Double, Double Oil and Trouble

[Occupied Deutschland]

This was covered in The Economist magazine: the US pumping out more barrels of petrol through fracking means Saudi Arabia pressures OPEC to decline oil prices to stay competitive. Although other OPEC members desperately need more revenue and could hardly survive with lower petrol prices, such as Venezuela, Saudi Arabia is trying its best to stay the market leader.

Exactly this. Though whether the Saudi strategy is a good one is a topic that could be argued (and probably was in whatever Secret Society of Super-Villain style lair they debated the idea in) as shale oil production has been booming exceptionally hard precisely because technological and logistical improvements in the process have made it cheaper than the market price of oil by a good deal (roughnecks over there (in the Bakken oilfield, realize I didn't mention this), though perhaps not the most trustworthy source, have told me on a couple occasions that some of the wells are pumping out so many barrels per day that they could be profitable even if the oil price collapsed into the 40 dollars range.

[Calimera II]

I'll put on my conspiracy theory hat and say that OPEC is letting prices drop in the hopes that businesses in the West will make the short term decision to lessen investment in renewables, in order that OPEC might extend its profiteering.

Nope, most OPEC countries are suffering too. The only country really profitting from it is Saudi Arabia.

[Imyoji]

I'll put on my conspiracy theory hat and say that OPEC is letting prices drop in the hopes that businesses in the West will make the short term decision to lessen investment in renewables, in order that OPEC might extend its profiteering.

Nope, most OPEC countries are suffering too. The only country really profitting from it is Saudi Arabia.

Knew it.

[Jordsindia]

Yea, because oil is solely responsible for killing off the planet. WE ARE ALL GONNA DIE!! ALL GONNA DIE I TELL YA! THE TEMPERATURE ROSE A DEGREE OR TWO!

Maybe if you payed more attention to the scientific studies or were remotely scientific literate, you would not say such bull that easily.

But am i wrong? The temperature only rose...a degree or two. Far from the 'We are all gonna die' fear being spread around.

[Imyoji]

Maybe if you payed more attention to the scientific studies or were remotely scientific literate, you would not say such bull that easily.

But am i wrong? The temperature only rose...a degree or two. Far from the 'We are all gonna die' fear being spread around.

Temperatures rising a degree or two?

Hm. Let's see what happens if such a 'tragedy' were to happen.

http://www.livescience.com/10325-living ... earth.html

http://www.epa.gov/climatechange/science/future.html

http://www.newrepublic.com/article/1197 ... r-possible

So please. Read. But this is not the topic at hand. The topic is more like 'why we should be mad at the Saudis' if anything.

[Maurepas]

I would actually say the conspiracy is directed at Shale Oil more than likely. If you drive the price down low enough it's no longer cost effective to Frack which is a big competitor with OPEC in the international market.

There's a lot of business sources saying this (Reuters, The Economist, couple otehrs, though it's too late for me to provide links). It's not an unreasonable thing for OPEC to do, but I've also seen discussion of how much money the Frac'ing companies have salted away for price drops. Apparently, they can take the hit for some months before they have to start slowing down their own production.

'course some sources are also looking at Iran, Venezuela, and/or Russia as possible economic targets of Saudi wrath. The Saudis have no love for Iran, and the US governemtn might be/might have been suggesting they put pressure on Russia, even at the short-term cost of domestic oil production.

I think either reason (market share or petro-politics) is plausible, and frankly, screwing up all of them (frac'ers, other countries) while lowering my fuel price is fine with me.

I couldn't agree more really. Fracking seems to me to be a pretty dirty process, and I have no particular love for any of those countries really, and a real particular love for low gas prices. Win-Win I say.

[Anglo-California]

I live in California, where gas prices have been extremely high (it's been mostly above $4.00 since the Recession. Hell, I still remember when it was like $5.00 in 2008).

Anyways, gas prices are now below $3.00, for the first time since like 2006. I like this.

[Imperial Nilfgaard]

The oil bust is a US-Saudi conspiracy to bring Russia and Iran to their knees.

[Big Jim P]

I live in California, where gas prices have been extremely high (it's been mostly above $4.00 since the Recession. Hell, I still remember when it was like $5.00 in 2008).

Anyways, gas prices are now below $3.00, for the first time since like 2006. I like this.

New York is about the same. I like this too. Now to get to Texas where is should be below $2 by now.

[Dracoria]

I'll put on my conspiracy theory hat and say that OPEC is letting prices drop in the hopes that businesses in the West will make the short term decision to lessen investment in renewables, in order that OPEC might extend its profiteering.

Nope, most OPEC countries are suffering too. The only country really profitting from it is Saudi Arabia.

