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LeeG
04-20-2018, 09:28 AM
Twits away!

https://mobile.twitter.com/realDonaldTrump/status/987284041304100864

Donald J. Trump
Donald J. Trump
@realDonaldTrump
Looks like OPEC is at it again. With record amounts of Oil all over the place, including the fully loaded ships at sea, Oil prices are artificially Very High! No good and will not be accepted!
6:57 AM · Apr 20, 2018

LeeG
04-20-2018, 10:18 AM
Actually DoNald. Besides, how can SA buy US made weapons without money, money, money!


https://assets.bwbx.io/images/users/iqjWHBFdfxIU/icji.teDs5tU/v1/-1x-1.png

lupussonic
04-20-2018, 11:51 AM
I have tried several times to understand the dynamics governing oil prices. It seems to be a geopolitical birds nest and my attempts to unravel it has failed numerous times.

John of Phoenix
04-20-2018, 12:48 PM
The one economic lever the Saudis have to punish Russia and Iran is oil and they've used it extensively to keep prices down for the last several years. They must be hurting if they're pushing prices up.

LeeG
04-20-2018, 12:58 PM
I have tried several times to understand the dynamics governing oil prices. It seems to be a geopolitical birds nest and my attempts to unravel it has failed numerous times.

I think it has something to do with supply and demand.

JimD
04-20-2018, 01:00 PM
I think it has something to do with supply and demand.With supply being very vulnerable to manipulation.

LeeG
04-20-2018, 01:04 PM
The one economic lever the Saudis have to punish Russia and Iran is oil and they've used it extensively to keep prices down for the last several years. They must be hurting if they're pushing prices up.

I haven’t read up on things in awhile but last I checked they committed a lot to social infrastructure when prices were high and it became a problem when prices dropped. The war in Yemen must be a drain.
Punishing Iran is going to be self-defeating for the US or Saudi Arabia as it simply increases ties between China and Iran.

John of Phoenix
04-20-2018, 01:05 PM
A few months ago we were "Energy independent". Oil, gas, frackin' our asses off. What happened?

LeeG
04-20-2018, 01:18 PM
With supply being very vulnerable to manipulation.

In some places not all. I think there’s a bias to ascribe bad intent to OPEC as though this is 1940 with a few oil companies dominating the market.

lupussonic
04-20-2018, 01:29 PM
I think it has something to do with supply and demand.

It's not that simple though. I work in the industry, or at least related to it, and the recent plummet has put a lot of colleagues out of work. If the Saudis want to lower the price, they surge supply, but why would they do that? To piss the Russians off over Syria? To attempt to stem fracking start-ups in the US? To remind the world of their standing in the production industry? Because of one of numerous political tangles in the ME? As a finger up to Australias Gorgon gas find? To attempt to kill N.Sea production? To punish countries that they have an interest in hurting? Because some 4th in line SA prince didn't get his oats? All of the aforementioned?

lupussonic
04-20-2018, 01:33 PM
I did notice that when SA oil came down from 100$ to 30$ a barrel overnight, my car fuel stayed more or less the same...

JimD
04-20-2018, 01:54 PM
It's not that simple though. I work in the industry, or at least related to it, and the recent plummet has put a lot of colleagues out of work. If the Saudis want to lower the price, they surge supply, but why would they do that? To piss the Russians off over Syria? To attempt to stem fracking start-ups in the US? To remind the world of their standing in the production industry? Because of one of numerous political tangles in the ME? As a finger up to Australias Gorgon gas find? To attempt to kill N.Sea production? To punish countries that they have an interest in hurting? Because some 4th in line SA prince didn't get his oats? All of the aforementioned?Possibly all of the above. If you have a high quality product that's cheap to produce you get higher profit margins for it on the global market. Other producers have smaller margins, and no margins at all if the price drops enough. So you could end up with smaller margins but a bigger slice of the total market if you manage to put less competitive suppliers out of business

LeeG
04-20-2018, 03:00 PM
It's not that simple though. I work in the industry, or at least related to it, and the recent plummet has put a lot of colleagues out of work. If the Saudis want to lower the price, they surge supply, but why would they do that? To piss the Russians off over Syria? To attempt to stem fracking start-ups in the US? To remind the world of their standing in the production industry? Because of one of numerous political tangles in the ME? As a finger up to Australias Gorgon gas find? To attempt to kill N.Sea production? To punish countries that they have an interest in hurting? Because some 4th in line SA prince didn't get his oats? All of the aforementioned?

The supply and demand aren’t simple monolithic entities. I am pretty ignorant about economics but my understanding is that Saudi Arabia wants the other OPEC countries to fall in line and that this partially a way to do that but they couldn’t do it for long.
WRT your pump prices not fluctuating as wildly as oil prices that’s in large part because of your high fuel taxes comprising a large part of the price per gallon. Over here they did fall significantly.

Speaking of the supply side

https://www.spe.org/en/jpt/jpt-article-detail/?art=3737

Unconventional output may be booming, but the low oil prices of the past 3 years has led to the lowest level of oil discoveries in the past 70 years.

