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[Jamin Lynch]

Price of gas keeps going down right along with the oilfield industry. It's nice on my wallet, but a lot of well paid oilfield workers are now out of a job.

It will eventually turn around though...always does.

[Brook Hovland]

Price of gas keeps going down right along with the oilfield industry. It's nice on my wallet, but a lot of well paid oilfield workers are now out of a job.

It will eventually turn around though...always does.

We were at $1.77 when I filled our Freightliner the other day.
Someone had tried to siphon our diesel...  REALLY?

[frank kayser]

We were at $1.77 when I filled our Freightliner the other day.
Someone had tried to siphon our diesel...  REALLY?

Around here, I'm still paying $2.37 for diesel.  Maybe that $0.60 just put them over the top.

[John Roberts {JR}]

There's a saying "the solution for low (or high) oil prices is low (or high) oil prices."  The market generally responds by increasing consumption when prices are low (people are buying trucks and SUVs, not econo-boxes).

The surfeit of supply now is caused by past high prices that stimulated drilling (and technology). This too will pass, but Saudi Arabia has not throttled back oil production to defend prices, to put a hurt on marginal US oil field companies, many of whom will go out of business and/or be bought up by the majors. All the countries that depend on oil money are hurting and can't afford to slow production to support prices, so this will be with us for a while. Add back in almost 1 million barrels a day from Iran, and we have a supply side gusher.

Pres Obama suggested a $10 a barrel tax on oil, which is a significant amount wrt $30 oil, but it is unlikely to make it into the budget. In fact if you ever wanted to raise the tax on gasoline, what better time to do it than when prices are so low?

JR 

[Jamin Lynch]

There's a saying "the solution for low (or high) oil prices is low (or high) oil prices."  The market generally responds by increasing consumption when prices are low (people are buying trucks and SUVs, not econo-boxes).

The surfeit of supply now is caused by past high prices that stimulated drilling (and technology). This too will pass, but Saudi Arabia has not throttled back oil production to defend prices, to put a hurt on marginal US oil field companies, many of whom will go out of business and/or be bought up by the majors. All the countries that depend on oil money are hurting and can't afford to slow production to support prices, so this will be with us for a while. Add back in almost 1 million barrels a day from Iran, and we have a supply side gusher.

Pres Obama suggested a $10 a barrel tax on oil, which is a significant amount wrt $30 oil, but it is unlikely to make it into the budget. In fact if you ever wanted to raise the tax on gasoline, what better time to do it than when prices are so low?

JR

The rig count it Texas is still surprisingly high given the price of a barrel of oil. It takes fewer workers today with modern drilling rigs than it did only a few years ago. So most are able to survive.

When the price is high, they add additional drillers to get as much out of the ground as fast as possible to bank as much money before the price drops.

[Barry Singleton]

Price of gas keeps going down right along with the oilfield industry. It's nice on my wallet, but a lot of well paid oilfield workers are now out of a job.

It will eventually turn around though...always does.

Lucky dogs!  We are a full buck higher in Las Vegas. Grrrrrr.

Barry.

[John Roberts {JR}]

The rig count it Texas is still surprisingly high given the price of a barrel of oil. It takes fewer workers today with modern drilling rigs than it did only a few years ago. So most are able to survive.

When the price is high, they add additional drillers to get as much out of the ground as fast as possible to bank as much money before the price drops.

They are shutting in some marginal wells but when the sunk cost to drill the well has already been spent, the only way to make any cash flow is to pump oil. When they can afford to, some wells will be idled until prices rebound (sometime after they stop falling  )

The real industry that is hurting is the tar sands up in Canada because their costs are so high it only made sense from the higher prices a couple years ago. Same for some synthetic fuels, with oil so cheap the math needs to be revisited.

JR

[Dave Pluke]

I heard on one news report that oil costs Saudi Arabia about $11 per barrel to produce.  So, they can still afford to let prices fall.  Such is not the case for North American producers.

Never thought I'd see gas for less that a buck and a half per gallon again in my lifetime.  As has been mentioned, its immediate impact on the average Joe is positive.  The long-term effects on the economy are less certain.

Another way to view it, though, is that the U.S. has now proven it can produce enough fuel to be self sufficient.  Why not use up the everybody else's oil first, at discount prices?

As long as equipment doesn't rot in the fields, that is.

Dave

[Keith Broughton]

The long-term effects on the economy are less certain.


Dave

Seems pretty certain up here in Canada!

[John Roberts {JR}]

I heard on one news report that oil costs Saudi Arabia about $11 per barrel to produce.  So, they can still afford to let prices fall.  Such is not the case for North American producers.

Probably less than $11, but they have revenue issues too... They pay out a lot of their oil revenue to keep their citizens happy.

Even big oil companies in US are not making money at $30 oil, but small marginal companies are walking dead. The too low for too long interest rates made it too easy for these small players to borrow too much money so they could drill more. Now they can't earn enough oil revenue to service that debt.

Never thought I'd see gas for less that a buck and a half per gallon again in my lifetime.  As has been mentioned, its immediate impact on the average Joe is positive.  The long-term effects on the economy are less certain.

I predict there won't be "long term" effects, because supply and demand will eventually normalize again and most predict long term prices well above where we are now (maybe $50-$60) The uncertainty is about why the price break to consumers now isn't having a larger stimulus effect. American consumers are saving more rather than spending this extra money suggesting they are apprehensive about the future of the economy (correctly IMO).

Another way to view it, though, is that the U.S. has now proven it can produce enough fuel to be self sufficient.  Why not use up the everybody else's oil first, at discount prices?

Another reason to use the coal too. A century in the future oil will be more valuable for making plastic than gas, but anyone who doesn't expect more advancements in all those areas is not reading history correctly. For some insane reason the government is selling oil from our strategic reserve now at the cheapest oil prices in years, while they were buying when it was above $100.

As long as equipment doesn't rot in the fields, that is.

Dave

The situation for Canada that depends more on energy exports than we do is hurting. And the strengthening dollar is not helping their loonies' purchasing power... While Canada may have caught a cold from this, some other countries are dying of influenza. Venezuela is flying in planeloads of currency to deal with their inflation. Russia is evaluating nationalizing some more private industries, to supplant missing energy revenue. 

Short term but long enough to cause much pain to oil producing nations, and companies. 


JR

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