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"Whiplash" & The Death Of The Last Industrialist
Submitted by Dmitry Orlov via Club Orlov blog,
Over the course of 2014 the prices the world pays for crude oil have tumbled from over $125 per barrel to around $45 per barrel now, and could easily drop further before heading much higher before collapsing again before spiking again. You get the idea. In the end, the wild whipsawing of the oil market, and the even wilder whipsawing of financial markets, currencies and the rolling bankruptcies of energy companies, then the entities that financed them, then national defaults of the countries that backed these entities, will in due course cause industrial economies to collapse. And without a functioning industrial economy crude oil would be reclassified as toxic waste. But that is still two or three decades off in the future.
In the meantime, the much lower prices of oil have priced most of the producers of unconventional oil out of the market. Recall that conventional oil (the cheap-to-produce kind that comes gushing out of vertical wells drilled not too deep down into dry ground) peaked in 2005 and has been declining ever since. The production of unconventional oil, including offshore drilling, tar sands, hydrofracturing to produce shale oil and other expensive techniques, was lavishly financed in order to make up for the shortfall. But at the moment most unconventional oil costs more to produce than it can be sold for. This means that entire countries, including Venezuela's heavy oil (which requires upgrading before it will flow), offshore production in the Gulf of Mexico (Mexico and US), Norway and Nigeria, Canadian tar sands and, of course, shale oil in the US. All of these producers are now burning money as well as much of the oil they produce, and if the low oil prices persist, will be forced to shut down.
An additional problem is the very high depletion rate of “fracked” shale oil wells in the US. Currently, the shale oil producers are pumping flat out and setting new production records, but the drilling rate is collapsing fast. Shale oil wells deplete very fast: flow rates go down by half in just a few months, and are negligible after a couple of years. Production can only be maintained through relentless drilling, and that relentless drilling has now stopped. Thus, we have just a few months of glut left. After that, the whole shale oil revolution, which some bobbleheads thought would refashion the US into a new Saudi Arabia, will be over. It won't help that most of the shale oil producers, who speculated wildly on drilling leases, will be going bankrupt, along with exploration and production companies and oil field service companies. The entire economy that popped up in recent years around the shale oil patch in the US, which was responsible for most of the growth in high-paying jobs, will collapse, causing the unemployment rate to spike.
It bears pointing out that the excess inventory of oil that has precipitated this price collapse is not particularly large. It all started with a concerted effort by Saudi Arabia and the US to dump oil on the international market, to drive down the price. The leadership in the US knows full well that their days as the world's largest oil producer are numbered in days or months, not years. They realize what a major economic hangover will result from the collapse of shale oil production. The Canadians, realizing that their tar sands adventure is likewise nearing its end, want to play along.
The game they are playing is basically a game of chicken. If everybody pumps all the oil they can regardless of the price, then at some point one of two things will happen: shale oil production will collapse, or other producers will run out of money, and their production will collapse. The question is, Which one of these will happen first? The US is betting that the low oil prices will destroy the governments of the three major oil producers that are not under their political and/or military control. These are Venezuela, Iran and, of course, Russia. These are long shots, but, having no other cards to play, the US is desperate. Is Venezuela enough of a prize? Previous attempts at regime change in Venezuela failed; why would this one succeed? Iran has learned to survive in spite of western sanctions, and maintains trade links with China, Russia and quite a few other countries to work around them. In the case of Russia, it is as yet unclear what fruit, if any, western policies against it will bear. For example, if Greece decides to opt out of the European Union in order to get around Russia's retaliatory sanctions against the EU, then it will become entirely unclear who has actually sanctioned whom.
Of course, toppling the governments of all three of these petro-states, destroying them economically, “privatizing” their oil resources and pumping them dry free of charge using foreign labor would be just the shot in the arm the US needs. But, if you've been following along, it appears that the US doesn't always get what it wants, and of late hardly at all. Which recent US foreign policy gambit has actually paid off the way it was supposed to? Hmm...
