SAND DIAL wrote:
Is there 'peak oil?'

"Peak oil" is a concept that was developed on the assumption that oil would continue to be extracted from the same geological formations and same technology as had been used throughout the twentieth century. 

Once fracking arrived, peak oil became an irrelevant concept.

Good Egg Productions wrote:
A few factors.

First, world demand is down.  While China is the largest emerging market for oil and energy, their economy is in a recession and their ramping demand has slowed as well.  Second, America, the largest consumer of oil by a factor of 2, has been using far more natural gas than ever as a result of successful fracking methods domestically.  So our demand for oil is way down compared to past years.  Third, OPEC is generally responsible for setting global oil prices by recommending that oil rich countries limit their production to keep demand high and prices stable.  Saudi Arabia and by proxy, the surrounding countries, have chose to disregard OPEC's recommendations and continue to export record volumes of oil in order to keep their GDPs healthy.  And then finally, the embargo on Iran is being lifted after this nuclear deal we just passed, so there will be a further glut of oil pushed into the global market.

Now, there's both good and bad with these low oil prices.  The good is lower gas prices.  It's also good that ISIS, who is getting hundreds of millions of dollars of funding by selling oil on the black market, can't sell it for nearly as much as if oil was more valuable.  The bad is that states who were doing very well through the recession when oil prices were through the roof, are now struggling as energy companies are laying off workers and trying to maintain profitability through this dip in prices.  There's more bad, as countries like Venezuela and other South American countries who rely heavily on their oil exports are finding their economies in a freefall. 

But for now, things are ok.  We all love $1.75 gas prices, but the firesale oil prices aren't globally sustainable.  It's really up to OPEC to throttle down production to try to stabilize pricing.  Currently, it's right at $35/barrel, about half that of the start of 2015.  There's speculation that it could bottom out at $25/barrel before the end of its slump.  The 1 year speculation is $39/barrel, which isn't much better than $35, except to the average American trying to fill their tank.



Disclosure:  These observations are largely my opinion, based on some of the data I could find and reports I've read.

^ This is pretty much the whole thing right here.
And yes, I've read about abiotic oil too.  It seems like a very convincing argument to me.

R.EYE.R wrote:
Uncle Obama is trying to cripple Russian export just like Reagan did in 1987.

Plus Venezuela and Iran.

Managing Light wrote:

Plus Venezuela and Iran.

Very much so.

Good Egg Productions wrote:
A few factors.

First, world demand is down.  While China is the largest emerging market for oil and energy, their economy is in a recession and their ramping demand has slowed as well.  Second, America, the largest consumer of oil by a factor of 2, has been using far more natural gas than ever as a result of successful fracking methods domestically.  So our demand for oil is way down compared to past years.  Third, OPEC is generally responsible for setting global oil prices by recommending that oil rich countries limit their production to keep demand high and prices stable.  Saudi Arabia and by proxy, the surrounding countries, have chose to disregard OPEC's recommendations and continue to export record volumes of oil in order to keep their GDPs healthy.  And then finally, the embargo on Iran is being lifted after this nuclear deal we just passed, so there will be a further glut of oil pushed into the global market.

Now, there's both good and bad with these low oil prices.  The good is lower gas prices.  It's also good that ISIS, who is getting hundreds of millions of dollars of funding by selling oil on the black market, can't sell it for nearly as much as if oil was more valuable.  The bad is that states who were doing very well through the recession when oil prices were through the roof, are now struggling as energy companies are laying off workers and trying to maintain profitability through this dip in prices.  There's more bad, as countries like Venezuela and other South American countries who rely heavily on their oil exports are finding their economies in a freefall. 

But for now, things are ok.  We all love $1.75 gas prices, but the firesale oil prices aren't globally sustainable.  It's really up to OPEC to throttle down production to try to stabilize pricing.  Currently, it's right at $35/barrel, about half that of the start of 2015.  There's speculation that it could bottom out at $25/barrel before the end of its slump.  The 1 year speculation is $39/barrel, which isn't much better than $35, except to the average American trying to fill their tank.



