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Sweet Crude prices and Gold Prices

Team SabatageTeam Sabatage USA, USA, USAPosts: 13,014 AG
Sweet crude closed at $66.15 yesterday, the lowest it's been in 5 years. How will this effect the global economy? How will it effect ours? Will this low cost cause a collapse in the drilling in ND?

Gold is also down, from above $1700 a couple of years ago to $1168 now. There is speculation that a vote by the Swiss could cause it to skyrocket well past the $1700 mark in very little time.

Discuss.
Strap me in, tie me down and roll me a bone, I'm getting on an airplane and I'm flying home...
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Replies

  • WaterEngineerWaterEngineer Posts: 24,415 AG
    We can thank OPEC for not coming to consensus that daily limits of total barrel sold by the consortium was reached for the low barrel price.

    http://www.reuters.com/article/2014/11/27/us-opec-meeting-idUSKCN0JA0O320141127
  • Big BatteryBig Battery Posts: 21,179 AG
    It will crush the shale oil industry if it stays low for long.... maybe make the keystone pipeline a moot point.
  • aboveboredabovebored Posts: 1,327 Officer
    Its the best economic news for the working class in a long time.
  • Grady-ladyGrady-lady east of the river, west of the woodsPosts: 5,282 Admiral
    Oil, I know very little about - gold, even less.

    But big picture generalities - lower prices benefit buyers, higher prices benefit producers. Importers benefit, exporters suffer.

    OPEC (via SA) could be waging a price war with the US and/or Canada. If oil prices drop too low, some of the OPEC nations will suffer, as well as producers here. If OPEC can hold out longer than we can, then American consumers and the economy may suffer in long run. Who knows - weren't crude oil prices much, much lower not too many years ago?
    I find my peace out on the sand...Beside the sea, not beyond or behind. R.A. Britt

  • CatBoxCatBox Posts: 3,706 Captain
    Grady-lady wrote: »
    . If OPEC can hold out longer than we can, then American consumers and the economy may suffer in long run. Who knows - weren't crude oil prices much, much lower not too many years ago?

    OK this might be heresy, but here goes....

    What if the Govt. put a tariff on ALL oil coming from the M.E. and put the funds toward Education or job skills programs?? Or just Pizz the money away, whatever it takes to help keep the US Oil business viable.

    Seems to me that the US Oil is putting a crimp in those "peace loving" Bentley driving idiots in the ME... :shrug
  • FibberMckeeFibberMckee Posts: 12,826 AG
    Most of oil's value comes from being burned. Most of gold's value comes from being hoarded. Prices are set by how fast they are extracted from the ground, too fast prices drop, too slow they go up.
    It will crush the shale oil industry if it stays low for long.... maybe make the keystone pipeline a moot point.
    abovebored wrote: »
    Its the best economic news for the working class in a long time.

    History shows that commerce in both resources is fairly easy to manipulate.
  • Grady-ladyGrady-lady east of the river, west of the woodsPosts: 5,282 Admiral
    CatBox wrote: »
    OK this might be heresy, but here goes....

    What if the Govt. put a tariff on ALL oil coming from the M.E. and put the funds toward Education or job skills programs?? Or just Pizz the money away, whatever it takes to help keep the US Oil business viable.

    Seems to me that the US Oil is putting a crimp in those "peace loving" Bentley driving idiots in the ME... :shrug

    First off - in a free market exchange of ideas there is no such thing as heresy. :)

    Secondly there are forces behind the scenes that I just have no knowledge or understanding of - so I'll have to stick to the obvious, for what it's worth.

