Now we know WHY oil prices suddenly dropped. The Saudis want the U.S. OUT of fracking in order to control the market. They also knew the people were going to vote the way they did, so they waited to make it rough on Republicans. Shrewd, evil people they are.
Lower oil prices are good for the economy in both the short and long term! This is true for any commodity, as price equilibrium sets in, supply stabilizes and creates a level of certainty necessary for planning.
Additionally, higher energy prices means higher prices for everything else. Not good!!
The House of Saud ain’t get tin’ its’ monies worth from the Clinton Foundation!
Then why has the cost of food kept rising, milk now is over $4 a gallon. And if you are trying to avoid those growth hormones it is MORE!
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 strength of the dollar is pushing oil and other commodities lower.
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.
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.
I don’t really see this lasting long like it was in ‘86. Those hungry years lasted forever. I didn’t feel even remotely safe for almost 10 years then came ‘98 and it got worse. They were hollow, painful years.
I looked at the annual report of an independent and their analyst presentation of a couple of months ago. A pure shale company. Their best production in the Eagle Ford and Wolfcamp / Bone Springs had a first year decline rate of 70 to 80%. The payouts look good at about a year or less but they posted the following for 2013.
800mm revenue, 600+ mm in expenses, 199 mm net income bfit, 1.5 BILLION in long term debt at nearly 6%. After a 70% decline and 30% drop in oil price I’d say they will be under water pretty soon. They didn’t improve their position at all in 2014... in fact they added a pile of debt and the 1.5 bil does not include the short term of about 350mm. I’d say this is pretty typical of a whole bunch of shale companies.
In broad strokes, if drilling slows a lot in the shale, and it will given these metrics, a million bopd of production can become 500 mmbopd inside a couple of years. Still a lot of oil but not a threat to world supplies.
Somebody will be right.
Thackney what about the costs or rather the sustainability of the fracking infrastructure that the costs have already been spent ?
So in short those companies that have larger debt andncosts in tracking they will either go out of business or invest money in other areas.
There has to be a silver lining in all of this.
Will America’s domestic production be able to stubstian 8 + million barrels a day in this downturn ?