US Oil Production And OPEC

Maybe the only bright spot this guy sees during the Obama admin, is the increased oil production by the US. Fracking has been a tremendous contribution to the industry lately.

It ain't pretty, but it ain't blood mixed with religion and war. Until new technologies enable us to be weaned from oil, we should use all our resources at hand, in order to keep the dollars and power out of OPEC's claws.

Just look at what is happening yonder, and wonder if our lessening reliance on Mid East oil is causing additional problems for the old regimes there. All the money we were giving, some was going to crazy Islamist's who only wanted chaos and submission. Look at Biden's comments about Mid East allies being our worst enemies.

 

From what I've heard the Saudis are actually upping production. Whether this is to maintain market share as was suggested on NPR or to put more stress on Russia and Iran (and consequently Syria) is another matter. Likely it's all of the above to some degree plus some additional concerns. One thing some forget is that they are heavily invested in the West so even if oil revenues go down because the price of oil drops they may actually make more money if the western economies take off.

 

In earlier times it was always touted by oil people that it was a good thing to import a lot as that would enable our resources here to last a great deal longer enabling our economy long into the future. So I just wonder if the opposite will prove to be true.....as we use up our supplies it will get more expensive to import to maintain our economy into the future. There are drawbacks to our "instant gratification" schedule for using up our resources. Cheaper now means very expensive later on if their observations are correct. I am hopeful that new technology will enable new sources of energy so that we might mitigate our economic dependance on oil and coal. We have only made marginal progress towards that goal.

 

From what I have read OPEC is now in the process of upping production if the price does not fall below $30 a barrel (Historical averages went accounting for inflation has been around $25 a barrel). Iran has recently stated that they will be alright with lower oil prices and seeing as they were one of the most vocal about oil prices I think we can see OPEC increasing production if the marklet doesnt correct it by its self.

On the other hand should the oil fall down to these levels the US oil boom will go bust as it cost's more then $30 a barrel to produce the fracking oil. According to this site http://www.businessweek.com/articles/2014-10-13/u-dot-s-dot-oil-prices-are-dropping-but-drilling-is-more-expensive US producers need on average $85 a barrel to break even, So I reckon this mighty US oil boom will come crashing down in a big big way, Might want to sell any stock in these companies if you have any.

On a side note after reading that link, Why is it so many western companies freak out when the price of a commodity starts to go down so their solution is to produce more which in effect over supplies the market driving prices down lower, Bunch of morons.

 

With China Oil consumption growing as it is I don't think OPEC needs to be afraid of a fall in demand, IMO the huge flow of money from oil consumers to producers, that didn't have a fragment of the economic consumption needed to use up that money interally, produced a huge amount of "loose" money that is partly responsible for the current troubles.

 

Whenever prices go down, taxes go up here, so we hardly see a difference.....

 

"flow of money from oil consumers to producers, that didn't have a fragment of the economic consumption needed to use up that money interally, produced a huge amount of "loose" money that is partly responsible for the current troubles."

It'd be interesting if you expounded on that TOS. Interested in hearing peeps opinions. That is how I form my own.

Sometimes I wonder if Mid East oil money has made it's way back here in order to disrupt our formerly glorious way of life. Of course, 9/11 has really put a dent in. And it only gets worse...Maybe I'll move to Alaska.

 

We in Darwin pay 170c+ a litre...Daylight robbery...don't want no franking though...

 

Oil money looking for investment opportunities with no ties and shared long term interests to the local population is likely to be disruptive, capital tends to improve life conditions only if it moves reasonably slowly but oil money doesn't.
Just a general feeling (haven't studied economics for years) but there are pointers that not all "investment capital" is equal when it comes to improve lifestyle, the current shark infested financial market is a threat to the ordinary man's lifesavings that make is the "natural prey" of the sharks, too many sharks and the ecosystem is at risk. Economic security plays a large part in human happiness, "may you live in interesting times" is Chinese curse, though for business schools "interesting times" are an opportunity, IMO to fast moving capital (aka speculation) is generally not a good thing, it definitely isn't in the short term and medium long term benefits are questionable stagnation is bad but the current capital market is absurd.

