What's the long term prospectus for diving gas prices?

[LegendKiller]

Short-term, OPEC is trying to drive everyone else out of business by keeping the prices so low.

You think this is about driving marginal players out of business? They couldn't care less. Besides, it's not like the wells disappear. Somebody else can take over and pump whenever prices go back up. That narrative is nothing but a smokescreen for the real motivation.

Russia.

 

[Ruptga]

Wow, is it too late to hop on this crazy train?

OPEC's effectiveness is down because of infighting, US and Canadian production is significantly up, therefore prices are lower. They probably will be for some time too. There, thread done, go home you wackos.

 

[LegendKiller]

Wow, is it too late to hop on this crazy train?

OPEC's effectiveness is down because of infighting, US and Canadian production is significantly up, therefore prices are lower. They probably will be for some time too. There, thread done, go home you wackos.

Yeah, it's just massive coincidence that Russia's economy demands more expensive oil, that a huge portion of their corporate debt is denominated in dollars, and that the WH press sec told us all to short Russia 10 months ago.

Yeah, ok, and pigs are going to fly.

This is nothing but a massively orchestrated economic war against Russia. Putin is uber-fucked and he knows it. He thinks that by rattling sabers about flyovers or whatever that he can threaten to do what Japan did, but it doesn't work. The Russian military sucks donkey balls.

Do you realize what happens when you have several hundred billion dollars in US denominated debt maturities in the next year when your currency has gone down 50%+?

 

[Ruptga]

Yeah, it's just massive coincidence that Russia's economy demands more expensive oil, that a huge portion of their corporate debt is denominated in dollars, and that the WH press sec told us all to short Russia 10 months ago.

Yeah, ok, and pigs are going to fly.

This is nothing but a massively orchestrated economic war against Russia. Putin is uber-fucked and he knows it. He thinks that by rattling sabers about flyovers or whatever that he can threaten to do what Japan did, but it doesn't work. The Russian military sucks donkey balls.

Do you realize what happens when you have several hundred billion dollars in US denominated debt maturities in the next year when your currency has gone down 50%+?

I'll just save some time by countering with my new favorite XKCD:



It applies to so much more than wireless signals.

 

[LegendKiller]

I'll just save some time by countering with my new favorite XKCD:



It applies to so much more than wireless signals.

lol - nice comic but doesn't address it at all.

Those who actually step back and look at shale knows it is unsustainable. It's why the smart money is trading in and out of it. The amount of money being lost by OPEC producers against shale is minuscule compared to what they are losing now. Furthermore, production has been this high for a while now and it hasn't effected prices.

I am pretty sure most of the mainline allied (with the US) producers are over producing at this point to flood the market and suppress the price. This is why they refuse to raise production and why they have abandoned the manipulation effort. Shale isn't big enough to matter to them, but what does matter is geopolitcal aspects.

 

[Capt Caveman]

You think this is about driving marginal players out of business? They couldn't care less. Besides, it's not like the wells disappear. Somebody else can take over and pump whenever prices go back up. That narrative is nothing but a smokescreen for the real motivation.

Russia.

I'll trust The Economist over you. Russia is part of the reason but not the only reason.

 

[LegendKiller]

I'll trust The Economist over you. Russia is part of the reason but not the only reason.

Yeah, I only have access to some of the best economists and research analysts in the world. I can make a call to any number of sales people at any bank in the world and get their research within 15mins on any subject I want.

Access to any CFO/CEO/Treasurer of any major bond issuer? No problem.

Yeah, I won't trust heads of some of the largest companies in the world, I'll just read a publication written for Joe Six Pack and depend on that...

lol, you guys are hilarious.

The Saudi's don't give a crap about shale production. It was bound to fail on its own, mainly because of the production decline curve is too steep and ROI to small.

 

[jpiniero]

The other issue of course is that demand is slumping. I'm sure they are hoping that the recent slide will get some more gas guzzlers on the road, and it seems like it is working. Whether it will offset that millennials don't want (or can't afford) a car is still something to be seen.

 

[norseamd]

This is the stealthiest call out thread I've seen in ages. Dr. Dave, paging Dr. Dave to the gas price thread.

LOL

 

[norseamd]

It would lead to a small price increase in the US if they do it.

Which is of minor concern compared to the current European-Russian energy situation and environmental sustainability.

 

[OverVolt]

Its a flash in the pan.

Gas demand is MUCH WEAKER than in the past. I was saying, the way you can tell this is because diesel prices haven't fallen as much. You get a smaller fraction of diesel out of a barrel of oil than you get a fraction of gasoline. People are sitting at home and ordering gifts online and having them trucked around the county instead I suppose. I personally made a huge effort to drive less and I would imagine others did the same. Its just habit now. Driving = $$$ and I better have a reason to be driving.

So Saudi pumped to kill off shale oil. They seem to be already taking ocean rigs and fracking wells offline. This is going to lead to alot of rips up and down in price. I'd actually expect the price to be unstable in general as oppose to any kind new trend. I wouldn't buy an SUV and I still think high MPG is the way to go in the future so I think this is a fluke.

 

[OverVolt]

Well he wanted the 1950's to be a golden era during his prime years. I'd say the same thing if I was in the 1930's. Now that he's long dead, he screwed us, and I doubt he cares. He got his mang! Gotta get yours! Sucks that he was borrowing from the future and eating a slice of your pie 50 years ago.

 

[walrus]

Companies are already cutting back on drilling new wells. There will be a shortage of crude soon.