Pretty much this. OPEC is in disarray and hasn't been able to act as a unit the past couple meetings, and as a result they're unable to do anything to curb the oil glut that's eating into their own profits. As one of the larger members, Saudi Arabia shares the blame even if they weren't the instigator.

[AiliailiA]

the price of gas here is about $.60/liter now.

That's cheap. Insanely cheap.

Why not tax it?

[Bulgar Rouge]

Interesting. Oil prices dropping, gasoline fuel prices rising here. Beautiful. Anyway, it's obviously an effort to fuck with Russia, Iran and Venezuela. The Russians will make it through though at the cost of their gold reserves and a contracted economy, Iran will probably give up in the nuclear negotiations and Venezuela will be thoroughly shaken and probably face a regime change.

[AiliailiA]

I'll put on my conspiracy theory hat and say that OPEC is letting prices drop in the hopes that businesses in the West will make the short term decision to lessen investment in renewables, in order that OPEC might extend its profiteering.

Interesting theory. But "investment in renewables" is a long term process, with reductions in fossil fuel demand coming a decade later. Oil demand perhaps even longer. Outright regulation, like fuel efficiency standards, has a quicker effect: though for instance EISA had a lead time of 13 years it affects auto purchase decisions much earlier than that; purchasers consider the resale value of their chosen vehicle, whole or for parts.

If there was an OPEC conspiracy, I think it would be to encourage new sales of gas guzzlers now. It would be targetted directly at consumers of cars. Unlike investors, or government regulators, auto consumers have immediate effect on future oil demand. The vehicle they buy this week has fuel needs for several years to come, whether they keep it or sell it on.

But I don't think there is a conspiracy.

I think OPEC has lost control of oil supply. Too many non-OPEC suppliers can ramp up to take advantage of OPEC members if they try to restrict supply and drive up the price. And it's no accident. The big money industry of oil development and refinery has had decades to work around the price fixing impediment to trade ... known as OPEC.

[Dracoria]

But I don't think there is a conspiracy.

I think OPEC has lost control of oil supply. Too many non-OPEC suppliers can ramp up to take advantage of OPEC members if they try to restrict supply and drive up the price. And it's no accident. The big money industry of oil development and refinery has had decades to work around the price fixing impediment to trade ... known as OPEC.

Pretty much what the banks and investors seem to be thinking. OPEC's lost control of the situation and to make matters worse (for them anyway) the cartel is no longer acting as a unit. Their most recent meeting resulted in absolutely no strategy for dealing with the plunging oil prices, and some have been going so far as to claim OPEC is dead as a group.

[AiliailiA]

Interesting. Oil prices dropping, gasoline fuel prices rising here. Beautiful. Anyway, it's obviously an effort to fuck with Russia, Iran and Venezuela. The Russians will make it through though at the cost of their gold reserves and a contracted economy, Iran will probably give up in the nuclear negotiations and Venezuela will be thoroughly shaken and probably face a regime change.

More conspiracy theory!

More I tell you. Give me more conspiracy theory. King Penguins from Antarctica, destabilizing the oil drilling industry to revitalize the renewable oil industry and stick it to their old enemy the whales. Like that.

[Bulgar Rouge]

Interesting. Oil prices dropping, gasoline fuel prices rising here. Beautiful. Anyway, it's obviously an effort to fuck with Russia, Iran and Venezuela. The Russians will make it through though at the cost of their gold reserves and a contracted economy, Iran will probably give up in the nuclear negotiations and Venezuela will be thoroughly shaken and probably face a regime change.

More conspiracy theory!

More I tell you. Give me more conspiracy theory. King Penguins from Antarctica, destabilizing the oil drilling industry to revitalize the renewable oil industry and stick it to their old enemy the whales. Like that.

[Costa Fierro]

Interesting. Oil prices dropping, gasoline fuel prices rising here. Beautiful. Anyway, it's obviously an effort to fuck with Russia, Iran and Venezuela. The Russians will make it through though at the cost of their gold reserves and a contracted economy, Iran will probably give up in the nuclear negotiations and Venezuela will be thoroughly shaken and probably face a regime change.

Venezuela's already fucked. Falling oil prices is just sodomy by pineapple to them now.

[Alcase]

I'm not very well versed in economics, but could if we were to place tariffs on oil imports, would that help lessen the burden on more domestic industries of natural gases and oil?

[AiliailiA]

But I don't think there is a conspiracy.

I think OPEC has lost control of oil supply. Too many non-OPEC suppliers can ramp up to take advantage of OPEC members if they try to restrict supply and drive up the price. And it's no accident. The big money industry of oil development and refinery has had decades to work around the price fixing impediment to trade ... known as OPEC.