And so, for now, all the oil producers are continuing to pump flat out. Some producers have the financial cushion to produce at a loss, and will do so to protect their market share. Other producers have already sunk the money into drilling the wells and have paid back enough of the loans while the oil price was high to continue producing profitably even at the lower price. Lastly, a number of producers (with Russia in the lead) can make a small profit even at $25-30 per barrel (if it weren't for taxes and tariffs).
Each producer has a slightly different reason to continue pumping flat out. A lot has been said about the US and Saudi Arabia colluding to drive down the price of oil. But the collusion theory can be sliced away with Occam's Razor, since they would be expected to behave exactly the same even without colluding.
The US is making a desperate attempt to knock over a petro-state or two or three before its shale oil runs out, with the Canadians, their tar sands now unprofitable, hitching a ride on its coat-tails, because if this attempt doesn't work, then it's lights out for the empire. But none of their recent gambits have worked. This is the winter of imperial discontent, and the empire is has been reduced to pulling pathetic little stunts that would be quite funny if they weren't also sinister and sad. Take, for instance, the words spoken by the US State Department's remote-controlled Ukrainian prime minister Yatsenyuk in Berlin recently: it turns out that the USSR invaded Nazi Germany, not the other way around! We are coming up on the 70th anniversary of the Soviet victory over Nazi Germany; and so there is no better time to do—what exactly? The Russians are confused. But the Germans took this howler on board and stayed mum, so score one for the empire!
Or take the Charlie Hebdo psy-ops in Paris, which, for anyone paying attention, was eerily reminiscent of the Boston Marathon bombing almost two years ago. Boston still hasn't got rid of all of the idiotic “Boston strong” stickers (no, Boston was not destroyed by a few firecrackers and a few amputee actors bursting bags of fake blood to pretend that they just had a leg blown off). And now Paris is festooned with eerily similar "I am Charlie" stickers. Killing a handful of innocents is, of course, standard procedure: few real atrocities help render the “conspiracy theory” version of the events unthinkable for anyone under imperial mind control because, you see “They are the good guys” and “good guys” don't do such things. But that mind control is slipping away, and even some national leaders—such as Turkey's Erdogan—publicly declared that the event had been staged. Also similarly, the supposed perpetrators were summarily executed by the police before anyone could find out anything about them. It's become quite clear by now that such events are being cooked up by the same bunch of not-terribly-creative hacks. They seem to be recycling the PowerPoints: delete Boston; insert Paris. But the French have defended their right to insult Moslems (and Christians) with impunity (but these rights are sure to be taken away when nobody is looking)—but not the inexplicably important Jews or gays, mind you, because that will get you a prison term. Score another one for the empire!
Or take the shoot-down of Malaysia's flight MH17 over Eastern Ukraine earlier this year. The western public officials and press instantaneously blamed "Putin-supported rebels" with the shoot-down. When the results of the ensuing investigation lead to a different conclusion, they were made secret. But now the Russians have a Ukrainian defector in witness protection who has identified the Ukrainian pilot who shot down the airliner, using an air-to-air missile fired from a fighter jet. Since the rebels have no air force, an air-to-air missile was an unusual bit of ordnance for the Ukrainians, and was clearly loaded up just for this occasion. So we know who, how, and why; the only remaining question is, for whom; bets are, the hit was ordered from Washington. This was big news in Russia, but western media has self-censored the story out of existence and, whenever the topic is mentioned, continues to repeat the "Putin did it" mantra, so... score another one for empire!
But a bunch of deluded people muttering to themselves in a dark corner, while the rest of the world points at them and laughs, does not an empire make. With this level of performance, I would venture to guess that nothing the empire tries from here on will work to its satisfaction.
