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STRAP IN: IT’S GOING TO GET BUMPY
Powerline ^ | MARCH 9, 2020 | STEVEN HAYWARD

Posted on 03/09/2020 8:40:09 AM PDT by Hojczyk

The big news over the weekend was not the coronavirus, contrary to what you might think from watching the news. The most consequential story of the weekend is the oil price war that has broken out between Saudi Arabia and Russia. Saudi Arabia has decided to increase its production and slash its price to punish Russia for not going along with OPEC quotas designed to prop up the price of oil, which has fallen by more than half over the last few months including today’s price collapse.

(Can’t help reminding that all the certified “smart people” like John Kerry and Al Gore were telling us 15 years ago that we had reached “peak oil,” and more specifically that Saudi Arabia had likely reached its production peak and would be unable to increase its production over 10 million barrels a day. Heh.)

On the surface this Saudi move will impose significant pain on Russia, which depends on high oil prices to prop up its economy, and will also increase pressure on Iran for the same reason. Likewise American consumers, and oil-consuming sectors like the airlines, can likely look forward to some lower prices

And while the story of the Saudi-Russia feud may be entirely true, keep in mind that a protracted period of low oil prices is going to devastate America’s oil production from fracking in Texas and elsewhere. A lot of the smaller and mid-sized independent producers who have been behind a lot of the increase in domestic oil production were already under a lot of pressure from falling oil prices.

If the price stays down around the $30 level it is near today, a lot of the highly leveraged firms will default on loans or head to bankruptcy. Production will start to fall in a few months.

(Excerpt) Read more at powerlineblog.com ...


TOPICS: Business/Economy; Politics/Elections; Russia
KEYWORDS: bloggers; covid19stockmarket; energy; oil; oilprice; oilprices; opec; powerlineblog; russia; saudiarabia; stockmarket; trumpputin
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To: Red Badger

descending roller coaster gif....

Wasn’t that on the science show about Joe Biden’s declining mental faculties? Really looks similar.


21 posted on 03/09/2020 8:52:34 AM PDT by frank ballenger (End vote harvesting,non-citizen voting & leftist media news censorship or we are finished.)
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To: NELSON111

Gutsy move. I think you’ll be rewarded as better news on the virus front is probably coming soon. Right now, for the time being, everything is negative.

I’m looking at buying some XLK.


22 posted on 03/09/2020 8:52:59 AM PDT by Starboard (has so far)
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To: precisionshootist

Energy Independence is the highest matter of national security.

Let’s stop leveraging our economy onto potential enemies.


23 posted on 03/09/2020 8:53:15 AM PDT by dfwgator (Endut! Hoch Hech!)
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To: precisionshootist

SA did this back in the 90’s as well. The goal was to ride out the low prices knowing that WE and OUR production couldn’t.

Once a lot of our guys went out of business and the industry went TU, OPEC raised prices again.


24 posted on 03/09/2020 8:53:36 AM PDT by Black Agnes
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To: DIRTYSECRET
The output of fracked wells falls off much faster than traditional wells. That is a good thing for the oil industry because when drillers cannot justify fracking new wells, the supply contracts quickly leading to higher prices.

When oil and natural gas prices are low, only less energy intensive methods of extraction are viable. That means the industry becomes more energy efficient, and outputs far less pollution.

25 posted on 03/09/2020 8:53:48 AM PDT by Reeses (A journey of a thousand miles begins with a government pat down.)
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To: Hojczyk
Cramer: Collapse of oil prices and bond yields is worse than ‘the chaos of 2007-2009’

The chaos and panic of that period gave us a muslim jr. senator from IL with and unknown background just ~7 years removed from 9/11 as the usurper president.

26 posted on 03/09/2020 8:54:19 AM PDT by rxsid (HOW CAN A NATURAL BORN CITIZEN'S STATUS BE "GOVERNED" BY GREAT BRITAIN? - Leo Donofrio (2009))
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To: Hojczyk

I remember when cheap oil was a good thing.

Yes it will now impact the American oil industry and fracking but it will be great for car owners and factories, air travel and energy costs.

And, in fact, it’s a double boon as this effectively destroys the Middle East cartel and hurts Russia too (if anything you’d think a smart leftist would be writing articles about how Trump and Putin are colluding to destroy the oil industry!)


27 posted on 03/09/2020 8:54:54 AM PDT by Skywise
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To: Hojczyk

One side effect: Gasoline is $2.139 in Wesley Chapel, Florida this morning. Chances are, it will dip below the $2/gallon mark.