Pretty much what the banks and investors seem to be thinking. OPEC's lost control of the situation and to make matters worse (for them anyway) the cartel is no longer acting as a unit. Their most recent meeting resulted in absolutely no strategy for dealing with the plunging oil prices, and some have been going so far as to claim OPEC is dead as a group.

With the enourmous cash flow they've had since the 70's Oil Shock you'd think OPEC members could have cornered the distribution and refinery markets. Some of the money has been well spent (irrigation schemes in Egypt, or industrialization in Iraq, or human development in Venezuala) but overall the OPEC members have acted more like lottery winners than smart capitalists.

They're getting what's coming to them. They blatantly cornered the market on crude oil supply, they profited for a while, they failed to make the investments which would extend and perpetuate that cartel. They could have bought right down the line of shipping and pipelining, refining, distribution and retail. They could have cornered the market and shut non-OPEC suppliers of oil out.

OPEC got screwed by the big old money which makes most of the profit in oil, between the well and the pump.

And frankly they asked for it. OPEC has been blatantly price-fixing, for their own benefit and screw everyone else. They've been doing it for decades. Fuck 'em.

[Allet Klar Chefs]

The oil bust is a US-Saudi conspiracy to bring Russia and Iran to their knees.

OPEC is setting the agenda here, not the Saudis, and Iran is a principal OPEC member, alongside Saudi Arabia.

They also have no particular reason to care about Russia, at all, and the collapse in oil prices is actually very harmful to American efforts to make shale oil and other alternative sources of oil worth extracting.

[Jetan]

its a good thing. it wont last anyway but its nice to have someone other than the oil companies benefitting from that money.

the price of gas here is about $.60/liter now. whats the price in Scotland? has it gone down for you too?

I'm insanely jealous. The cheapest variety (which my car runs on, luckily) is c. 1.4 euros/litre at the moment. C. 1.75/L in dollars.

[Cresilia]

Cheap oil is bad for Alberta. But hey, cheap gas is good too so we will see who blinks first, the Saudis or US Shale producers.

[Dracoria]

Pretty much what the banks and investors seem to be thinking. OPEC's lost control of the situation and to make matters worse (for them anyway) the cartel is no longer acting as a unit. Their most recent meeting resulted in absolutely no strategy for dealing with the plunging oil prices, and some have been going so far as to claim OPEC is dead as a group.

With the enourmous cash flow they've had since the 70's Oil Shock you'd think OPEC members could have cornered the distribution and refinery markets. Some of the money has been well spent (irrigation schemes in Egypt, or industrialization in Iraq, or human development in Venezuala) but overall the OPEC members have acted more like lottery winners than smart capitalists.

They're getting what's coming to them. They blatantly cornered the market on crude oil supply, they profited for a while, they failed to make the investments which would extend and perpetuate that cartel. They could have bought right down the line of shipping and pipelining, refining, distribution and retail. They could have cornered the market and shut non-OPEC suppliers of oil out.

OPEC got screwed by the big old money which makes most of the profit in oil, between the well and the pump.

And frankly they asked for it. OPEC has been blatantly price-fixing, for their own benefit and screw everyone else. They've been doing it for decades. Fuck 'em.

Full agreement here. Many of the Middle Eastern OPEC nations have little aside from oil in terms of natural resources. Without natural resources to fall back on, you need to find something - manufacturing, banking, some other way to take your share from the global economy (look at Israel. Some of them did invest in banking, but for the most part, they'll be screwed as their oil reserves dwindle and non-OPEC nations like Canada, Russia and the USA tap into more of their own. For some of those countries, the next petroleum price spike (it'll occur at some point, give it time) may be their last chance to invest their oil earnings properly.

I'd feel worse about it, but I've always felt contempt toward as you said, lottery winners who tossed money around and took pictures lighting cigars with twenty dollar bills only to have to sell everything a few years later to cover their debts and wind up in even worse shape than when they first won. Do feel a little bad for their citizens, but there are people out there worse off.

[Arkotania]

I'm personally happy. At the moment, I only have to pay $2.30 a gallon, for regular w/cash, at the pump. That's a whole lot better than $3.60 especially since i commute 40 miles(round-trip) four days a week to college(though the semester is ending, I'll still be driving so it won't make much a difference).

[Skeckoa]

I'll put on my conspiracy theory hat and say that OPEC is letting prices drop in the hopes that businesses in the West will make the short term decision to lessen investment in renewables, in order that OPEC might extend its profiteering.

Or knock smaller western companies out of the market before the prices come up again? Maube?

$2.80/gallon ain't too bad though.