Saudi Arabia: We'll Never Cut Oil Production

TIDE-HSV

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how about working from home and driving almost never. My car is sitting in the garage with ~13 Gallons of $4 premium unleaded in it at the moment
I work partially from home also. I've noticed the original savings from making that change have really shrunk...
 

Tidewater

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ripple effects are coming, many of them good. Lower food prices, travel prices, and shipping/transport in general lowering the cost of almost everything you buy.

Some however are very bad. The economies of Texas, Oklahoma, Louisiana, North Dakota and Alaska are all going to take a significant hit. All that "drill baby drill" work that is going on, that will grind to a halt. Then factor in all of the ancillary industry and not just Oil and Gas suppliers you'd think of like the ABB's and Haliburtons but also the Big IT Firms, construction, you name it it will be effected. Really happy that I let a team mate take on the Oil and Gas Vertical and attached quota for 2015 when I was asked earlier to do it. I warned him that the gravy train wouldn't roll forever. O&G Super computing exploration dollars that seemed limitless 6 months ago are evaporating from budgets as fast as the price is falling
I look at oil this way. A particular barrel of oil is worth a certain amount today ($56.52 today). Assuming we don't drop oil-derived products in the near future (a safe assumption in my view). Long-term (read decades), the price of oil is going to go up.
Thus, every barrel pumped out of the ground today and sold by $56.52/barrel is a barrel that might be pumped out of the ground twenty years from now for $140/barrel. So a market correct, shutting down some of the supply is both expected and good (at least for the oil companies).
For the time being, however, I'm happy paying $2.19 for gasoline.
 

mittman

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Let them sell their oil when they want to. We know we can produce again when we need to. I do feel for the economies of areas that are tied to the industry, but IMO this is good for almost everyone else, and it is hitting those that are not being friendly to us harder than it is us.
 

92tide

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The airlines (reportedly) are locked into long-term (I can't put a number to 'long-term') fuel contracts; and if any leg of the cargo's journey is on a plane, gas could go down to $1 a gallon tomorrow and shipping costs will remain the same.
we do very little air freight (thankfully, it is a royal pita). we do pretty much everything in 40ft reefers.
 

TIDE-HSV

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This is the normal boom and bust cycle. I represented some small companies during the last boom in the late 70s - early 80s. I still remember a board meeting of one, when they realized they were going to have to close down. The president said "Gentlemen, we were never real 'oil men.' We were just whores of the industry." Said with a smile. My wife and I spent our 1986 honeymoon backpacking in the Wind River Range in WY. The night before we kicked off, we stopped at a little motel in Lander, WY. I asked the room price and the clerk said $55. I half-stifled a chuckle and the clerk noticed and asked me why. I just said that just three years before, a company I represented was renting the room for $375. He just shook his head and said "Those days are gone..." ;)
 

Mystical

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Sep 28, 2009
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This will also hurt investments and research in to alternative fuels. Large vehicles are getting a bump because of the cheaper gas as well. The majority of the Country is almost getting a small pay bump or tax cut.
 

mittman

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This will also hurt investments and research in to alternative fuels. Large vehicles are getting a bump because of the cheaper gas as well. The majority of the Country is almost getting a small pay bump or tax cut.
I had a discussion with my daughter before the first Obama administration election about fuel costs. I told her that if he was elected I expected fuel costs to go up significantly simply because that is what they want to happen for this very reason. Not that I believe that administrations have total control over prices unless the specifically try to set price controls (a very bad thing IMO), just that that was the policy position of those she was considering voting for. Two or three years later she agreed.

That said, I am not sure the administration really caused as much as I expected them to. IIRC there was a pretty steep drop in prices right before he took office. I honestly think the industry to an extent priced themselves out of their own market.
 

Displaced Bama Fan

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I had a discussion with my daughter before the first Obama administration election about fuel costs. I told her that if he was elected I expected fuel costs to go up significantly simply because that is what they want to happen for this very reason. Not that I believe that administrations have total control over prices unless the specifically try to set price controls (a very bad thing IMO), just that that was the policy position of those she was considering voting for. Two or three years later she agreed.

That said, I am not sure the administration really caused as much as I expected them to. IIRC there was a pretty steep drop in prices right before he took office. I honestly think the industry to an extent priced themselves out of their own market.
Part of the problem is we allow speculators to trade oil and they dramatically increase or decrease the price of oil.
 

Displaced Bama Fan

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Yes, but I would still rather have a free market than an artificial one.
A free market where speculators can artificially drive up the price of oil? I'll pass. Some of these guys are just average Joes sitting in their house speculating on oil prices like derivatives. They have no infrastructure to either produce, refine, store or transport the oil. Why would should they be allowed to speculate on the price? I'm going to give that a big negative Ghost Rider.
 

mittman

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A free market where speculators can artificially drive up the price of oil? I'll pass. Some of these guys are just average Joes sitting in their house speculating on oil prices like derivatives. They have no infrastructure to either produce, refine, store or transport the oil. Why would should they be allowed to speculate on the price? I'm going to give that a big negative Ghost Rider.
I agree that there is a problem when speculators artificially drive the prices. Controls are necessary to prevent them from damaging the market, however this has to be handled with care. Whether or not they are in the supply chain, a free market needs investors.
 

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