Oil - stock market
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aja8888
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Worldwide over production of crude oil. Saudis tying to hang on to market share and squeeze U.S. shale producers, the Vens, Russia, etc.
Historical pre-first oil embargo (1973) crude price was $3.60/bbl. Inflation adjusted that is about $21/bbl. You guess next?
Yep, lost jobs, houses not selling, but big pickup trucks jumping off the car lots (gotta have my truck!).
Senator
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$10 oil is possible. For the majority of the USA, it will be great. For small pockets, like Houston and Alaska, it will be horrific.
Can you imagine a state resident paying an income tax after they have been getting a handout for so many years?
Can you imagine a state resident paying an income tax after they have been getting a handout for so many years?
Mulligan
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Cramer said this morning, RDS will start pumping oil out of Gulf of Mexico this year that will more than replace the on land shale production drop off. Supply seems boundless still.
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Car-Guy
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I don't watch comedy shows in the morning.
I can remember just a few years ago, when gas prices were getting so high that a well known oil giant CEO was taking about how ~1/2 of the world oil supply had been used up in the last 100 years. Another suggesting that in 25 to 30 years gasoline would become a commodity for the rich.
Maybe all of that was (is) true but it's amazing to me that we're seeing such an oil glut now and gas prices that are cheaper than bottled water and cheaper today in my area (inflation adjusted) than is was in the 60's.
Yes, new discoveries, technologies, market manipulators, etc, all have an effect but it's still amazing to me.
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aja8888
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Mulligan
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Massive, huh? A simple plug the hole with a cork and wait for higher prices won't happen there I assume.
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Mulligan
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I don't watch comedy shows in the morning.
I can remember just a few years ago, when gas prices were getting so high that a well known oil giant CEO was taking about how ~1/2 of the world oil supply had been used up in the last 100 years. Another suggesting that in 25 to 30 years gasoline would become a commodity for the rich.
Maybe all of that was (is) true but it's amazing to me that we're seeing such an oil glut now and gas prices that are cheaper than bottled water and cheaper today in my area (inflation adjusted) than is was in the 60's.
Yes, new discoveries, technologies, market manipulators, etc, all have an effect but it's still amazing to me.
You should see my "energy research report" essay I wrote back in early 80s, that won me a free trip to DC when I was in school. Good thing the trip wasn't refundable, as I would have to pay it all back. Basically none of the projections were close to being right. And I was using quality research, not just making the numbers up!
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Can't find it now but I saw a cartoon this morning - small cars driving into a car dealer's lot and SUVs & large pickups driving out.
Markola
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It is remarkable to witness such change. There were very smart and rich people in the media just a few years ago who believed we'd reached "peak oil". Oil country dictatorships were thriving and causing trouble from Russia to Venezuela and the Middle East. State budgets in Texas, Wyoming and Alaska were flush, while people were flooding North Dakota for jobs in the oil patch. Now all of those places are upside down, as is all of that "peak oil" certainty. This is why I buy index funds, because who knows what the future really holds?
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folivier
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The oil price slump is nothing new. It has happened before and could happen again. It's all about supply and demand. Shale oil production increased the supply quicker than the market could adjust to and so the price plummets. Of course OPEC and especially the Saudis know their undeveloped supply is finite and are trying to re-capture their market share. And the only way they can do it is to flood the market now and expect that the USA domestic oil producers will pull back production.
And whether someone wants to acknowledge it or not we are living in an oil-based society. It's not just about diesel and gasoline, many products are derived from oil: plastics, pharmaceuticals, tires, on and on....It will not be as easy to replace these products with non-oil products as it is with alternative energy.
And whether someone wants to acknowledge it or not we are living in an oil-based society. It's not just about diesel and gasoline, many products are derived from oil: plastics, pharmaceuticals, tires, on and on....It will not be as easy to replace these products with non-oil products as it is with alternative energy.
Many shale oil companies are heavily in Debt ($100s of billions) what they cannot repay with even $30 per b price, many closing the production. Don't you think it could trigger another financial crises if the price stays too low?
GravitySucks
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Folks have very short term memories.
I went to buy a used car in '08 when local gas price had hit $5 a gallon the previous week. When I got to the dealership to check out the car I saw online the salesman steered my towards a Cadillac Deville that had similar miles and one year older. It was about $1,500 less than the slightly better gas mileage Impala I was looking at. That $1,500 in extra gas costs wouldn't ever have been used up even if gas stayed near its high.
I bet those paying premiums for SUVs now will be yelling the loudest when gas eventually climbs back to $3.00 a gallon.
Senator
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There will be some defaults, but even 100s of billions is peanuts compared to 2008.
Banks are more diversified, and very few banks loan to oil companies any large amounts.
DrRoy
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Any particular price is theoretically possible given the right set up of supply/demand. However, I have also seen other similar situations where some "expert" throws out a price that some commodity or security is going to hit and it doesn't happen. Sometimes it is just because the person is fishing for attention.
ESRwannabe
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IMHO what happened is Saudi Arabia had a change in ruler-ship and now the place is essentially being run by a 30 year old with a degree in islamic studies. He has gotten SA directly involved in multiple wars and tanked the oil market.
Anyway, a tremendous amount of oil projects have been canceled. Eventually that will force things into balance again or more likely will lead to a under-supply shock. My guess is oil prices will be higher sometime in the next three years.
Anyway, a tremendous amount of oil projects have been canceled. Eventually that will force things into balance again or more likely will lead to a under-supply shock. My guess is oil prices will be higher sometime in the next three years.
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