Oil Below $108

Off Topic Politics & World Issues
61

[quote]ALDurr wrote:
rainjack wrote:
ALDurr wrote:
Breaking news:

[i]OPEC decides to curb overproduction
By Associated Press
12 HOURS AGO

VIENNA, Austria - OPEC oil ministers have decided to curb overproduction by more than 500,000 barrels.

The move is a compromise meant to avoid new turmoil in oil markets while at the same time reflecting OPEC attempts to prevent prices from falling too far. Crude prices have dropped nearly 30 percent since spiking to nearly $150 a barrel in July.

An OPEC statement issued after oil ministers ended their meeting early Wednesday said the organization agreed to produce 28.8 million barrels a day. OPEC President Chakib Khelil said that quota in effect meant that member countries agreed to cut back 530,000 barrels a day in overproduction…[/i]

http://finance.comcast.net/www/news.html?x=http://www.origin.comcast.akadns.net/data/news/2008/09/09/1054942.xml

This is pathetic on OPEC’s part. But it was largely only a symbolic cutback. 500,000 barrels a day? Hardly newsworthy - but like I was saying, the press has a gushing orgasm hen the news is bad. It is basically only cutting back to where they were before Bush asked them to increase production earlier in the summer.

So far today, oil is still under $5/bl.

I agree, but did you see the part where he states that people are used to $100/barrel for oil? Won’t that affect the bet on here?[/quote]

I made a typo - oil is under 105/bl. Actually, it is under 103.

I have to admit I didn’t read your link. I had already read about it this morning when I was doing my daily market research.

I don’t know at what point people are "used’ to an oil price. It’s my observation that people don’t really care about oil itself, they are far more concerned about the price of self-serve unleaded at the pump.

Those prices are pegged to one another, but I would wager that if the oil companies actually had a couple more refineries built, that gas prices would fall to a lower level.

I think that people are not going to throw a titty fit over $3.00 gas, but tend to get grumpier and grumpier as it rises above $3, and will stop driving so much when it hits $4.

62

[quote]rainjack wrote:
ALDurr wrote:
rainjack wrote:
ALDurr wrote:
Breaking news:

[i]OPEC decides to curb overproduction
By Associated Press
12 HOURS AGO

VIENNA, Austria - OPEC oil ministers have decided to curb overproduction by more than 500,000 barrels.

The move is a compromise meant to avoid new turmoil in oil markets while at the same time reflecting OPEC attempts to prevent prices from falling too far. Crude prices have dropped nearly 30 percent since spiking to nearly $150 a barrel in July.

An OPEC statement issued after oil ministers ended their meeting early Wednesday said the organization agreed to produce 28.8 million barrels a day. OPEC President Chakib Khelil said that quota in effect meant that member countries agreed to cut back 530,000 barrels a day in overproduction…[/i]

http://finance.comcast.net/www/news.html?x=http://www.origin.comcast.akadns.net/data/news/2008/09/09/1054942.xml

This is pathetic on OPEC’s part. But it was largely only a symbolic cutback. 500,000 barrels a day? Hardly newsworthy - but like I was saying, the press has a gushing orgasm hen the news is bad. It is basically only cutting back to where they were before Bush asked them to increase production earlier in the summer.

So far today, oil is still under $5/bl.

I agree, but did you see the part where he states that people are used to $100/barrel for oil? Won’t that affect the bet on here?

I made a typo - oil is under 105/bl. Actually, it is under 103.

I have to admit I didn’t read your link. I had already read about it this morning when I was doing my daily market research.

I don’t know at what point people are "used’ to an oil price. It’s my observation that people don’t really care about oil itself, they are far more concerned about the price of self-serve unleaded at the pump.

Those prices are pegged to one another, but I would wager that if the oil companies actually had a couple more refineries built, that gas prices would fall to a lower level.