Disclosure:  These observations are largely my opinion, based on some of the data I could find and reports I've read.

Yep.  Market conditions with supply and demand determine commodity pricing.  The wild cards are natural disasters and wars. 

Although Saudi Arabia, Russia, Venezuela, Nigeria, etc would like the price per barrel over $80 for their own economies.

And for the new players in the US oil production, they were also counting on 80+/barrel to make money.  I believe their greed overtook market logic.  For them some bankruptcies and buy outs will result.  Those with better finances and cash reserves will cap wells until the supply drops or demand goes up.

Cover ready wrote:
Because a republican is not president,yet.

http://www.consumerreports.org/cro/news … /index.htm

Photos by DeanR wrote:
In addition to what Good Egg wrote, he OPEC countries want to stop new production and screw up existing projects like the northern Alberta oil sands.
The Can$ is taking a huge beating now because of this.

stop new production in Canada? Where?

R.EYE.R wrote:
Uncle Obama is trying to cripple Russian export just like Reagan did in 1987.

How does BHO control oil prices?

SAND DIAL wrote:

How does BHO control oil prices?

If you are wondering about mechanics of decision and order chain - I believe you would be in a better position of knowing it than me.
I believe it involves meetings, advise from relevant members of staff followed by order and or "go ahead" sign.

If you are wondering about role of USA in global politics, it is rather obvious that not a single country in the world could make a shifting decision without the approval of USA unless they want sanctions imposed.

SAND DIAL wrote:
Why is Oil so cheap?

Good question.

Why did the cost of gas in California not fall by the same amount? It has not been so long since prices dropped below $4/gallon.

When monopolies, price fixing and knee-jerk new taxes are layered on to sop up the falling prices before they trickle down to us peasants who have to keep filling our tanks, supply and demand is only part of the equation to the extent they can prevent collapsing refined product prices as the price of the raw material plummets.

How is this playing out with the cost of energy in aggregate?

What other commodities rise and fall in parallel to the price of oil?

R.EYE.R wrote:
Uncle Obama is trying to cripple Russian export just like Reagan did in 1987.

I thought obama has been rolling over for putin on many issues, as he has been with China.

To what extent can obama affect the price of oil? In what ways? I would guess it's his wet dream to nationalize all the energy companies, but I don't think he has been able to do that yet.

He has tried to jack up all of our other domestic utilities in any way he can. He was able to stop the pipeline of sand oil from Canada. He is constantly attacking coal and fracking. None of these efforts would result in falling prices. To the contrary.

Obama can harass the energy companies, but I don't know to what extent he can dictate prices any more than any other leader of any other oil producing country.

In spite of his efforts to interfere with production, oil production on private property has expanded around him.

Demand is probably weak because the economy has been in the tank, more or less, since the financial crash of 2008.  It was sickly before that.

Click Hamilton wrote:

I thought obama has been rolling over for putin on many issues, as he has been with China.

To what extent can obama affect the price of oil? In what ways? I would guess it's his wet dream to nationalize all the energy companies, but I don't think he has been able to do that yet.

He has tried to jack up all of our other domestic utilities in any way he can. He was able to stop the pipeline of sand oil from Canada. He is constantly attacking coal and fracking. None of these efforts would result in falling prices. To the contrary.

Obama can harass the energy companies, but I don't know to what extent he can dictate prices any more than any other leader of any other oil producing country.

In spite of his efforts to interfere with production, oil production on private property has expanded around him.

Demand is probably weak because the economy has been in the tank, more or less, since the financial crash of 2008.  It was sickly before that.

You really hate the man, don't you?

Please point to specific legislation that he's called for that support your claims that he wants to nationalize the energy companies.  Which executive orders has he signed that does anything to affect fracking or coal?  You choose to ignore that a President doesn't make law, Congress does.  The President only signs legislation to make it official and enforceable.  Certainly, he (or soon, she) will suggest legislation to constituents, but as we all know, almost nothing becomes a bill without 20 riders and pork projects.  The political process has become a joke and until line item is instituted, no bill is 100% good or bad to any particular party.

