CKA Forums
Login 
canadian forums
bottom
 
 
Canadian Forums

Author Topic Options
Offline
CKA Uber
CKA Uber
 Vancouver Canucks


GROUP_AVATAR
User avatar
Profile
Posts: 24441
PostPosted: Sat Jan 03, 2015 2:29 am
 


Say it with me Harry - "Thank you Koch Brothers"


The Ironies of Oil


"Gasoline prices are on the verge of crashing down to below $2 a gallon. The price of oil may dip below $50 a barrel.

Even with renewed demand from a global economic resurgence, energy prices continue to fall. The U.S. has suddenly become the world’s largest combined producer of oil and natural gas.

That fact — along with a desire to weaken hostile Iran and Russia — has prompted the oil-rich Gulf sheikdoms to keep pumping oil even as the price falls. In their game of petro-chicken, the desperate sheiks hope that either their poorer enemies will run out of cash or that fracking in the U.S. will become unprofitable and cease.

Everyone seems to have forgotten about “peak oil” — the catchphrase of the new millennium.

The world in general, and the United States in particular, supposedly had already burned more oil than was left under the Earth. Under President Barack Obama, gasoline prices had soared. When he entered office in January 2009, gas prices averaged around $1.60 per gallon. Four years later, by spring of 2013, gas prices had climbed beyond $3.50 a gallon.

The Obama administration never much worried about high energy costs. During the 2008 campaign, Obama promised that “under my plan . . . electricity rates would necessarily skyrocket.” Shutting down coal plants and using higher-priced but cleaner natural gas would pave the way for an even pricier mandated wind and solar generation.

In the vice-presidential debates of 2008, Joe Biden mocked Sarah Palin for the supposedly mindless campaign mantra of “Drill, baby, drill.” Biden intoned that “it will take ten years for one drop of oil to come out of any of the wells that are going to be drilled.”

The energy secretary-designate, the professorial Steven Chu, in 2008 had unwisely voiced a widely held but wisely unspoken progressive belief that “somehow we have to figure out how to boost the price of gasoline to the levels in Europe” — or about $9 a gallon.

Just two years ago, when up for reelection, Obama reminded Americans, “We can’t just drill our way to lower gas prices.”

Obama ridiculed the Republican idea of lowering gas to $2 a gallon through new oil-recovery techniques. “They’re already dusting off their three-point plans for $2 gas,” Obama mocked. “I’ll save you the suspense: Step one is drill, step two is drill, and step three is keep drilling.”

Such easy rhetoric was backed by action — or lack of it. The Keystone XL pipeline was put on permanent hold. New fracking leases on federal lands were postponed. Huge areas of oil- and gas-rich federal lands were put off limits. Some blue states stopped fracking. Money poured into solar schemes like Solyndra.

Decreased use of expensive energy was deemed desirable. Cash-strapped commuters would be forced to drive less, thereby advancing the noble cause of curbing supposed man-made global warming. Federal subsidies flowed for high-speed rail. Wind, solar, and other alternate energies could at last become competitive. Cap-and-trade legislation looked as if it might sail through Congress.

Unfortunately for the Obama administration, the new age of sky-high oil prices proved an economic disaster. The natural cycle of recovery never quite followed the end of the recession in mid 2009, as U.S. budget and trade deficits soared.

Abroad, all the wrong countries were empowered as never before.

The late Hugo Chávez used his oil windfall in Venezuela to subsidize subversion throughout Latin America. Petrodollar-rich Russian president Vladimir Putin charted a confident anti-American foreign policy.

Iran used its growing riches to step up progress toward producing a nuclear bomb while upping subsidies to terrorist organizations such as Hezbollah.

Then, finally, oil and gas prices plunged owing to the “drill, baby, drill,” can-do attitude of the private sector. Americans should thank the U.S. oilman — from the drillers in the field to the engineers behind the scenes — who did the impossible. They vastly increased the supply of what was supposedly a permanently declining resource, and thereby helped to crash prices.

