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  • gunnut,

    And who was it 8 years ago said "drill, baby, drill" and "drill here, drill now?" I can't remember now. It must be someone very smart. Was it The Obama, the smartest president in US history? He surely have foreseen this technological revolution. And doubters said at the time new oil wouldn't reach market place for at least 10 to 15 years. We are on the brink of rendering OPEC obsolete, thanks to fracking.
    eh, I'm enthusiastic about shale oil, but not -that- enthusiastic. Saudi oil is still easier and cheaper to extract than shale; plus there will be expected Iraqi and Iranian reserves coming along.

    predatory pricing by OPEC worked for decades because technology just hadn't caught up despite the obvious economic incentives to do so. that was the main limiting factor, not Obama's "war on oil" or whatever it was he's guilty of.

    similarly, US shale oil is not doing well at the moment due to the glut plus the huge commodity demand drop in China.
    There is a cult of ignorance in the United States, and there has always been. The strain of anti-intellectualism has been a constant thread winding its way through our political and cultural life, nurtured by the false notion that democracy means that "My ignorance is just as good as your knowledge."- Isaac Asimov

    Comment


    • US is now the swing producer. OPEC doesn't know how to deal with it. Add Iran and Russia, OPEC is in serious trouble. I feel so bad for our "eternal friends." *insert sarcastic emoticon*

      Most important of all, I hope this puts a dent in the "green" bullshit we've been wasting billions of dollars on.
      "Only Nixon can go to China." -- Old Vulcan proverb.

      Comment


      • Saudis doubling down on predatory pricing.

        Saudi Oil Minister Surprises OPEC

        The Wall Street Journal.

        Benoit Faucon, Selina Williams, Summer Said

        2 hrs ago

        LONDON—Saudi Arabian Oil Minister Ali al-Naimi surprised fellow members of the Organization of the Petroleum Exporting Countries on Tuesday when he said the kingdom was prepared to let oil prices slip to $20 a barrel—a level that would strangle some of the group’s own members.

        At a Houston conference drawing oil-company executives and officials from producing countries, Mr. Naimi ruled out coordinated production cuts across OPEC and non-OPEC nations to address an oversupply that has caused crude prices to drop 70% since June 2014. Oil supply is outstripping demand by a million barrels a day.

        Mr. Naimi said market forces would rebalance supply and demand, pushing prices low enough to force cutbacks from producers in places outside the Middle East, where some projects need oil prices of $60 per barrel or more to make a profit.

        “Inefficient, uneconomic producers will have to get out,” Mr. Naimi said. “This is tough to say and that’s a fact. “We can coexist with $20. We don’t want to, but if we have to, we will.”

        Mr. Naimi is taking aim at producers in places like U.S. shale reserves and Canada’s oil sands. U.S. shale drillers couldn’t pump at $20 oil despite reducing their break-even costs, Keith Cochrane, the chief executive of Weir Group PLC, which supplies the industry with pumps and valves, said in a conference call with reporters Wednesday.

        In contrast, Persian Gulf Arab states like Saudi Arabia, the United Arab Emirates and Kuwait “can make lots of money” with oil prices in the range of $20 to $30 a barrel, said Tim Weller, the chief financial officer of U.K. oil-services provider Petrofac Ltd. in a separate a conference call Wednesday.

        The problem for OPEC is that Saudi Arabia’s high production also hurts other members of the group such as Nigeria and Angola. Their big reserves are offshore and have higher costs than Saudi Arabia-—indeed so high that major projects coming online in those countries are the type of expensive production that Mr. Naimi wants “to get out” of the market for prices to rebound. A Nigerian oil official said the country needs prices of at least $30 to $35 per barrel for offshore projects to break even.

        The slump is already hurting the economies of African producers. Nigeria is holding talks with the World Bank and African Development Bank to borrow $3 billion to help with an $11 billion budget deficit this year.

        Angola has slashed its domestic fuel subsidies to help cut government spending, triggering price rises of up to 80%.

        Mr. Naimi’s remarks represented a repudiation of what some see as the organization’s purpose: Keeping prices stable. Mr. Naimi said regulating prices wasn’t part of OPEC’s core mission, suggesting instead that its role was to balance supply and demand.

        “The country that has sacrificed for defending prices is Saudi Arabia,” Mr. Naimi said, referring to past production cuts by OPEC that were borne largely by the kingdom, the world’s largest exporter of crude. “We are still willing to do that but will do it differently. We are going to let everyone compete.”

        That message was clear to one Iranian OPEC official who said: “OPEC is no longer playing its role in balancing markets.”

