If Oil Price Drops to $40

[GURPS]

U.A.E. Sees OPEC Output Unchanged Even If Oil Price Drops to $40


OPEC will stand by its decision not to cut output even if oil prices fall as low as $40 a barrel and will wait at least three months before considering an emergency meeting, the United Arab Emirates’ energy minister said.

OPEC won’t immediately change its Nov. 27 decision to keep the group’s collective output target unchanged at 30 million barrels a day, Suhail Al-Mazrouei said. Venezuela supports an OPEC meeting given the price slide, though the country hasn’t officially requested one, an official at Venezuela’s foreign ministry said Dec. 12. The group is due to meet again on June 5.

“We are not going to change our minds because the prices went to $60 or to $40,” Mazrouei told Bloomberg yesterday at a conference in Dubai. “We’re not targeting a price; the market will stabilize itself.” He said current conditions don’t justify an extraordinary OPEC meeting. “We need to wait for at least a quarter” to consider an urgent session, he said.

 

[GURPS]

New era of cheap oil 'will destroy green revolution'


The collapsing oil price that is reshaping the global economy could derail the green energy revolution by making renewable power sources prohibitively bad value, experts have warned.

Oil tumbled below $60 a barrel for the first time in more than five years yesterday – a fall of 44 per cent since June. It is forecast to fall further.

A new “era of cheap oil” would be good news for consumers and motorists – but analysts say the consequences for politics, industry and the climate could be even more radical.

The ripple effects could help the Conservatives to remain in power at next year’s general election by making voters feel richer as bills fall – while hurting Scotland’s oil-reliant economy and setting back its campaign for independence.

 

[stgislander]

while hurting Scotland’s oil-reliant economy and setting back its campaign for independence.

I thought that issue was already decided the the recent special election? Independence lost by a pretty large margin.

 

[LibertyBeacon]

Safe to assume this is all about putting shale on ice for a bit, yes?

 

[Larry Gude]

Poorly written article. By saying it "...could derail the green energy revolution by making renewable power sources prohibitively bad value, experts have warned." it leaves the impression it was ever a good value. It was not and is not. Green energy as a good value has great potential but, it has been crippled by subsidy for far too long as, like leaving training wheels on far too long, the advances needed to be real riding have not happened. So, this is GOOD for proper green energy which will now learn to 'ride' because it has to. $100 oil only helped hide the training wheels for a time. It was never a good value unless you were in the training wheel business.

Shale can scale back. What's important is that it is now up to speed and can be put back into service MUCH faster than even a few years ago. It can now serve as leverage. There is nothing wrong with cheap oil IF you care about the people who have to pay for it; the middle class and general economic recovery. This means real dollars will be in their pockets to be spent elsewhere. Which leads us to the next thing that must be fixed, debt.

This is a good start but, nothing more than a start. Now, on to wiping out trillions and trillions in debt.

 

[SG_Player1974]

So.... a few years ago, the cost of just about everything had gone up (groceries, clothing, etc.) due to what was called "An increase in shipping charges incurred due to increased fuel costs."

Can anyone tell me whether THEY have seen the prices at the grocery or department store go down lately? Gas prices at the pump have gone down significantly over the last 6 months.

Hmmmmmm......

 

[Gilligan]

So.... a few years ago, the cost of just about everything had gone up (groceries, clothing, etc.) due to what was called "An increase in shipping charges incurred due to increased fuel costs."

Can anyone tell me whether THEY have seen the prices at the grocery or department store go down lately? Gas prices at the pump have gone down significantly over the last 6 months.

Hmmmmmm......

Increases in the cost of food are due to quite a number of factors; the cost of fuel is only one of them. In some cases - beef for example - the cost of transportation (fuel) is probably the least of the factors involved. Now if you want to talk about the extent to which the Federal ethanol mandate is effing with food costs, that's a different animal and the cost to produce ethanol is not reduced because the cost of a barrel of oil is reduced. Hopefully, the decrease in gasoline prices will increase the pressure on the administration to back off on the ethanol mixing requirements.......but I'm not holding my breath.

 

[PeoplesElbow]

I think it will be bad for the economy at least in the short term. There will be a lot of folks in PA,WV, WY, ND, SD out of work, unemployment numbers (if they are not fudged....) will start to go up and then the dominoes will follow. There are a lot of small towns that have booming economies because of fracking jobs that were created due to high energy prices.

 

[Larry Gude]

I think it will be bad for the economy at least in the short term. There will be a lot of folks in PA,WV, WY, ND, SD out of work, unemployment numbers (if they are not fudged....) will start to go up and then the dominoes will follow. There are a lot of small towns that have booming economies because of fracking jobs that were created due to high energy prices.