Of course minor Arab nobility with crazy ideas, tons of money, some organization skills and no accountability can be a lot worse.

 

Looks like crude is about 85. That is not good for Canada. But, willing to sacrifice in order to see how the Mid East dealio turns out. Tension (war, disease) may increase prices, and oil might go back up to around 100.

 

With the drop of oil prices these days, the concern here in Louisiana is that the off-shore rigs will be pulled up and moved away. Also, since oil fracking is a slightly expensive operation, development will be curtailed a bit until the price swing stabilizes. I own 4 acres of woodland in north east St. Helena Parish that is right smack dab on top of the Tuscaloosa Trend, full of oil just waiting to be fracked. Natural gas too they told me. Well, was waiting to be fracked. Looks like I'll have to start buying lottery tickets again.

 

Yeah. I hear you 58..Fracking ain't cheap. Hold on though. Crap will hit the fan. Then nobody will want to ship oil via/with the bad places.

 

Beers on me then!

 

Thats the spirit, Hope the rest of the world goes down the dunny so you can pay high oil prices =D

 

Not me, once they get back to fracking, I'm good.

 

Qatar would be a fine example of how our friends are actually frenemies...Like I said earlier, thinking a lot of OPEC oil money makes its way back here as a thorn in our side. ..Our excess oil money fills greedy pockets, also some goes to good causes. Where does some OPEC oil money go?
The Brookings Institution:
http://www.breitbart.com/Big-Peace/2014/10/29/IPT-Exclusive-Qatar-s-Insidious-Influence-on-the-Brookings-Institution

The Brookings Project on US Policy Towards The Islamic World:
http://www.brookings.edu/~/media/events/2002/10/19%20doha/fulldoha.pdf#page=6

 

Oh I have no doubt that the majority of OPEC profit goes into greedy profits while fracking in the US puts a little bit more into good causes (Though they largely write that off on the taxes) but one argument that OPEC does have that is solid is that high oil prices don't help developing nations and the poor. Lower oil prices allows more funds in a developing nation (or poor family) to be used else where allowing either A. Faster growth in economy or B. More stability at home and funds for decent food.

So while OPEC might be the greediest out of both their greed actually does/would do more to help.

 

Do poor nations pay the going freight on oil? Thought they had huge discounts.

Anyway, article from 2000:
http://www.daleeasley.com/resources/Essays/The_OPEC_Oil_Embargo_and_Third_World_Debt.html

http://richleebruce.com/economics/3rd-world.html

Learning here. Don't kick the 'nads too hard.

 

Sorry for late reply..

Some poor nations do have huge discounts but that is covered by their own respective nations, Not the oil producer so it is actually driving already weak economies into more challenging situations. Discounted oil is all well and good for Western type nations or oil producers that can afford it but those that are third world standard and not pumping out their own domestic oil (a large chunk of the world) get kicked in the guts and left in the gutter so to speak.

http://allafrica.com/stories/201412240178.html

Recent article I read OPEC wont cut production eve if it falls to $20 a barrel, If OPEC stays together or breaks apart is another matter but as Mr Ali al-Naimi points out why should OPEC cut production when others aren't willing to do so them selves? In any case cheaper oil bring it on, Yes some economies will be hurt but touch wood it will make them diversify their revenue income, Countries that start to rely on a natural resource to hold up their economies always have big issues (ie: Australian government [Im Aussie and begging for some one to nuke Canberra next Parliament session] relying on iron ore and coal to hold up the economy, They hoped for the massive highs that historically rarely last to have stayed permanently and got stumped when the prices have started to crash, Countries should get their books running in the black without the revenue of natural resources, Anything from that sector should be the cherry on top)

 

The oil price collapse has other unexpected effects. The Rouble is going to hell and inflation in Russia is sky-rocketing. In the EU the economies wil probably improve due to lower costs paid by companies, which in turn may invest .
On the other hand it is tempting for our dear govenrments to raise the taxes and "compensate".