Oilmen, not the government, returned hundreds of billions of dollars to American consumers. They, not Ivy League experts and Wall Street grandees, kick-started the economy where federal subsidies had failed to. They, not the policies of the Obama administration or the rhetoric of Secretary of State John Kerry, weakened our enemies.

Almost everything Obama tried for six years in an effort to rev the economy — from near-zero interest rates and $1 trillion annual budget deficits to Obamacare and vast increases in entitlements — has failed. His foreign-policy stances of resets and leading from behind led to chaos and emboldened enemies.

Yet the United States economy is slowly recovering with cheap energy. Consumers have more money. Industries are returning to U.S. soil.

Abroad, spendthrift oil producers such as hostile Iran, Russia, and Venezuela are nearly broke. Friendly rivals such as Japan and the European Union can’t compete with the U.S. energy edge.

What Obama once ridiculed is now saving him from himself — after he had championed policies that nearly destroyed him.

The Greeks had a word for it: irony."



http://www.nationalreview.com/article/3 ... vis-hanson


Offline
CKA Uber
CKA Uber
 Montreal Canadiens
User avatar
Profile
Posts: 13404
PostPosted: Sat Jan 03, 2015 9:11 am
 


Yup. We've just discovered that there is an infinite supply of oil, after all.


Offline
CKA Uber
CKA Uber
User avatar
Profile
Posts: 33492
PostPosted: Sat Jan 03, 2015 9:12 am
 


The Greeks had a word for that too: hubris.


Offline
CKA Uber
CKA Uber


GROUP_AVATAR
User avatar
Profile
Posts: 20892
PostPosted: Sat Jan 03, 2015 9:15 am
 


:roll:

What a load of crap. There are so many half-truths and outright lies in there that it's not worth the paper it's written on.

Quote:
According to more EIA data, total spending by oil (and natural gas) companies grew 11 percent on average per year from 2000-2012, and spending on development activities increased by 5 percent ($18 billion) in 2013. All this culminated in the U.S. production of 7.9 million barrels of crude oil per day in 2013, a level the country hasn’t hit since 1988.

U.S. production is expected to continue rising, to 8.4 million barrels per day in 2014, and 9.1 million barrels per day in 2015.


http://time.com/67163/why-are-u-s-oil-imports-falling/

Anyone who thinks that a measly 1.2 million BPD of production is going to drop prices this much is delusional - the truth is actually buried in your own article.

N_Fiddledog wrote:
...has prompted the oil-rich Gulf sheikdoms to keep pumping oil even as the price falls. In their game of petro-chicken, the desperate sheiks hope that either their poorer enemies will run out of cash or that fracking in the U.S. will become unprofitable and cease.


That is why prices are falling - everyone is producing like crazy and demand has dropped.

And this has absolutely NOTHING to do with falling oil prices

N_Fiddledog wrote:
The U.S. has suddenly become the world’s largest combined producer of oil and natural gas.


Natural gas is irrelevant to this conversation because it is used far less than oil in most industries, especially given the fact that far more electricity is generated from oil than natural gas.

N_Fiddledog wrote:
Everyone seems to have forgotten about “peak oil” — the catchphrase of the new millennium.


Actually, this is EXACTLY what Hubert postulated - once all the easy oil was gone, we'd be so desperate that we'd need to access the hard to get stuff, which is precisely what fracking does.


N_Fiddledog wrote:
Just two years ago, when up for reelection, Obama reminded Americans, “We can’t just drill our way to lower gas prices.”


He was right - it takes the Gulf sheiks to drill our way to lower prices because neither the US nor anyone else in the West can produce enough to satisfy our demand for oil.

