DailyDirt: Who Doesn't Like Cheap Oil?

from the urls-we-dig-up dept

For a pretty good stretch, the price of a barrel of oil was about $90-$100, but now the price is around $35 or so. That’s a good bargain for some consumers, but on the other hand, thousands of oil workers aren’t working and plenty of companies that bet on oil prices staying high are going out of business. The simplified explanation is that the current oil supply exceeds the demand for it — and it takes some time/politics for oil production to adapt. Oil prices might start to go back up significantly in 2017, but in the meantime, there are about 68 oil projects around the world worth about $380 billion that are on hold for a while.

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Comments on “DailyDirt: Who Doesn't Like Cheap Oil?”

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17 Comments
Anonymoussays:

Afghan oil and gas?

I wonder how they expect the oil and gas industry in Afghanistan to be profitable? After all, Afghanistan is landlocked which makes it very difficult for them to get their oil to the world market.

Sure, maybe they can export some oil to neighboring countries, but I have trouble picturing enough production to be net profitable. But I’m not an expert.

To me, it sounds like one of those projects that looks good on paper to bureaucrats, but can only exist as long they’re willing to pour money into it.

drjimmysays:

Re: Afghan oil and gas?

Look at Afghanistan on a map. Pipelines were planned to run through Afghanistan well before 9/11. All the XXX-stans north of Afghanistan are already being or have been developed. Afghanistan is in the direct path of pipelines to get the product to where the demand is; India and Pakistan. Do you really think we invaded Afghanistan to get terrorists?

shawnsays:

cheap oil

So who’s getting hurt here. In the Dakotas I heard some truckers were making six figures transporting energy products. My feeling is they should have saved for the inevitable rainy day.

As for the oil exporting countries now burning through cash reserves because of the low price.
Awesome!

As for the hedge fund managers and the traders who bet wrong.
Tough shit!

As for the average consumer.
Enjoy while it lasts, because it won’t.

Anonymous Anonymous Cowardsays:

Re: cheap oil

May I suggest some fact checking. Were those truckers self employed? Were the figures gross or net? If the truckers were self employed then they are responsible for buying the truck, paying for fuel, lubricants, tires, maintenance, insurance, room and board on the road, etc. I have talked with some who had a high gross pay, but were having a hard time feeding their families.

@bsays:

An ad or an article?

They’re for realz piratez, brah.

If we want to move to renewables we have to assume oil prices will be artificially lowered by such easy methods as “accidentally” sucking up too much.

Billionaire investors in oil will insist their risks be taken out of their gamble. They use the State to RIG the oil corp regulations in their favour. Our planet is a victim of a sunken cost fallacy. They are chasing lost gains down deep drains.

I find out hard to attribute to oops that which we can attribute to billions of $$$.

Anonymoussays:

I remember a decade or so ago when oil prices started rising past the levels they’ve been falling past for the past few months. I don’t feel any sympathy for those who are now shocked and appalled that oil priced are now so “low”. As far as I’m concerned, this is a long overdue correction in the price after years of it being artificially inflated by market speculation, and production cuts aimed at creating an artificial scarcity.

Anonymoussays:

Re:

Yep, artificial scarcity is the exact way to explain it.

There is a backstory to this current situation that will likely only come out years from now. Saudi Arabia does not benefit from the US being oil independent; thus they are happy to keep the price of oil low and help contribute to the imminent bankruptcy of the Dakota shale boomers.

The interesting thing is that last week, the US said to Iran, “yes please, c’mon in and sell us some oil now” after decades of embargo.

Someone in the US is pulling strings for an outcome that we consumers are yet to be enlightened about.

Oil has been the driving force force behind U.S. foreign policy since the 1970s.

Richardsays:

Re: Re:

Saudi Arabia does not benefit from the US being oil independent; thus they are happy to keep the price of oil low and help contribute to the imminent bankruptcy of the Dakota shale boomers.

This started because the Saudis wanted to drive the shale producers out of the market. Unfortunately (for them) they miscalculated the level of price drop that would be necessary to do this (partly because the US has a preference for US sourced oil – even at a slightly higher price). Hence they are now hurting – and unlike other large oil producers – their economy has little else to fall back on.

Richardsays:

Re: Re: Re:

As a rider to this I would say that the world is transitioning from oil to gas – which is a more environmentally acceptable fuel (generates more water – less CO2) and is also more convenient for all non-transport uses. I believe the switch away from oil will be accompanied not by shortage and high prices – but by glut and low prices.

The politicians may think that they are manipulating the market – but in reality it is driven by factors well beyond their control.

annonymousesays:

low prices?

I remember back when the price of fuel was in lockstep with that of oil.
Then people started driving more efficient diesel cars and the cheaper to produce fuels price jumped to and even passed that of gasoline.
Over the last decade or so the price of oil went up and fuel went up in lockstep.
Yet now oil has drastically dropped yet fuel has barely budged down. Hucksters for big oil whine that it’s the taxes but anyone with a basic grasp of math and taxes know that the tax is a fixed percentage of the price. So even though oil has dropped the only ones getting less are the producers ie oil field rights holders be they private or public.
Why no crying from government? Same as always. … money!

naschsays:

Re: low prices?

Yet now oil has drastically dropped yet fuel has barely budged down.

Within the last year or two I was paying $3.50 or $3.75 a gallon, and now it’s $1.90. Your local prices may vary but for me at least it has been a drastic drop. And incidentally I have seen diesel prices even lower than gas, which I hadn’t seen in many years. I don’t know the explanation for that.

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