    Since we are still an importer of oil, a tariff on imported OPEC oil (Venezuela is a member of OPEC) will be paid for by the consumer. Lower prices at the pump will leave more money in the pockets of the workers to spend or save as they choose. But am already hearing concerns expressed by certain factions that low oil prices will up consumption, decrease investment in 'renewables', and reduce tax revenue for roads and bridges. If the oil prices hold low, look for a raise in taxes at the pumps, imho.
    I find my peace out on the sand...Beside the sea, not beyond or behind. R.A. Britt

  • nuevowavonuevowavo Posts: 6,824 Admin
    At $70, there is still incentive for new exploration and invesment in oil extraction. If it gets down to $60, you'll lose marginal players and the more stable companies will cut back on new investment.
    It's going to be interesting to watch the effect of lower prices on Iran, Russia and Venezuela.

    Grady-lady is right about tariffs, but increased consumption will increase tax revenue, since the tax receipts are levied per gallon and are not affected by price. Lower prices do allow more room for increasing taxes, which would be great for the economy as jobs are created to rebuild our crumbling infrastructure, but I doubt you'll see the next Congress step up to the plate and do what's necessary.

    As for "speculation that a vote by the Swiss could cause (gold) to skyrocket well past the $1700 mark in very little time", that sounds like wishful thinking from the gold bugs. If the Swiss do decide to increase their holdings, it will be done gradually. The price may see a short term pop, but that will fade quickly. And it appears the vote will be against this measure, anyway.
    Federales, bring my baby back to me!
  • Big BatteryBig Battery Posts: 21,179 AG
    Raising taxes will never help the economy. Where does this nonsense come from?
  • rickcrickc Posts: 9,172 Admiral
    buying cheap middle eastern oil and saving ours for later makes sense to me.

    no matter what you may believe we are going to eventually use up the world's oil. Better to save ours to the end.

    of course if you are a what is in it for me, I want it right now, selfish, self-centered, capitalist, rightie you might want us to go ahead and get ours while the getting is good. make all the money you can as quick as you can. The Hell with the Future.
  • Team SabatageTeam Sabatage USA, USA, USAPosts: 13,014 AG
    Why wait to buy a yacht that you won't be able to get fuel for?
    Strap me in, tie me down and roll me a bone, I'm getting on an airplane and I'm flying home...
  • SWFL_F1sh0nSWFL_F1sh0n Posts: 17,248 Officer
    Thank god obamas president.
  • SWFL_F1sh0nSWFL_F1sh0n Posts: 17,248 Officer
    It will crush the shale oil industry if it stays low for long.... maybe make the keystone pipeline a moot point.

    It's almost like wiser and thoughtful minds knew this was coming and hence the delay on the destruction of our environment.
  • onthefiftyonthefifty Posts: 4,093 Captain
    Thank god obamas president.

    TWI!
  • SWFL_F1sh0nSWFL_F1sh0n Posts: 17,248 Officer
    onthefifty wrote: »
    TWI!

    Twi? Come on grammar boy to lazy to type it out?
  • onthefiftyonthefifty Posts: 4,093 Captain
    Twi? Come on grammar boy to lazy to type it out?

    Too uneducated to know the difference between "to" and "too"?

    I hope gold goes back up, I could use a few extra bucks.
  • CatBoxCatBox Posts: 3,706 Captain
    OK hear me out on this.

    Why couldn't we use "commerce" as a weapon?

    Charge more for M.E. fuel and charge less for Western Hemisphere Fuel :shrug
  • MACDMACD Lee CountyPosts: 4,975 Captain
    The "green back" is getting happy against the majors.
  • Grady-ladyGrady-lady east of the river, west of the woodsPosts: 5,282 Admiral
    Cat - Here are a few imho's from fading memory banks - if wrong please, anyone, chime in.

    Not all crude is equal - each grade of crude requires it's own refinery, or at least re-tooling to refine the poorer grades...such as in the case of Venezuela's and Mexico's 'heavy' crude. Plus, the US has laws against exporting it's own crude - maybe it's time to rethink that.