I think that people are not going to throw a titty fit over $3.00 gas, but tend to get grumpier and grumpier as it rises above $3, and will stop driving so much when it hits $4.
[/quote]

I didn’t get too pissed off when gas went to $3/gallon. I expected that it eventually would. I just thought it would be more of a gradual increase. But when it was close to $4/gallon at one point, I did get pissed off.

63

[quote]ALDurr wrote:
I didn’t get too pissed off when gas went to $3/gallon. I expected that it eventually would. I just thought it would be more of a gradual increase. But when it was close to $4/gallon at one point, I did get pissed off.[/quote]

I think that is true pretty much across the country.

The “experts” are looking at about 50 different reasons the economy is in the tank - there is only one. And the first presidential candidate to use “it’s the gas prices, stupid”, as a campaign slogan will probably win.

The average american could give a shit about the Fan/Fred problem. Give them 2.50 gas prices, and they will be happy little campers buying shit like there’s no tomorrow.

64

[quote]rainjack wrote:
ALDurr wrote:
I didn’t get too pissed off when gas went to $3/gallon. I expected that it eventually would. I just thought it would be more of a gradual increase. But when it was close to $4/gallon at one point, I did get pissed off.

I think that is true pretty much across the country.

The “experts” are looking at about 50 different reasons the economy is in the tank - there is only one. And the first presidential candidate to use “it’s the gas prices, stupid”, as a campaign slogan will probably win.

The average american could give a shit about the Fan/Fred problem. Give them 2.50 gas prices, and they will be happy little campers buying shit like there’s no tomorrow.
[/quote]

RJ, do you realize that we are having a civil exchange and haven’t yelled at each other? I’m not used to this! At least call me an asshole or something so I know that the world hasn’t gone completely crazy!

65

[quote]ALDurr wrote:
rainjack wrote:
ALDurr wrote:
I didn’t get too pissed off when gas went to $3/gallon. I expected that it eventually would. I just thought it would be more of a gradual increase. But when it was close to $4/gallon at one point, I did get pissed off.

I think that is true pretty much across the country.

The “experts” are looking at about 50 different reasons the economy is in the tank - there is only one. And the first presidential candidate to use “it’s the gas prices, stupid”, as a campaign slogan will probably win.

The average american could give a shit about the Fan/Fred problem. Give them 2.50 gas prices, and they will be happy little campers buying shit like there’s no tomorrow.

RJ, do you realize that we are having a civil exchange and haven’t yelled at each other? I’m not used to this! At least call me an asshole or something so I know that the world hasn’t gone completely crazy![/quote]

Patience, young grasshopper - patience. Your time will come.

66

OPEC wants to control prices by cutting production, but there is a little problem with that. When they cut production, it is showing that the market is strong.

There is the possibility that it could backfire on them. It also means they have that much more of an ability to boost production at any time.

In other words investors may see this as signs of a strong supply, and OPEC fears of overproduction.

67

[quote]The Mage wrote:
OPEC wants to control prices by cutting production, but there is a little problem with that. When they cut production, it is showing that the market is strong.

There is the possibility that it could backfire on them. It also means they have that much more of an ability to boost production at any time.

In other words investors may see this as signs of a strong supply, and OPEC fears of overproduction.[/quote]

OPEC want to stop the slide in the price per barrel and add some stability to the market - I believe this is how the market will asses this decision. OPEC (Saudi) have always had the potential to add millions of barrels to the market if they desired by simply opening some valves, they chose not to.

Personally I believe Oil at 100/barrel is a reasonable price and I agree with OPEC’s position on stability. Oil companies are not going to invest and risk billions on new developments with a wildly fluctuating market price.

If the price of oil does start to fall off significantly in conjunction with no new oil coming into the market is a tell tale sign of a global slowdown/recession. Let’s hope it stays at $100.

68

[quote]JamFly wrote:

Personally I believe Oil at 100/barrel is a reasonable price and I agree with OPEC’s position on stability. Oil companies are not going to invest and risk billions on new developments with a wildly fluctuating market price.

