Posted on 12/03/2014 7:50:28 AM PST by thackney
With the recent collapse of oil, Jim Cramer has turned to a real expert on the subject to get a better sense on where the oil patch is headed during this crucial time.
That is why he has turned to oil tycoon T. Boone Pickens, best known as an American business magnate and financier who chairs BP Capital Management. Cramer thinks this Oklahoma native understands the oil business better than anyone else and could shed light on the importance of OPEC and impact of Russia on the energy space.
"They didn't say they wouldn't cut, but OPEC will have to cut and that is what's going to happen. The Saudis are the ones that make the cut. They can take $70 oil and take it out 10 years they have the cash reserves that allow them to do that. But they can't do that to the rest of OPEC," added Boone.
Pickens said that the industry assumed that the demand for oil would increase in 2014, and the actual demand was half. He noted that he expects that oil will be back at $100 a barrel in 12 to 18 months.
(Excerpt) Read more at cnbc.com ...
True, they made it clear before the meeting any cuts would need to be shared.
They have the currrency reserves to ride this out and the others do not.
Large reserves and they have more refining/petrochem capabilities that gain in the same market. No where near the size of the oil income, but some offset.
Countries like IRAN and Venezuela need will have to cut oil production.
They are going to have to significantly reduce government spending, in most expected situations going forward. A major event could change that, like a large war, etc...
T. Boone has a better understanding of oil than most, but to say more than anyone, no sale.
As for $100 oil in 12 to 18 months...I hope both Cramer and T. Boone are putting their money where their mouths are.
Hell, I'd like some of that action...on the other side.
Five years, sure...but 12-18 months?
I don't think so.
I have been in this industry for about 35 years, and I'll say that you have a pretty good analysis. The shale play has become the "trump" card to keep OPEC from holding us hostage. Too bad this technology was not practical back in the '70's.
You are discounting increased demand. There is a natural tendency to use more when it is cheap. Works that way in every commodity.
Cramer is the PT Barnum of the CNBC talking heads. I tell my friends he keeps a dart board behind his set for picks.
T.Boone has. His Natural Gas Vehicle Fueling company needs the oil price high to justify the additional cost of NatGas based engines.
CNG makes sense in a lot of cases. LPG in others, and I have no doubt we'll see $100 oil again. Just not on his timeline.
Boone has been drilling a lot of dry holes lately, financially speaking.
I for one will never drive a CNG vehicle. Am surprised there have not been more enhanced “kablooie!!” events from accidents.
And yet, after decades of use, your fears are not realized.
One of the great things about using Nat Gas in vehicles is leaks of fuels, rare as they are, dissipate away instead of accumulating on the ground.
The tanks are allow very strong.
Is CNG safe?
http://www.oringcngfuelsystems.com/is-cng-safe/
The answer to this is, unequivocally, yes CNG is a safe form of energy. However, there are many myths out there regarding the dangers of CNG and we would like to discuss those here. For a visual demonstration of just how safe CNG is, please check out these three videos:
Gun Test on Natural Gas Tank
https://www.youtube.com/watch?v=irvktfQvu4M&feature=related
Dynamite Test on Natural Gas Tank
https://www.youtube.com/watch?v=5ZUK-HJOfvU&feature=related
Severe Abuse Test on Natural Gas Tank
https://www.youtube.com/watch?v=M-ExcJ7PaRc
New OEM natural gas vehicles are subjected to the same federal government crash tests as other vehicles. OEM natural gas vehicle fuel systems must meet Federal Motor Vehicle Safety Standards 303 and 304. Natural gas cylinders are much thicker and stronger than gasoline or diesel tanks. Cylinders are designed not to rupture when fully fueled over six times a day, 365 days a year, far beyond what they will see in service. They are designed for a specific lifetime from 15 up to 25 years and are required to be inspected every 3 years or 36,000 miles.Industry standards test them far beyond normal environmental and service damage risks. Cylinders must even withstand a bonfire test, crash tests, and penetration by a 30-caliber bullet without rupture!
The shale play is going to work in our favor, as we watch Russian and OPEC squeal if oil drops say below $60/bbl.
Here is a good example key indicator which will explain why:
Oil production as part of GDP
Saudi Arabia- 45%
Russia- 15%
USA- 0.9%
On the other hand working in the hydrocarbon industry (35 years) I have seen what can happen when there is loss of containment. I also would counter, that I hope you have noticed the amount of auto recalls through the years. Can you imagine what would happen if some faulty check valves were installed in the tank/fuel lines?
Chalk this up to the same argument as flying. I know it's safer than driving, but I still don't like it.
For that reason, I am less comfortable with propane as vehicle fuel. The ability to puddle up to an significant spill in an ignitable mixture with air, is concerning.
I do work in Mont Belvieu these days. Previously some propane truck loading terminals. Some of the those NFPA codes bother me more than the Nat Gas concerns.
Old Earl Hafler bet Kramer that the flight to Pittsburgh would leave before his flight to Houston.
We be carbon brothers.....:)
I keep considering dual-fuel for the next truck, probably F250. A new fueling station went in that would be convenient fueling, at $2.05 gallon gasoline equivalent.
That looked a whole lot better when gasoline was >$3 than $2.50. The equipped dual-fuel is about the same adder as a diesel engine. The economic just are not there yet for me.
When I bought my last truck in ‘07 I got the flex fuel option. Ended being worthless.
I don’t remember the $1 gas in the 90’s, but I do remember the oil price bust of the mid 80’s- and that wasn’t pretty for TX, LA, and OK. And it lasted for a few years.
Wonder what caused/is causing the volatility that seems to be increased since about 1999?
Nobody can say for sure but Saudi has a lot of mouths to feed... princes that is. The cost of keeping the country satisfied is rumored to be closer to 70 to 90 for all that. Their target price has been 90. That would be enough to keep up their cash reserve and support all their people. For the last three years the price has been closer to 100... nice windfall of 3 years x 100 - 80 or so gives them a bankable wind fall of 3 x 20.. they won’t blow all the bank. They need to subsidize say 80-60 or 70... 10 to 20 dollars a bbl They could do that for about 18 months before digging too deeply into their reserve.
‘15 will be tough and ‘16 will be better but not good. I don’t know if I’ve got enough left in me for another bust. I’ve been through several already. I’ve been beat up so bad and so many times I recoil at the thought of it.
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