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Thread: Oil at $75 Means Patches of Texas Shale Turn Unprofitable

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    Re: Oil at $75 Means Patches of Texas Shale Turn Unprofitable

    Quote Originally Posted by poweRob View Post
    Well conspiratorially thinking... perhaps at our request?
    Think about it. Is it worth shutting down American oil too?

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    Re: Oil at $75 Means Patches of Texas Shale Turn Unprofitable

    Quote Originally Posted by poweRob View Post
    Well conspiratorially thinking... perhaps at our request?
    They're bringing you into line too.

    " ...It is critical to remember that the Saudis have no compunction about imposing costs on other nations to maximize the value of their oil resource long term and hence the power they derive from it. The 1970s oil shock produced a nasty recession in the US and most other advanced economies and gave a further impetus to inflation, which was already hard to manage and dampened growth by discouraging investment.

    The current alignment of factors gives the Saudis the opportunity to make life miserable for a long list of parties they would like to discipline, including the US.

    The sharp rise in the dollar means that lowering the price of oil in dollar terms is unlikely to leave the desert kingdom worse off in local currency terms. But it undermines US energy development, both fracking and development in the Bakken, as well as more development by the majors, who were regularly criticized by analysts for how much they were spending on exploration when the math didn’t pencil out well at over $100 a barrel. Countries whose oil is output is mainly heavy, sour crude, like Iran and Venezuela, find it hard to sell their oil when prices are below $100 a barrel (or at least when the dollar was weaker, but the $80 price point, even with a strong dollar, may be low enough to cause discomfort).

    In other words, this is a classic case of predatory pricing: set your price low enough long enough to do real damage to competitors, and reduce their market share, not just immediately, but in the middle to long term.

    Now admittedly some pet targets may not be hurt as badly as hoped. Russia will suffer more of an opportunity loss than an actual cost from the price reduction, since the ruble has fallen significantly against the dollar. The Saudis may hope to partially displace Russia as a supplier of oil to Europe (now roughly 1/3 of the total) but refineries would need to be retooled to refine the Saudi’s light crude, so it isn’t clear whether even what amounts to bargain prices will offset this cost (and readers point out that Russian crude may also produced a better mix of distillates for European use, since they are much heavier users of diesel fuel than the US).... "

    Saudis Deploy the Oil Price Weapon Against Syria, Iran, Russia, and the US | naked capitalism
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    Re: Oil at $75 Means Patches of Texas Shale Turn Unprofitable

    Quote Originally Posted by EnigmaO01 View Post
    I'm skepical of websites that are out to sell you something.
    I hear where you are coming from, but I took a look at the article and the sources do check out.
    "And in the end, we were all just humans, drunk on the idea that love, only love, could heal our brokenness."

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    Re: Oil at $75 Means Patches of Texas Shale Turn Unprofitable

    Quote Originally Posted by EnigmaO01 View Post
    Think about it. Is it worth shutting down American oil too?
    Big oil isn't going to hurt. Its not permanent.
    Quote Originally Posted by Moderate Right View Post
    The sad fact is that having a pedophile win is better than having a Democrat in office. I'm all for a solution where a Republican gets in that isn't Moore.

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    Re: Oil at $75 Means Patches of Texas Shale Turn Unprofitable

    Quote Originally Posted by Manc Skipper View Post
    They're bringing you into line too.

    " ...It is critical to remember that the Saudis have no compunction about imposing costs on other nations to maximize the value of their oil resource long term and hence the power they derive from it. The 1970s oil shock produced a nasty recession in the US and most other advanced economies and gave a further impetus to inflation, which was already hard to manage and dampened growth by discouraging investment.

    The current alignment of factors gives the Saudis the opportunity to make life miserable for a long list of parties they would like to discipline, including the US.

    The sharp rise in the dollar means that lowering the price of oil in dollar terms is unlikely to leave the desert kingdom worse off in local currency terms. But it undermines US energy development, both fracking and development in the Bakken, as well as more development by the majors, who were regularly criticized by analysts for how much they were spending on exploration when the math didnít pencil out well at over $100 a barrel. Countries whose oil is output is mainly heavy, sour crude, like Iran and Venezuela, find it hard to sell their oil when prices are below $100 a barrel (or at least when the dollar was weaker, but the $80 price point, even with a strong dollar, may be low enough to cause discomfort).

    In other words, this is a classic case of predatory pricing: set your price low enough long enough to do real damage to competitors, and reduce their market share, not just immediately, but in the middle to long term.

    Now admittedly some pet targets may not be hurt as badly as hoped. Russia will suffer more of an opportunity loss than an actual cost from the price reduction, since the ruble has fallen significantly against the dollar. The Saudis may hope to partially displace Russia as a supplier of oil to Europe (now roughly 1/3 of the total) but refineries would need to be retooled to refine the Saudiís light crude, so it isnít clear whether even what amounts to bargain prices will offset this cost (and readers point out that Russian crude may also produced a better mix of distillates for European use, since they are much heavier users of diesel fuel than the US).... "

    Saudis Deploy the Oil Price Weapon Against Syria, Iran, Russia, and the US | naked capitalism
    I was just postulating based on the question. But I personally think it's more of what you just cited. The Sunni nation of Saudi Arabia will do anything to destabilize the Shi'ite nation of Iran. The Saudi's are terrified of Iran's gaining strength in the middle east since Iraq flipped to Shi'ite control. The weakening of their competition in the US and in Russia is just icing on the cake for them.
    Quote Originally Posted by Moderate Right View Post
    The sad fact is that having a pedophile win is better than having a Democrat in office. I'm all for a solution where a Republican gets in that isn't Moore.

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    Re: Oil at $75 Means Patches of Texas Shale Turn Unprofitable

    Quote Originally Posted by Lursa View Post
    If they are making a profit then they dont need subsidies. "Subsidies" are not "their money."
    What is a subsidy? Do you mean they are following the current tax laws? If so do you agree that now is a great time to push for either a flat tax or a fair tax?

    Here is one explanation:
    What is a fossil fuel subsidy?
    A fossil fuel subsidy is any government action that lowers the cost of fossil fuel energy production, raises the price received by energy producers or lowers the price paid by energy consumers. There are a lot of activities under this simple definition—tax breaks and giveaways, but also loans at favorable rates, price controls, purchase requirements and a whole lot of other things.

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    Re: Oil at $75 Means Patches of Texas Shale Turn Unprofitable

    Energy & Oil Prices: Natural Gas, Gasoline and Crude Oil - Bloomberg

    WTI $49.86
    Brent $52.87

    Some experts believe it will be in the mid $40s by the end of the week.
    I have CDO, it's like OCD but the letters are in alphabetical order like they should be.

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    Re: Oil at $75 Means Patches of Texas Shale Turn Unprofitable

    And so the shale bubble begins to pop.
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    Re: Oil at $75 Means Patches of Texas Shale Turn Unprofitable

    Quote Originally Posted by azgreg View Post
    Energy & Oil Prices: Natural Gas, Gasoline and Crude Oil - Bloomberg

    WTI $49.86
    Brent $52.87

    Some experts believe it will be in the mid $40s by the end of the week.
    I saw one projection that it may even drop into the 30's.

  10. #180
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    Re: Oil at $75 Means Patches of Texas Shale Turn Unprofitable

    Quote Originally Posted by EnigmaO01 View Post
    I saw one projection that it may even drop into the 30's.
    That's insane.
    I have CDO, it's like OCD but the letters are in alphabetical order like they should be.

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