If the price of oil does start to fall off significantly in conjunction with no new oil coming into the market is a tell tale sign of a global slowdown/recession. Let’s hope it stays at $100.[/quote]

There was a study just let out in the last couple of days that proved the huge jump in oil prices was not nearly as much a factor of S/D as it was market manipulation by speculators.

However, it makes no sense that OPEC would encourage the US, or any other country with domestic oil reserves, to explore. OPEC should want the price so low as to discourage that.

OPEC wants more money. Plain and simple. They have not made a sound business decision since their inception. The only reason OPEC was formed was to stop countries from undercutting each other.

69

[quote]The Mage wrote:
OPEC wants to control prices by cutting production, but there is a little problem with that. When they cut production, it is showing that the market is strong.

There is the possibility that it could backfire on them. It also means they have that much more of an ability to boost production at any time.

In other words investors may see this as signs of a strong supply, and OPEC fears of overproduction.[/quote]

Let me get this straight, if they increased production, you’d have seen it as supporting your oil@$80 theory. If they cut production, you say that the market is strong and imply that prices will fall regardless.

I really doubt any of that is going to happen.

70

[quote]lixy wrote:

Let me get this straight, if they increased production, you’d have seen it as supporting your oil@$80 theory. If they cut production, you say that the market is strong and imply that prices will fall regardless.

I really doubt any of that is going to happen.[/quote]

Actually I was paraphrasing an economist who explained why cutting oil production doesn’t always work, and sometimes backfires.

There is history to this.

71

[quote]rainjack wrote:
JamFly wrote:

Personally I believe Oil at 100/barrel is a reasonable price and I agree with OPEC’s position on stability. Oil companies are not going to invest and risk billions on new developments with a wildly fluctuating market price.

If the price of oil does start to fall off significantly in conjunction with no new oil coming into the market is a tell tale sign of a global slowdown/recession. Let’s hope it stays at $100.

There was a study just let out in the last couple of days that proved the huge jump in oil prices was not nearly as much a factor of S/D as it was market manipulation by speculators.

However, it makes no sense that OPEC would encourage the US, or any other country with domestic oil reserves, to explore. OPEC should want the price so low as to discourage that.

OPEC wants more money. Plain and simple. They have not made a sound business decision since their inception. The only reason OPEC was formed was to stop countries from undercutting each other.

[/quote]

When we talk about Opec we are really talking about Saudi - sure you have many other countries in there, but the Saud’s are really the controlling infuence. It’s not about money for the Saud’s they have more money than the know what to do with. It’s about control and security and it’s also about ensuring that they (as a nation) benefit from their resources which the rest of the world needs for many years to come - they are a pretty smart bunch, look at the Norwegians they have done exactly the same thing with great results for their population. Contrast this with the UK and the North Sea, Margaret Thatcher could not send the UK’s natural resources across the pond fast enough. We are now paying for that in higher prices (I believe the price at the pump in Saudi is somewhere around 50cents a gallon and they do not have income tax).

72

Differing OPEC countries have differing ideas, but the Saudis have mentioned a dislike of oil over $100 a barrel in the past specifically because it spurs development of resources elsewhere.

73

Right now, oil is trading at under $102/bl. This is after the OPEC decided to cut back a whopping 500K barrels per day.

Oil will be below $100 by Monday, if not today.

Kinda makes me wish I had shorted oil back in July. I’d be stinkin’ rich by now.

It’s always fun to read lixy’s pathetic attempts at understanding economics - almost as fun as reading her bloviations about US politics.

74

[quote]The Mage wrote:
Differing OPEC countries have differing ideas, but the Saudis have mentioned a dislike of oil over $100 a barrel in the past specifically because it spurs development of resources elsewhere. [/quote]
Your last sentence was what I was trying to say.