That demand is why the US is STILL importing nearly 3 billion barrels of oil each year;

http://www.eia.gov/dnav/pet/hist/LeafHa ... RIMUS1&f=A



N_Fiddledog wrote:
ARAB Oilmen, not US oilmen, returned hundreds of billions of dollars to American consumers. They, not Ivy League experts and Wall Street grandees, kick-started the economy where federal subsidies had failed to. They, not the policies of the Obama administration or the rhetoric of Secretary of State John Kerry, weakened our enemies.


Fixed that for you...


Last edited by bootlegga on Sat Jan 03, 2015 9:24 am, edited 1 time in total.

Offline
CKA Uber
CKA Uber
 Montreal Canadiens
User avatar
Profile
Posts: 13404
PostPosted: Sat Jan 03, 2015 9:17 am
 


... like he sez ↑↑↑ ...


It's kind of hilarious and pathetic that they managed to segue into "Obamacare" from the falling price of oil. I'm surprised that the didn't bring up Bengazi.


Offline
CKA Uber
CKA Uber
User avatar
Profile
Posts: 33492
PostPosted: Sat Jan 03, 2015 9:24 am
 


Can you explain what you mean, Boots? I'm not following.


I think there's a lot of truth to the idea that our economies are built on cheap energy, and since we haven't bothered to find a replacement for oil, they are built on cheap oil. Most recessions have come about because of expensive oil, apparently. (not sure if the last one qualifies). All well and wonderful, except of course for the various problems that oil use brings with it. And, we haven't had stable oil prices for a long time, it yo yos, which makes it hard for govt and business to plan. For instance, just as car companies have started getting a bit more serious about fuel economy, as many gas hogs have gone the way of the do do, now all of a sudden there will be demands for pig mobiles once again. The advances we've made in conservation will get thrown out the window, and when the next spike comes we'll be standing there with our fingers up our ass going "whu happen?"

We'd do a lot better to wean ourselves off this oil dependence - probably make for much stabler economies, instead of this world wide boom bust thing. The world is just Alberta writ large.


Offline
CKA Uber
CKA Uber


GROUP_AVATAR
User avatar
Profile
Posts: 20892
PostPosted: Sat Jan 03, 2015 9:27 am
 


Sorry, I accidently hit submit instead of preview halfway through my post...my bad.


Offline
CKA Uber
CKA Uber
 Vancouver Canucks
User avatar
Profile
Posts: 20878
PostPosted: Sat Jan 03, 2015 10:01 am
 


Jabberwalker wrote:
... like he sez ↑↑↑ ...


It's kind of hilarious and pathetic that they managed to segue into "Obamacare" from the falling price of oil. I'm surprised that the didn't bring up Bengazi.


National Review--they only know the one song.


Offline
CKA Uber
CKA Uber
User avatar
Profile
Posts: 33492
PostPosted: Sat Jan 03, 2015 10:12 am
 


Quote:
There are at least three numbers that you have to remember when we talk about whether falling oil prices are a problem for a country:

The fiscal breakeven: The oil price necessary for a government to avoid running a budget deficit.
The accounting breakeven (or what most people just call the "breakeven"): The oil price necessary for an oil drilling project to be profitable
The cash cost: The oil price necessary for drillers to keep their pre-existing projects operating.

First stop: fiscal math. For countries like the United States that don't generate a great deal of tax revenue from oil production, falling prices are generally good economic news, since cheaper fuel puts more money in consumer profits. But for the oil dependent nations of OPEC, cheap crude is a budget nightmare. And, as Deutsche Bank pointed out in an October analysis, oil producers like Russia, Venezuela, and Nigeria all need prices above $100 a book to balance their books. Even Saudi Arabia needs around $99 to support its spending.

But deficits are a bigger problem for some countries than others. Thanks to their massive dollar reserves, the Saudis can afford to overspend for a while. Russia, too, has a little bit of a cushion. Countries like Nigeria that barely have any reserves are in far greater trouble.