Saudi Arabia is generally displeased with the US, because the US has been failing at its job of policing the neighborhood and generally keeping a lid on things. Afghanistan is reverting to Talebanistan, Iraq has ceded territory to ISIS and now only controls the territory of the bronze age kingdoms of Akkad and Sumer, Libya is in a state of civil war, Egypt has been “democratized” into a military dictatorship, Turkey (a NATO member and a EU candidate member) is now trading primarily with Russia, the mission to topple Syria's Assad is in shambles, the US “partners” in Yemen have just been overthrown by Shiite militiamen, and now there is ISIS, initially organized and trained by the US, threatening to destroy the House of Saud. Add to that that the US-Saudi joint venture to destabilize Russia by formenting terrorism in Northern Caucasus has completely failed. It couldn't organize even a single terrorist action to disrupt the Sochi Olympics. (Saudi Arabia's Prince Bandar bin Sultan lost his job over that fiasco.) And so the Saudis are pumping flat out not so much to help the US as for other, more obvious reasons: to drive out high-priced producers (US included) and to maintain their market share. They are also sitting on a stockpile of US dollars, which they want to put to good use while they are still worth something.
Russia is pumping the usual amount because there is really no reason to stop and plenty of reasons to continue. Russia is a low-price producer, and can wait out the US. It is also sitting on a large stockpile of dollars, which might as well get used up while they are still worth something. Russia's greatest asset is not its oil but the patience of its people: they understand that they will go through a difficult patch as they scramble to replace imports (from the west especially) with domestic production and other sources. They can afford to take a loss; they will make it all back once the price of oil recovers.
Because it will recover. The fix for low oil prices is... low oil prices. Past some point high-priced producers will naturally stop producing, the excess inventory will get burned up, and the price will recover. Not only will it recover, but it will probably spike, because a country littered with the corpses of bankrupt oil companies is not one that is likely to jump right back into producing lots of oil while, on the other hand, beyond a few uses of fossil fuels that are discretionary, demand is quite inelastic. And an oil price spike will cause another round of demand destruction, because the consumers, devastated by the bankruptcies and the job losses from the collapse of the oil patch, will soon be bankrupted by the higher price. And that will cause the price of oil to collapse again.
And so on until the last industrialist dies. His cause of death will be listed as “whiplash”: the “shaken industrialist syndrome,” if you will. Oil prices too high/low in rapid alternation will have caused his neck to snap. Some artisans will collect a bit of oil from some slowly oozing old wells, refine it using clay pots heated with wood, and use it to power an antique hearse that will take the planet's last industrialist to the industrialist boneyard.
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so time to buy low costs oil producers with low leverage of balancesheet..
Russian oil producers looks beaten to heavy and offer good risk/reaward opportunity/
http://prudentvalueinvestor.blogspot.com
Forget Russian oil producers, I get to drive my 1970 Boss 429 every day.
American demand for gasoline has been in secular decline since 2005, and the decline will continue from now on. Smaller more efficient cars begat hybrids begat electric cars.
The golden age of oil is over.
Pump it out now while you can still get $50.
Bend over.
.
electric cars - coal fired cars that can't drive for more than a few hours before having to stop for hours to charge with more burning coal.
You don't know what you are talking about.
If not from plugging in somewhere(to the grid, ie coal fired power plant).
Then where does this recharging electricity come from?
Electric cars, which are 3X more energy efficient than gas powered cars, will typically plug into the grid. American coal, of which we have an enormous supply, will provide some of the power. Renewables will also supply some.
At some point the grid will have to be expanded to handle the load, so more jobs for Americans.
I'll be using the electric power that my solar panels used to send back to the grid.
The grid will have to be expanded.... Right.
RIGHT after fusion power comes on line.
(A few homes with panels and wind turbines will be 'Fly shit on a cannonball' of an impact.)
Sorry, ain't gonna happen.
(And I have a degree in renewable energy btw)
The grid is easily expanded. Coal powered plants are not rocket science.
Renewables are slowly gaining market share as well. It's happening in Germany. Some day the US will awake fully.
Many hydroelectric dams have been foolishly decommissioned. That should stop.
