Crash?

Discussion of current events
User avatar
Milo
Posts: 2494
Joined: Thu Dec 15, 2016 10:14 pm

Re: Crash?

Post by Milo » Thu Mar 12, 2020 4:18 pm

neverfail wrote:
Thu Mar 12, 2020 4:13 pm
Oil price collapse beyond any government’s control

The plunge in the global oil price won’t affect all economies in the same way


With no agreement between OPEC and non-OPEC states, Saudi Arabia did the same thing as in 2014 – it launched a price war by boosting production and discounting its product to Asian and European economies to grab market share.

The Saudis are able to undertake this aggressive push because production costs are low in the kingdom. The cost of producing and transporting a barrel of oil in Saudi Arabia (and other Arab Gulf states) is less than $10. In Russia, it is $30. In the US, it is closer to $50.

https://asiatimes.com/2020/03/oil-price ... s-control/
Obviously, the US cannot produce oil profitably as long as the global oil price remains at its current low.

I believe that the US shale oil industry is heavily indebted. If it cannot produce oil profitably then obviously it cannot meet it's debt repayment obligations. Very likely whole sections will go bankrupt.

But so what?


Even if the indebted firms are foreclosed upon by their creditors the oil will be still there in the ground and the pumps and delivery infrastructure w8ill still be their intact awaiting the arrival of higher prices when it will be cost-effective profitable for the US to produce again (under a set of new owners).

Meanwhile the US will have the option of importing as much cheap oil from abroad as it needs for its recessed economy at lower prices.

Why not keep your own oil in the ground for when you really need it when you can live off someone elses" oil more cheaply?

Indeed, the re-entry of the US into the global oil market as a major importer will have the benefical effect of pushing world prices back up towards the magic $50 per barrel break-even mark regardless of the wishes of the Saudis and the Russians in the matter.
Experts say Russia can stand lower prices than the KSA, other experts say the opposite, it seems there are no experts here.

Jim the Moron
Posts: 1822
Joined: Thu Dec 15, 2016 9:51 pm

Re: Crash?

Post by Jim the Moron » Thu Mar 12, 2020 4:50 pm

Milo wrote:
Thu Mar 12, 2020 4:18 pm
neverfail wrote:
Thu Mar 12, 2020 4:13 pm
Oil price collapse beyond any government’s control

The plunge in the global oil price won’t affect all economies in the same way


With no agreement between OPEC and non-OPEC states, Saudi Arabia did the same thing as in 2014 – it launched a price war by boosting production and discounting its product to Asian and European economies to grab market share.

The Saudis are able to undertake this aggressive push because production costs are low in the kingdom. The cost of producing and transporting a barrel of oil in Saudi Arabia (and other Arab Gulf states) is less than $10. In Russia, it is $30. In the US, it is closer to $50.

https://asiatimes.com/2020/03/oil-price ... s-control/
Obviously, the US cannot produce oil profitably as long as the global oil price remains at its current low.

I believe that the US shale oil industry is heavily indebted. If it cannot produce oil profitably then obviously it cannot meet it's debt repayment obligations. Very likely whole sections will go bankrupt.

But so what?


Even if the indebted firms are foreclosed upon by their creditors the oil will be still there in the ground and the pumps and delivery infrastructure w8ill still be their intact awaiting the arrival of higher prices when it will be cost-effective profitable for the US to produce again (under a set of new owners).

Meanwhile the US will have the option of importing as much cheap oil from abroad as it needs for its recessed economy at lower prices.

Why not keep your own oil in the ground for when you really need it when you can live off someone elses" oil more cheaply?

Indeed, the re-entry of the US into the global oil market as a major importer will have the benefical effect of pushing world prices back up towards the magic $50 per barrel break-even mark regardless of the wishes of the Saudis and the Russians in the matter.
Experts say Russia can stand lower prices than the KSA, other experts say the opposite, it seems there are no experts here.
The world-famous expert re oil markets - Jim the Moron - must come in here. Oil? Them's that got, got. Them's no have are screwed. KSA, the US, and Russia are sitting pretty. China is smart to buy and store cheap oil.

User avatar
Doc
Posts: 4222
Joined: Thu Dec 15, 2016 7:09 pm
Location: Cradle To Grave

Re: Crash?

Post by Doc » Thu Mar 12, 2020 8:59 pm

Jim the Moron wrote:
Thu Mar 12, 2020 4:50 pm
Milo wrote:
Thu Mar 12, 2020 4:18 pm
neverfail wrote:
Thu Mar 12, 2020 4:13 pm
Oil price collapse beyond any government’s control

The plunge in the global oil price won’t affect all economies in the same way


With no agreement between OPEC and non-OPEC states, Saudi Arabia did the same thing as in 2014 – it launched a price war by boosting production and discounting its product to Asian and European economies to grab market share.

The Saudis are able to undertake this aggressive push because production costs are low in the kingdom. The cost of producing and transporting a barrel of oil in Saudi Arabia (and other Arab Gulf states) is less than $10. In Russia, it is $30. In the US, it is closer to $50.

https://asiatimes.com/2020/03/oil-price ... s-control/
Obviously, the US cannot produce oil profitably as long as the global oil price remains at its current low.

