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Investors Don't Believe Low Oil Prices Are "Unequivocally" Good For America
While investors are told day after day that low oil prices are "unequivocally" good for America's economy (pick your number $20, $30, $40 billion tax cut for consumers), it appears they are not buying this big lie (that appears to forget the other side of the equation of capex, jobs, and spending from the Shale Oil miracle). As oil prices push to levels where the majority of US Shale plays become non-economic on a half-cycle basis, markets are voting withtheir money and shale-based stocks are pressing to new lows (down 50-70% in the last few months).
At $75, oil prices are crushing more and more economic scenarios for Tight-Oil...
and equity investors know it...
Charts: Barclays and Bloomberg
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Not the first time shale extraction has been shut down by falling prices.
1984 Redux. OPEC is fearful of price collapse so is artificially low ball price from reserve, wiping is out of alternative oil production. Albertan Tar Sand (Sincrude) is wipe out, America is suck teet of Royal Family of Saudi for 3 decade.
Heavy blow to Denver at the time.
The City of Glenwood Springs CO was "ghosted" practically overnight.
Reminds me of when the grest rail speculation bust in 1890s or so
Hey, somebody's ass has to be gored.
Key Q: How much it thakes for shale extraction to reboot if shut down?
Nice to see Boris is still on the hedge. Always entertaining like russian bear mauling banker.
I'd pay to see that!
I think 2oz of silver woud be a good price.
most make min payment on credit card. Lower gas prices have zero impact on min payment. Most live week to week on credit card debt, they charge gas so lower prices give the poor nothing. Big banks borrow at zero rates, but charge poor 25% interest. Where are Obama and Dems on this rape.
Easy, hard at work screwing over the hated shale play while screwing over the working class together. Brilliant move by the Liberal Technocrats fundamentally transforming America.
Hope, Hope and Change!!!!
How can low oil price NOT be good for Americans? It allows them to drive to McDonalds more, between playing their latest time kill.
Low oil prices does not always mean good for the people because it means slow down in economy. Think shale oil will is no longer profitable which means layoffs at oil fields in North Dakota and elsewhere. More people will join the unemployment line. Yes, it's good for the people who recieves check from the government because as you say they can buy more and drive cheaper to McDonalds but how can the new unemployed drive to McDonalds when they no longer have the ability to afford McDonalds because of loss of wages? It's the same as the past globalization of trades we lost jobs in manufacturing and information technologies and our standard of living has sled down but hey, prices of trinkets from China are cheap but who can afford them without a paying job?
Of course investors in various energy plays are going to squeal. They should stop and consider the bonanza they have been getting since March 2009, while the average guy and the real economy has gotten killed. Trickle UP economics!
If input cost fall then, if you believe in competition, output prices will eventually fall. Net result is deflation and lower earnings
How does one define "price" in a "market" that prevents true price discovery?
TPTB tell you and you say thank you sir may I have another!
Nobody's approached me and told me I was going to be FORCED to invest in shale oil stocks yet.
Truly and which "investors" are we talking about? The Cramer/Gartman sheep or the GS/JPM sheep?
Damn! I just hate paying lower prices at the pump! It really fucks up my day!
Yeah, I prefer the ancient Chinese saying: Boo Fukkin Hu
It's important that you start believing that what's good for you and 99% of Americans like you is bad for the economy. It's the other Chinese saying: Wi Too Lo. Here, let me help you....
You are getting sleepy. Very sleepy. You want to pay more for everything. Deeper and deeper you go. High gas prices are a sign of a growing economy. You are peaceful and tranquil. High oil prices are good for you and your stock portfolio. You feel safe, protected and warm when the prices of energy go higher....
Now I'm going to count backwards from 10 and when you wake up.....
Except high gas prices aren't a sign of a growing economy. It's an artificial global tax to prop up the NWO BRIC bullshit that is going tits up. Now that Russia/China are signing bilateral trade agreements on oil, TPTB are being boxed out of the shakedown and fleeing for the exits. Can't support the artificial prices anymore. IMO, it ain't Wi Too Lo it's Wi Aint Lo Enuf. Everyone just got too complacent with the prices at higher levels that were way overdone.
Most people will appreciate the short-lived tax rebate at the pump. Until Russia is forced into war to prop prices up again.
Normally would agree with you since I just paid $3.08 vs 3.80 just a few weeks ago but,for some reason, I get the feeling I'm merrily picking up loads of flapping fish on the beach.
Miffed
Pittsburgh can go back to being Pittsburgh. America's toilet gateway to the Midwest.
Where are the announcements that the White House is filling the SPR to the tippy top? With all this cheap oil that would be a boon when costs go up, and in the meantime it will help the poor US-based producers.
So much for peak oil.
You mean the point in time when global production hits a peak and begins to decline?
It happened with conventional crude in 2005.
It will happen with unconventional before the decade is out.
