End Game for Oil?

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Jim the Moron
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End Game for Oil?

Post by Jim the Moron » Tue Jul 28, 2020 1:24 am

"OPEC prepares for an age of dwindling demand"
https://channelnewsasia.com/news/busine ... d-12969590

". . . consumption might never fully recover."

The US and Canada will gain market share, to the extent where increased production beyond meeting domestic needs is profitable. But oil production isn't the whole of their economies - unlike Russia, which only has turnip farming to fall back on, and the OPEC folks, whose backup income source is peddling sand for glass-making.

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Doc
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Re: End Game for Oil?

Post by Doc » Tue Jul 28, 2020 2:19 am

Jim the Moron wrote:
Tue Jul 28, 2020 1:24 am
"OPEC prepares for an age of dwindling demand"
https://channelnewsasia.com/news/busine ... d-12969590

". . . consumption might never fully recover."

The US and Canada will gain market share, to the extent where increased production beyond meeting domestic needs is profitable. But oil production isn't the whole of their economies - unlike Russia, which only has turnip farming to fall back on, and the OPEC folks, whose backup income source is peddling sand for glass-making.
Not the end of Oil Just the end of OPEC.

But from what I see from where I sit, Saudi is betting on more production not less
“"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

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Sertorio
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Re: End Game for Oil?

Post by Sertorio » Tue Jul 28, 2020 3:59 am

Jim the Moron wrote:
Tue Jul 28, 2020 1:24 am
But oil production isn't the whole of their economies - unlike Russia, which only has turnip farming to fall back on...
If stupidity was a marketable commodity, some people would get rich very quickly...
Russia is one of the so-called BRIC countries, the four major emerging markets. It is also considered to be one of the fastest growing economies, being one of the world’s leading producers and exporters of oil, natural gas, metals, wood, chemicals, and a wide variety of civilian and military manufactures.
Russia’s Top 10 Exports

Mineral fuels including oil: US$220.8 billion (52.2% of total exports)
Iron, steel: $18.1 billion (4.3%)
Gems, precious metals: $15.3 billion (3.6%)
Machinery including computers: $9 billion (2.1%)
Wood: $8.6 billion (2%)
Fertilizers: $8.4 billion (2%)
Cereals: $7.9 billion (1.9%)
Aluminum: $5.8 billion (1.4%)
Electrical machinery, equipment: $5.6 billion (1.3%)
Copper: $5.2 billion (1.2%)

neverfail
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Re: End Game for Oil?

Post by neverfail » Tue Jul 28, 2020 2:41 pm

Jim the Moron wrote:
Tue Jul 28, 2020 1:24 am
"OPEC prepares for an age of dwindling demand"
https://channelnewsasia.com/news/busine ... d-12969590

". . . consumption might never fully recover."

The US and Canada will gain market share, to the extent where increased production beyond meeting domestic needs is profitable. But oil production isn't the whole of their economies - unlike Russia, which only has turnip farming to fall back on, and the OPEC folks, whose backup income source is peddling sand for glass-making.
Hi Jim!

"The US and Canada will gain market share" you claim? You obviously did not take into account production costs versus likely returns on sales.

Low consumer demand implies globally low prices (even OPEC cannot defy economic gravity) and poor returns for producers. This list of production costs in various petrolium rich countries highlights the fallacy that it is likely to be the US and Canada that gain market share in a world of permanently low oil prices:
https://en.wikipedia.org/wiki/Price_of_ ... 20cheapest.

In 2016, the Wall Street Journal reported that the United Kingdom, Brazil, Nigeria, Venezuela, and Canada had the costliest production.[77] Saudi Arabia, Iran, and Iraq had the cheapest.
Canada' high costs are likely explained by a preponderance of tar sands production (as distinct to a lesser volume of production from wells) which pushes up average cost per barrel of production.. But as the reader can see the US would not be too far behind in cost with the (newer and higher cost) shale oil production pushing up average production per barrel closer to Canadian costs. With dwindling traditional well production (the USA must have the oldest wells and most depleted oil resevours in the world) and growing reliance of shale oil to make up the production shortfall, costs within the US must surely be steadily rising.


Oil and gas barrel production Cost, March 2016[77]
Country Total
UK.. $44.33
Brazil $34.99
Nigeria $28.99
Venezuela $27.62
Canada $26.64
U.S. Shale $23.35
Norway $21.31
U.S. non-shale $20.99
Indonesia $19.71
Russia $19.21
Iraq $10.57
Iran $9.08
Saudi Arabia $8.98
While these listed costs are now a few years old now, I cannot see how they could have declined since.

The current (US benchmark price) for West Texas Intermediate crude currently stands at US$40.80 per barrel while the UK benchmark price (Brent) is at US$43.15.
Currently, if the British producers are pumping oil out of their North Sea offshore wells they must be doing it at a considerable loss.

But reader, now take a good look at the production costs of the three cheapest: Saudi Arabia, Iran and Iraq - all OPEC members. In a globally free oil market but with a world of low oil prices (lower than now); even without OPEC these three would remain in business while the US and Canada would send themselves broke if they tried. Likewise prices would need to be very low before Russia would be driven to regress to "turnip farming". :)

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Doc
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Re: End Game for Oil?

