The 'Real' Price Of Oil Is Below $17

"You see a big destruction in the income of the oil and commodity producers," exclaims on analyst but, as Bloomberg notes, while oil prices flashing across traders' terminals are at the lowest in a decade, in real terms the collapse is considerably deeper. Adjusted for inflation, WTI is its lowest since 2002 and worse still Saudi Light Crude is trading at below $17 (in 1998 dollar terms) - the lowest since the 1980s...

Slumping prices are a critical signal that the boom in lending in China is “unwinding,” according to Adair Turner, chairman of the Institute for New Economic Thinking.

In fact, while sub-$30 per barrel oil sounds very scary, Saudi prices would be less than $17 a barrel when converted into dollar levels for 1998, the year oil sank to its lowest since the 1980s.

Slowing investment and construction in China, the world’s biggest energy user, is “sending an enormous deflationary impetus through to the world, and that is a significant part of what’s happening in this oil-price collapse,” Turner, former chairman of the U.K. Financial Services Authority, said in an interview with Bloomberg Television.

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So while prices are very low any description, never forget about inflation - The Fed won't!

Comments

[Monteriano]

The real value price of oil is 10X the price of natgas. Today's price was $2.15 for natgas so oil should be $21.50. These numbers are based on energy equivalents. Watch these numbers and eventually, long term, they work out.

[new game]

explains the drop in a cord of firewood.

seriously...

[Omen IV]

BTU equivalents dont tell the story based upon chemical downstream options for oil as well as the transport is much easier

will always command a premium for oil

[NEOSERF]

BDI hits 383 and heading south hard...yeah this is going to end well

[turnoffthewater]

Houston, we have a problem

http://www.alibaba.com/product-detail/good-price-2015-new-steel-drum_603...

When someone figures this out, we'll all be rich. Just haven't figured out what we will be rich in. LOL

[Chuckster]

The real price of oil??????  What the marketeers can convince the public to pay.  I agree with the guy who said when the barrel is worth more than the oil....then what?  The times....they are a changing.   It is beyond time for a global financial reset.  It's like Martin Armstrong says: "The liquidity is contracting and things will get more volatile."

[arbwhore]

No intrinsic value. Only FRN's have "value". Welcome to the New Normal.

[TheSkipper1967]

Just saw gas here for $1.69 gallon.

[Zandalf]

Peak was still about 2005... This is gonna be quite a ride! 'Course, who doesn't love like, 1965 valuations for gas....tho I guess I still better keep Sally's flat feet on the ground....

[kelley805]

Here are some signs of a coming recession.

1. Investors in high-yield bonds are expecting to see their first negative return since the start of the credit crisis in 2008.

http://www.marketwatch.com/story/deteriorating-junk-bonds-flash-warning-signs-for-stocks-2015-12-07?dist=afterbell

2. Factory orders continue to drop

http://www.zerohedge.com/news/2015-10-02/us-factory-orders-flash-recession-warning-drop-yoy-10th-month-row

3. Default risk spikes

http://www.zerohedge.com/news/2015-10-02/us-financials-default-risk-spikes-2-year-high

4.  M&A set record

http://michaelekelley.com/2015/05/29/mergers-and-acquisitions-set-record/  

5. Iron ore prices tumble

http://www.marketwatch.com/story/iron-ore-prices-keep-crashing-adding-to-global-growth-fears-2015-11-30

6. Baltic dry shipping index tumbles

http://www.marketwatch.com/story/shipping-index-falls-to-all-time-low-stoking-fears-about-global-growth-2015-11-19

Here is how to prepare.

http://michaelekelley.com/2014/10/16/8-things-to-do-when-recession-happens/

Here is how to get your mind off this stuff.

http://michaelekelley.com/category/humor/

Good luck!

[robertocarlos]

That's good because the actual value of most labour is 12 dollars a day.

[SweetDoug]

‘
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Gasoline is ?$1/litre in Toronto.

Converted to a US gallon with exchange, that’s $2.66 US/gallon.

Nice.

In 2008 when oil reached ?$35 barrel, Canada was paying ?60¢/litre Cdn at the pumps.

Inflation or gouging?

And they don’t refine it up there. Type in “refine Canada” and see all the ßµ££$?φ justification why they don’t build refineries up there.

Bring on the solar and the wind and thorium and LENR and bankrupt these $??$øv?????ë$.

•?•
V-V

[sidiji]

here comes forex hungry Iran, and they've got lots and lots and lots of oil for sale :D

[EndTimesRichie]

Outright assault on all third world oil producers.