Commerce is MARKEDLY reduced across the world, as supply chains are drying up, and much less product is being moved. Also, many airlines are grounded or greatly curtailed.


28 posted on 03/09/2020 8:55:18 AM PDT by alloysteel (Freedom is not a matter of life and death. It is much more serious than that..)
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To: Skywise

Many of the small drillers have been bought up by the biggies. Exxon, etc. They can absorb the short-term loss. Yes, some will go under but if they did not see this coming.. that is unfortunate


29 posted on 03/09/2020 8:57:09 AM PDT by ground_fog ( My God this was from today!S)
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To: rxsid

When Cramer forecasts doom and calamity, that probably marks the market bottom. The guy is a carnival barker.


30 posted on 03/09/2020 8:57:09 AM PDT by abb
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To: NELSON111

look at the volume of puts compared to open interest for this weeks expiration at 9.5

Wonder if someone sold them to open a position.


31 posted on 03/09/2020 8:57:46 AM PDT by RummyChick
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To: abb

lol, he certainly can be.


32 posted on 03/09/2020 8:57:57 AM PDT by rxsid (HOW CAN A NATURAL BORN CITIZEN'S STATUS BE "GOVERNED" BY GREAT BRITAIN? - Leo Donofrio (2009))
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To: DIRTYSECRET
It needs to be $60 or fracking disappears. What am I missing?

I agree. Russia might be the target but the ulterior motive is to hurt the US oil exploitation industry.

Canada is already weak (thanks to Turdo) so now on to the US, making OPEC great again (to borrow a phrase)

33 posted on 03/09/2020 9:02:02 AM PDT by llevrok (Vote while it is still legal)
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To: Black Agnes
“ SA did this back in the 90’s as well. The goal was to ride out the low prices knowing that WE and OUR production couldn’t. Once a lot of our guys went out of business and the industry went TU, OPEC raised prices again.”.

That’s right. SA has done this MANY times in the past and we let the get away with it every time. President Trump needs to take immediate action. This is one case where we MUST have import tariffs.

34 posted on 03/09/2020 9:04:47 AM PDT by precisionshootist
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To: precisionshootist
Slap a tariff on oil imports IMMEDIATELY!

We're a net exporter of crude and petroleum products.

You want to tax Americans and transfer the money to the drillers, but in the process you're killing our export business.

35 posted on 03/09/2020 9:06:49 AM PDT by semimojo
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To: Gay State Conservative
I believe you are confusing your terms. An oil rig is the infrastructure used to drill the well. Here's a picture:

Once the well is finished, the rig is moved to the next site.

A key number in the oil industry is percentage of rigs in use. During boom times, the percentage would be near 100%. If a rig is not in use, someone is losing money.

Producing wells have operating costs. At $30 per barrel, some wells become uneconomical and will be shut down. In most instances, a well that is shut down will not be restarted.


36 posted on 03/09/2020 9:08:05 AM PDT by FtrPilot
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To: DIRTYSECRET

They did the same thing in 2015 (?) and the America oil market survived. They can’t press the oil price down for too long. The Saudis will pay for it too.


37 posted on 03/09/2020 9:11:12 AM PDT by struggle
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To: Red Badger

Kings Island (OH) “The Beast” rollercoaster?


38 posted on 03/09/2020 9:15:05 AM PDT by newfreep ("INSIDE EVERY PROGRESSIVE IS A TOTALITARIAN SCREAMING TO GET OUT" - DAVID HOROWITZ)
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To: semimojo
“ We're a net exporter of crude and petroleum products.”

We WERE oil exporters but that will end real quick with oil prices in the twenties.

You are way over thinking this. SA is driving the price down to put pressure on US oil production. We would not be transferring anything to domestic producers we would be protecting them from being driven into bankruptcy and making us once again dependent on SA.

39 posted on 03/09/2020 9:15:20 AM PDT by precisionshootist
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To: Hojczyk

This virus panic is all about hurting Trump..I 10000000000 percent believe that..in 2009 H1N1 killed more people and not a peep about it in the media, 19000 Americans died and I didnt know a damn thing about it..this entire thing is being blown out of proportion its a VIRUS yes its bad but the world isnt going to end..what the commie left is doing is using a virus to try to destroy Donald Trump..the question is, will people allow that to happen


40 posted on 03/09/2020 9:15:31 AM PDT by Sarah Barracuda
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