75

[quote]JamFly wrote:
rainjack wrote:
JamFly wrote:

Personally I believe Oil at 100/barrel is a reasonable price and I agree with OPEC’s position on stability. Oil companies are not going to invest and risk billions on new developments with a wildly fluctuating market price.

If the price of oil does start to fall off significantly in conjunction with no new oil coming into the market is a tell tale sign of a global slowdown/recession. Let’s hope it stays at $100.

There was a study just let out in the last couple of days that proved the huge jump in oil prices was not nearly as much a factor of S/D as it was market manipulation by speculators.

However, it makes no sense that OPEC would encourage the US, or any other country with domestic oil reserves, to explore. OPEC should want the price so low as to discourage that.

OPEC wants more money. Plain and simple. They have not made a sound business decision since their inception. The only reason OPEC was formed was to stop countries from undercutting each other.

When we talk about Opec we are really talking about Saudi - sure you have many other countries in there, but the Saud’s are really the controlling infuence. It’s not about money for the Saud’s they have more money than the know what to do with. It’s about control and security and it’s also about ensuring that they (as a nation) benefit from their resources which the rest of the world needs for many years to come - they are a pretty smart bunch, look at the Norwegians they have done exactly the same thing with great results for their population. Contrast this with the UK and the North Sea, Margaret Thatcher could not send the UK’s natural resources across the pond fast enough. We are now paying for that in higher prices (I believe the price at the pump in Saudi is somewhere around 50cents a gallon and they do not have income tax).[/quote]

Having a resource does not make you a genius.

It reminds me of the dot com days. I had several clients - older ladies, with a lot of extra cash - who started an investment club. They couldn’t make a mistake from 1999 - 2000. Not because they were smart, but because of the market. Hell, a drunk, blindfolded spider monkey could get rich picking stocks back then.

That’s the same way OPEC is right now.

As long as oil is over $60/barrel - the US has an incentive to explore and improve technologies domestically.

And because of oil soaring so high recently, further exposing our weakness, I would bet that the incentive to increase domestic production regardless of the world price of LSC.

76

[quote]lixy wrote:
The Mage wrote:
OPEC wants to control prices by cutting production, but there is a little problem with that. When they cut production, it is showing that the market is strong.

There is the possibility that it could backfire on them. It also means they have that much more of an ability to boost production at any time.

In other words investors may see this as signs of a strong supply, and OPEC fears of overproduction.

Let me get this straight, if they increased production, you’d have seen it as supporting your oil@$80 theory. If they cut production, you say that the market is strong and imply that prices will fall regardless.

I really doubt any of that is going to happen.[/quote]

That could happen, they cut 500,000 today we could still see the price slide due to falling demand in the east - which would be another indicator of a global recession.

77

[quote]rainjack wrote:
JamFly wrote:
rainjack wrote:
JamFly wrote:

Personally I believe Oil at 100/barrel is a reasonable price and I agree with OPEC’s position on stability. Oil companies are not going to invest and risk billions on new developments with a wildly fluctuating market price.

If the price of oil does start to fall off significantly in conjunction with no new oil coming into the market is a tell tale sign of a global slowdown/recession. Let’s hope it stays at $100.

There was a study just let out in the last couple of days that proved the huge jump in oil prices was not nearly as much a factor of S/D as it was market manipulation by speculators.

However, it makes no sense that OPEC would encourage the US, or any other country with domestic oil reserves, to explore. OPEC should want the price so low as to discourage that.

OPEC wants more money. Plain and simple. They have not made a sound business decision since their inception. The only reason OPEC was formed was to stop countries from undercutting each other.

When we talk about Opec we are really talking about Saudi - sure you have many other countries in there, but the Saud’s are really the controlling infuence. It’s not about money for the Saud’s they have more money than the know what to do with. It’s about control and security and it’s also about ensuring that they (as a nation) benefit from their resources which the rest of the world needs for many years to come - they are a pretty smart bunch, look at the Norwegians they have done exactly the same thing with great results for their population. Contrast this with the UK and the North Sea, Margaret Thatcher could not send the UK’s natural resources across the pond fast enough. We are now paying for that in higher prices (I believe the price at the pump in Saudi is somewhere around 50cents a gallon and they do not have income tax).