        Venezuela, an OPEC nation where the economy has been devastated by low oil prices, has tried to convince Saudi Arabia and big non-OPEC producers like Russia to cooperate, the country’s oil minister said earlier this month. And Mr. Naimi and his Russian counterpart, Alexander Novak, struck a deal last week with Qatar and Venezuela to limit their production to January’s levels.

        But it came with a hitch: Other big producers like Iran would have to follow. But Iran, newly freed from international sanctions, is trying to increase its output to levels recorded before the sanctions were tightened in 2012.

        On Tuesday, Iranian Oil Minister Bijan Zanganeh called the idea of freezing production “a joke.”

        Meanwhile Iraq’s OPEC representative Faleh al-Amri said Wednesday at an Abu Dhabi conference that OPEC action was needed but that his country had no intention to curb its output.

        “If producers want the oil price to rise, they have to act now, he said, adding “it’s a very, very dangerous situation.”

        Mr. Naimi said a production freeze would help stop any increase in supplies as demand naturally rises. But he nodded to estimates from the International Energy Agency and bank analysts that it wouldn’t happen quickly.

        “It will take time,” Mr. Naimi said.

        Write to Benoit Faucon at [email protected] and Selina Williams at [email protected]
        http://www.msn.com/en-us/money/marke...Q7x?li=BBnb7Kz

        This shit is popcorn worthy.
        "Only Nixon can go to China." -- Old Vulcan proverb.

        Comment


        • gunnut,

          Most important of all, I hope this puts a dent in the "green" bullshit we've been wasting billions of dollars on.
          why should it? in fact, it's one of the more encouraging things that despite the amazingly low price of oil, green technologies have continued to develop at an exponential pace. solar is finally within shouting distance of achieving the efficiency of oil, and that's a great thing.
          There is a cult of ignorance in the United States, and there has always been. The strain of anti-intellectualism has been a constant thread winding its way through our political and cultural life, nurtured by the false notion that democracy means that "My ignorance is just as good as your knowledge."- Isaac Asimov

          Comment


          • Originally posted by astralis View Post
            gunnut,



            why should it? in fact, it's one of the more encouraging things that despite the amazingly low price of oil, green technologies have continued to develop at an exponential pace. solar is finally within shouting distance of achieving the efficiency of oil, and that's a great thing.
            Seriously? You really believe solar power is as cheap as coal or oil? Did you read any of the posts in this thread? 5 square miles of mirrors and it produces a fraction of the power a fossil plant would produce, and unreliable.
            "Only Nixon can go to China." -- Old Vulcan proverb.

            Comment


            • gunnut,

              Seriously? You really believe solar power is as cheap as coal or oil? Did you read any of the posts in this thread? 5 square miles of mirrors and it produces a fraction of the power a fossil plant would produce, and unreliable.
              I said -shouting distance- at this time...:-)

              solar efficiency is improving something along the lines of 4-5% every year. we're seeing smaller but not inconsiderable advances in electricity storage and distribution efficiencies. in 10, at most 20 years, it will be as cheap if not cheaper than oil. that's a fairly conservative guess-- bill gates is predicting something rather more revolutionary, for instance.

              combine that with AI cars and you'll have a system where solar powered vehicles will become considerably cheaper than alternatives.
              There is a cult of ignorance in the United States, and there has always been. The strain of anti-intellectualism has been a constant thread winding its way through our political and cultural life, nurtured by the false notion that democracy means that "My ignorance is just as good as your knowledge."- Isaac Asimov

              Comment


              • Originally posted by astralis View Post
                gunnut,

                I said -shouting distance- at this time...:-)

                solar efficiency is improving something along the lines of 4-5% every year. we're seeing smaller but not inconsiderable advances in electricity storage and distribution efficiencies. in 10, at most 20 years, it will be as cheap if not cheaper than oil. that's a fairly conservative guess-- bill gates is predicting something rather more revolutionary, for instance.
                I disagree with that sentiment. Electricity doesn't like to be stored. Cars by definition need energy storage. Electric cars have been the future for the last 100 years. They will continue to be the future for decades to come.

                However I do agree that eventually a planetary solar grid can be effective to supply the entire world with a good percentage of the electricity we need. Half of the planet is always in the sun. A planetary grid can avoid temporary outrages and night time inconveniences.

                Originally posted by astralis View Post
                combine that with AI cars and you'll have a system where solar powered vehicles will become considerably cheaper than alternatives.
                I doubt it. We will never trust driverless cars. The most we can do is a smart cruise control like what Honda has already achieved.

                You're in DC, I'm sure you're familiar with DC Metro. It was a fully automated system without drivers when it started service. Then something happened and some deaths were involved and now every single Metro train has a driver.

