How low will OIL Go ?

$2.17 where I live and our a$$hole Governor wants to increase the taxes on it because we were used to paying over $3.00.

a reply to: JIMC5499

That's because he wants to make up for the losses the state is suffering due to the fact that there is no drilling going on.. The state would be collecting a # load from Chevron, if they were drilling.

Bandar Bush offered Putin a stabilized oil market back in 2012 or so, and he bawlked.

All the bad guys are suffering; Saudis, Russia, Iran, Venezuela...

originally posted by: FlyingFox
All the bad guys are suffering; Saudis, Russia, Iran, Venezuela...

Some of the good guys are suffering too - Canada is losing billions in revenue, between the extremely low oil prices, and an extremely low Cdn dollar.

It can't stay under $30/barrel for long, so I'll guess there's a leveling out around $35-45/barrel for the next year or two. Inflation makes the true cheaper than anytime in the last half century or so. I got gas in New Braunfels for $1.56 last week! That's probably equivalent or better than $1.09 I remember back in the late 90s.

originally posted by: masqua
On a side note... Canadian crude from the Tar Sands is trading at $20 a barrel and Alberta is in dire straits. Makes me wonder if the $15B law suit brought against the US government for cancelling the Keystone pipeline isn't just an attempt to keep the company afloat.

Steaming the oil out of that muck costs big bucks and $20 doesn't go anywhere near the production.

World oil price is down to $32 now, blaming the Chinese stock market rout this morning.

Ouch.

Crime is definitely up in Alberta, lots of job losses, wage reductions, housing forclosures, food prices going up again because of the Cdn dollar in the toilet...it's getting scary....

There are a couple of facets of this I did not see discussed yet. The immediate oil supply is more than the demand. OPEC flooded the market to drive the price down and put the frackers out of business. However, the long term supply does not have a good outlook. My entire career has been in R&D. One of the things I worked on was the design of systems meant to get more out of every barrel of oil processed, and from sludge not even considered before now. Light sweet crude is great and has enormous energy potential. Sludge, not so much. It takes a fair amount of R&D to make sludge a profitable medium. We can create fuel, lubricants, strip the fins (olefins etc,) for manufacturing, but it all requires additional processes/ing to accomplish. The reason companies are willing to pay that price is because the amount of light sweet crude is finite, and we are nearing the end of that one time endowment of oil. Oil producers need to get more from every barrel and find value in what used to be considered waste. The problem is that the low prices have caused producers to cut all funding to R&D. Future projects are always the first ones on the sacrificial economic altar. Second are the less profitable processes. Each time one of these conditions is implemented, it affects all the companies on that chain. Think of the cost to just about any company that packages a product when the cost of olefins used to make packaging material goes up. The producers will raise the price of the olefins to justify maintaining the processes which forces the end user to raise their prices which impacts sales on the customer end. Its a no win situation.

originally posted by: JacKatMtn
a reply to: Agit8dChop

I am no expert, but I think you nailed it with the Russia deal...

This just may be the price for what occurred in Ukraine?

While it does have the side effect of lowering IS' money flow from their oil sales, I think Russia is the intended target.

I wrote a post awhile ago about this. Oil will drop in the mid 20s as a few nations suffer from it. Mainly Russia who needs prices to be around 110 per barrel to be healthy and Venezuela needs a crazy 140 per barrel to be healthy, and even Canada needs around 90 to be healthy. I think fracking comes profitable in he US at about 80 per barrel, so that is kind of on hold too. With China's fake economy boom these last few decades where they been on a massive build up all over the world with little need has come to and end, and it is time to pay the piper for them. That means even more reduction in oils prices as their economy is crumbling as I write this...lol

Russia: 2/3 of Fed money comes from oil so that has been cut to what 30% now as to what they need? Business can not borrow money due to sanctions, and the huge devalue of the Ruble has killed imports, so things are not looking good there. What if oil prices stay low for 5 years...wow

Venezuela: Hyper inflation at 270% per year, need I say more. Wouldn't it be interesting if Columbia just says screw it and takes the whole country and Venezuela disappears? Would the people there be upset or happy...hehe

Canada: Lost 25% of the Canadian dollar since this has started. Almost no growth in the economy, seeing records in consumer dept at 164% of disposable income, increase in the cost of living, and all this has not leveled off yet so we will see how bad it gets in 2016 for them.