I believe that the US shale oil industry is heavily indebted. If it cannot produce oil profitably then obviously it cannot meet it's debt repayment obligations. Very likely whole sections will go bankrupt.

But so what?


Even if the indebted firms are foreclosed upon by their creditors the oil will be still there in the ground and the pumps and delivery infrastructure w8ill still be their intact awaiting the arrival of higher prices when it will be cost-effective profitable for the US to produce again (under a set of new owners).

Meanwhile the US will have the option of importing as much cheap oil from abroad as it needs for its recessed economy at lower prices.

Why not keep your own oil in the ground for when you really need it when you can live off someone elses" oil more cheaply?

Indeed, the re-entry of the US into the global oil market as a major importer will have the benefical effect of pushing world prices back up towards the magic $50 per barrel break-even mark regardless of the wishes of the Saudis and the Russians in the matter.
Experts say Russia can stand lower prices than the KSA, other experts say the opposite, it seems there are no experts here.
The world-famous expert re oil markets - Jim the Moron - must come in here. Oil? Them's that got, got. Them's no have are screwed. KSA, the US, and Russia are sitting pretty. China is smart to buy and store cheap oil.
Sounds like a good time for the US to raise oil import taxes :D
“"I fancied myself as some kind of god....It is a sort of disease when you consider yourself some kind of god, the creator of everything, but I feel comfortable about it now since I began to live it out.” -- George Soros

User avatar
Milo
Posts: 2494
Joined: Thu Dec 15, 2016 10:14 pm

Re: Crash?

Post by Milo » Thu Mar 12, 2020 9:21 pm

The focus is on the oil price war but the panic over virus seems certain to hit consumption hard.

In other words, even if the oil producers come to an agreement, prices will likely be way down for the foreseeable future.

neverfail
Posts: 4953
Joined: Sun Dec 18, 2016 3:47 am
Location: Singapore

Re: Crash?

Post by neverfail » Fri Mar 13, 2020 4:22 am

Cheaper petrol but supermarket shelves cleared of tiolet paper? Give me a break!

User avatar
armchair_pundit
Posts: 267
Joined: Thu Dec 15, 2016 7:23 pm

Re: Crash?

Post by armchair_pundit » Fri Mar 13, 2020 8:44 am

neverfail wrote:
Fri Mar 13, 2020 4:22 am
Cheaper petrol but supermarket shelves cleared of tiolet paper? Give me a break!


People are bracing for torrents of snot and diarrhea? :roll:

Jim the Moron
Posts: 1822
Joined: Thu Dec 15, 2016 9:51 pm

Re: Crash?

Post by Jim the Moron » Sun Mar 22, 2020 10:58 pm

bad url

neverfail
Posts: 4953
Joined: Sun Dec 18, 2016 3:47 am
Location: Singapore

Re: Crash?

Post by neverfail » Mon Mar 23, 2020 4:35 am

The speed with which the World is closing down under impact of the Coronavirus pestelance moves me to hope and pray that the coming global recession will not be as severe as the 1930's Great Depression.

User avatar
Milo
Posts: 2494
Joined: Thu Dec 15, 2016 10:14 pm

Re: Crash?

Post by Milo » Mon Mar 23, 2020 11:22 am

neverfail wrote:
Mon Mar 23, 2020 4:35 am
The speed with which the World is closing down under impact of the Coronavirus pestelance moves me to hope and pray that the coming global recession will not be as severe as the 1930's Great Depression.
A lot depends on whether we go back to the way things were.

There's a lot of jobs that depend on 'buggy whip' technology, if we decide that we cannot risk much contact anymore, flu or not, those jobs are not coming back.

For example, I have to physically go to a courtroom and also file things on actual paper prior to going. Why? Well, despite what many say, it is because lots of court clerks etc. are employed because of that. Right now, my jurisdiction is suspending these 19th century requirements "temporarily". My question is, why go back at all?

I am convinced that a top policy priority around the world is to avoid telling all this dead wood to learn new skills or move out of the way.

Another policy priority is to preserve a high threat level at all times.

Will the powers that be fudge some banal explanation to continue to cripple those of us who know basic computer skills, so that we keep these clowns employed, and we have a flu quarantine every year?

Obviously that's what the powers that be want but sometimes even they, even these days, have to bow to reality.

neverfail
Posts: 4953
Joined: Sun Dec 18, 2016 3:47 am
Location: Singapore

Re: Crash?

Post by neverfail » Mon Mar 23, 2020 12:35 pm

Milo wrote:
Mon Mar 23, 2020 11:22 am
neverfail wrote:
Mon Mar 23, 2020 4:35 am
The speed with which the World is closing down under impact of the Coronavirus pestelance moves me to hope and pray that the coming global recession will not be as severe as the 1930's Great Depression.
A lot depends on whether we go back to the way things were.
By the time this has run its course we will probably find that we can't even if we would want to.

Post Reply