Americans used to have faith in their ability to solve problems. Then there are those who have a vested interest in obsolete ideas.
I assume you feel the same way about petrochemicals too, huh?
http://www.pennwellbooks.com/petrochemicals-chart-2013/
Don't need any of that stuff when you have an electric car ... <snickers/>
Regards,
Cooter
What about petrochemicals?
Taking oil out of personal transportation will be more than enough to keep the price of oil under conrtrol.
Try again.
this is not true.
currently the lifecycle cost of batteries are about 30 cents per kilowatt hour.
this means that at 3$ a gallon, which equals 10 cents per kilowatt hour of gasoline.. when converted at 25% efficiency to shaft horsepower.. means at 10 cents a kilowatt hour for electricity i have to get below 30 cents a kilowatt hour of battery power to fuel the wheels at less than the price of gasoline.
presently this is just barely possible. and the price of batteries is mostly fuel and human labor to mine the chemicals. decrease both and you decrease the price of the battery. batteries aren't expected to get cheaper much quicker than 5% per year. we may have two generations to go before a battery's lifecycle cost is less than fossel fuels when burned at 50% efficiency.
No, you're wrong. And you need to replace the dusty factoids in your head with some new fresh ones.
What flavor cool aid ya drinkin' there?
Waiting for that Solyndra dividend check this quarter?
Power plants fired by American gas will also supply electricity.
America as a nation is moving away from suburban sprawl and re-urbanize. The need for driving cars will decrease accordingly.
Demand for oil will continue to fall.
Any attempt at a price spike will be met with accelerated decrease in demand.
The golden age of oil is over.
Sounds like you have watched too much Blade Runner. We are all not moving to arcologies....the trend is to move AWAY from that.
And you dont know what you are talking about on electric cars.
1) Grid is powered mostly by coal, so electric cars are not "green"
2) That big ass lithium ion battery was not green to make nor will it be green to dispose of. And yeah, it will need to be replaced effectively totaling your car even if Wonder boy Tony Stark Musk says he will replace it within 8 years under warranty
3) Solar can never and will never power anything of any scale. The panels cost too much to make and dont last very long. Also dont forget to clean the panels and watch out for rainy days. Solar is a pipe dream
4) Nat gas will not stay cheap for long and we are not really geared up to use NatGas to generate electricty...the correct answer is nuclear
could go on...but you get the point...or maybe you dont
You brought up "arcologies", not me. I'm talking about good old fashioned urban living something your grand parents probably did. I'm doing it right now. No blade runners or robo-cops in sight.
Who mentioned "green" anything. My point is that oil's stranglehold on the world is finished, and this country can be powered by American resources. With electric cars the focus on "green" moves away from individual Americans and goes where it belongs i.e. corporations.
Replacing the battery can be done by the owner operator of the car. Also most of the maintenance items associated with gas powered cars (Oil changes, air filters, various engine repairs) disappear. But lets let the market decide, OK? KIA, Toyota, Nissan, Volkswagen and Mercedes are introducing electric cars in 2015. Will see if these car manufacturers know anything.
Solar powers most of my farm in New England. You simply have not kept up with the technology.
"we are not really geared up to use NatGas to generate electricity."
Getting "geared up" is another way of saying inventing, investing and building. That's what an economy does and traditionally Americans are pretty good at that.
Nuclear? LOL. Fukushima.
The trend is to fuel cell powered vehicles. Try to keep up.
I'd be happy to hear what your primary income producer is, it sure isn't your hobby farm , gentleman farmer.
Try the Mixed Berry.
Wow! This is more heated than the God vs. Evolution debate from a few posts ago.