    There's limited refining capacity for high quality crude, which I think includes shale oil too, but maybe shale oil is more expensive to extract and/or refine than the sweet crude from the Saudi's. So, if we want to sell US gasoline from US crude refined in the US at a lower cost than refined ME oil, it seems that it might require 'subsidies'...and/or more refineries. :shrug

    I don't think we are yet at the point we can thumb our noses at the ME. In addition there are groups in the US who would prefer that the cost of fuel and electricity go even higher in order to discourage use and/or more investment in alternatives...I doubt those folks will be happy about lower fuel prices...unless it puts US oil producers out of business. :willy-nilly

    Nuevo - I see the need to maintain and build roads and bridges, and not just by drivers...but before I can be convinced a raise in gas taxes is needed - I'd like to see an accounting of current federal gas tax uses, and assurance that bids for federal projects will be open to all contractors without regard for union membership or ethnicity of the company's owner.
    I find my peace out on the sand...Beside the sea, not beyond or behind. R.A. Britt

  • Grady-ladyGrady-lady east of the river, west of the woodsPosts: 5,282 Admiral
    Lower Oil Prices Are a Free-Market Victory
    Larry Kudlow | Nov 30, 2014

    Seldom has so much good news been portrayed so negatively. Oil prices continue to fall in the U.S. and around the world, but near everyone in the media is grumpy about it. The headlines today are among the silliest I’ve seen: Energy-company stocks are declining, oil deflation is an economic threat, the Fed might raise rates much later than expected, OPEC is dissolving, shale companies are going bankrupt, Russia is going bankrupt(!), and on and on.

    Well, most of this is just humbug. Lower oil prices are unambiguously positive.

    First, U.S. oil production has nearly doubled in recent years to 9 million barrels a day, and the Paris-based International Energy Agency (IEA) expects U.S. supply to rise by more than 1 million barrels a day next year. And it is this supply increase that is driving down prices. Saudi Arabia and OPEC have essentially thrown in the towel, surrendering to the inevitability of lower prices from exploding U.S. energy production.

    This is not only a triumph of U.S. energy independence, it is a victory for the workings of the free market. Greater supply, not government cartels, is driving down prices.

    And the latest oil-price drop of nearly $8 a barrel makes the economic outlook even rosier. Apart from the declining share prices of some oil producers, virtually every other aspect of the world economy benefits, including most world stock markets. (By the way, the IEA reports that most production in the Bakken formation, one of the main drivers of shale-oil output, remains profitable at or below $42 a barrel.) And here in the U.S., the oil-price drop is a huge tax cut that will primarily help the middle class...


    (the rest)
    http://finance.townhall.com/columnists/larrykudlow/2014/11/30/lower-oil-prices-are-a-freemarket-victory-n1925232
    I find my peace out on the sand...Beside the sea, not beyond or behind. R.A. Britt

  • nuevowavonuevowavo Posts: 6,824 Admin
    Grady-lady wrote: »
    Nuevo - I see the need to maintain and build roads and bridges, and not just by drivers...but before I can be convinced a raise in gas taxes is needed - I'd like to see an accounting of current federal gas tax uses, and assurance that bids for federal projects will be open to all contractors without regard for union membership or ethnicity of the company's owner.

    Actually, the Highway Trust Fund (where Federal gas tax dollars go) was one of the better-run Federal agencies, with all its revenue used for infrastructure, until Congress began raiding it in 1990 for "deficit reduction". That ended in 1997.

    Your suggestion that we audit the Fund is a noble one, but impractical. We'd probably save more money if we did the same for the Department of Defense. And imagine all the new jobs that would be created by the demand for accountants!

    As for the assurance that new projects would be awarded "without regard for union membership or ethnicity of the company's owner", the Federal government determines how much money is to be sent to each state for infrastructure repairs and development. The state then takes control of the process, including the bidding and awards.
    Federales, bring my baby back to me!
  • WaterEngineerWaterEngineer Posts: 24,415 AG
    nuevowavo wrote: »
    Actually, the Highway Trust Fund (where Federal gas tax dollars go) was one of the better-run Federal agencies, with all its revenue used for infrastructure, until Congress began raiding it in 1990 for "deficit reduction". That ended in 1997.

