesterday, in the middle of two rig moves, sent them to the yard. Stacked and will pay the 14 grand a day in rig stand-by charges until 6 month contract is terminated.
I can remember in the 90’s when engineers and geologists were mowing lawns to make ends meet.
My father, whom re-tipped rock bits in the awl patch back in the 30’s making a grand a month, said these times coming up is when the wise will make big money in the ‘patch’. Those that saved money when times were good will get some real deals on everything and to just be wise because this world absolutely has to have oil.
2008 drop farther faster, but that was following such a steep climb up. This was a more steady time before the drop.
http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=RCLC1&f=D
That one doesn’t count, the awl patch was in na-na land at 140 per.
Since '49? Yikes! That's a bunch of em. :-)
I remember the 1998 drop very well... Oil was ~ $22-25 a barrel. I had a meeting one day with a guy from Citgo who's official title was "Strategic Planner". I couldn't resist but to ask him about the future price of oil. I mean, that's his business, right?
He told me, "Steady as she goes.... in a $3-5 range all year". Literally 6 months later, it was $10. So, it happened then at almost exactly the same speed and depth as today. Assuming, of course, that today's drop has just about run it's course.
The days of “unbridled capitalism”, sometimes referred to as the “Gilded Age” were a time of fearlessness even in the face of potential ruination, and rampant optimism. Only after it was over, and criticism set in, did the concept of the “robber barons” become lodged in the consciousness of the Progressive mind. Many of those early Twentieth Century Progressives had made their enormous fortunes by exploiting just these tactics, and later became so grief-stricken at their part, they just had to “give it all away”, and prevent anybody else from ever having to face that moral dilemma.
Another great of that era was a businessman and senator from Ohio, Mark Hanna. When McKinley (with whom Mark Hanna was a great ally) was shot down and died in 1901, Senator Hanna was heard to mutter, “Now look, that damned cowboy (TR) is President!” Hanna’s relationship with Roosevelt was never as warm as that with McKinley.
One more point driving the drop in oil prices, and an important one:
The strengthening of the dollar: as the dollar becomes worth more, it takes fewer of them to buy a barrel of crude.
A large part of the reason for the increase in gas prices during the Obama reign has been the Fed’s driving the value of the dollar down, and now that they’re signaling rate hikes, the dollar in growing stronger against foreign currencies.
Meanwhile, consumers (like me) save anywhere from $150-$300 in gas consumption.
Don’t forget the Fed pumping money into the Q’s, which leads to a 10+ margin in the stock market.
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