Those jobs are a drop of piss compared to the 400 million gallons a day we use so, we get under $2 a gal, that's $800 mil PER DAY saved, $300 BILLION a year or, roughly half our current deficit. This is HUGE.

And, now, on to wiping out debt and raising interest rates.

 

[PeoplesElbow]

Those jobs are a drop of piss compared to the 400 million gallons a day we use so, we get under $2 a gal, that's $800 mil PER DAY saved, $300 BILLION a year or, roughly half our current deficit. This is HUGE.

And, now, on to wiping out debt and raising interest rates.

I think a lot of how the economy is doing is about perception. Stocks often fall farther than they should and raise farther than they should on "momentum" alone.

OPEC was worried about US energy production, otherwise they would not allow the prices to drop the way they have been. I am all for using up all of their oil before we use our own though.

 

[Larry Gude]

I think a lot of how the economy is doing is about perception. Stocks often fall farther than they should and raise farther than they should on "momentum" alone.

OPEC was worried about US energy production, otherwise they would not allow the prices to drop the way they have been. I am all for using up all of their oil before we use our own though.

Perception certainly matters but, don't set aside geo politics when it comes to oil and laugh at any one who argues it is a free market. When was the last time we invaded a nation over 'free market' concepts?
There is interest in cooling Iran's heels a little as well as Russia's. The time to kill fracking was before it became so established. Again, as is, we CAN, not that we will but, can use it as a lever now. Another factor is that the world very much enjoys using the US military for their own ends and that becomes tougher when we lose interest especially if we're worried about cost so, it's certainly part of the equation of folks like the Saudi's that they want the US to be doing well enough to waste some more of our people to serve their interests.

:shrug:

 

[PeoplesElbow]

Perception certainly matters but, don't set aside geo politics when it comes to oil and laugh at any one who argues it is a free market. When was the last time we invaded a nation over 'free market' concepts?
There is interest in cooling Iran's heels a little as well as Russia's. The time to kill fracking was before it became so established. Again, as is, we CAN, not that we will but, can use it as a lever now. Another factor is that the world very much enjoys using the US military for their own ends and that becomes tougher when we lose interest especially if we're worried about cost so, it's certainly part of the equation of folks like the Saudi's that they want the US to be doing well enough to waste some more of our people to serve their interests.

:shrug:

I think it could very much have the opposite effect with Iran. They go ahead and build and test nuclear weapons, they saw what we did with North Korea, give, get lied to, give some more, get lied to some more.

Pretty much everyone in the region is weak right now, I can see them wanting to take over some more territory. Iran is small potatoes compared to Russia though.

I think OPEC nations could keep up the supply for quite some time until we forget about our supplies, it took us a while to spool back up with coal and really that tech did not have to be invented, just old miners found and train the next generation of miners. Experienced miners were getting some great pay a couple years ago when coal was at its peak and open mines were minimal.

 

[Larry Gude]

I think it could very much have the opposite effect with Iran. They go ahead and build and test nuclear weapons, they saw what we did with North Korea, give, get lied to, give some more, get lied to some more.

Pretty much everyone in the region is weak right now, I can see them wanting to take over some more territory. Iran is small potatoes compared to Russia though.

I think OPEC nations could keep up the supply for quite some time until we forget about our supplies, it took us a while to spool back up with coal and really that tech did not have to be invented, just old miners found and train the next generation of miners. Experienced miners were getting some great pay a couple years ago when coal was at its peak and open mines were minimal.

Not to argue, because you do have a point but, more for conversation, my limited understanding of fraking is that it is relatively easy to start up/shut down. Also, again with my limited understanding, fraking's expense is more in starting up and equipment along with every other high end expense of a new process. The costs associated with it will come down, substantially so, when we're told it has to be at $80-90 to be profitable, that's a point in time and, to your point, a perception. We'll see if they can't make some money at $50 soon enough.

As for Iran, I think that horse has long left the barn. Everyone paints them as these suicidal psychos and that is NOT what Shia's do. The suicidal types are, most of the time, Sunni's and who are sunni's? Saudi's. We've gotten them to avoid going nuke for generations now because they're the real scary ones. That's a huge part of why US presidents have been using our troops to act in Saudi national interest when it comes to Iraqi and, to some extent, Iran; to make the Saudi's feel like they don't need nukes. Of course, there is a component of that argument that says it serves US national interests too but, if we believe the worst of these people then, all we're really doing is waiting for the next attack.

In any event, our economy MUST have cheap energy for the middle class to thrive and a strong middle class is 'good' America. We also need to shed debt and raise interest rates to salve the wounds of those who will be eating the losses.