Even the ACA has allowed big pharma to jack up prices and become more profitable.  That's the American Way ©®™

Good Egg Productions wrote:

You really hate the man, don't you?

Please point to specific legislation that he's called for that support your claims that he wants to nationalize the energy companies.  Which executive orders has he signed that does anything to affect fracking or coal?  You choose to ignore that a President doesn't make law, Congress does.  The President only signs legislation to make it official and enforceable.  Certainly, he (or soon, she) will suggest legislation to constituents, but as we all know, almost nothing becomes a bill without 20 riders and pork projects.  The political process has become a joke and until line item is instituted, no bill is 100% good or bad to any particular party.

Even the ACA has allowed big pharma to jack up prices and become more profitable.  That's the American Way ©®™

Yep. Pretty much. Executive Orders do have the effect of law but only apply to the heads of Federal agencies - their marching orders for administering laws enacted by Congress if you will. Funny thing is, that (regardless of party) many EO's are flat out ignored for no other reason than the agencies simply don't have the funds to actually implement them.

SPV Photo wrote:
Why is oil so cheap? There's a lot of it right now.

Besides basic supply and demand economics you have this huge derivatives (futures/options) market.
Think most people these days are aware of the big players and what goes on in derivatives.

Good Egg Productions wrote:
You choose to ignore that a President doesn't make law, Congress does.  The President only signs legislation to make it official and enforceable.

So simple and innocent as that, eh?
[Long and outstanding post with lots of supporting links redacted]
This is not the time or place to talk about the reality of politics, leverage and obama's doctrine of "fundamental transformation" as a euphemism for boilerplate marxism.

I'll leave you with one link to ponder:
http://www.cnn.com/2015/11/06/politics/ … ion-kerry/
If you admire this guy anyway, flanked by two monumental genius's in their own right, maybe you'll enjoy his scripted hogwash. So what difference does it make?

Click Hamilton wrote:

So simple and innocent as that, eh?
[Long and outstanding post with lots of supporting links redacted]
This is not the time or place to talk about the reality of politics, leverage and obama's doctrine of "fundamental transformation" as a euphemism for boilerplate marxism.

I'll leave you with one link to ponder:
http://www.cnn.com/2015/11/06/politics/ … ion-kerry/
If you admire this guy anyway, flanked by two monumental genius's in their own right, maybe you'll enjoy his scripted hogwash. So what difference does it make?

Would the XL affect global oil prices?

We have historic supply levels, and are running out of places to store it.  I agree that the XL was a political bargaining chip that Obama never had to play.  In the grand scheme of things, nobody needs it.  Oil prices are near all time lows.  Domestic projects to get even MORE oil seem foolish at this point.  The jobs this would have created can surely be shifted to infrastructure jobs. 

Too many times, our government chooses unimportant projects to battle each other against, pitting politics above common sense.  And we, the dumb citizens, buy into the fight without looking at who among them profits the most if the project succeeds or fails.  And before someone chimes in and says how profitable the Pipeline would have been and how soon, be sure to cite WHO would profit and using what data, 2013 oil prices, or 2016 oil price futures.

Good Egg Productions wrote:
Would the XL affect global oil prices?

To the extent it would affect supply in the US, and in turn US demand for foreign oil, yes.
To the extent Canadian oil reaches the Gulf more efficiently for distribution to international markets, yes.

To what extent, I don't know. These are sub-elements of a much bigger and evolving equation.

Logically I would guess the domestic effect would be significantly more than the international effect. In terms of national security I would guess that a shift of dependence away from Saudi and middle east oil toward Canadian oil would be a good thing. As would the dilution of cartel influence. Cost of distribution would be cheaper.

Good Egg Productions wrote:
We have historic supply levels, and are running out of places to store it.