Post by Doc » Tue Jul 28, 2020 11:06 pm

Sertorio wrote:
Tue Jul 28, 2020 3:59 am
Jim the Moron wrote:
Tue Jul 28, 2020 1:24 am
But oil production isn't the whole of their economies - unlike Russia, which only has turnip farming to fall back on...
If stupidity was a marketable commodity, some people would get rich very quickly...
Russia is one of the so-called BRIC countries, the four major emerging markets. It is also considered to be one of the fastest growing economies, being one of the world’s leading producers and exporters of oil, natural gas, metals, wood, chemicals, and a wide variety of civilian and military manufactures.
Russia’s Top 10 Exports

Mineral fuels including oil: US$220.8 billion (52.2% of total exports)
Iron, steel: $18.1 billion (4.3%)
Gems, precious metals: $15.3 billion (3.6%)
Machinery including computers: $9 billion (2.1%)
Wood: $8.6 billion (2%)
Fertilizers: $8.4 billion (2%)
Cereals: $7.9 billion (1.9%)
Aluminum: $5.8 billion (1.4%)
Electrical machinery, equipment: $5.6 billion (1.3%)
Copper: $5.2 billion (1.2%)
USA GDP $21.44 trillion
Russia GDP $1.61 Trillion
“"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

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Sertorio
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Re: End Game for Oil?

Post by Sertorio » Tue Jul 28, 2020 11:10 pm

Doc wrote:
Tue Jul 28, 2020 11:06 pm
Sertorio wrote:
Tue Jul 28, 2020 3:59 am
Jim the Moron wrote:
Tue Jul 28, 2020 1:24 am
But oil production isn't the whole of their economies - unlike Russia, which only has turnip farming to fall back on...
If stupidity was a marketable commodity, some people would get rich very quickly...
Russia is one of the so-called BRIC countries, the four major emerging markets. It is also considered to be one of the fastest growing economies, being one of the world’s leading producers and exporters of oil, natural gas, metals, wood, chemicals, and a wide variety of civilian and military manufactures.
Russia’s Top 10 Exports

Mineral fuels including oil: US$220.8 billion (52.2% of total exports)
Iron, steel: $18.1 billion (4.3%)
Gems, precious metals: $15.3 billion (3.6%)
Machinery including computers: $9 billion (2.1%)
Wood: $8.6 billion (2%)
Fertilizers: $8.4 billion (2%)
Cereals: $7.9 billion (1.9%)
Aluminum: $5.8 billion (1.4%)
Electrical machinery, equipment: $5.6 billion (1.3%)
Copper: $5.2 billion (1.2%)
USA GDP $21.44 trillion
Russia GDP $1.61 Trillion
What has that to do with turnip farming?...

neverfail
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Re: End Game for Oil?

Post by neverfail » Wed Jul 29, 2020 1:41 am

Doc wrote:
Tue Jul 28, 2020 11:06 pm
USA GDP $21.44 trillion
Russia GDP $1.61 Trillion
Sertorio wrote:
Tue Jul 28, 2020 11:10 pm
What has that to do with turnip farming?...
Nothing. doc is trying to tell you that he is very proud of his country.

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Sertorio
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Re: End Game for Oil?

Post by Sertorio » Wed Jul 29, 2020 3:44 am

neverfail wrote:
Wed Jul 29, 2020 1:41 am
Doc wrote:
Tue Jul 28, 2020 11:06 pm
USA GDP $21.44 trillion
Russia GDP $1.61 Trillion
Sertorio wrote:
Tue Jul 28, 2020 11:10 pm
What has that to do with turnip farming?...
Nothing. doc is trying to tell you that he is very proud of his country.
Proud is nice. Critical is more useful...

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Doc
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Re: End Game for Oil?

Post by Doc » Wed Jul 29, 2020 6:32 am

Sertorio wrote:
Tue Jul 28, 2020 11:10 pm
Doc wrote:
Tue Jul 28, 2020 11:06 pm
Sertorio wrote:
Tue Jul 28, 2020 3:59 am
Jim the Moron wrote:
Tue Jul 28, 2020 1:24 am
But oil production isn't the whole of their economies - unlike Russia, which only has turnip farming to fall back on...
If stupidity was a marketable commodity, some people would get rich very quickly...
Russia is one of the so-called BRIC countries, the four major emerging markets. It is also considered to be one of the fastest growing economies, being one of the world’s leading producers and exporters of oil, natural gas, metals, wood, chemicals, and a wide variety of civilian and military manufactures.
Russia’s Top 10 Exports

Mineral fuels including oil: US$220.8 billion (52.2% of total exports)
Iron, steel: $18.1 billion (4.3%)
Gems, precious metals: $15.3 billion (3.6%)
Machinery including computers: $9 billion (2.1%)
Wood: $8.6 billion (2%)
Fertilizers: $8.4 billion (2%)
Cereals: $7.9 billion (1.9%)
Aluminum: $5.8 billion (1.4%)
Electrical machinery, equipment: $5.6 billion (1.3%)
Copper: $5.2 billion (1.2%)
USA GDP $21.44 trillion
Russia GDP $1.61 Trillion
What has that to do with turnip farming?...
If you add up all your numbers from above, they don't amount to much.
“"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

neverfail
Posts: 5591
Joined: Sun Dec 18, 2016 3:47 am
Location: Singapore

Re: End Game for Oil?

Post by neverfail » Wed Jul 29, 2020 3:58 pm

Yet despite economic sanctions Russia has been running trade SURPLUSSES for years while the USA (with no trade sanctions applied) has run DEFECTIS for decades.

https://tradingeconomics.com/russia/balance-of-trade

I wonder how the Russkis did that?

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