                Airliners are fully capable of flying themselves. Do we trust them? No. Not even after Malaysian 370's rogue pilot incident.
                Last edited by gunnut; 25 Feb 16,, 20:43.
                "Only Nixon can go to China." -- Old Vulcan proverb.

                Comment


                • I disagree with that sentiment. Electricity doesn't like to be stored. Cars by definition need energy storage. Electric cars have been the future for the last 100 years. They will continue to be the future for decades to come.
                  eh, battery technology is also improving dramatically, not least due to the demands of smartphones.

                  that being said, it's not as if everyone is going to go out and buy a tesla tomorrow. hybrids first to accommodate the range worries. plus, solar price per watt continues to fall exponentially so it's not a technology of the future like fusion, it's now. seriously, 10 years is already fairly conservative in this aspect, the more optimistic folks say 5.

                  I doubt it. We will never trust driverless cars. The most we can do is a smart cruise control like what Honda has already achieved.
                  again, not that hard to have a system where a driver can take control of the car as necessary. that's what we do for airplanes. in fact, the most dangerous parts of a flight are the ones not automated, like takeoffs and landings.

                  hell, the google car safety record is pretty amazing already.

                  re: DC Metro, actually, there were (and of course are) drivers, even when it was automated. the crash was terrible, but to put it in perspective, how many people die from drunk driving or other car accidents every year? it's not an accident that a lot of us who do follow the DC Metro WANT the automated system to be put back into place, because it's not clear that human drivers are much safer AND they're jerky and late to boot.

                  if you think about the far-reaching consequences of AI cars and services like Uber-- it means quite a few things, like far fewer traffic jams and less accidents. it means taxi services become far more efficient once you take away the human driver equation, and the need to actually own a car goes way down.
                  There is a cult of ignorance in the United States, and there has always been. The strain of anti-intellectualism has been a constant thread winding its way through our political and cultural life, nurtured by the false notion that democracy means that "My ignorance is just as good as your knowledge."- Isaac Asimov

                  Comment


                  • You mean when you wont have to pay the cab driver a salary.
                    No such thing as a good tax - Churchill

                    To make mistakes is human. To blame someone else for your mistake, is strategic.

                    Comment


                    • yes, there's that... as well as time spent idling, cab drivers not wanting to pick up a passenger from a certain place, bad hours, etc.

                      of course it's not going to be a pretty process when it comes to employment, especially because the reason why Uber is so popular/plentiful now is because of a lot of underpaid or unemployed people suddenly became "contractor" taxi drivers.
                      There is a cult of ignorance in the United States, and there has always been. The strain of anti-intellectualism has been a constant thread winding its way through our political and cultural life, nurtured by the false notion that democracy means that "My ignorance is just as good as your knowledge."- Isaac Asimov

                      Comment


                      • Originally posted by astralis View Post
                        eh, battery technology is also improving dramatically, not least due to the demands of smartphones.

                        that being said, it's not as if everyone is going to go out and buy a tesla tomorrow. hybrids first to accommodate the range worries. plus, solar price per watt continues to fall exponentially so it's not a technology of the future like fusion, it's now. seriously, 10 years is already fairly conservative in this aspect, the more optimistic folks say 5.



                        again, not that hard to have a system where a driver can take control of the car as necessary. that's what we do for airplanes. in fact, the most dangerous parts of a flight are the ones not automated, like takeoffs and landings.

                        hell, the google car safety record is pretty amazing already.

                        re: DC Metro, actually, there were (and of course are) drivers, even when it was automated. the crash was terrible, but to put it in perspective, how many people die from drunk driving or other car accidents every year? it's not an accident that a lot of us who do follow the DC Metro WANT the automated system to be put back into place, because it's not clear that human drivers are much safer AND they're jerky and late to boot.

                        if you think about the far-reaching consequences of AI cars and services like Uber-- it means quite a few things, like far fewer traffic jams and less accidents. it means taxi services become far more efficient once you take away the human driver equation, and the need to actually own a car goes way down.
                        Well, we'll see. So far I've been right on global warming and oil.

                        Here's another thing about oil. Highsea, whom I have a lot of respect for, believed oil market is not free and price-fixing was rampant. That was the reason for $147/barrel in 2007. I argued that oil price is still governed by free market. All we have to do is increase supply and the price will go down.

                        Fast forward 8 years, huge new supplies hit the market coupled with decreasing demand, bam!, oil price crashes through the floor. If there really is a cartel of traders fixing prices, why wouldn't they keep prices high to continue the profit?
                        "Only Nixon can go to China." -- Old Vulcan proverb.

                        Comment


                        • gunnut,

                          Well, we'll see. So far I've been right on global warming and oil.

                          Here's another thing about oil. Highsea, whom I have a lot of respect for, believed oil market is not free and price-fixing was rampant. That was the reason for $147/barrel in 2007. I argued that oil price is still governed by free market. All we have to do is increase supply and the price will go down.

