Posted on 01/10/2015 9:14:44 PM PST by zeestephen
Representatives of Saudi Arabia, the United Arab Emirates and Kuwait stressed a dozen times in the past six weeks that the group won’t curb output to halt the biggest drop in crude since 2008...The global oversupply is 2 million barrels a day, or 6.7 percent of OPEC output, Qatar estimates.
(Excerpt) Read more at msn.com ...
If you could cut your production by 6.7%, and then raise your price 100% ($50 to $100 per barrel), wouldn't that make more sense?
Instead of worrying about new USA drillers, wouldn't it make more sense to continuously invest in cost reducing technology for your own fields, and keep the price as high as possible?
Game of chicken, mostly against Iran and Russia.
We’re further down the line, but we’re there.
So what is the truth?
disinformation wins every time.
All I know is that I wish I had a big underground tank as I would be filling it up at today’s prices. Hopefully our government is taking advantage of the current glut in order to top off strategic reserves.
I believe 0bama cut a deal with his Arab brothers to crash oil prices to harm Putin, while simultaneously killing our domestic oil producers in the US(which he hates for other reasons).
If so, it’s probably the most effective thing he has ever done as president. (sadly) lol
It’s my opinion that we mere mortals thinking we can encapsulate the many forces at work in this complex situation in one or two sentences is.....silly.
If you wanted to tell me that that speculating about what’s behind it is fun, like a party game, I’m right there with ya. It’s fun to trade oil stocks, too. Futures, too, even though they can rip your head off.
But I find it kind of presumptuous to think we know or can know the dynamics behind this. If KSA found these results detestable and they hated the idea of losing billions of USDs, aren’t there some big round wheels they could turn clockwise and fix the problem in 10 minutes? And they could buy the crap out of oil futures too, for the runup in prices.
I *do* think that the drop in oil price is an absolutely remarkable and fascinating story and certainly one of the biggest stories of 2014.
Re: “Game of chicken, mostly against Iran and Russia.”
I don’t get it.
What game?
Iran is in OPEC, and nominally supports this policy.
And Iran and Russia have very deficient and very poorly maintained infrastructure, so there is no imminent threat that they will increase production.
So, Saudi Arabia and the other wealthy sheikdoms decided to take a 50% income haircut to make some kind of vague political statement?
Sorry, I just don’t get it.
I haven’t heard anything more plausible than the explanation that Saudi Arabia wanted to drown its Iran problem in oil so cheap that Iran would begin losing money. And that, because the USA wasn’t helping out any. It looks like Saudi Arabia is getting its wish and it couldn’t happen to a nicer group of Muslim extremists (Saudi Arabia is “officially” moderate).
I believe u completely.
I don’t know about the internals, but if SA wants to drown Iran in cheap oil it can. Cartel behavior is ultimately voluntary.
Nope, they aren’t doing that. They figure that the recent dumbass society will accept a revenue increase.
Obama hates Putin. I notice all the bad blood started when Putin resisted homos. Obama took that personally.
... because once a producer with the capacity of Saudi Arabia undercuts the cartel, the rest have no choice but to cut prices too or sell no oil at all. “Moderate” Sunni Muslim oil producer states (Iran, whom much of the world fears is trying to produce a clandestine nuclear bomb, is radical Shiite, the rival Islamic sect to Sunni) understand the situation and aren’t complaining.
I heard it was nearly full.
Whatever did it, it is sure good that we are doing something right about Russia.
“All I know is that I wish I had a big underground tank as I would be filling it up at today’s prices.”
What’s kind of funny about your comment is that you absolutely have the ability to do the functional equivalent of that; and you have the ability to do so without tens if not hundreds of thousands of dollars in fees and permitting and etc etc never mind the actual cost of the actual tank and the actual cost of digging a big hole to drop it in. And without the potential MILLIONS of dollars in liability insurance you would have to carry if the tank ever sprang a leak and the EPA came after your butt. Of course you’d be on Maxie Waters s**tlist as an evil speculator, but hey, I think that could be fun! Speculators only make money when the price rises, you understand that, yes?
So how many gallons of gas would you buy at today’s price? 5000 at $2 a gallon?
You realize that gasoline has a limited life stored in tanks, measured in months. I don’t know what that number is, but gas will go bad after several months in storage. (I am told by folks whose opinion & experience I respect)
Hopefully you get that I am not advocating anything one way or another but I *am* setting out a course of action that would, if the future played out as you seem to suggest, benefit you HUNDREDS OF TIMES better than what, +50 cents or + a buck a gallon * 5000 gallons. You could place your bet in the futures market with your $10K (5000 gallons * $2) and could place a bet out 1-2-5-8 years. Which is way way beyond the life expectancy of actual gasoline that you actually stored in a tank!
Just a thought exercise. All I really want to point is out is that, in reality, you could really and truly place this bet you speak of ten times easier in the futures markets than owning an actual tank! And people do, every day.
politics makes strange bedfellows, they say. even when they are buggerers
I don’t agree nor disagree.
There are plenty of theories and statements about all kinds of things that are more or less plausible. This is one of them.
It’s just that, this thing of “plausibility” of any given theory is more a feeling of comfort that relates to what we know, or think we know, and how well the theory explains what we know or think we know.
For obvious example, the theory of Anthro Global warming is one that gives frickin moonbats warm glowy feelings all over because all at once they feel justified remembering how hot is was last summer along with how much they hate America, pollution, and capitalist society which they believe would be much better off just buying their ipads for them.
All I am saying that we probably don’t know the full story and nobody is exactly rushing to tell us. In the meantime, we naturally substitute in this “plausibility” thing instead of the “fact” thing. Is it fun? Yes!!
It’s more than comfort in this case, it is a working philosophy. It looks like it is more for the good than it is for the bad.
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