Posted on 12/01/2014 10:08:44 AM PST by rellimpank
Saudi Arabia, Kuwait, and United Arab Emirates—the only OPEC members financially solvent enough to afford temporarily reducing crude oil production—are believed to have refused to cut output on November 27, 2014 to push oil prices down to $68 a barrel in hopes of killing the U.S. oil boom.
But unlike traditional oil wells that lose future production capability if temporarily shut down, U.S. shale oil wells have the flexibility to close and then reopen without a long-term loss of production capability.
From an annual low of $1.21 a barrel in 1970 to an annual high of $108.90 in 2012, OPEC, through member restricted production quotas, has tried to parasitically bleed its customers to the fullest extent. But each time the cartel dramatically forced up prices, its own members would ship more than their quota, and worldwide exploration and production would surge. A resulting massive surplus would then cause prices to crash.
(Excerpt) Read more at breitbart.com ...
Obama: Yes we can.
Game of chicken. With these Petrostates they rely on oil to fund their governments so their what is break even point is way above production costs. Budgets are going to start bleeding a lot of red ink. The three countries mentioned have huge foreign reserves and investments to rely upon. Countries like Venezuela and Russia are going to have serious problems before the shale is affected.
0bama can shut down oil production. 0bama can shut down coal.
We need to tell the opec parisites to (censor) off and keep their oil.
Some argue that reduced costs is bad for our economy, as it will slow exploitation. Doesn’t work, since that is only good for the production side. Everyone else has been getting soaked.
As a rule, a healthy economy needs abundant affordable energy. Near $4 a gallon aint it.
We need to break opec and let an honest market, one that can’t play price fixing games, make reasonable proffit.
Just wait until someone discovers how to make gasoline from coal...............................oh, wait, THEY DID!.........................
OPEC can kill OPEC with low crude prices. OPEC members like Venezuela and Iran can’t survive economically if prices are below $100 a barrel for an extended period of time. I’m sure that a lot of the other members have made their own economic plans based on high prices as well. The infighting is going to get very serious very soon.
New shale oil drilling is down 15% due to lower prices already. Low prices do have an affect on production.
The Keystone Pipeline will never get out of the WH with approval. It might overcome a veto after the GOP takes the Senate, however.
It is also worthy to note that speculation/futures, based on supply and demand reports, drives the price of a barrel of oil. But that doesn't actually HAVE to be what oil/fuel is actually contracted and sold for. It is simply a price point that sets the value of the commodity. When there is a surplus and producers have to compete to sell their product, they will lower their fees/profits to move their product. They just need to sell more of it to realize the total gross revenue/profit that they need. AND THIS is why the “problem” for some producing nations may be an exponential or cascading problem.
The Saudis are underestimating American oilers.
How about an executive order banning fracking?
C’mon Baraq, we dare ya....
There was a proposal ten or more years ago that we should put a floor under the price of oil, the floor being high enough to pull non-OPEC alternatives onto the market. I always thought it was a good idea, the key caveat being that the proceeds of the necessary tax be rebated to the taxpayers in a transparent and rational way.
The devil is in the details, but we have the power to break OPEC any time we can sustain the political will over time. And we should have done so many years ago.
Thackney has pointed out (and has a link) that suggests that the Saudis are well aware of how quickly Shale Oil can restart. They may be motivated to drop oil prices to kill off ISIS funding.
It is possible that the Saudis are the good guys here.
Texas drilling permits fall 50 percent in November, data shows
http://www.freerepublic.com/focus/f-news/3232627/posts
Please no. No additional government meddling in the market place. We need less involvement by government in industry, not more.
It is kind of amazing to read conservatives complaining that OPEC won’t hold back production to raise prices.
They are not producing more, we are.
http://www.eia.gov/forecasts/steo/report/global_oil.cfm
1. I think the Saudis and other oil states are extremely dependent on oil revenue to keep their populations ‘in check’. Without street money, the Saudi royals would have their heads on sticks...they can’t play this game of chicken forever.
2. This may stifle new drilling...but the breakover to force an already fracked well has to be pretty low.
3. Should help our economic growth and increase market for energy, stabilizing prices.
4. I think the Saudis and others are constantly stabbing each other in the back, and probably near max production anyway. The price swings are speculative...but lets see if the actual supply of oil increases in a meaningful way.
Are you thinking the amount of oil produced should go up with the decline in prices?
“It is kind of amazing to read conservatives complaining that OPEC won’t hold back production to raise prices.”
But that’s only part of the story.
Part A is increase production - no problem with that.
But we all know what Part B will be in the future.
Any decision of any kind by OPEC is obscene to me - because by its very nature OPEC disrupts free markets. If OPEC announced they were removing all production restrictions...AND...dissolving OPEC, I’d have nothing to complain about.
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