Oil companies discovered less oil and gas in 2017— 7 billion BOE— than any year on record, the Norwegian research firm Rystad Energy said in a new report issued this week.

“We haven’t seen anything like this since the 1940s,” says Sonia Mladα Passos, a senior analyst at Rystad. “We have to face the fact that the low discovered volumes on a global level represent a serious threat to the supply levels some 10 years down the road.”

webishop14
04-20-2018, 03:00 PM
I think it has something to do with supply and demand.

Yes. We supply the money upon their demand. Our local gas providers demonstrate an interesting degree of lethargy. That is, when the announced price of gas goes up, our local stations immediately increase their prices, even when their tanks are full of the more cheaply purchased fuel. But when the price of gas drops, they only drop their prices after they've sold their first tankful of cheaper gas. Money, money, money.

And when the refiners need to increase their prices: well, there's always a refinery fire to be had, isn't there.

LeeG
04-20-2018, 04:16 PM
Yes. We supply the money upon their demand. Our local gas providers demonstrate an interesting degree of lethargy. That is, when the announced price of gas goes up, our local stations immediately increase their prices, even when their tanks are full of the more cheaply purchased fuel. But when the price of gas drops, they only drop their prices after they've sold their first tankful of cheaper gas. Money, money, money.

And when the refiners need to increase their prices: well, there's always a refinery fire to be had, isn't there.

nope, our expectation for lowest cost fuel and low taxes ensures maximum consumption. Drive more, buy more, live farther from work. No one is doing that to us but ourselves.

LeeG
04-20-2018, 04:20 PM
A few months ago we were "Energy independent". Oil, gas, frackin' our asses off. What happened?

check it out

https://www.desmogblog.com/2018/04/18/finances-great-american-fracking-bubble

As a whole, the American fracking experiment has been a financial disaster for many of its investors, who have been plagued by the industry's heavy borrowing, low returns, and bankruptcies, and the path to becoming profitable is lined with significant potential hurdles. Up to this point, the industry has been drilling the “sweet spots” in the country's major shale formations, reaching the easiest and most valuable oil first.
.
.
declares that “this time is different,” assuring everyone there won’t be a bust. The sentiment about the early 2000s housing bubble was much the same, with critics being drowned out by the players claiming that, this time it was different, arguing “Housing doesn’t go down in value.”

And what about for shale production? Is this time really different? Some in the industry apparently think so.

“Is this time going to be different? I think yes, a little bit,” energy asset manager Will Riley told the Wall Street Journal. “Companies will look to increase growth a little, but at a more moderate pace.” There is little evidence of restraint or moderation in the industry. Until analysts and investors start talking about profits instead of growth, however, this time is likely to end, at some point, in a completely familiar and predictable way: bust. A fate even Aubrey McClendon, the highest-paid CEO, the shale king, eventually met.

David Hughes summed up his take on the industry's financial outlook: “Ultimately, you hit the wall. It's just a question of time.”

John Smith
04-20-2018, 04:20 PM
I have tried several times to understand the dynamics governing oil prices. It seems to be a geopolitical birds nest and my attempts to unravel it has failed numerous times.

If you are a Fox viewer, you would have learned, when G.W. was in the White House, that the president has no control over gas prices, so don't blame Bush for them going up. When Obama was in the White House and they went up, you'd learn it was his fault. When they went down under Obama, you'd have learned nothing, as the networks seemed silent on the subject.

ISN'T THIS A GOOD REASON TO GET OFF OF OIL?

Phil Y
04-20-2018, 04:20 PM
Then there's that whole thing where the UK gets paid in oil for running the Saudi military.

John Smith
04-20-2018, 04:26 PM
Back when we had the gas lines, PBS had a show about them. One guy, a believe a one time Ambassador to Saudi, had a unique perspective.

The gist of his comments was that the US kept asking Saudi, and I guess others, to "temporarily" increase production. We kept building big, gas consuming vehicles and viewed these increases as permanent.

Under his suggested scenario, the oil producing countries were sending us a message "USE LESS" The only thing they believed we would respond to was cutting the supply, which is what they did.

Ever since it seems we've been making cars that get more and more miles out of a gallon.

John of Phoenix
04-20-2018, 07:05 PM
Comparing oil prices of the 70s gas line era to "activity" in the Middle East can be enlightening.

Gerarddm
04-20-2018, 07:08 PM
I read somewhere once that the Saudi cost of producing oil was just $15/barrel. They can withstand price drops better than anybody else in OPEC, or the Russians.

LeeG
04-20-2018, 08:07 PM
I read somewhere once that the Saudi cost of producing oil was just $15/barrel. They can withstand price drops better than anybody else in OPEC, or the Russians.

except when their spending requires X$/barrel.


https://www.aljazeera.com/programmes/insidestory/2018/04/saudi-arabia-spreading-thin-180420174607872.html

JayInOz
04-20-2018, 08:26 PM
I've never been able to get my head around oil pricing. Prior to going after Saddam, the cost of filling a 22 gallon tank in Iraq was about $1.20 U.S. Not because they were the eighth largest oil producer in the world, but because America was paying them billions in subsidies. These days in Irag your $1.20 will buy you less than two litres. JayInOz