It's much more costly to go hunt for oil in the frozen arctic deep, or to use techniques like fracking and horizontal drilling to extract oil out of U.S. shale deposits, than it its to pump conventional oil straight out of the Arabian desert. As this graph from Morgan Stanley (posted by Business Insider) nicely illustrates, the Middle East indeed has the lowest breakeven prices—generally falling well beneath the $40-a-barrel mark. The number can be far higher in other parts of the world, such as Russia, or in America's shale basins.

Attachment:
Capture.PNG
Capture.PNG [ 393.07 KiB | Viewed 83 times ]



The breakeven price is especially important in the United States, because the unconventional wells that have fueled our domestic oil boom deplete quickly, meaning that companies need to keep drilling new ones to keep production up. If it's suddenly not profitable to do so, then we should expect the flow of crude to taper off (as I wrote last week, that wouldn't necessarily be a bad thing). This is one reason that many analysts think, rightly or wrongly, that the Saudis are essentially waging a war of attrition to drive down U.S. production and preserve their market share. Not so sure American oilmen are ecstatic about this

But even if a pre-existing well stops being profitable based on the cost it took to find and drill, that doesn't mean Exxon or Shell will suddenly shut it down. No, the price to keep your eye on at which oil companies will suddenly start pulling the plug on projects that are already operating is known as the "cash cost"—the bare amount of money necessary to cover daily production, taxes, and marketing. And that figure can be quite low, as shown in this graph from Morgan Stanley. The green tracks the cost including royalties paid to the government, whereas the blue is raw production expense.

Attachment:
Capture.PNG
Capture.PNG [ 330.47 KiB | Viewed 76 times ]



http://www.slate.com/blogs/moneybox/201 ... ouble.html


Offline
Forum Super Elite
Forum Super Elite
User avatar
Profile
Posts: 2366
PostPosted: Sat Jan 03, 2015 10:34 am
 


The idea that a government would engineer higher prices to force people to use public transit for their own good is as evil and destructive a policy as letting drug user OD and die to end the drug problem.

The big let down of the Democrat program was the advancement of solar over nuclear. For a fraction of the cost of the solar subsidies they US could be mass producing nuclear power plants in an industrial scale, for internal use and export. But instead they are importing Chinese manufacturing for expensive and ultimately useless wind and solar gear.


Offline
CKA Uber
CKA Uber
 Vancouver Canucks


GROUP_AVATAR
User avatar
Profile
Posts: 24441
PostPosted: Sun Jan 04, 2015 1:30 pm
 


The below is a clip from a piece in Macleans. You can read the whole thing here...

http://www.macleans.ca/economy/economic ... -surprise/

We'll begin with a letter from another far left bedwetter who is upset Macleans is predicting oil could go down to $25 a barrel.

Quote:
I wonder what will happen first? Maclean’s long-standing claim of a housing market crash in Canada or oil returning to $25 a barrel? One problem with Mr. Hoye’s thesis is that the U.S. cannot export crude by law. So extra production in the U.S. does not reach international markets, but displaces U.S. imports. Should extra Saudi crude be travelling the high seas looking for a home, the Saudis would cut production.


The reply...

"Well, a funny thing happened along the way. Yes, America has an export ban on oil. Yet, despite that, America is now exporting more oil than it has in decades.

Image

This has occurred due to loopholes in the ban, which was put in place after the price shocks caused by the 1970s Arab oil embargo. Companies can sidestep the ban by exporting refined fuel, such as gasoline or diesel, while there is also an allowance for crude exports to Canada. Both types of exports have surged. At the same time, U.S. officials appear to be turning a blind eye as companies sell certain types of lightly processed oil abroad.

As for Saudi Arabia, government officials have made it abundantly clear they are willing to keep on pumping oil and to let prices fall further. It’s part of an urgent gamble that lower prices will kneecap those rivals that have usurped OPEC’s dominance, such as the Canadian oil sands and America’s fracking industry, which both have higher operating costs than Saudi producers. At the end of December, Saudi oil minister Ali al-Naimi said he won’t budge from this commitment to maintain output and defend Saudi Arabia’s market share, even if oil prices fall to US$20 a barrel.