Everyone seems to oversteer on this issue. They either hate everything to do with alternative energy or they think solar panels can save the world. As an electrical power systems engineer my opinion is conservation is the easiest way to reduce carbon use (I know this is an oil debate, but I digress). In my short career of 15 years I've seen watt/ft² values decrease dramatically.....and nobody needed any LEED bullshit to do it. Sensible energy codes and a few brave souls to jump in and prove the payback was all that was needed. Take your generic recessed downlight, or 'can' light to most. LED technology has come so far as to reduce what used to be a 42 watt fluorescent light fixture down to 13 watts. That's a 70% savings in energy, with double to triple the life of the product, at no additional cost. Multiply that out among 600 fixtures down the corridors of a building and you're getting somewhere. Advanced lighting controls, daylight harvesting, etc. also contribute a great deal. You'll soon see your average 2x4 grid fixture change from fluorescent to LED, but the price points are still a bit high for most private projects. It's a very exciting time. I'm doing load calcs for propsed buildings and need to double check my math becasue I just can't believe that the size of the electrical service can be that low.
Cars are personal. I like my big truck, too, and don't want to give up the ski boat because it uses gas. Lets focus on the energy pigs that nobody really gives a shit about changing, like our office buildings!!!!
Mutually planned destruction of a whole industry, market and those who invested in it. Heckofa job Big O and Saudi's
"We "broke" some people."
how relavant! until the world quites supporting this fiat scam dolla regime of buying turdsuries, the ussa will continue with its' mic, domestic programs for fallout(unemplyment, snap, freeshit), maybe relief for shale fallout a possiblilty. all this allowing an unabated empire to march to the cliff...
ZH,
whats up? Why can i up or down vote others but not Arrowflinger who posted teh real culprit behind the oil problems? as one in the US Upstream E&P Biz for 30 yrs, i can confirm the problem wiht this bust, like every other since 1913, is fiats adn fiat credits, manipulations in the futures markets (equity, bond, and commodiites), and infinite rehypoths and Off Bal Sht derivatives.
ALL of the prior responsible by TBTF and FedRes. Of course by and for, solely, TBTF and FedRes.
End the Fed and Hang some folks as teh treasonous SOBs they are. After a fair trial of course.
Arrowflinger began his post with italics, which disables the voting button.
If you still want to vote Arrowflinger up, you can select his name and then hit tab a couple of times, and hit enter when the upvote area is selected.
I usually reserve this kind of trouble only for trolls who deliberately begin with italics to discourage a volley of red arrows.
It's not italics, but the blockquote option (at the beginning of a post) that disables the arrows.
Right, Note to posters; Press enter (new paragraph) BEFORE writing or pasting stuff to get around these issues.
(Like I did)
I am being pedantic, but it doesn't disable them - instead it "draws" the box that contains the quote over the buttons, so you can't click them with the mouse. As was said, you can select an "element" near it and tab to it, and use the keyboard.
All ZH needs to do, IIRC, is to change the Z-Index of this quote container/element so the browser draws it behind the up/down vote buttons instead of on top of it ... but it has been like this a long time, so ...
Regards,
Cooter
I have no problem chewing up the Saudi and Kuwaiti reserves at these low prices, rather than the US reserves. $100 oil is inevitable again - just pick the year in the near or far future.
a gift with many strings attached...
oh yea - fed stated policy - price stability - fucken farce...
another whip a shity commodity with insiders gain.
who got short after horseshit face visited saud?
i already know the answer-no need to research.
Three generations who can't afford to drive, or are not interested in driving.
When everyone and everything is a terrist, there will never ever ever be the demand these fucktards think is coming back.
You want demand? Start by shutting the fucking Muslims down.
What's that? Oh, it doesn't fit into the great ripoff??
LOL!!! " the cure for low oil prices is low oil prices"
Not anymore...
This is straight retarded.
Yes, because entrepreneurs have no ability to forsee price fluctuations. The free market doesn't work, prices are too unstable, we need the government to set prices.
/sarc
I agree that high cost oil producers will stop drilling and oil production will eventually decline, leading to higher prices. But when prices recover, shale drillers will have no problem borrowing money to restart production. The lenders will simply require that they hedge their future production to guarantee a minimum selling price sufficient to repay their loans. Just as banks require risky home buyers to buy insurance as a condition of the home loan.
