Global oil demand is not in decline. There is still the normal seasonal swings that happen every winter, but demand continues to rise, although slower than it was.
Posted on 01/20/2016 4:26:34 AM PST by John W
U.S. stock index futures pointed to a sharply lower open, with Dow futures sinking in excess of 300 points as European and Asian shares tumbled in the wake of renewed oil price weakness.
European stocks fell sharply shortly after market open, with the pan-European STOXX 600 down in the region of 3 percent after a weak session in Asia and fresh lows in oil.
(Excerpt) Read more at finance.yahoo.com ...
We learned in WWII bombing oil fields and refineries is a hard messy thing to do....
I understand the manifold purposes of petroleum, but understand that extremely cheap oil does not mean a strong economy. Americans benefit if/when we’re pulling that oil from the ground. That keeps drillers and engineers employed, truckers on the road, and money stays onshore. As the price of oil craters, it becomes cost prohibitive to pull the oil out of the ground domestically, thus all of those drillers, engineers, and truckers lose their jobs.
I think the magic number was ~$50 per barrel. Under that, oil exploration and extraction is not just unprofitable but an accounting liability.
I think that you’re exactly right.
or not
OIl companies that didn’t plan for the possibility of such a downturn and banks that loaned those companies money should pay the price for their foolish decisions. During feasts you prepare for famines. I write this as someone who has invested in oil companies. They should have prepared for something like this. It doesn’t take a genius to know the Saudis weren’t going to stand by and do nothing while the oil shale industry made America an energy exporter.
Look, I am all for tariffs to protect industry so if you want to propose a floating tariff to keep oil at $40.00 a bbl ( gas around $2.00/gal) I am all for it. The tariff would go away once oil went above $40.00. But you say the word tariff around here and it is like throwing Holy water on a vampire.
And Obama will take credit for the lower gas prices which is correct but in the wrong context when he destroyed the economy of this once great nation.
“I know there are many folks who work in the oil industry, but I wish someone could explain how lower oil prices are so terrible for the rest of the economy.”
Supposedly, the drop in oil reflects an emerging world wide recession. The world economies are retracting, not expanding. Consequently, they aren’t buying oil and the price is dropping. It’s not that the price of oil is driving the economies/markets lower, it’s that the lower price of oil reflects something else that driving markets/economies lower. I’ve read reports where oil demand is actually up, but oil is so plentiful that it is driving prices lower.
Personally, I think the real culprit is China. China stimulated the crap out of their economy and stock market over the past few years. Their stimulus made ours look small. As China slows, it creates a ripple in the countries China was buying commodities to turn into manufactured goods.
There are a significant number of commodity based economies that are struggling to cope. Australia, Brazil, all the oil producing countries, etc. These struggles reduce demand for manufactured goods, ie, trucks, tractors, airplanes, consumer goods, etc. It’s a vicious circle.
BTW, don’t bet on my opinion being right. But, I went to 100% cash yesterday. Should have done that a month ago.
Global oil demand is not in decline. There is still the normal seasonal swings that happen every winter, but demand continues to rise, although slower than it was.
“Demand for fuel will increase with decrease in price.”
For the first time in a couple of decades...I’m actually considering the purchase of a large gas-guzzling, carbon-spewing, road-hoarding, planet-killing SUV. That should make a car manufacturer happy, fund an autoworker’s union retirement account and give the truck salesman a +1 mark on the sales board. There’ll be the added bonus of knowing I pissed off an environmentalist and killed a polar bear.
If it was $80-$100/bbl...then yes. But...the current decrease in oil has nothing to do with demand being restrained by costs. Costs are low enough now and the price of oil is not an impeding factor to productivity. What is causing the low price is the glut in surplus (which will only get worse when Iran comes online) and low demand because the world economy stinks...especially China(who's fake building boom is imploding before our eyes)...and oil could be $10/bbl and there would be no increase in demand.
It's not that low oil is so bad for the economy. It's more than low oil is a SYMPTOM of a BAD economy. When you are not moving as many goods around...making as many things...you need less oil. When oil builds a surplus and you need less of it...the supply-demand curve kills you.
The low price of oil is the fever...not the illness. However, when prices go too high...then there is a choking point on the economy. It does stifle growth. It's just doesn't work that way when its reversed.
When I think of the Obama Admin I look at it as the time when my house was cold every winter for 8 years.
Well one year from today he’s history.
“The elite aren’t going to cede their wealth and power. They’d rather let civilization for the rest of us descend into chaos.”
Exactly! They are the petulant little child who flips over the game board and scatters the pieces as soon as they see they aren’t winning.
People sell because they fear a downturn. The increased selling drives values lower, fueling more selling. When everyone is selling, it might wise to look for some bargains.
-——What is causing the low price is the glut in surplus——
now there you have it
a prudent man would be stocking up while the prices are low. however since prices have been dropping for some time, the prudent man has been buying and has filled all his tanks and cans and tea cups. Although it would be great to take advantage of the super low prices, if there is no where to put it, it can’t be bought until he sells some of his inventory to make room
when you look at the classic supply and demand curves, there is no limiting value that results from inadequate storage capacity
A cold dark period in US history will end soon.....
Low oil prices are not a direct problem for the economy.
Because of low oil prices, hundreds of billions of dollars are no longer being invested per year by the oil companies.
That is a lot of steel, pipe, valves, pumps, motors, cables, controllers, etc that isn't getting ordered. Also big decreases in equipment ordered by Caterpillar, etc.
The direct oil jobs lost are only a fraction of the total jobs lossed in the US from this size of drastic fall in prices.
The only bright spot in the economy for the past few years has been in oil and natural gas development ( part of the economy the administration had yet to over regulate ). Cheap oil ( partially because Saudi Arabia is dumping trying to collapse the US developers ) is driving the whole sector into a deep recession shedding jobs and support industries.
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