                          Fast forward 8 years, huge new supplies hit the market coupled with decreasing demand, bam!, oil price crashes through the floor.
                          of course there is price-fixing, that's the whole purpose of OPEC. it worked for decades until technology finally caught up.

                          OPEC agreed to continue production as is to drive down the price of oil-- in part to shutter US shale oil production. to some extent, it worked-- numerous US shale oil lines were shut down. however, the Saudis et al (and quite a few US observers) were surprised to find out that the surviving shale oil lines already had most of their costs sunk already, and are still profitable at the $35 per barrel point.

                          moreover there's a double whammy, OPEC was surprised by the extent of the Chinese downturn. i think OPEC was trying to get oil to fall down to $60-70 a barrel, where they'd be comfortable; they didn't foresee the huge drop past that.

                          If there really is a cartel of traders fixing prices, why wouldn't they keep prices high to continue the profit?
                          now that's exactly what they're trying to do after their little experiment went pear-shaped.

                          http://money.cnn.com/2016/02/25/inve...ze-opec-qatar/

                          but this is a lot harder to do now, after their respective internal economies have been thrown into chaos.
                          Last edited by astralis; 25 Feb 16,, 23:49.
                          There is a cult of ignorance in the United States, and there has always been. The strain of anti-intellectualism has been a constant thread winding its way through our political and cultural life, nurtured by the false notion that democracy means that "My ignorance is just as good as your knowledge."- Isaac Asimov

                          Comment


                          • Originally posted by astralis View Post
                            gunnut,



                            of course there is price-fixing, that's the whole purpose of OPEC. it worked for decades until technology finally caught up.

                            OPEC agreed to continue production as is to drive down the price of oil-- in part to shutter US shale oil production. to some extent, it worked-- numerous US shale oil lines were shut down. however, the Saudis et al (and quite a few US observers) were surprised to find out that the surviving shale oil lines already had most of their costs sunk already, and are still profitable at the $35 per barrel point.
                            I read about this months ago. The article said Saudis will fail because a lot of the shale producers can survive at less than $40 a barrel. What's more interesting is more than half of the wells have shut down from 1 year ago, but the output did not decrease by much.

                            Originally posted by astralis View Post
                            moreover there's a double whammy, OPEC was surprised by the extent of the Chinese downturn. i think OPEC was trying to get oil to fall down to $60-70 a barrel, where they'd be comfortable; they didn't foresee the huge drop past that.
                            Chinese downturn is a symptom of US recession.

                            Originally posted by astralis View Post
                            now that's exactly what they're trying to do after their little experiment went pear-shaped.

                            http://money.cnn.com/2016/02/25/inve...ze-opec-qatar/

                            but this is a lot harder to do now, after their respective internal economies have been thrown into chaos.
                            Add Russian oil and Iranian oil to the mix, our "eternal friends" are in for a rough time.

                            I can't get enough popcorn for this train wreck.
                            "Only Nixon can go to China." -- Old Vulcan proverb.

                            Comment


                            • A bit of history for everyone

                              back in the day, when shale technology started off in natural gas, we had something similar to whats happening today. Albeit within the continental United States given the fractured nature of natural gas market (physical limitation of pipelines). Henry Hub prices plunged and the ensuing crash caused mayham everywhere back in '08-09.

                              Natural gas shale producers reacted as they are doing today. Cut CAPEX, and start closing rigs with very low productivity, while focus to wringing more natural gas and lowering cost on the more efficient rigs. Results: at first rig count dropoed, ... everyone saw that as rig count drops means output drops ... not exactly, as output in fact increased based on this lower but more productive rigs.

                              Same thing is happening in the oil market, in the first half of 2015, the shale producers started closing rigs and everyone started talking about how shales are scaling back. Not true. For shale to scale back, the price needs to drop below their very low marginal cost, which has been steadily dropping.

                              Comment


                              • Originally posted by astralis View Post
                                OPEC agreed to continue production as is to drive down the price of oil-- in part to shutter US shale oil production. to some extent, it worked-- numerous US shale oil lines were shut down.
                                not true, please see my comment above
                                rig count drop doesn't have a linear relation with #barrel being removed from the output.

                                During the expansionary phase, as shale technology expanded the aim was to expand at all cost and build the most rigs no matter how un productive they are. During the downturn, efficiency and cost control kicked in to lower the rigs but to pull out more barrels and more efficiently.

                                Saudi understood that the shale had in fact became the de facto swing producer. So in fact, I submit that they had no choice to do what they did in Nov 2014.
                                Last edited by xerxes; 02 Mar 16,, 01:52.

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