Back to the letter:"

Quote:
For Mr. Hoye’s prediction to come true, a few things would need to happen.
1) The parabolic spike in U.S. production has to continue. Have you ever seen a parabolic chart continue into infinity?


"No, I haven’t. But there is no law that states production has to go on being parabolic forever for an oil glut to form. Besides, as the chart below shows, U.S. oil production was booming for three years before prices reacted. This shakeout has been coming for a while."

Image

Quote:
2) Libya, Iran, Iraq and Kazakhstan crude that has either been offline due to wars or technical problems comes on line simultaneously


"This didn’t happen across the board. Libya’s oil output is one-third of what it was in 2010, and Iran is also struggling. But production in Kazakhstan has been rising in recent years, while Iraq, despite ongoing security concerns, is pumping more oil than it has in years."

Quote:
3) Traders unwind [their futures bets on higher prices] all at once


"That’s exactly what happened, in frantic fashion. The massive unwinding of speculative bets on rising prices helped drive prices lower in the past few months. There’s some evidence that trend is ending, though, with more traders once again betting that prices will rise rather than fall."

Quote:
4) OPEC and Russia refuse to cut supplies in the face of building stockpiles.


"OPEC did just that (see above). Russia, well, Russia is in no position to cut supplies. Falling oil prices, combined with sanctions imposed on it as a result of its aggression in Ukraine, have blown a hole in the country’s economy. Russia is revenue-starved and needs to sell every barrel of crude it can get its oily paws on."

Quote:
5) That entire formations of tight oil and oil from shale will be as prolific as the originally chosen drill locations. I am suspect about the haloes being as productive. I think the sweet spots have been drilled.


This remains the big question, and opinions are divided. Many, including the International Energy Agency, argue that by 2020, supplies of oil locked in shale rock will begin to decline, at which point, U.S. production will taper off, threatening the world once again with an oil shortage crisis.

The flip side is that, as has always been the case with rising commodity prices, human ingenuity will prevail and lead to the development of new extraction technologies, the discovery of untapped energy sources and higher productivity (thus lower costs) in the energy sector.

As an aside, there’s been a fair bit written lately about the work of Julian Simon, a business professor at the University of Maryland whom Wired magazine once called the Doomslayer. In 1980, Simon entered into a now-famous bet with ecologist Paul Ehrlich over the future direction of commodity prices, as measured by a basket of five metals. Ehrlich—who, in his 1975 book The End of Affluence, predicted resource scarcity would soon lead to a Malthusian catastrophe of food riots, martial law and nuclear war—took the view that resource production had peaked and would drive commodity prices higher by 1990. Simon, who had everlasting faith in human ingenuity, wagered prices would instead fall, which they did. As he wrote in his 1980 book, The Ultimate Resource (by which he meant “people—skilled, spirited and hopeful people”): “The history of energy economics shows that, in spite of troubling fears in each era of running out of whichever source of energy was important at that time, energy has grown progressively less scarce, as shown by long-run falling energy prices. . . . The long-run trends in energy prices, together with the explanatory theory of induced innovation, promise continually decreasing scarcity and cost—just the opposite of popular opinion.” (You can read his book here.)

Again, that was in 1980. Incidentally, the real price of oil, adjusting for inflation, is now more than 40 per cent below where it was when Simon and Ehrlich made their commodity bet.

Finally, back to the letter’s conclusion:


Quote:
I don’t know much about crude oil markets—having degrees in geology, economics, formerly working as an investment banker, futures trader and geologist—but I suspect $25 oil has a lot of headwinds.


Since we’re now a little more than $25 away from hitting that price, those headwinds don’t seem nearly as strong anymore.

http://www.macleans.ca/economy/economic ... -surprise/


Offline
CKA Uber
CKA Uber
 Vancouver Canucks


GROUP_AVATAR
User avatar
Profile
Posts: 24441
PostPosted: Sun Jan 04, 2015 1:41 pm
 


The far left appears to be upset that the price of oil is going down at present. They have a lot of angry little explanations and diversions from the main point.

