Posted on 12/20/2014 8:06:02 PM PST by NKP_Vet
I side with the belief that an oil glut was created an no one chose to be the odd man out and quit producing. This sent oil prices downward.
People are already bringing out their SUVs and pickup trucks in celebration. Where before people limited their use, they are now preferring gas-intensive vehicles.
I don’t suspect new car owners will be jumping too quick to buy guzzlers, but the move continues, none-the-less.
Nope.
It really is OPEC keeping the price per barrel down. They've got enough riches, oil reserves, infrastructure, and staying power, to outlast a staring contest with the fracking boom in the West.
The OPEC nations need us as customers. They would rather lose billions of petro-dollars in the short term, and have us cave into them in the long term. It's why they're willing to drive the price of crude oil so low, that it will be more feasible for us to buy from them, rather than drill our own oil.
It's a matter of control and power.
OPEC is cutting their price. They do this every time we start drilling in order to drive American oil production out of business. The us needs to slap an import teriff on OPEC oil to protect US production. It’s called predatory pricing, and it’s illegal in the US. Why we’ve let the Arabs get away with it for decades I have no clue.
Anytime someone says “Keep an eye on /some sector/ JUNK BONDS, well, yeah, I get real, real nervous...
“...2 dollars, regular. and can you check the oil.”
Many years go I worked at a gas station. A regular customer was a really old lady. When she stopped, it was, “$2.00 regular, check the oil, check the radiator, check the battery, check the tires...and don’t forget my green stamps.”
We called it an island overhaul.
I don't think so.
Oil / fuel demand hasn't dropped. What's changed, is the supply of crude oil. There's simply a LOT more of it on the market, due to the American revolution in fracking.
Because there's more oil available, and the Mideast oil producing nations have refused to lower their production, the end point price for fuel is dropping at the pump.
There's nothing more mysterious here than the law of supply and demand.
This is geo-economics at work.
The Saudis (and the other oil producing nations in the middle east) have so much wealth, that they can afford to absorb the hit from low oil prices in the short term. They're betting that they can drive the price down so low, that it will become too costly for us to extract our own oil through fracking - which will then send us right back to them as a prime customer.
With all due respect, I think that's an incorrect read on your part. The sudden drop in oil prices is geo-economic.
The law of supply and demand is most definitely in full force. We're seeing a drop in the price at the pump, precisely because there's such a glut of crude oil on the market. Prices cannot fall, unless supply exceeds demand.
The reason there's such a glut, is because America is now producing so much more oil (due to fracking), and the fact that the Saudis and the other OPEC nations are refusing to lower their oil production.
My take is that the Saudis are keeping the price artificially low in order to break the back of the U.S. fracking boom. At some point, it will (again) become more profitable for America to buy cheap Saudi oil, than to drill our own reserves.
Slick, eh?
Back when gas was 30 cents a gallon and love was just 60 cents away. Ah, the good times.
https://www.youtube.com/watch?v=gbPJ3Q9Tfbs
Bingo.
What most folks are missing is the logic behind what the Saudis are doing.
They can take a short term hit to the price per barrel, but what they're not willing to lose, is the American dependency on their oil. If they can keep the prices low for long enough, American fracking operations will begin to shut down, because it'll be cheaper to buy oil from the camel jockeys, than drill our own.
fracking can be started again when prices go back up
The last time junk bonds collapsed, a major stock market crash followed fairly rapidly.And those that were hardest hit were the
big Wall Street banksTaxpaying citizens…
There, fixed that...
total BS
Little did the western world imagine that accepting a cartel as normal in international trade was a good precedent.
They never imagined that, as a bonus, the West, indirectly, would be financing and enabling the worst world-wide muslim terrorism in 400 years.
They probably also said “Will pay to the bearer on demand 1 dollar silver” on the top of the bill too...
Ah yes, .39/9 for about a decade
Most of our imported comes from Canada and Mexico. Tariffs on the oil would only please the eco freaks and .gov crew though, they’d have reduced demand and some more revenue to keep the handout buffet going.
If there was/is to be some type of government “intervention” in this, I’d have to go for buying U.S. sourced oil at a higher price for refilling the strategic petroleum reserve. Either that, or “creating” more reserve by having the government purchase drilled wells who’s production or production potential would go to that reserve.
The ideal situation is that drillers and petroleum industry investors see this cycle, and plan accordingly and those that don’t go out of business. Between thew ease of ridiculously cheap credit and the swarming field of sheep investors though, there will be a constant supply of leverage/OPM to keep these going forever.
Consumers have a couple of major choices. Each decides whether to get ready for the big TEOTWAWKI crash or continue to be a tourist looking for the nonexistent escape in entertainment. The former saves money and keeps the price of oil lower. The latter is the way to certain poverty, when the big collapse comes.
I remember $0.18 gas. Wasn’t so long ago. 1970.<<<<<<
During the early to mid-60’s gas wars in SoCal, we typically got our gas down to $0.17 or so, most often at our local Powerine station. Unfortunately it did not come with full service there. But a couple of bucks to fill up was probably a big hit on my high school job salary.
Yes it was. could Cruise all night on a buck.
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