Posted on 11/05/2014 5:09:15 AM PST by thackney
We’re beginning to see the effects that the low oil prices of the past few months is having on America’s domestic energy boom. On Thursday, ConocoPhillips became the first major producer to announce it plans to scale back drilling in some of the hottest U.S. oil plays, such as the Rocky Mountains and the Permian Basin of West Texas.
While ConocoPhillips still expects to boost production from other areas, chief executive Ryan Lance told reporters the company also may cut exploration spending. Oil prices on the world market have fallen more than 25 percent since June, and the price of West Texas Intermediate crude, the U.S. benchmark, is now trading at a three-year low of $76 a barrel, down from more than $107.
Meanwhile, Shell said it plans to cut spending and eliminate jobs in its U.S. operations because of weak results from its shale projects. Shell cited the Eagle Ford play in South Texas, one of the country’s hottest drilling prospects, as an area it hopes to exit.
Like many of the major oil companies, Shell came to the hydraulic fracturing game late, and even before the oil price decline it struggled to generate the higher returns it needs as a large company. Now, with commodity prices falling, its prospects of making money in shale have dimmed.
In contrast to the caution exhibited by ConocoPhillips and Shell, independent producers have said they expect to continue their fracking operations unabated. Many smaller companies have lower cost structures and can still make money fracking at current prices.
Oil would have to fall farther before they started feeling the pinch....
(Excerpt) Read more at forbes.com ...
WTI prices have been historically low in recent years. WTI is usually higher than Brent, but that has been inverted for much of the last few years as more and more U.S. oil has come on the market and we now actually have a glut of oil in North America (we can't refine oil as quickly as we can produce it).
the oil business still should get more oil. Forget the Saudis - look they are stabbing America in the back by supporting the terrorists on the sly too. Makes no sense but nonsense for America to be dependent on the Saudis.
Even the Military Commissary has milk at $4 a gal. Bread at over $2. Meat is out the roof and becoming unfordable, unless you like to eat bologna and hot dogs and they don’t come to cheap either.
The Aldi grocery store near us in FL had bread on sale for 25 cents a loaf last week. Try it if you have one in your area.
All good points, but surely all that “excess” oil isn’t sitting in huge tanks somewhere, is it?
Dollar General has bread at $1.00 (white), $1.50 (wheat, $1.50 (hot dog and hamburger buns), Milk at $3.40. when I go shopping at Walmart i look for the meats that are stuck with the yellow sale price, and I buy up a whole lot. Stick them in ice filled cooler and get them home immediately freeze in freezer.
I also go to Dollar Tree - Schwann single serve pizza $1.00. No bologna and hot dogs for me, reflux cannot handle them>
Saudi is pricing their oil relative to the Dubai Mercantile exchange for oil.
If these oil producers in the U.S. are ramping up production even though the forecasts of consumption growth aren't very high, then this probably means that these producers are counting on the U.S. government to lift the ban on crude oil exports.
Bump for later. Heading off to work in my fuel-efficient car. LOL.
What excess oil? The market demand fluctuates as well. It isn’t piling up.
Yeah, I’ve got to head to a job site now as well.
Cheers.
” we now actually have a glut of oil in North America (we can’t refine oil as quickly as we can produce it).”
Then why are we buying oil from Saudi Arabia??????
They’ve done this every time the US ramped up production.
But I think the tech curve is way ahead of them this time.
They won’t be able to lower their prices below what existing fracked wells can produce, and they don’t have the supply to keep up with the demand at $1.60 per gallon of gas.
If you have evidence of that, please put it out there. It is far more likely that there will be production cuts (leaving the oil in the ground as a proven reserve) than post-extraction storage (meaning you have to pay the cost of extraction and then storage and the asset generates no cash for you the entire time).
You have too many oil-producing countries that need both high oil production figures and high oil prices to keep their national budgets intact. In this hemisphere, Venezuela will implode sooner rather than later. Then they’ll hit up Chevron to modernize Maracaibo, and Chevron will, then the Venezuelans will nationalize the upgraded facilities and we can start that whole dance all over again.
Add Russia and Nigeria to the mix.
The only countries that can afford a low oil price are the Saudis, the Emirates and Kuwait. In the US, Dallas banks will stop lending on fracking projects at 70 USD/bbl. At 60 USD/bbl the TX economy starts to take a hit. Just in time for Rick Perry to make a decision on a presidential run.
http://www.reuters.com/article/2014/11/05/bhp-billiton-ltd-texas-oil-idUSL6N0SV00620141105
who needs the US govt’s permission?
It’s a repeat of 1999-2000.
Remember the recession Bush inherited from Clinton.
That orchestrated recession came directly from Clinton using the Oil for Food Program to manipulate the price of oil and the Saudis and other oil producers flooding the market with oil.
The price of oil went so low it put millions out of work.
The MSM ignored the recession until Bush was elected then it became Bush’s recession.
The recession that’s coming is going to be blamed on the republicans by the dems and the republicans will blame it on Obama.
Hillary will blame both.
What a coincidence.
There’s truth in that. And I still note folks are talking about the dollar being replaced, when in fact it’s still the best currency out there.
We all know it has problems what with the way our nation is being run, but with the right policies, even now our system could be made much stronger, and the dollar along with it.
It probably will.
Start looking for the old single hull tankers to be used as floating storage tanks.
Pennsylvania just inserted a new Governor who is hostile on energy production within PA. Not green enough. So he will be pushing the industry on one end with stifling regulations and taxes while market forces are making it less profitable on the other. It’s foreseeable even before he’s sworn in that his administration will see huge job losses and stifled growth.
Spot on, you win the thread.
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