Demand is desire coupled with ability to pursue. Pass peak oil, desire doesn't go anywhere, but the ability drops. Oil may be getting cheaper, but people are getting poorer at a much faster rate.
who cares? it's called deflation - tell the investors to get used to it.
consumers are earning less, using less and buying less - invest in that
Deflation
learn it
love it
The average American remains clueless. All they see is the price-at-the-pump. Their reptilian brains can't fathom that the USD is a "PetroDollar"....and as oil goes...eventually so does the petrodollar. Any interim 'strength' of the USD is simply a cog spinning in the bigger machine. For my money, I suspect this is a temporary 'drop'...flush out the weak players, frackers, shale.....and please the CIA in their not-so-covert efforts to cause problems for Russia....and eventaully install a new permanent (and higher) 'floor' for oil prices.
Even with reduced demand....the world still runs on oil. Until that changes, everything else is just Kabuki theater.
CRB (commodity basket) near 4 yr low. It isn't just oil. The global economy (slowdown) 'might' be playing a role
new (fuel efficient) vehicle sales gonna take a hit
prices in my hood have gotten low enough i'm back to driving my old 17mpg pathfinder. Incentive for trading in old gas guzzlers not very hight
And what do I do with the extra cash saved at the pump? Do I buy a Kindle, more shoes, another TV. Nope, just keep paying down the mortgage so when it all falls apart I got some land with a house, some gold, and a little food. What a farce this all is.
You'll never survive tax forfeiture. The municipality WILL get its revenues one way or another, and they don't accept that shiny crap.
Ahem. Ignorant of how stock price affects overall cash flows, I fall back on "The Hudsucker Proxy" for investment advice: DRIVE DOWN THE STOCK TO MAKE BUYBACKS A SNAP!"
What's wrong with having stocks tank 70% in one day, say, thanks to HFT algos? It may matter to the daytrading fools. But to the managers who get products to the shelf, what's the immediate disadvantage aprt from panic over one's personal portfolio? Does a plunge affect short-term loans? "Sorry sir, your biweekly loan of $135,000 to cover payroll has been denied as it appears your firm is worth $1.35."?
Did Barclays and Bloomberg write this piece or just provide the chart fodder?
Fuck the petro dollar and the prehistoric horse corpses it rode in on.
No shit Sherlock! Surely those middle classed americans don't deserve a break in their carbon polluting vehicles. Where is that Carbon Tax bill? Bring that sombich over here no that dingy harry is on the skids. I love it when "investers" tell me what is good for America. Shiiitttt
"Investors Don't Believe Low Oil Prices Are "Unequivocally" Good For America"
WTF...ever heard of that concept 'petrodollar' ? A bit of a no-brainer I think.
How are low oil prices bad for the petrodollar?
What do low oil prices do with the demand for dollars ?
What does low demand for dollars do to the exchange rate ?
What does a low exchange rate do to purchasing power ( imports ) ?
Thanks. I'm still trying to figure this stuff out. Does this bring inflation back home?
Not sure. Ask Yellen maybe.
Disclaimer : I am an amateur.
"The Shale Oil Miracle"... wow.
Shale wants gov't to step in and save them?
Just think of all the Chinese consumer electronics the US public can buy! I doubt very much this will cripple the Russians or the Saudis.
Oil at $36 will cause a shooting war .
This is a "Tragedy of the Commons" type problem .
The commons is the global trading community . This includes currencies .
Without Ostrum Principles , the system collapses into a desperate hunt for relative advantages , tariff wars , etc
See
https://www.academia.edu/9289413/Relative_advantage_leads_to_war_
http://andreswhy.blogspot.com/2014/11/laundry-economics.html
Apologies : inadvertent duplication . And there is no Delete button . (A common complaint in Paternity courts)
Oil at $36 will cause a shooting war .
This is a "Tragedy of the Commons" type problem .
The commons is the global trading community . This includes currencies .
Without Ostrum Principles , the system collapses into a desperate hunt for relative advantages , tariff wars , etc
See
https://www.academia.edu/9289413/Relative_advantage_leads_to_war_
http://andreswhy.blogspot.com/2014/11/laundry-economics.html
Low oil prices will only help the average Merican if the price at the pump gets below $2.00 a gallon. Spending $100 a week in gas for both my cars in absurd. One of the reasons the economy in the 90's was so good was that gas was under a buck. That is when low oil prices will help the average Joe. When it cost $40 to fill a fucking Honda Civic, there is not much money left over for the week. I used to be able to fill BOTH of my tanks in my pickup back then for $40 and drive all month on that. I could drive to NC and back on $100 in a fuel thirsty V8 pickup. Now, it cost me $40 for a week in my four banger. One big problem with the oil price is people, or I should say "traders" or people who pretend to be traders are able to get into the oil futures market. The two big problems are people can buy oil who have no interest in oil except to make money short term and you can buy oil on margin. Get rid of those two things and the price will stabilize more than it is now. We have to take the Paper players out of oil futures. YOU SHOULD HAVE TO BE ABLE TO TAKE DELIVERY OF THE COMMODITY YOU ARE TRADING IN. IF YOU CAN'T TAKE DELIVERY THEN STAY OUT. https://www.youtube.com/watch?feature=player_detailpage&v=B71HytDmEso#t=30
Low oil prices are a result of poor consumption and an economy that is slowing.
People are spending more on Food and Insurance and using cheaper public transporation more, car insurance, gas costs, and car payments are not something average Americans can continue to afford anymore.
My Groccery bill has DOUBLED from last year, and I am eating LESS of the same.