Why? And if this is really the case and not a simplistic after-the-fact excuse for finger pointing, why didn't industrial leaders see this glut coming and why did this price crash seem to suddenly catch them, the bankers, the economy planners and everyone else off guard?

Or, if they DID quietly see this glut coming, why did they fail to keep prices artificially high?

Why should this major decrease in the cost of energy not be leveraged to stimulate and expand our economy, create real jobs and improve the competitive productivity and comparative advantage of the United States in the world?

Good Egg Productions wrote:
I agree that the XL was a political bargaining chip that Obama never had to play.  In the grand scheme of things, nobody needs it.  Oil prices are near all time lows.  Domestic projects to get even MORE oil seem foolish at this point.  The jobs this would have created can surely be shifted to infrastructure jobs.

Why should oil be supported at artificially high prices?

The other part about private sector jobs based on productivity and "infrastructure jobs" doled out by the government gets too political and dictatorial to address in this thread. The latter is too corrupt, too inefficient, and too stupid to be functional in a way the produces more than it consumes. The entire flow of diverted resources quickly becomes political money laundering and "transfer of wealth" by way of political payback. i.e. campaign funding. Infrastructure that never gets built or repaired is the excuse.

Good Egg Productions wrote:
Too many times, our government chooses unimportant projects to battle each other against, pitting politics above common sense.  And we, the dumb citizens, buy into the fight without looking at who among them profits the most if the project succeeds or fails.  And before someone chimes in and says how profitable the Pipeline would have been and how soon, be sure to cite WHO would profit and using what data, 2013 oil prices, or 2016 oil price futures.

All the more reason why incompetent bureaucrats and failed government policies, combined with the elemental greed of politicians and special interests who try to establish privileged monopolies should not be so big and so deeply invasive into all aspects of our lives. The Dept of Energy and the State Department should not be trying to manage the extraction and distribution of oil and energy resources any more than all the other Federal departments try to take over and manage our health industry, technology, housing markets, food & agriculture, utilities, education, student loans, banking & finance, etc., etc., etc. They don't know how to do it, they can't do it, and they shouldn't try. Many of these federal resource management departments should be abolished. The federal budget should be required to be balanced by a Constitutional amendment to put a cap on all this endless bureaucratic political sprawl and meddling that sucks massive amounts of money and produces nothing in return.

SAND DIAL wrote:
Will some of the bigger Petrol - Gas- Oil companies go under soon?

I guess you missed that Halliburton bought Baker Hughes and that Schlumberger bought Cameron?
My wife likes that I can fill the boat AND the truck up for less than it used to cost me to fill up just the truck when gasoline was $3.50 a gallon...but the energy sector really is suffering. One point of good news in the Omnibus spending bill is that Republicans added wording that will end the oil export ban. That could be great for US oil companies.

FlirtynFun Photography wrote:

I guess you missed that Halliburton bought Baker Hughes and that Schlumberger bought Cameron?
My wife likes that I can fill the boat AND the truck up for less than it used to cost me to fill up just the truck when gasoline was $3.50 a gallon...but the energy sector really is suffering. One point of good news in the Omnibus spending bill is that Republicans added wording that will end the oil export ban. That could be great for US oil companies.

Heh,that Omnibus dumpster fire is an exercise in who could out pork who....but I digress,
This is one known item that is very good

FlirtynFun Photography wrote:
... One point of good news in the Omnibus spending bill is that Republicans added wording that will end the oil export ban. That could be great for US oil companies.

And then prices go up for us.  Same thing with natural gas.  We might be paying three times as much if we let gas become part of the global market.  But the oil companies, unlike us, have their lobbyists.

SAND DIAL wrote:
Thanks- And then prices go up for us. 

How High???

If it becomes a world market, then world price for oil and gas.  Seems like Europe is paying about 3 times as much for natural gas as we are.

Guss W wrote:

If it becomes a world market, then world price for oil and gas.  Seems like Europe is paying about 3 times as much for natural gas as we are.

Due to import duty and transport?