    Your suggestion that we audit the Fund is a noble one, but impractical. We'd probably save more money if we did the same for the Department of Defense. And imagine all the new jobs that would be created by the demand for accountants!

    As for the assurance that new projects would be awarded "without regard for union membership or ethnicity of the company's owner", the Federal government determines how much money is to be sent to each state for infrastructure repairs and development. The state then takes control of the process, including the bidding and awards.

    Untrue. The state does not "control the process." There is much complexity to using fenderal dollars and the federal government makes a ton of hoops to jump through to use their money for a project. While the state manages the federal funds, the agreement includes federal wording that the onerous Davis-Bacon wage scale will prevail.

    Please stick to what you know. It isn't infrastructure and the funding agreements there of.

    http://www.dol.gov/whd/regs/compliance/whdfs66.pdf

    Furthermore, audit both agencies/departments. Heck audit the entire government. That would be a nice accountant make work program giving the government a taste of their own medicine for what they make financial houses and banks go through.
  • Team SabatageTeam Sabatage USA, USA, USAPosts: 13,014 AG
    Grady-lady wrote: »
    Cat - Here are a few imho's from fading memory banks - if wrong please, anyone, chime in.

    Not all crude is equal - each grade of crude requires it's own refinery, or at least re-tooling to refine the poorer grades...such as in the case of Venezuela's and Mexico's 'heavy' crude. Plus, the US has laws against exporting it's own crude - maybe it's time to rethink that.

    There's limited refining capacity for high quality crude, which I think includes shale oil too, but maybe shale oil is more expensive to extract and/or refine than the sweet crude from the Saudi's. So, if we want to sell US gasoline from US crude refined in the US at a lower cost than refined ME oil, it seems that it might require 'subsidies'...and/or more refineries. :shrug

    I was not aware of this. I though that the process was a little different, but was not aware that a single refinery could only refine a single kind of crude. You learn something every day, I guess.
    In my city there are 4 refineries, most of the crude that is in my state is what is called "waxy", it is very thick and must be heated just to truck it to the refineries.
    Strap me in, tie me down and roll me a bone, I'm getting on an airplane and I'm flying home...
  • ThrottleThrottle Posts: 2,845 Captain
    nuevowavo wrote: »
    It's going to be interesting to watch the effect of lower prices on Iran, Russia and Venezuela.
    True. I think Putin hoped to benefit not only from access to Ukrainian resources and pipelines but also from the anxiety his moves there have caused, but it's failed to push the price higher. Venezuela is unable to do anything meaningful along those lines, but Iran should be watched closely. If they drop a nuke on Israel it'll almost certainly create the sort of anxiety that'll push the price of crude up where they need it to be, and they're already inclined to do it anyway.
  • ThrottleThrottle Posts: 2,845 Captain
    rickc wrote: »
    buying cheap middle eastern oil and saving ours for later makes sense to me.

    no matter what you may believe we are going to eventually use up the world's oil. Better to save ours to the end.

    of course if you are a what is in it for me, I want it right now, selfish, self-centered, capitalist, rightie you might want us to go ahead and get ours while the getting is good. make all the money you can as quick as you can. The Hell with the Future.
    Very true, from a strategic point of view, considering world war is inevitable. If the other sources of cheap easy oil dry up and we still have domestic reserves it'll be a good thing when we really need it, at any cost of extraction. Meanwhile, should we allow some development of our resources for the evil pig capitalists? It seems to be working to our benefit right now. And our economy should really take off with cheap energy, in spite of Obama's impediments to growth. Who knows, he'll probably get the credit in spite of himself, at least from you.
  • Team SabatageTeam Sabatage USA, USA, USAPosts: 13,014 AG
    Throttle wrote: »
    True. I think Putin hoped to benefit not only from access to Ukrainian resources and pipelines but also from the anxiety his moves there have caused, but it's failed to push the price higher. Venezuela is unable to do anything meaningful along those lines, but Iran should be watched closely. If they drop a nuke on Israel it'll almost certainly create the sort of anxiety that'll push the price of crude up where they need it to be, and they're already inclined to do it anyway.

