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Well smart for the Saudis, but just a tad painful for many opec members. Especially as it may not be as successful as they hope.
Well yeah but it's a strategy that is likely to work for them, even if it might take 2-4 years to pay off. I worked in Saudi and they are strategic and I think it will work for them at some point. Only possible problem is if some type of energy source is discovered that is efficient and cheap and then they are totally fuched either way.
Location: Georgia, on the Florida line, right above Tallahassee
10,471 posts, read 15,863,367 times
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Quote:
Originally Posted by Ponderosa
One word: Obama! Obama ordered the oil companies to drop the prices so that Americans would have more money in their pockets to spend this holiday season.
I read a bunch of posts that said he made it higher. Now, it's going down, so obviously, Obama has lost control and his days of being a ruthless oil baron are over.
No, the crash did not happen because gas was $4.11 / gallon.
It lit the fuse though. The actual straw that broke the Camel's back. More specifically it hit as I recall Mississippi first, when home gasoline costs vs income rose past a certain point. I don't recall all the details.
Demand and supply. The Saudi's would have to cut production or someone else. But with china alone needing 350K more barrels daily now in this slow world economy that will change in time. Just as Obama could control the US getting to where it is in crude production ;he can't control this market based product.He has tho assured US producers will reach the break even point by more expense to transport to market tho; eliminating likely many smaller producers of crude.Those with both upstream and down stream business will fair much better .If it last every long it could be a real disaster for alternatives trying to compete.
What is behind the fall in oil prices? A stronger dollar? More domestic production? Slower global economy?
I am officially putting on the tin foil hat, so be fore-warned.
I believe the US government and Saudi Arabia made an under-the-table deal in which the Kingdom increased production for two reasons.
1. By increasing production, it drops the price of oil and reduces our domestic production and reduces investment in new fields and technologies which will effect future production. This benefits the Saudi Arabia.
2. By increasing production, it drops the price of oil and hurts the Russian economy. Much of their economy is hedged on energy production. It's a way to "punish" Putin without direct action.
What is behind the fall in oil prices? A stronger dollar? More domestic production? Slower global economy?
Speculation in the stock market. They see no demand and a big supply.
Keep an eye on the energy stocks. Not just oil.
They are on the verge of collapse, because of the low oil prices.
When that happens the stock market will correct itself in a major way. The fed won't be able to bail it out this time. Banks are going to lose that monetized debt, owed to them, busting their value over ½, worse than 2008.
I am officially putting on the tin foil hat, so be fore-warned.
I believe the US government and Saudi Arabia made an under-the-table deal in which the Kingdom increased production for two reasons.
1. By increasing production, it drops the price of oil and reduces our domestic production and reduces investment in new fields and technologies which will effect future production. This benefits the Saudi Arabia.
2. By increasing production, it drops the price of oil and hurts the Russian economy. Much of their economy is hedged on energy production. It's a way to "punish" Putin without direct action.
But, that's just my little conspiracy theory.
You might even add BIG OIL to the mix.
Check today's trading tape.
Most of the big boys have recovered 2~3% today. Not so for the smaller operators. While there are a few greens on my screen, the juniors look to be headed further down.
This Saudi shakedown is testing Bakken cash reserves but not too painful for BP, XOM, CVX, etc.
Location: New Albany, Indiana (Greater Louisville)
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I have heard that Opec is not cutting back on production because they want to cripple USA / Canadian domestic production which is about as good as ever. If oil falls below $60 a barrel fracking isn't economical in most areas
OPEC price manipulation. They are trying to make US oil production unprofitable. It worked last time, but I doubt it will work this time. It's hurting mother Russia more than anyone.
I wouldn't really describe *this* price fall as OPEC price manipulation, so much as a decision by OPEC not to limit production. Oil has not been a free market in decades. They are certainly going after shale production, and the Saudis, at least, probably see Russian pain as beneficial.
Quote:
Originally Posted by PedroMartinez
I am officially putting on the tin foil hat, so be fore-warned.
I believe the US government and Saudi Arabia made an under-the-table deal in which the Kingdom increased production for two reasons.
1. By increasing production, it drops the price of oil and reduces our domestic production and reduces investment in new fields and technologies which will effect future production. This benefits the Saudi Arabia.
2. By increasing production, it drops the price of oil and hurts the Russian economy. Much of their economy is hedged on energy production. It's a way to "punish" Putin without direct action.
But, that's just my little conspiracy theory.
I'm not sure that a deal even had to be made. The Russian pain probably benefits both the United States and Saudi Arabia (unless it leads to unpredictable destabilization). The shale pain benefits the Saudis and other OPEC countries very directly. It has benefits for the United States, as well, in that shale is more environmentally damaging and it makes the Tar Sands look like a total boondoggle (and thus easy to ignore).
There is economic pain in pockets of the United States where shale is produced, which is undesirable but not so widespread as to be concerning.
OPEC states will suffer in the short term, as they rely on oil money to fund their defense and social programs, but their long-term benefits are too obvious to ignore.
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