OT: Let's talk about oil/gas prices

All I know is this is what the hubs paid for gas today!

Yeah, he has an Avalanche - was costing us $120/pop when gas was around $4/gallon. Today was AWESOME!

This may be the cheapest that gas will cost during the remainder of my lifetime, and I don't even own a car.

Is that just in the US?

I should care, considering I inherited a shite ton of Exxon and Chevron stock from my grandparents. Fortunately, my financial advisor has spent the last few years diversifying my portfolio, so my care level is pretty low. I'm sure it will go back up and down a few times before I'm ready to retire on it.

And yet, as a consumer driven economy, the US economy as a whole benefits when oil prices are low.





Also, "logic" but.. shouldn't preventing drilling in portions of Alaska HELP oil prices?

The problem isn't Saudi Arabia.. it's the rampant increase in production by the world's largest oil producing nation (That's us) who has doubled production in the past 5 years and the lack of increase in demand worldwide relative to the production numbers.


It's not like the shale is going anywhere. Those jobs will pick right back up when oil prices rebound at some point. Right now though the world economy is slowing (the US economy is outpacing world growth... that's not something a developed nation should do).

The main global downside to cheap oil is continuing to frick up our climate.

The Saudis do not like U.S. oil production. They can also stick it to Russia and Iran whose economies are based on oil prices being around one hundred dollars a barrel.

Our government is also already talking about raising gas taxes since people were managing to pay for gas before the price dropped they think they can raise taxes without people being upset since the price should still be lower than it was.

Just a dumb ole redneck's opinion.

i just looked closely at that- it's .89, not 1.89???? was that at kroger?

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And yet, as a consumer driven economy, the US economy as a whole benefits when oil prices are low.

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Not really. Since 2007, shale states added 1.36 million jobs.

When oil bottomed out in 2008, what happened to our economy?

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Also, "logic" but.. shouldn't preventing drilling in portions of Alaska HELP oil prices?

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No. Drilling is currently going on in the portion of Alaska Obama is trying to make a wildlife refuge. Our country does not need to be dependent on foreign oil.

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The problem isn't Saudi Arabia..

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Of course they are the problem. They control the oil market all across the world. Oil cartels are worst than Mexican drug cartels.

There is oil all throughout Mexico. Why do you think America has done its part in not allowing any exploration in Mexico?

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it's the rampant increase in production by the world's largest oil producing nation (That's us) who has doubled production in the past 5 years and the lack of increase in demand worldwide relative to the production numbers.

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Yes, we are now the worlds #1 producer of oil. It hasn't always been like that, though. Which is why Saudi still is trying to control the market by driving oil prices down.

Saudi oil companies can break even around $15/bbl. Where US oil companies break even point is around $40/bbl.

My problem with this is that at some point we need to separate ourselves from the Saudi's and control our own market.

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It's not like the shale is going anywhere. Those jobs will pick right back up when oil prices rebound at some point

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Sure they will, at some point. Until then, these families will be on some sort of government assistance until the jobs pick back up.

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Wouldn't opening up new areas for drilling just contribute to keeping the prices low?

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These areas aren't "new" areas. They are currently being drilled and produced.

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My problem is that we are allowing the Saudi's to dictate this issue.

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What is the alternative? The Saudis have been very clear that they are focused on protecting their market share over the past decade, it just became much more clear to the west recently. Do you actually want the US to start taking political or economic shots at the only Islamic, middle eastern country we have positive relations with?

Many have made the argument, which I see a lot of credence in, that a large amount of this run up in the price of oil since say 2003/2004 was due to was sheer speculation from not only the financial traders but the physical traders. It was hard to find somebody who was net short oil for years. Oil curves are generally in contango, which means you'll get negative roll yield by holding it (i.e. the price of futures contracts are higher than spot price). However, price appreciation from the mid 2000's run-up more than overcame your negative roll yield over that time. 2008 obviously busted the 2007 ~$140 barrel stupidity but then a lot other players and primary dealers started buying up storage units and other inventory infrastructure on the LME (Goldman was singled out in the media but they were not alone by any means). The popular opinion is they were manipulating commodities markets (although that really wasn't true, they only were accused in the aluminum markets), but to stay on topic here the end result throughout all of this is you did have more of a price support from physical and financial speculation.

Finally when the US energy supply increase starting significantly outpacing our demand dynamics, the Saudi's started to protect their market share. Net longs got smoked, levered players had to start unwinding, and here we are. Personally, I doubt we ever see $100 WTI within the next 5 years outside of a massive geopolitical event. $60-$80 a barrel range is perfectly fine for the US shale industry, in fact it keeps most companies from doing extremely capital intensive projects (e.g. deep water drilling). $40-$60... eh... not only will US shale producers have issues but the Lat Am will be even worse (Pemex, Petrobras) not to mention Russian (Gazprom).