In fact, some shale drillers had already hedged before oil prices collapsed. These will be the ones that survive to drill again.
So fraking will act to put a lid on oil prices. Not at $50, but perhaps somewhere in the $70 to $90 range.
Your presupposition is the break even price for shale, which is debatable now but will be much less so in the future after a lot of BKs.
You are correct shale will come back online, but it will be MUCH smaller than what we have today.
Regards,
Cooter
>This post is sensible.
>This post is senseless.
May the ZHedge decide! Dow Jones was the last industrial list I'd heard of and it is going and going, replacing listed companies and such, rebasing the divisor, not really being the list as it started out. Is that survivor bias?
It gets my 'Best Post of the Day' vote.
I have to calculate how much diesel I need to stack to operate my black market smuggling operation after the lights go out in Merica.
Somehow I don't share the author's concern over the rentier petro-governments, who, living off the well, are even more self-indulgent than other ingrown blood-tick gangs we call "governments".
Every single petro government could go, and the world would be a better place for it.
WTF?! Interesting article until i hit "fake bags of blood". Orlovs "Reinventing Collapse" was a good read but he sorta runs into the weeds near the end of this article.
Hmm, downvotes. I thought that was a bit out there myself. Haven't seen the fake injuries with the Boston Marathon thing before. I just presumed actual people got hurt because the douchebags who did it didn't give a fuck.
Regards,
Cooter
Orlov was correct - the guy with the missing leg was missing it before the bomb went off.
http://educate-yourself.org/cn/bostonbombingdidyouthink20apr13.shtml
Gee, what if someone came up with a business model whcih anticipated these inevitable chaotic price swings in order to manage their impact such that their company was sustainable and profitable over the long term?
Nevermind, that would be dumb.
I'll agree with Sheep Dog One.
In order to maintain a "fluid" continance of supplies? I find highly questionable, but NOT unheard~of
All the shale oil reserves in US will meet US oil consumption needs for a shade under 2 years. All the US oil reserves will meet US consumption for only 6 years.
Total tight oil reserves are 10 billion barrels (including condensate). The U.S. consumes about 5.5 billion barrels per year, so that's less than 2 years of supply.
Tight oil comprises about one-third of total U.S. crude oil and condensate reserves. The U.S. is only the 11th largest holder of crude oil reserves (33.4 billion barrels) in the world.
http://www.zerohedge.com/news/2015-01-20/crushing-us-energy-export-dream
So, if US did not import any oil, it would be all out of domestic oil in just six years. The US is currently producing 9.1 million barrels per day and that will last for 12 years or so.
Given the precarious nature of US crude oil reserves, it is quite likely that oil prices will recover - and probably sooner than most expect.
Long Imports and gas misers.
Whoever it was that decided dropping the price of oil was a good idea may or may not have kicked off this current snafu. While its entertaining to think of Obama as the squirrel who dropped the acorn in Ice Age that may not be the case. We may simply be in another cycle of demand destruction like we saw in 08. Historical gas prices reveal a pattern. http://www.gasbuddy.com/gb_retail_price_chart.aspx
The author had it pretty much right until he got carried away with his own narrative, a la,
The fix for low oil prices is... low oil prices.
He's right and should have quit right there, but insisted instead on positing that the shale and other high-priced producers would be shut down, bankrupted and then the price could begin to rise again. That's exactly where he went off the path, fell over and died.
Remember when oil was $100 a barrel, everybody said, "oh, it's not just gas for your car, everything uses petrol, from food production to toys to whatever."
So, suppose that was/is true and hasn't changed (spoiler alert: it hasn't). Then what happens to these high-price producers? Their costs go down as well. Wages go down or layoffs begin. Infrastructure suppliers begin to cut costs, everybody begins to realign. Meanwhile, out there in the real economy, people aren't exactly driving more just because gas is cheaper. They're using the saved money to buy stuff that, to their surprise, is also cheaper.