Having a resource does not make you a genius.

It reminds me of the dot com days. I had several clients - older ladies, with a lot of extra cash - who started an investment club. They couldn’t make a mistake from 1999 - 2000. Not because they were smart, but because of the market. Hell, a drunk, blindfolded spider monkey could get rich picking stocks back then.

That’s the same way OPEC is right now.

As long as oil is over $60/barrel - the US has an incentive to explore and improve technologies domestically.

And because of oil soaring so high recently, further exposing our weakness, I would bet that the incentive to increase domestic production regardless of the world price of LSC.

[/quote]

There are many countries who have squandered their resources (look at Africa) Saudi and those in Opec are managing theirs in a controlled way and have effectively got the US and others by the short and curlies that’s the point I was trying to make.

The major problems that the US has with increasing its domestic production is that it’s expensive (profound water and drilling depths), risky (new and untried technology) and ecologically and politically risky (current election campaign issues) - there is no easy solution, and that is why world oil prices will remain high.

78

[quote]JamFly wrote:
The major problems that the US has with increasing its domestic production is that it’s expensive (profound water and drilling depths), risky (new and untried technology) and ecologically and politically risky (current election campaign issues) - there is no easy solution, and that is why world oil prices will remain high.
[/quote]

As I said earlier, it becomes cost effective to increase domestic exploration when oil is over $60/barrel. Last I checked it was somewhere in the $101 - $102 range, so expense is not much of a barrier.

Risk? How much risk is involved in drilling offshore, ANWAR, and in the Dakotas? We know it’s there, it is only a matter of drilling the wells, and hooking them up to the massive pipeline networks already in oplace.

Ecological concerns means dick. If we have oil, drill it in the safest way possible, but get the shit out of the ground.

What political risk? Both candidates are in favor of drilling. No risk, unless you are running for office in a district filled with the tree hugging birkenstock crowd.

If spply is increased domestically, then we relieve the world of 13% of the demand for ME oil. Going to compressed NG, will further reduce the need for OPEC crude. Getting as many nuclear power sites on line as fast as possible will do even more damage.

the reason oil is so high is because of China’s new found thirst for it, and our laziness.

79

[quote]rainjack wrote:

the reason oil is so high is because of China’s new found thirst for it, and our laziness.

[/quote]

I agree completely. Since we tend to be a reactive society instead of a proactive society things like this will always happen.

Lazy might be a little harsh though. Capitalism tends to work this way. Things won’t change until it becomes profitable to explore alternatives. Finally we’ve hit that threshold where companies think it is worthwhile.

80

[quote]AssOnGrass wrote:
rainjack wrote:

the reason oil is so high is because of China’s new found thirst for it, and our laziness.

I agree completely. Since we tend to be a reactive society instead of a proactive society things like this will always happen.

Lazy might be a little harsh though. Capitalism tends to work this way. Things won’t change until it becomes profitable to explore alternatives. Finally we’ve hit that threshold where companies think it is worthwhile.[/quote]

Maybe lazy is a bit harsh. Maybe chicken shit is a better term, since this country is unique in that it is the ONLY industrialized nation on the planet that is being held hostage by radical environmentalism.

Oil has been over $60/ barrel for quite some time, at which price we should have been cranking up the wildcatters. But the enviro-whackos won’t let us drill off shore, in ANWAR, or anywhere else.

We are thirty years behind the rest of the world when it comes to the use of nuclear power.

As much as I dislike T. Boone - I agree 100% with his desire to move towards compressed natural gas. We have more NG than we can possibly ever use, and it is a much cleaner fuel than gasoline.