Posted on 12/15/2014 11:04:18 AM PST by thackney
Our war with the Cartel is just beginning.
Biota from the past fueling the present. And the guts from the present in teasing it out.
Isn’t this how the Arabs shut down our oil production back in the 1970’s? Sure, American oil companies can always start the wells back up, unless they go bankrupt waiting for the price to go back up.
Have no clue how deep it will go this time around.
I see the market and industry far to different from 1970s to make any reasonable comparison. You’re going back to the time of the Seven Sisters.
I'm referring to the time of James Earl Carter, when the economy and confidence in our president and congress sucked. Quite similar to today.
I think our government did more lasting damage to the US oil industry from that time than OPEC began to do.
Fear the response that the Federal Government needs to save us from low prices.
How much lag is there to restart? That’s my fear when the pendulum swings back is there a shortage due to ramping back up.
I would say that is a normal part of a dip this fast and this deep.
If the Fed and state governments would lower the taxes on each gallon, it could spark an economic boom that could help drive up the prices enough to “sustain”(I usually hate hearing that word) US oil production.
US gasoline price has already dropped nearly twice the average fuel tax.
Where is the economic boom from that?
It’s coming. There’s a lag. Lower prices always lead to more consumption. Always.
Is that what happened in 2009?
There was a recession then. Not so now.
Much of the Shale oil Boom was financed thanks to ZIRP, and junk bond financing. Some 18% of all US High-Yield bonds are currently in Oil and Energy Exploration.
ZIRP destroyed the most fundamental index in the financial universe: the true cost of borrowing money. The truth of Basic Math is beginning to take over.
Why do you think the global oil demand is stagnating?
High prices, at least until late summer. There is a lag, I believe. As there will be a lag in the consumption increase. Once folks get a bit used to it, they’ll drive plenty. Always have.
But this oil price drop is primarily, but not exclusively, a supply issue. The near-doubling of US production in the past several years is to “blame.”
In my opinion, you give far too much weight to the US gasoline consumption rate towards the global price of oil. And it doesn’t fluctuate nearly that much.
The price hasn't fallen enough yet to spark an economic boom. Cutting gas tax will drive the cost of gas lower without hurting oil production. Letting the barrel of oil price drop more will only hurt US oil production. Fracking can't continue below $50 a barrel.
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