    Israel would launch retaliatory strikes before the Iranian missiles hit, and then there would be no oil from Iran, or Iraq, or Egypt, or Saudi Arabia or Qatar or any other Arab country.
    Knowing they were all going to die in a few minutes, Israel would launch everything they had, "Fire all your guns at once, explode into space".
    Strap me in, tie me down and roll me a bone, I'm getting on an airplane and I'm flying home...
  • Team SabatageTeam Sabatage USA, USA, USAPosts: 13,014 AG
    Throttle wrote: »
    Very true, from a strategic point of view, considering world war is inevitable. If the other sources of cheap easy oil dry up and we still have domestic reserves it'll be a good thing when we really need it, at any cost of extraction. Meanwhile, should we allow some development of our resources for the evil pig capitalists? It seems to be working to our benefit right now. And our economy should really take off with cheap energy, in spite of Obama's impediments to growth. Who knows, he'll probably get the credit in spite of himself, at least from you.

    Obama could be single handedly drilling every well all by himself and you wouldn't give him any credit.
    Tell me, why has the "oil boom" taken place under Obama, was it because he wouldn't allow it?
    Also, explain to everyone, is the oil that Obama would not allow to be drilled for on public land still there, or did the holes on private land suck all that up with horizontal drilling?

    I mean, if all that oil is still there, we're sitting pretty, right, but because of Bush, right? If it has all been sucked out already from bordering private land, then what exactly did Obama prevent?
    Strap me in, tie me down and roll me a bone, I'm getting on an airplane and I'm flying home...
  • ThrottleThrottle Posts: 2,845 Captain
    Obama could be single handedly drilling every well all by himself and you wouldn't give him any credit.
    Tell me, why has the "oil boom" taken place under Obama, was it because he wouldn't allow it?
    Obama is not drilling any wells, so let's put that hyperbole away.
    What he is doing is blocking drilling on public land. What he can't do is block drilling on private land, or prevent fracking, and that's why we have an oil boom is spite of Obama's obstruction. That's why he deserves NO credit. I'm glad I could explain that for you.
  • Team SabatageTeam Sabatage USA, USA, USAPosts: 13,014 AG
    How do you feel about still having all the public land oil that Obama would not allowed to be drilled for still sitting there, you know, just in case our military needs it.
    Realize also, that if Obama had allowed for the cheap leases on public land to be auctioned off, we would not be drilling on the more expensive leases on private land.
    Who profits?
    The private land owners profit, the oil companies profit, ND has the lowest unemployment rate in it's history.
    There are $70 an hour jobs in Williston right now for mid skilled labor like concrete finishers, framers, electricians and plumbers. Landscapers need not apply, there will be no landscaping other than pavement at these buildings. I know because I have crews there right now, living in "man-camps" of travel trailers. You would not believe how much pipe there is stored on lots all over the north of town, what a waitress makes in a day, without being on her back.

    All because Obama would not allow drilling on public land, which by the way, still does have it's oil, just incase the ME explodes.
    Strap me in, tie me down and roll me a bone, I'm getting on an airplane and I'm flying home...
  • FreeLinerFreeLiner Posts: 1,572 Captain
    This is a result of JP Morgan and Goldmans pissing their pants. They were/are manipulating the physical commodities market.

    For the Senate team investigating and punishing them. Excellent job is all Im saying. The fact that they acknowledge its time to separate Investment Banking from Consumer Banks is a big step forward.

    http://www.forbes.com/sites/maggiemcgrath/2014/11/19/goldman-morgan-stanley-and-jp-morgan-named-in-commodity-manipulation-investigation/


    Morgan Stanley, meanwhile, was found to have controlled 55 million barrels of oil storage capacity, 100 oil tankers, and 6,000 miles of pipeline while also trying to supply major airlines with jet fuel and build its own compressed natural gas facility.
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