OPEC is panicking

[SERWIN + 749]

5 hours ago, Illurion said:

I remember.

I remember paying 17 cents per gallon.

I remember when all of the gasoline pumps had 2 digit gauges that could only show the gas price up to .99 cents per gallon,  and that during the embargo in the 70's,  that most all of the gas stations had to have clerks standing by the pumps with notepads and sometimes old mechanical adding machines to determine how much we owed for the gas because the pump gauges could not add it up correctly.

I remember it took several YEARS for all of the gas stations to upgrade to new pumps that could calculate a 3-digit gasoline price up to $9.99 per gallon.

  LOL, we are showing our age here... I remember getting REGULAR gas, you know, leaded? I remember when they phased it out and I was filling up at about .40 a gallon until it was all gone. And I drove a gas guzzler that only averaged about 16 MPG(I also had a truck that only got about 11). And yes, I do remember the old pumps. I remember when you drove up to the pump, got what you needed and went inside and payed for it. Too many thieves out there today to do that one now.

  So why didn't we really start our oil independence then? OPEC opened up all the spouts again and everyone just forgot? We had built the Alaskan pipeline soon after all that and we could have started really using that oil... Decided to stay under the OPEC thumb though. Maybe if we had done that then we would never have been involved in the M.E. crap that we are in the middle of now. I am happy though that we are pulling out of Syria, SA and the rest need to see what will happen when the Russians are the dominant force, they need to experience it firsthand so they will understand....

[John Foote + 1,135]

11 hours ago, NWMan said:

The media always come up with a $ price of oil that Saudi needs to balance their budget.  That is applicable if they intend to balance their budget that year.  If they are short of money they could sell a few Man City footballers.

That's Qatar that plays silly money with footballers, Man City, PSG, and a World Cup 2020 for their charm bracelets. Another reason the KSA can't IPO Aramco, Qatar might buy it. That would be funny. Can you imagine the Saudis having to answer to Qatar?

Qatar has roughly 300,000 citizens. KSA has roughly 20 million. A lot more mouths to feed. Go to the souks in the Eastern Province. Is it a recession, or depression, that is going on? Ask people who live there. Times are getting hard, and it's just beginning.

The Saudis do have significant financial reserves, but that buys them only so many years. After initially tightening things up MbS has gone all-in with mega deals, restored wages in the public sector, actions accelerating their deficit and has inadvertently scared off private sector investments for the economic growth needed. Don't be fooled about lazy Saudis. The Saudis will learn to work again. Aramco was built with Saudi labor (and yes, then USA leadership). Many already know how to work, and most of the women I worked with were exceptional. They had to overachieve to get where they were. 

[Tomasz + 1,608]

Shale oil is rather  not a long term deciding factor in oil market.

Its big player now but in next 10 years time I think rapid shale oil growth will be past glory.

 Its prediction of both EIA and IEA.

Art Berman on the other hand predicts it as retirement party with production slipping hard in not a distant future.

Today KSA has of course like all oil exporting countries rather tough times but next decade imho looks a little brighter for them. As for many other commodity exporting countries in a new cycle of declining $ rates.

Edited December 29, 2018 by Tomasz

[ronwagn + 6,290]

3 hours ago, Tomasz said:

Shale oil is rather  not a long term deciding factor in oil market.

Its big player now but in next 10 years time I think rapid shale oil growth will be past glory.

 Its prediction of both EIA and IEA.

Art Berman on the other hand predicts it as retirement party with production slipping hard in not a distant future.

Today KSA has of course like all oil exporting countries rather tough times but next decade imho looks a little brighter for them. As for many other commodity exporting countries in a new cycle of declining $ rates.

The world is full of shale oil and it can be developed by anyone who has the resources to do so. The technology and expertise to run it just keeps getting better. Cheaper oil will always sell first. 

[NWMan + 89]

You love that map but if you applied an economic filter it would be blank.  Because of the economic melt down interest rates have been at historical lows.  so what to do with money.  These guys can produce oil, it wont make much money but it will reduce the price of oil and stimulate the economy.  Why not. 

Now Interest rates are rising, it would be better to keep your money in a bank that give it to shale oil companies, shale oil companies are struggling to pay higher interest debt payments.  It may not happen but the hole shale oil thing could collapse.

[John Foote + 1,135]

10 hours ago, NWMan said:

Now Interest rates are rising

People seem to forget interest rates have been too low this since the 2008 debacle. A base rate of 3 to 4% should be normal. To force money into the system money back in 2008 money was essentially made free at the top end. With free money of course operating with debt was the way to do business.

This issue is well beyond the shale issue. So much financial leveraging out there. The only thing that's kept inflation from going crazy was most folks didn't really gain, so spending was in check, plus an increase in goods from China and such helped consumer prices stay low. However we did get massive asset inflation, what stocks cost, what properties cost, tech stocks way over-valued by traditional models. So many of us now depend on this asset inflation. Letting air out of the balloon will not be fun. But either there is fundamental growth, or at some time we pay the piper. The Fed is now trying to let a little air out of the balloon in a controlled manner, at least I hope so. 

I don't mind the debt generically, but I do mind protecting the entity/system loaning the money. Let the loan entities eat it when that shale project doesn't come in. Don't privatize the profit, and subsidize the risk. If you let the system fail, it will correct. If it's too big to fail, well then we've let the risk be too much in one basket so to speak.

[ronwagn + 6,290]

On 12/28/2018 at 10:32 PM, NWMan said:

You love that map but if you applied an economic filter it would be blank.  Because of the economic melt down interest rates have been at historical lows.  so what to do with money.  These guys can produce oil, it wont make much money but it will reduce the price of oil and stimulate the economy.  Why not. 

Now Interest rates are rising, it would be better to keep your money in a bank that give it to shale oil companies, shale oil companies are struggling to pay higher interest debt payments.  It may not happen but the hole shale oil thing could collapse.

I am looking at shale oil from an international standpoint, not just America. We are energy independent now and can decrease the wealth of Russia and the Middle East while allowing our own citizens to save money at the pump and in the pricing of all transported goods. The Middle East is sending its surplus population all over the world as it builds mosques everywhere it can. That is not a plus to most Americans or Europeans. Definitely not to the Chinese or Indians. 

Shale oil should be developed all over the world and I think it will be eventually. I prefer to see natural gas used as the primary transportation fuel, heating,  and electrical generation fuel. I think natural gas can be sold for the equivalent of less than $50 oil and I think it is more plentiful than oil and it is substantially cleaner. So, I say let the best fuel compete with the status quo when it comes down to it. Let the markets work as they are supposed to not the way we handled it under Obama. 

An abbreviated selection of thousands of links on natural gas. References on the Natural Gas Revolution

https://docs.google.com/document/d/19Yf0MWpo91vrlu-mmJtjB1ERukjJo5W41oi4RZVQBug/edit

Current CNG prices per gasoline gallon equivalent 

http://www.cngprices.com/station_map.php

Edited December 31, 2018 by ronwagn
added reference