Posted on 03/08/2020 5:03:21 PM PDT by Hojczyk
Oil prices plunged 30% in early trading after OPEC’s failure to strike a deal with its allies regarding production cuts caused Saudi Arabia to slash its prices as it reportedly gets set to ramp up production, leading to fears of an all-out price war.
International benchmark Brent crude futures plummeted 30% to $32.05 per barrel. U.S. West Texas Intermediate crude dropped 27% to $30 per barrel, its lowest level since Feb. 22, 2016.
“This has turned into a scorched Earth approach by Saudi Arabia, in particular, to deal with the problem of chronic overproduction,” Again Capital’s John Kilduff said. “The Saudis are the lowest cost producer by far. There is a reckoning ahead for all other producers, especially those companies operating in the U.S shale patch.”
After the initial drop the losses were pared somewhat, with each contract trading down slightly more than 21%.
On Saturday, Saudi Arabia announced massive discounts to its official selling prices for April, and the nation is reportedly preparing to increase its production above the 10 million barrel per day mark, according to a Reuters report. The kingdom currently pumps 9.7 million barrels per day, but has the capacity to ramp up to 12.5 million barrels per day.
(Excerpt) Read more at cnbc.com ...
Russian production cost > market price; very dangerous. Russian will invade and steal given opportunity. Watch for it.
Severance tax to the the state goes down and other taxes will come up and that hits everybody. 39 oil producing states take it on the chin. The oil and gas industry in Texas pays around 4 billion+ a year to the state in severance taxes. Total budget for the Texas school system was around 9 billion, who thinks they will cut back?
At least two weeks for gasoline prices to reflect this drop.
There goes my, and many others, job. We’re just finishing drilling a well now, and supposed to move to another in a few days. Bet that gets cancelled.
And I’m too old to learn to code.
Think anyone will pay me to fish?
$2.029 today at the local WAWA on Phillips Highway/University Blvd. in Jacksonville, FL.
“Bring me $2/gallon gas and I’ll believe it“
You will believe it even more at 1.50. And consider how much of that is tax.
OTOH, aren’t we half-past overdue for the traditional and customary springtime refinery explosion? Doesn’t matter how cheap it is if it can’t be refined.
[polka band:] Roll out the barrel...
A few weeks back, someone in open thread asked me of all people which oil stocks to buy at this time, and I told that person, don't do it, don't do it, don't do it, don't do it...
I paid $1.829 today.
Inexpensive energy is fantastic for the American economy so you can shove it up your azz. You probably believe in peak oil as well you inbred molester of goats.
The domestic fracking industry is not going to collapse due to low prices. They were always players in the field that have low costs and only the ones that overleveraged them selves will go out of business. It’s called ‘free market’ And it’s why the Saudi’s cannot put us out of business.
“First, there are fewer stronger dollars flowing into the country because the world isn’t buying oil. “
Before becoming an exporter, there were NO dollars flowing into the country, it was ALL outflow. Bad.
“Second, our exports become more expensive and US exporters suffer.”
Not necessarily. Other countries need oil and food no matter what the price. We STILL bought foreign oil when it was $150/barrel.
Until we increase refinery capacity, won’t it just sit in tankers somewhere....
First I thought you were just being a smart azz, now it’s obvious your just ignorant. It’s not inexpensive if your unemployed! You do realize there’s 39 oil producing states? You do realize that millions are employed directly in exploration, drilling, production and all of the support services needed? You do realize that billions of dollars based on the price of oil is taken in severance taxes to the states? Hundreds of billions of dollars pour into towns all across the US from the local oil business? You do realize that states will end up raising taxes to offset revenue loss from severance taxes? I’m trying to be nice here I don’t really know why, you don’t deserve it. Been in the oil and gas business for 45 years, been through multiple ups and downs. I’ve seen fortunes won and lost, I’ve seen schools close down, I’ve seen towns lose 50 percent of their populations and people lose everything. Then I see people like you who haven’t a clue as to how many people are involved in putting that gallon of fuel in your tank. You don’t give a chit where it comes from or the millions of lives dependent, just whine like a baby when 7-11 raises the price at the pump a nickle. Oh and by the way, I’m here in the middle of the Permian Basin we raise cattle not goats. See I’m even involved in feeding your ignorant azz!
The USA imports 6 million bbls/day to meet domestic demand.
Severance taxes from oil and gas here in TX generate just over 50% of the money needed to fund our schools. When the price drops to low everybody feels it, and if it stays low to long there’s usually a sales or property tax increase to offset the loss in revenue. In 98 it went so low that some schools were shutting down and busing kids to larger schools. The state gets about 7% severance per unit on gas and around 6% on oil, property tax on leases and a fuel tax at the consumer. That’ a whole lot of money that is felt quickly when it’s gone.
Don’t sound like it’s your first rodeo, just hang on, been through many of these in the last 45 years.
With the current price war - Russia refused to slow production so nobody wants to - it may stay low enough to give us lower prices - regular can be had for $1.91 down in S. MS and that was with prices $22 higher than what they just fell to.
So Israel and Kushner ally Saudi Arabia is getting ready to tank the economy even before China’s supply chains get a chance to?
The oil price drop is only going to shake out the weak players in the market. Oil will still continue to be produced because even when banks seize assets they need to make money off of those assets. People still need electricity, still need oil, and they will always need plastics and chemicals. Quit freaking out.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.