oil is trading at 33.82 right now. Less than 4 months ago it was over $140 a barrel. An analyst on CNBC this morning is projecting a bottome of between $17 - $18 a barrel. He then said if that does not hold it could go to $10. But anything below $30 starts to be below the cash cost to extract it for many wells, so wells start shutting down once it breaks $30.
The good news is that gas could fall below $1 a gallon again so that is like a tax break for individuals and more money in the economy. The bad news is exploration starts to be halted at these levels and wells start shutting down domestically since imported oil becomes cheaper. Then as the economy turns around we are more dependent on imports of oil and the price will spike very fast.
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I understand that OPEC is cutting their production a bit. This summer, it was costing me approximately $40 to fill my Honda when I had a half a tank. Yesterday, it cost me $15.
I just saw an article on CNN website that said that Texas is bracing itself for an oil bust.
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Newer technology in existing oil fields is costly. 17 drilling rigs in Oklahoma stopped drilling and sent their crews home once oil went to below $100 per barrel.
For existing wells there is a break-even mark for pumping.
It's great for the US as a whole, but not for those in the industry. Chaos thoeory in action....
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Agree .... actually oild prices this low is very bad as you pointed out it hurts the US oil industry and actually makes us more dependent on imported oil.
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Yes they cut 2.2 million barrels a day ... or that is their target. But they always cheat so expect oil to stay low for a while.
It is nice at the pump, but actually not good for oil to be this low for the long haul. Less incentive for alternative energy, hurts US oil industry and jobs and makes us more dependent on imports. Then they stick it to us again.
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| Name: |
muddauber
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| Subject: |
Oil
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Date:
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12/20/2008 6:41:07 AM
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Simply put, with the extreme billions per quarter they have racked up this past year, excuse me if I take that personally. Stop pumping might be one thing. Stop drilling is unthinkable. Isn't it their argument those extreme profits are necessary for exploration and drilling?
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Would you spend $100 to only get $75 back? These are publicly held companies that are in business for profit. Not sure why they would keep wells pumping to sell the oil for less than it cost them to get it out of the ground. As for exploration .... I think that has been most of the oil companies arguments is to open up areas that have proven volume reserves rather than in fields with limited capacity. It costs millions upon millions of dollars to set up rigs. If the price does not justify it or the "volume" then it is not cost effective. There are plenty of areas that have been put off limit that have more reserves than all of the middle east that would be very cost effective to set up drilling.
Keep in mind that after oil is pulled out of the ground it must be transported to a refinery, processed and then transported again before you put gas in your car or truck.
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| Name: |
muddauber
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| Subject: |
Oil
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Date:
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12/20/2008 11:52:51 AM
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I don't think we are in disagreement. I specifically said to stop drilling is unthinkable. Of course you are not going to keep producing when the sale cost is below your investment. I expect that prices will rise, and I'd like to think we will have more wells to produce in the US than buy overseas. That means drilling now.
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Asphalt is produced from the sludge in the bottom of the barrel. It is still sky high and has not come down at all! Obama is talking about a stimulus package for roads and bridges. This will cost us al a good penny I'm afraid.
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| Name: |
water_watcher
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| Subject: |
Oil/Asphalt
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Date:
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12/21/2008 6:50:56 AM
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Good point. It is funny how everything is related.
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| Name: |
water_watcher
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| Subject: |
Imported oil solution
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Date:
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12/21/2008 7:02:18 AM
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I say Obama tells the oil companies, look i want to become energy independent. I would like alternative enegy in the mix, but i know oil will be a key part of energy for many more generations. So here is what I will do ... you tell me where the best reserves are that are the most cost effective and quickest to get and we will approve drilling in those areas.
You guys go get it and as long as oil is under $50 a barrel i will give you a tax break as an incentive to explore and drill so we continue to reduce our dependence on imported oil even when the price is low. If oil goes over $90 a barrel (which it may not ever again if he did this since we would start to be more self sufficient and all that oil from other countries creates excess supply so the price stays low) you need to pay a windfall tax on back to the government. Between $50 - $90 a barrel it is normal business tax.
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| Name: |
muddauber
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| Subject: |
Imported oil solution
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Date:
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12/23/2008 3:14:45 PM
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You are making good sense. You'll never be a politician with that outlook. lol
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