Posted on 08/02/2016 4:28:47 AM PDT by HomerBohn
This is the real indicator of how bad the Obama economy is. Energy is the magic ingredient for producing wealth and prosperity. It is when energy is converted to goods and services that an end product of value is produced. The cost of energy has been cut in half during Obama’s presidency, yet growth has been stagnant. Any leader who can’t produce 4% or higher growth under those conditions is either an economic idiot or holding the economy down on purpose.
Oil price was lower last winter, $34.
I want a policy / process that will bankrupt the Saudis. I want them destitute and begging. I want their wells to dry up so that they all have to go back to being nomads.
Eliminate the cities, secure the oil fields.
Keeping that in mind, the pundits who had no idea that this was coming know exactly what will happen because of low oil prices, right?
I think not.
Good news for global stability though.
The Maduro regime in Venezuela will collapse.
Iran will have fewer resources for bomb-building.
The House of Saud will have less money to throw around the globe creating Sharia mischief.
I did not read the article. Anyone that thinks high oil prices are good for the economy has simply gone full retard.
Where is the BARF alert? When gas prices drop consumers have more discretionary money to spend on necessary new gutters, or a new mattress, we got a new retaining wall that replaced a crumbling one to keep our back yard from flooding. Being on fixed incomes you have to budget for these things, and when gas was over $4 a gal, all our extra money went in the gas tank.
It will take longer to hit food prices as producers are producing less.
Nope. I look at it the same as I do a tax cut - welcome relief.
But I'm sure it's only a matter of time before the oil companies are looking to Uncle Sugar for some handouts.
“So why is the rig count going up in the US? “
The normal time lag between prices and drilling.
Two months ago at $50/bbl, it was worthwhile to start some wells. Now at $40/bbl, fewer projects will get a green light, so when the rigs are done with what they are working, there will be less follow-on jobs.
The “shale Band” for prices is usually considered $45-65/bbl. As prices change, the lowest cost fields in Texas would be the last to stop and the first to start, while the highest cost major field, the Marcellus in Pennsylvania, would be among the last to rehire.
Technology has brought the cost to produce shale oil down somewhat, but Middle East producers have inherently lower cost to economically produce - under $10/bbl for some Saudi fields.
Total demand has to exceed their capacity for prices to sustain a rise in price. That will basically require the global economy to improve.
A booming economy under Trump will cause much more energy use to occur.
Our economy has bordered on a Great recession for 7.5 years.
I believe it could collapse if Hillary is elected.
Thank you.
I’ll second that.
I paid $1.69 a couple days ago.
I agree. A dose of Hillary, thanks to ignorant fools who are allowed to vote, will pound the nails in our coffins.
And that means people will be having more fun.
Possibly. Russia and Iran are also targets. Also simply to hold market share. If Saudi pulls back, the benefit of decreased supply accrues disproportionately to others.
You’re assuming that there will be a lot of money left after paying for fuel.
Not so.
Incomes have dropped dramatically since the one-time foreign aid student was elected by hook and crook and by many American voters.
Few budget as they see the central socialist government tossing money out the door like it was popcorn and believe that the corrupted Uncle Whiskers will take care of them.
“Lower prices are due to Saudi Arabia trying to run frackers out of business.”
It is true that they want that, and are trying to achieve that, but they are somewhat helpless to do anything else.
They have to pump, because they need the money. They are running big deficits trying to pacify their population with subsidies, and have been expending more on security with the war in Yemen. They have little else in their economy to rely on. They have been cashing in their US treasury bonds and overseas investments at a rapid clip.
As much as they would like to shut out American competition, they are more worried about Iranian competition, and the threat to their lives posed by a rich Iran. They are locked in an arms race with Iran, trying to siphon as much possible revenue away from Iran as they can.
OPEC has pretty much ceased to function as a mechanism to artificially inflate oil prices, because it always relied on the Saudis to restrain their production to do it.
The Saudis face a hard strategic situation - their oil may well be worth less in the future, so they need to monetize it soon. That is why they are looking to sell shares in the state oil company Aramco, and another big reason why they have to pump as much as they can now.
Their lowest cost fields are getting old, and their cost to produce is projected to creep up over time. Shale technology has rapidly lowered the cost to produce from shale, but only Americans are really doing it. In 5 or 10 years, huge shale deposits in Russia, China, Argentina and elsewhere could come into production as well, as the technology spreads. Solar cell and battery technology improvements seem on track to chip away at oil demand as well.
To drive oil prices back to sustained highs, it would likely require
- a significant global economic upturn (boom),
- an epic catastrophe in some producer nations, like a big war,
- or a massive government manipulation, like a big carbon tax (which would not help producers).
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