Has anyone checked to see if any nations are taking advantage of these price drops to drastically increase their strategic petroleum reserves??? What if the prices are being depressed intentionally in order to increase reserves in anticipation of some catastrophic event which will cut off daily supply routes?? Also, in what way can we take advantage of the low prices in regards to our portfolios??? I have never delved into the futures market so am inexperienced in how to profit from these low prices for a later date.

originally posted by: Vroomfondel
The reason companies are willing to pay that price is because the amount of light sweet crude is finite, and we are nearing the end of that one time endowment of oil.

Are you sure? It's like saying gold is almost gone because it isn't laying in streams anymore like it once did. Today the world produces about 77 million barrels of oil per day and off the top of my head I can count 1 trillion barrels of oil in just six untapped but known locations, and we are finding new locations all the time, so even without new locations and not counting what we are tapping today that is over 35 years of sweet stuff at today's rate of production in just those six places alone.

People go after the crappy fracked oil because it is profitable above 80 per barrel even when it takes more to process it.

originally posted by: AmericanRealist
Has anyone checked to see if any nations are taking advantage of these price drops to drastically increase their strategic petroleum reserves??? What if the prices are being depressed intentionally in order to increase reserves in anticipation of some catastrophic event which will cut off daily supply routes?? Also, in what way can we take advantage of the low prices in regards to our portfolios??? I have never delved into the futures market so am inexperienced in how to profit from these low prices for a later date.

Where would they store it? Maybe pump it back in the ground in their own country. We can fill up TX and OK again.

a reply to: Xtrozero

Ok so in fact we are actually doing the opposite of what I was theorizing a moment ago U.S. Plans to Sell Down Strategic Oil Reserve to Raise Cash

The U.S. plans to sell millions of barrels of crude oil from its Strategic Petroleum Reserve from 2018 until 2025 under a budget deal reached on Monday night by the White House and top lawmakers from both parties.

The proposed sale, included in a bill posted on the White House website, equates to more than 8 percent of the 695 million barrels of reserves, held in four sites along the Gulf of Mexico coast. Sales are due to start in 2018 at an annual rate of 5 million barrels, rising to 10 million by 2023 and totaling 58 million barrels by the end of the period. The proceeds will be “deposited into the general fund of the Treasury,” according to the bill.

The U.S. may sell also additional barrels to cover a $2 billion program from 2017 to 2020 to modernize the strategic reserve, including building new pipelines.

So based on this information, maybe we dont know how low it will go, but clearly policy makers are planning on a timeline of at least 9 years. Unless they have inside knowledge on the price going up starting i 2017-2018 and that is why they will begin selling it then??

originally posted by: AmericanRealist
So based on this information, maybe we dont know how low it will go, but clearly policy makers are planning on a timeline of at least 9 years. Unless they have inside knowledge on the price going up starting i 2017-2018 and that is why they will begin selling it then??

Prices have not stopped dropping so I guess sell it at 33 and buy it back at 22...hehe

originally posted by: Xtrozero

originally posted by: Vroomfondel
The reason companies are willing to pay that price is because the amount of light sweet crude is finite, and we are nearing the end of that one time endowment of oil.

Are you sure? It's like saying gold is almost gone because it isn't laying in streams anymore like it once did. Today the world produces about 77 million barrels of oil per day and off the top of my head I can count 1 trillion barrels of oil in just six untapped but known locations, and we are finding new locations all the time, so even without new locations and not counting what we are tapping today that is over 35 years of sweet stuff at today's rate of production in just those six places alone.

People go after the crappy fracked oil because it is profitable above 80 per barrel even when it takes more to process it.