The main point is "If things are getting better, neither Obama nor any "Progressive" policy had anything to do with it. Claims that are, or will be made claiming credit for any economic improvement are nothing more than the excrement of the bull."


Offline
CKA Uber
CKA Uber
 Vancouver Canucks


GROUP_AVATAR
User avatar
Profile
Posts: 24441
PostPosted: Sun Jan 04, 2015 2:04 pm
 


And just in case you missed it the first time...

Quote:
As for Saudi Arabia, government officials have made it abundantly clear they are willing to keep on pumping oil and to let prices fall further.

It’s part of an urgent gamble that lower prices will kneecap those rivals that have usurped OPEC’s dominance, such as the Canadian oil sands and America’s fracking industry, which both have higher operating costs than Saudi producers.


BTW, stay tuned...The new Republican Senate begins it's move to sign on to Keystone this week.

http://legalinsurrection.com/2015/01/im ... %B7tion%29


Offline
CKA Uber
CKA Uber


GROUP_AVATAR
User avatar
Profile
Posts: 20892
PostPosted: Sun Jan 04, 2015 5:30 pm
 


N_Fiddledog wrote:
As for Saudi Arabia, government officials have made it abundantly clear they are willing to keep on pumping oil and to let prices fall further. It’s part of an urgent gamble that lower prices will kneecap those rivals that have usurped OPEC’s dominance, such as the Canadian oil sands and America’s fracking industry, which both have higher operating costs than Saudi producers. At the end of December, Saudi oil minister Ali al-Naimi said he won’t budge from this commitment to maintain output and defend Saudi Arabia’s market share, even if oil prices fall to US$20 a barrel.


N_Fiddledog wrote:
Besides, as the chart below shows, U.S. oil production was booming for three years before prices reacted.


Translation: American oilmen had NOTHING to do with the current decline in price.

As I said, your article is so full of holes it looks like Swiss Cheese...


Offline
CKA Uber
CKA Uber
 Vancouver Canucks


GROUP_AVATAR
User avatar
Profile
Posts: 24441
PostPosted: Mon Jan 05, 2015 2:04 am
 


No, the articles are fine. Are you sure you understand what they're saying?

Surely you don't actually believe Saudis just woke up one morning and said "Let's drive down the price of oil, just because..."

You give no reason why the Saudis and their buddies might do this. You just get angry at anybody who does offer an explanation.

OPEC didn't just drive gas prices down as a Christmas gift. The problem with your critique is it appears to suggest these things happen in a vacuum. That, of course, does not make sense.

If you do have a better reason than what the articles offer for why oil people might decide to drive down oil prices I'm sure we'd love to hear it.

For now though, the articles suggest OPEC wants to go back to go the old days when they had the monopoly say on what oil prices did. They want to destroy the competition.

There's evidence of their steadily mounting fear of fracking, and willingness to do something about it. It increased over the three years shown on the graph. Off the top of my head there was the financing of the Matt Damon anti-fracking movie, and there was that Qatari prince who was advising his board something had to be done. (That last one is going to be hard to find, but I'll get on it if you want to insist).

In the meantime though, here's a sidebar issue. Just cause it's interesting.

Oil slump causes barrel-load of uncertainty for Canadian economy

It's an opinion piece from the Vancouver Province. The guy is examining possible effects of these plummeting oil prices on the Canadian economy. Overall he sounds optimistic.


Last edited by N_Fiddledog on Mon Jan 05, 2015 2:29 am, edited 1 time in total.

Post new topic  Reply to topic  [ 25 posts ]  1  2  Next



Who is online

Users browsing this forum: No registered users and 1 guest




 
     
All logos and trademarks in this site are property of their respective owner.
The comments are property of their posters, all the rest © Canadaka.net. Powered by © phpBB.