Posted on 12/30/2015 8:03:34 AM PST by bananaman22
Russia’s oil-dependent economy appears headed for a second year of recession, and Energy Minister Alexander Novak says the blame falls squarely on the Saudis.
The Russian gross domestic product fell by 4 percent in November from its level in the same month in 2014, and had shrunk 3.7 percent in October from its levels a year earlier, the Economy Ministry reported Monday.
The reason, to no one’s surprise, is the plunge in oil prices over the past 18 months. The global average value of a barrel of oil has crashed from over $110 per barrel in the summer of 2014 to just below $40 per barrel today.
Because Russia’s government relies on oil production for half its revenues, it’s preparing for a 3 percent deficit in the budget for the coming 2016 fiscal year. Making matters worse, profits in any industry related to oil are down so far that it appears its current recession may last as long as two years.
(Excerpt) Read more at oilprice.com ...
Is the gas price plummet starting to make sense now?
Russia continues record oil production ' energy ministry
https://www.rt.com/business/324267-russia-oil-output-opec/
If the Sauds were to tighten up it would not put Russia in the black. The price of oil probably can’t go much higher than $60 whatever OPEC might decide to do short of starting a general war. At that price the shale wells become profitable again and come back on line. There is so much shale oil in the ground in so many places that the cost of producing it is what determines the unmanipulated price of oil. Even now, as the price is too low for most shale oil to be profitable, the industry is working on technology improvements to reduce the cost. Once it is opened up again by some combination of falling costs and OPEC controls OPEC loses its last handle on the price. Arabia keeping the taps open would seem to be the most profitable long-term policy, I think. The Sauds can always choke down for a short term flood of money in a national emergency even though that will hasten long term lower prices. If they restrict production as a general rule to keep the price up the price will fall steadily as shale oil production ramps up and the cost of production goes down.
It would be in Russia’s interest to start a war.
hink Russia has already embarked on that enterprise.
Oh . . .
OPEC Has Already Turned to the Euro
GoldMoney Alert
February 18, 2004
...The source for the euro exchange rate is the Federal Reserve, and I have calculated the euro's average exchange rate to the dollar for each year based on daily data.We can see from column (4) in the above table that in 2001, each barrel of imported crude oil cost $21.40 on average for that year. But by 2003 the average price of a barrel of crude oil had risen 26.0% to $26.97 per barrel. However, the important point is shown in column (6). Note that the price of crude oil in terms of euros is essentially unchanged throughout this 3-year period.
2001
As the dollar has fallen, the dollar price of crude oil has risen. But the euro price of crude oil remains essentially unchanged throughout this 3-year period. It does not seem logical that this result is pure coincidence. It is more likely the result of purposeful design, namely, that OPEC is mindful of the dollar's decline and increases the dollar price of its crude oil by an amount that offsets the loss in purchasing power OPEC's members would otherwise incur. In short, OPEC is protecting its purchasing power as the dollar declines.
Oil crash is shrinking MY GDP.
Royalty checks are 40% of normal. We will be just fine, my primary job isn’t in the oil field. But. $1.63 gas doesn’t make up for the loss of income (and Texas doesn’t care that property taxes next month will be >20% of the annual new net.)
Blah. Surely there’s some happy medium where prices can be lower than the recent norm but not so low they kill off royalties and jobs.
$75 oil would suit me fine.
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