Having been involved with the industry for so many years, yes, I am sure. Oil was a one time endowment and will not be replenished in out lifetime. As population growth continues to increase so will usage and viable alternatives are still in development. I made a living trying to extract value from what was once considered waste. No corporation worth its salt would waste that much money on something unnecessary. We wont run out of oil tomorrow, but it will happen. And relatively soon. That is why people are devoting so much effort to reach and use harder to find and extract supplies.

Many people believe we reached peak oil, the point where consumption exceeds production, many years ago. The problem is that production has a maximum rate that can be achieved. Consumption (demand) does not. There is a difference between production and depletion of reserves. Post-peak production can decline but depletion will continue.

Cognitive dissonance is human nature. As long as there is gas in the tank, everything is ok. It won't be until we can see the bottom of the barrel that people will really start to react to this. In around 120 years we have burned through more than half of our one time endowment of oil reserves. As population grows, demand increases. We will burn through the second half much faster than the first. Much faster. The rate increases exponentially and will continue to do so until viable alternatives are not only found but implemented globally.

a reply to: Vroomfondel

That "peak oil" did occur early 2000s for sweet crude. The "slush" is mostly what's kept the production high since then. We once had roughly 100 barrels produced for every barrel in energy used, now the EROI is in the teens or lower overall. I think we're seeing the beginning of serious alternative rampups just in time to save the day, or at least outright collapse. Solar alone will hopefully offset the decline in production capacity.

February 4 is the date.....the call has been made.....4th- the 8th anyway.....it's all rigged my friends.

every aspect of our lives these days is rigged.....


the GBP/JPY is the canary in the mine shaft......it quit breathing two weeks ago, now we just wait for the 88.6% correction for a projection up........or it's curtains for the global scene, hey, we are all going together in this journey....

which ever way it goes right now is in GBY/JPY.....that's me !!!

How low will OIL Go ?
Probably low enough to put our 401k's into the red zone, then it will come back like a vengeance.

a reply to: GBP/JPY

I'll buy you a drink next 9th and we can laugh at the silly assumptions we all make.

Cheers!

originally posted by: Vroomfondel
Cognitive dissonance is human nature. As long as there is gas in the tank, everything is ok. It won't be until we can see the bottom of the barrel that people will really start to react to this. In around 120 years we have burned through more than half of our one time endowment of oil reserves. As population grows, demand increases. We will burn through the second half much faster than the first. Much faster. The rate increases exponentially and will continue to do so until viable alternatives are not only found but implemented globally.

I think you need to read the book Superfreakonomics, very interesting. One of the stories in there was about horses in how bad they were by 1890s.

Horses are lovely animals, but when crowded into cities they cause a variety of problems. The 15 to 30 pounds of manure produced daily by each beast multiplied by the 150,000+ horses in New York city resulted in more than three million pounds of horse manure per day that somehow needed to be disposed of. That’s not to mention the daily 40,000 gallons of horse urine.

It was extremely bad in many ways to the point of undermining society on a large scale, then along came the car.

…the private automobile was widely hailed as an environmental savior. In the span of two decades, technology eradicated a major urban planning nightmare that had strained governments to the breaking point, vexed the media, tormented the citizenry, and brought society to the brink of despair.

The car was our savior from the horse and just as we start to see the same situation with gas, technology will once again fix it and gas will go the way of the horse. One word, batteries....

When you can buy a battery operated car for 30k, and it gets 400+ miles on a charge that takes less than an hour to charge back up, and oh 0 to 60 in 3 seconds, the gas engine will be put out to pasture. Pun intended...

That will happen in the next 20 years... also think of houses having battery systems that need less and less grid power and so on. We are basically the 1890s with horses right now but we could easily see a huge drop in oil needs in a few decades, think if we went from 77 million barrels per day down to 5 million per day with no end in the the reduction long before the oil runs out.

a reply to: pl3bscheese

cool....the refineries have to shut down to re-vamp......so I say we're at the low....it probably won't go much lower.....not to 25 dollars....so 40 dollar oil by March....