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As I understand things the U.S. wants Iran, Arabia, and Russia to reduce the output of their oil. But they aren't doing that and I read it is because they want to ruin the American fracking business. Anything more to it? Probably much more and I would like to understand whats going on. Why isn't the price of gas going down with all that oil being put on the market at a low price? Anyone know?
Its not a war, its an effort by the Saudis and OPEC to finally start protecting marketshare again. They let prices get too high over the last decade. That worked for a while, but which caused all types of alternatives like shale oil that become possible with the high prices. So now they want to reassert their market and drive down some alternatives so they are keeping supply high and reducing prices. They should have done it a long time ago. The single stupidest thing Saudis did for their own industry was letting prices get too high. It spurred on so much research into drilling and also spurred on all manner of political opportunists to decry oil and create the political climate and development of other sources.
Its not a war, its an effort by the Saudis and OPEC to finally start protecting marketshare again. They let prices get too high over the last decade. That worked for a while, but which caused all types of alternatives like shale oil that become possible with the high prices. So now they want to reassert their market and drive down some alternatives so they are keeping supply high and reducing prices. They should have done it a long time ago. The single stupidest thing Saudis did for their own industry was letting prices get too high. It spurred on so much research into drilling and also spurred on all manner of political opportunists to decry oil and create the political climate and development of other sources.
the research was already there, just not in place for cost reasons like you said...
but the Saudis also enjoyed the higher prices too... it wasn't like they "profited" at $50 while everyone else was getting $100...
Its not a war, its an effort by the Saudis and OPEC to finally start protecting marketshare again. They let prices get too high over the last decade. That worked for a while, but which caused all types of alternatives like shale oil that become possible with the high prices. So now they want to reassert their market and drive down some alternatives so they are keeping supply high and reducing prices. They should have done it a long time ago. The single stupidest thing Saudis did for their own industry was letting prices get too high. It spurred on so much research into drilling and also spurred on all manner of political opportunists to decry oil and create the political climate and development of other sources.
The thing about it is that the Saudi's and Opec got greedy and were depending on the US politics to turn to alternative energy type stuff which they knew was not cost effective. That is one of the reasons they have been the biggest supporters of the anti-fracking they figured between that and Obama getting elected and forcing drilling off of most of the federal lands that they could keep prices high while limited competition from the US.
The problem is they miscalculated the affect that the anti-fracking lobby would have, and they also did not realize that between new oil finds and private land owners willing to take the risks to make the big money that it has backfired on them, with the US raising production to the levels they got to.
There are many things going on right now. Commodities in general have suffered price declines due to demand side weakness. The slowdown in China has much to do with this. China is also a large consumer of oil. People forget how many things are actually products of petroleum, like plastic.
The world is awash in oil right now. Gluts can be formed when demand declines, but output remains unchanged. This could be contributing to what we are seeing now. It takes time to adjust production volume to match market demands. I'll take a glut over a shortage any day.
The thing about it is that the Saudi's and Opec got greedy and were depending on the US politics to turn to alternative energy type stuff which they knew was not cost effective.
But which has begun to get....more cost effective.
And new fracking technology lowered costs.
AND....we got serous about fusion, with over half a dozen companies have announced that they expect commercial fusion within 8 years.
Suddenly peak oil ma occur....its not so funny anymore. And it wont come from running out of oil, but rather demand.
No; its the markets at work. In time it will adjust to a level that can be supported by cost to obtain. Cost to drill and then get down stream to refiners vary by type of recovery and how delivered to refineries. Piplelines are cheaper than train for example in delivery.
There's hoarding of oil at these low prices. Traders are storing oil to take advantage of contango. China is filling its SPR. India is planning to do the same.
As I understand things the U.S. wants Iran, Arabia, and Russia to reduce the output of their oil. But they aren't doing that and I read it is because they want to ruin the American fracking business. Anything more to it?
No, it's not just fracking. A Saudi oil minister hinted earlier this year that the continuing world climate change summits represent a long term risk to the value of Saudi oil assets. The Saudis are right; in the decades ahead, as climate change worsens, world pressure to discourage oil consumption could leave Saudi Arabia holding the bag if oil remains underground unsold as a stranded asset. This has more or less already happened to coal. I also believe they see the massive exponential growth in solar and wind power worldwide, and it makes them nervous enough to be happy to take $65 today because oil might only fetch $25 in 20 years.
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