Posted on 11/29/2014 6:03:37 AM PST by Hojczyk
Seldom has so much good news been portrayed so negatively. Oil prices continue to fall in the U.S. and around the world, but near everyone in the media is grumpy about it. The headlines today are among the silliest I’ve seen: Energy-company stocks are declining, oil deflation is an economic threat, the Fed might raise rates much later than expected, OPEC is dissolving, shale companies are going bankrupt, Russia is going bankrupt(!), and on and on.
Well, most of this is just humbug. Lower oil prices are unambiguously positive.
First, U.S. oil production has nearly doubled in recent years to 9 million barrels a day, and the Paris-based International Energy Agency (IEA) expects U.S. supply to rise by more than 1 million barrels a day next year. And it is this supply increase that is driving down prices. Saudi Arabia and OPEC have essentially thrown in the towel, surrendering to the inevitability of lower prices from exploding U.S. energy production.
This is not only a triumph of U.S. energy independence, it is a victory for the workings of the free market. Greater supply, not government cartels, is driving down prices.
And the latest oil-price drop of nearly $8 a barrel makes the economic outlook even rosier. Apart from the declining share prices of some oil producers, virtually every other aspect of the world economy benefits, including most world stock markets. (By the way, the IEA reports that most production in the Bakken formation, one of the main drivers of shale-oil output, remains profitable at or below $42 a barrel.) And here in the U.S., the oil-price drop is a huge tax cut that will primarily help the middle class.
(Excerpt) Read more at realclearpolitics.com ...
the price at the pump is still higher than when obuma took office
Nop, what the bast*rds are going to do, republicans also, is raise the taxes on the gasoline.
Why can’t they let the f..ing oil set it’s own market price? Leave it go where it should go. I don’t care if it goes to $5...just let it go whereever it wants.
I’m so sick of the idiots in Washington, esp the jerk in office. How much more can we stand from these people?
In the year 2000, average pump price was $1.51.
Folks who make more money can afford the more expensive “gas saver” cars. So us folks who drive an old guzzler (20 MPG) are going to subsidize them. if there is any gas tax increase.
In 1999 I paid $.99 for regular in Dallas Texas, I’m sure it was cheaper in some places. In 1999 the Saudis were saying $25.00 a barrel would be a fair price...at the time it was around $9.00. The price of oil has been held at an artificially high price for more than a decade...the correction is coming!!!
I think it’s reasonable to note that consuming the Saudi oil now leaves more of ours in the ground for future use. The oil isn’t going to go away.
That said, one of the few government interventions in the market I might consider justified would be a bounty on US-produced oil. It is arguably a highly effective defense strategy to make the US more energy independent.
But but but... profits will only be 6 Billion instead of $10 Billion for the oil companies now. The first thought that came to mind after hearing all this “woe is me” the U.S. economy is going to hell because the price of an barrel went down to $68 was how much HAVE they been manipulating the markets all these years. I can actually afford to fill my tank now for a change; haven’t in years.
Just thought of another advantage of lower prices with regard to the fracking revolution.
It puts intense pressure on drillers to find ways to drill more cost-effectively.
> the price at the pump is still higher than when obuma took office
But Obama will take credit for the prices falling and point to his falsified unemployment figures and claim success when he had absolutely nothing to do with it.
With all the increased supply and draining of our tectonic plates lube we might as well enjoy it till all the massive earthquakes start, right?
A Republican Congress can defund EPA.
A Republican Congress can defund EPA.
A Republican Congress can defund EPA.
A Republican Congress can defund EPA.
A Republican Congress can defund EPA.
A Republican Congress can defund EPA.
A Republican Congress can defund EPA.
A Republican Congress can defund EPA.
A Republican Congress can defund EPA.
A Republican Congress can defund EPA.
A Republican Congress can defund EPA.
A Republican Congress can defund EPA.
A Republican Congress can defund EPA.
A Republican Congress can defund EPA.
A Republican Congress can defund EPA.
Saudi’s will keep the price war going to drive others out of business. Fracking has been a great deterrent to their increased pricing. Since the Saudi’s have more than likely paid for all their infrastructure and the new U.S. producers have NOT yet done so, it will put a major hurt on those U.S. suppliers, not to mention all the new EPA regulations coming forth. Going to be interesting year ahead of us.
Having said that, it's closer today than it has ever been. The Saudis have every intention of driving the price downward in order to halt US production and they think this "strategy" is going to work. Unfortunately for them, the oil is here and it's not going away. Their days of 130/barrel oil are almost over. What they WILL accomplish is disruptive and will cause wild fluctuations for the foreseeable future, but in the end, the market is going to win over. They can't play the monopoly game very long without going broke doing it. I read somewhere a while back that 70-80 dollars was the threshold for profitability on shale oil, not sure how accurate that is. In the meantime, even more reachable oil will be discovered in US/Canada, further eroding the sustainable price. At least that's my possibly misguided theory of things to come...
but in the end, the market is going to win over.
http://www.investopedia.com/terms/i/invisiblehand.asp
But government and big business don’t like it because it can’t be controlled, but they keep trying.
I’m not worried about the Saudis. We can beat them with our productive capacity, no matter what they do to kick prices up or down. I’m worried about the commies. In the WH. In the EPA. They are our true and lasting enemies.
It’s better than people think. When it’s said that fracked oil in such-and-such a formation is only profitable at $xx a barrel, it depends on drilling costs. For the past few years drilling costs have been through the roof. First, fracking is a new technology, so lots of learning had to be done. Second, supplies of fracking equipment have not caught up with demand, so drillers have been paying outrageous amounts for equipment.
With the froth out of the market, the existing equipment will be dedicated to the more productive formations, and the equipment market will be able to grow supply more affordably.
Fracking knowledge and technology continues to accumulate and improve, making future fracking cheaper and more profitable.
Some of this is probably true. Yet the fracking industry will go on. The technological advances in fracking cannot be uninvented. It may indeed take a temporary hit, but the shale gas will be brought out. It may be in 2 years or it may be in 20 years. Thats what great about the market,its fairly good at reacting to price. Admittedly I dont know how quickly shale fields can be brought back online. However, if the Saudis want to stop shale production long term then they have to keep the oil price down long term.
The very first thing to do would be to eliminate all export controls on oil & gas. As the markets now stand, that doesn’t do a thing - but it gets a bad law off the books. Instead, we should put a small tariff on importation of oil. Not enough to matter a whole lot, necessarily, but enough to function as a shot across the bow of any future OPEC manipulations.From the Nixon Administration until the fracking boom, that would have constituted an idle threat. Now, the Saudis know that we know that we can handle higher prices. Not without pain, of course - but it would hardly be uncharted territory for us.
So the idea of whipsawing our producers again would not be on the table - reduce production again, the tariff goes up, and our production soars. And stays up indefinitely. Because legislation would allow the POTUS to raise the tariff (within limits) on his own initiative, but not to lower it without an act of Congress.
The fun part is that as we get more self-sufficient, the towelheads best customer is becoming China.
Those lovable guys with mafia business practices and 1.5 billion expendable people to enforce them.
The next decade won’t be nearly so much fun for the mideast.
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