Posted on 12/12/2014 8:38:48 AM PST by Signalman
A global glut of oil will persist next year, putting further pressure on prices and raising the risk of unrest in some producing countries. That's the stark warning from the Paris-based International Energy Agency, which on Friday cut its forecast for global demand growth in 2015. It now sees demand growing by less than 1% next year.
Oil prices have already fallen by more than 40% in six months, but there's little sign of that stimulating demand yet, or constraining production enough to remove excess supply. "Oil price drops are sometimes described as a 'tax cut' and a boon for the economy, but this time round their stimulus effect may be modest," said the agency, which monitors energy market trends for 29 of the world's wealthiest nations. U.S. crude prices fell again on Friday to around $59 a barrel.
(Excerpt) Read more at money.cnn.com ...
These chicken sh!ts just can't wait to grab more of our money.
I hate every damn one of them.
All seriousness aside...I’ve bought my last vehicle (I hope). It’s 8 years old and paid for...gonna make it last as long as possible.
Although, those Tundras are nice...
Or it may trigger economic reform out of necessity. Many oil producers are run like fiefdoms, with sector (retail, telecom, power, water, et al) monopolies doled out to various factions. While this is superior to communist economies, where private property is banned, it’s the principal reason so many are one-industry countries.
Someone has to stand up to the Russia/Syria/Iran axis. We won’t, so the Saudi/Egyptian/Jordanian/Israeli alliance is.
This is sunni v Shiite.
Gas was $ 1.80/gallon and Oil was $ 40/barrel when Nobama was coronated.
Yes to cheap gas! 2.17/gal works for me. Just filled up with it for $35.
risk of unrest in some producing countries
Venezuela, Iran...
I totally agree with ya. Americans have painted their palaces long enough.
As a reminder, most of the 911 highjacking murderers were Saudi.
Piss on’em!
That’s good unrest I don’t see the downside. But I suppose there are those that do. Who doesn’t love high gas prices!!!sarc/on
It’s not so much that the prices are going down. It’s the velocity of the drop.
This will impact the new oil fields that have mostly driven our “recovery” in the ND through TX corridor.
If Veneuzuala falls that might cause some unrest and defaults in South America that might bother us a little.
The big dog that is getting hurt is Russia. How could they retaliate? They could dump treasuries or other assets. They could retaliate against Europe. Or, the financial crisis in Russia could lead to a more physical reaction like picking a fight with someone.
The falling oil prices are great for you and me. I drive a lot. But that might be short lived if we have fewer places to drive.
I am not one of those, “it’s raining cats and dogs” guys. It’s just that everything is connected and the economic relationships are all complicated. It wouldn’t take much pulling on a string to unravel the entire sweater.
Average prices will go down, including for the break even costs. But some of that isn’t a change, it is just shelving the more expensive side of items.
For an example, say a company has 10 areas where they were considering investing for new oil production. Break even cost for them are: 51, 53, 55, 57, 59, 61, 63, 65, 67, 69 $/bbl. Their average break even costs are $60/bbl.
If they just shelve the top 5 most expensive projects, they just lowered their break-even cost to $55/bbl. No technology change, but still lower average cost. They will just produce less until prices climb up.
Combine that with during a slow down, the premiums being paid the past couple years for equipment, material and labor go down.
Rex Tillerson says Exxon can operate at $40.00 a barrel....He’s the CEO are we suppose to believe 1)He is stating the absolute lowest price 2) Exxon Mobile can operate cheaper than any one else 3) the break even point is a theoretical number corporations give to support their real intensions witch is to make the landing not so hard!!I’m skeptical of anything a corporation says publicly....their one and only loyalty is to the stockholders...not the consumer...and the stockholders should be their priority!!
Significant unrest in the countries, will likely result in reductions of oil production. Which lowers global supply, then raises prices and the roller-coaster ride continues.
The bad part for us would being dragged into an armed conflict because one of those countries tried to take some more production from a neighbor, like August 2nd, 1990.
I’m not suggesting we should ask the feds to do anything due to low oil prices, not at all.
I am only saying, don’t be surprised if Venezuela, maybe Iran crack. I’m hoping the people, cut off from their subsidizes, rise up and overthrow. But Venezuela may try gaining some Columbia production to offset their loss in income.
[From my point of view, cheap gas works for me!]
Not for long if Congress gets it way - there’s talk of slapping a gasoline tax on lower prices to pay for the highways.
I don’t think the new incoming Congress will vote to increase the federal gas tax.
I agree they and many others will operate and continue to exist at that price, at least for a while.
But many small companies that took on too much debt will be selling assets to the stronger financial companies. Maybe they will pick them up at the bankruptcy auction.
But they won’t be drilling and expanding like we saw the last couple of years. And any significant duration of deep prices will have plenty of people loosing jobs. Nature of the business, has always been that way. Part of the reason it pays well.
I don’t concern myself with the problems of corporations unless the government gets involved. The market will take care of that. The price of oil has been at an artificial high spiral for more than a decade. This the correction and some companies might not survive....that’s the market. What will be left is the companies who can exist at the market level. Oil futures traders are in for a bad run....that’s a good thing. Actual producers will survive...albeit with less profit...That’s the way capitalism works!!!
They sell short and long. There is money to be made (and lost) in a falling market, no different than a rising one. The market that starves a trader would be a steady, unchanging market, high or low.
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