 

[KlokWyze]

IMO it's to bang out Russia's economy with a couple other incentives. What else can the US do to Russia? More sanctions? lol

This is the only one that clicked for me. Seeing that falling energy prices also means a more productive economy on the whole is just more incentive for the US and it's allies.

TBH though, I haven't really been reading up on shit that much so that's just my laymen's 2 cents.

 

[Blackjack200]

Yeah, I only have access to some of the best economists and research analysts in the world. I can make a call to any number of sales people at any bank in the world and get their research within 15mins on any subject I want.

Access to any CFO/CEO/Treasurer of any major bond issuer? No problem.

Yeah, I won't trust heads of some of the largest companies in the world, I'll just read a publication written for Joe Six Pack and depend on that...

lol, you guys are hilarious.

Wow man, you're so connected.

The Saudi's don't give a crap about shale production. It was bound to fail on its own, mainly because of the production decline curve is too steep and ROI to small.

What you're seeing is the gradual loss of OPEC control over the world's oil prices. Practically every economy outside the US is stagnant or in recession, which depresses global demand. The American economy is seeing healthy growth, but we spent the last 10 years kicking people out of their houses and encouraging them to trade their trucks and SUVs for hybrids. American demand for oil has been flat for a decade.

You say that OPEC is losing more with oil at $55 than they were with oil at $105 and more American competition, and that's true, but it ignores an important point: OPEC is not capable of driving prices back up to $105 with modest production cuts. It would require huge cuts, and they would cede most of the market to non-OPEC producers, who would quickly make up the production.

As for Putin, if you honestly believe that the Western and Middle Eastern energy producing nations give the first fuck what that toothless hag is doing I don't know what to tell you. He's an impotent prick reduced to bullying the even poorer former soviet satellites that surround his shithole country. That fucking place is approaching North Korea levels of desperation/isolation.

 

[Blackjack200]

IMO it's to bang out Russia's economy with a couple other incentives. What else can the US do to Russia? More sanctions? lol

Russia's economy is fucked right now. Like LK said, they're probably on the verge of defaulting on their debt for the second time in under twenty years.

This is the only one that clicked for me. Seeing that falling energy prices also means a more productive economy on the whole is just more incentive for the US and it's allies.

TBH though, I haven't really been reading up on shit that much so that's just my laymen's 2 cents.

There's no conspiracy, it's just a combination of soft global demand and improved extraction techniques making more oil economically accessible. That simple.

 

[dmcowen674]

What you're seeing is the gradual loss of OPEC control over the world's oil prices.

Bahahahahaha you have to be joking right?

OPEC can crank it back to $120 in less time than you can make a phone call.

 

[dmcowen674]

There's no conspiracy, it's just a combination of soft global demand and improved extraction techniques making more oil economically accessible. That simple.

Oh please please please by that bridge from me, I could use the money.

 

[Blackjack200]

Bahahahahaha you have to be joking right?

OPEC can crank it back to $120 in less time than you can make a phone call.

Sure they can, all they need to do it cut production by about 80%. Good idea. In about 5 years, enough American and European production would come online that it would be falling back to $90 anyway.

Oh please please please by that bridge from me, I could use the money.

I'm sure you could.

 

[Ruptga]

You know you've lost the argument when McOwned of the five dollar gas comes in on your side. Someone should put a fork in this thread.

 

[Belegost]

 

[Captante]

My guess is the holders of the petroleum purse-strings will find a way to jack prices back up north of $4 a gallon sooner rather then later.

 

[Capt Caveman]

Yeah, I only have access to some of the best economists and research analysts in the world. I can make a call to any number of sales people at any bank in the world and get their research within 15mins on any subject I want.

Access to any CFO/CEO/Treasurer of any major bond issuer? No problem.

Yeah, I won't trust heads of some of the largest companies in the world, I'll just read a publication written for Joe Six Pack and depend on that...

lol, you guys are hilarious.

The Saudi's don't give a crap about shale production. It was bound to fail on its own, mainly because of the production decline curve is too steep and ROI to small.

Shale production? Yeah, that's the only thing that lower oil prices is affecting besides Russia, shale production. I suggest you make some phone calls stat.

 

[StrangerGuy]

Its a flash in the pan.

Gas demand is MUCH WEAKER than in the past. I was saying, the way you can tell this is because diesel prices haven't fallen as much. You get a smaller fraction of diesel out of a barrel of oil than you get a fraction of gasoline. People are sitting at home and ordering gifts online and having them trucked around the county instead I suppose. I personally made a huge effort to drive less and I would imagine others did the same. Its just habit now. Driving = $$$ and I better have a reason to be driving.

So Saudi pumped to kill off shale oil. They seem to be already taking ocean rigs and fracking wells offline. This is going to lead to alot of rips up and down in price. I'd actually expect the price to be unstable in general as oppose to any kind new trend. I wouldn't buy an SUV and I still think high MPG is the way to go in the future so I think this is a fluke.

Exactly. Intel won't make another Prescott space heater CPU, car makers won't make less efficient cars etc etc just because oil went $50. The world on the whole is already so well adjusted living with sky high oil prices with ever higher energy efficiency that price drops won't make a significant difference to demand.

 

[sportage]

A lot of things can make the difference.
War, economy, war, taxes, war and more war.
One hard cold clue...
Many republican governors in states with republican governors are already talking about raising the states gas tax due to falling prices.
Sounds fine, maybe, if gas prices were guaranteed to stay low.
But when gas goes back up to $4 a gal, that extra 15 - 25 cent state gas tax can hurt.
And republicans pretend they are anti-tax. yEaH rIgHt....

So one way or another in republican governor controlled states, gas will go up.
OPEC and your friendly state republican governor working hard(ly) for you.