Cheaper and cheaper. Soon enough people start believing in deflation because, 1) it's happening right before their eyes, and 2) it feels pretty good.
Demand, due to a combination of fewer and fewer people working, technology, and, some debt-clearing, craters. If high oil prices did anything, it taught people to conserve and not waste. Those habits have become ingrained upon the populace. Sure, there's some random excess, like guys driving their muscle cars every day, but, when their paycheck isn't growing, or their hours get cut back, the muscle car goes back into the garage.
So, the truth, straight from Adam Smith, and maybe with an aside by J.M. Keynes, is...
The fix for high oil prices is deflation.
And that, my friends, is right where we are today.
Oil will not recover for at least four-five years because the globe is going deeper into a depression that was only masked by massive QE from the US Fed. The BoJ and the Eurozone impostors don't hold a candle to what was done by the US Fed, printers of the global reserve currency.
All other attempts at re-igniting inflation will fail because the bazookas aren't big enough. Only the Fed can blast away deflation, so, because the BoJ has already failed, and the EU will also fail, the Fed will print, but that's for another day, another quarter, another year. Look forward to at least two years of 0% interest rates and maybe some rate hiking by the Fed, but it will be smallish and unimportant. 1% will still be awesome and nobody will hardly notice.
The game will go on, but prices will go lower... and lower... and lower. When housing busts, then is when we're actually getting closer to "normal," whateverthefuckthatis.
Someone recently said that in the world coming prices of things you don't need will decrease and those of things you do need will increase. I think he was right. In a deflationary cycle people will spend on only those things they need - as Orlov said, demand elasticity of oil is pretty low - whether its price goes up or down, people still need it - they need to eat, they need transport, they need chemicals.
If you believe prices will just keep falling, making life easier and more fun for us all, I think you are mistaken. People will not spend, money will not circulate at the rate it needs to, and this consumer debt-based economy wil falter badly. The price of oil will go up because we need it to survive as a civilisation. But there will not be enough money in circulation (remember deflation?) to cover new investments in re-starting the more expensive fields, nor will it be easy for the oil production and discovery tool industry, which wil be seriously impacted by deflation and oil production cutbacks, be able to re-tool fast enough in a wolrd where money is becoming scarce.
We have been living beyond our means for at least 70 years. The piper is waiting for his money. It might just be the time to pay up.
Classic: "But, if you've been following along, it appears that the US doesn't always get what it wants, and of late hardly at all. Which recent US foreign policy gambit has actually paid off the way it was supposed to?"
History's actors indeed...
The collective karma awaiting the Anglo-Zionist Empire will ensure it doesn't go down into insignificance, like the Portuguese or Spanish empires before it. It will go down in flames.
For years we have paid $100 for oil. Most of this oil didn't cost $100 to produce so the high profits could be plowed into mischief. Imagine all oil costing $90 to produce. There is still a profit but now the high production cost is absorbed by labor and drilling equipment meaning lots of high paying jobs and a lot less cash for mischief making.
there's got to be something big afoot, Saudi is making many neighbors, enemies, who's promised them protection?
is the, (questionable), heightened, (world-wide), terrorist threat going to be, (the wmd's), for the us, eu, Israel, Saudi arabia, and others, to act, as they please, anywhere, anytime in the ME., (or world-wide),?
Saudi spokesperson just a couple days ago stated these actions, lowering oil prices, weren't directed at Russia.
I think come the 3rd quarter 2016 Americans willing be paying closer to $5 a gallon for gas, than $3, who's going to keep it down?
my 2 cents, the publicly hidden partnership, can't keep hidden any longer, us., eu., Israel, and Saudi Arabia, and they need a msm deflection.
I would think most oil producers have hedged the majority of their production.
With hedged output you just keep on pumping your price is guaranteed.
This is probably why most producers are doing better than expected (Venezuela obviously didn't hedge its output).
Mexico has hedged about 60% of its output at a level that it has budgeted for.