OPEC will not cut oil production: Saudi minister
Source: CNBC
The Organization of Petroleum Exporting Countries (OPEC) decided on Thursday not to cut oil production, despite sliding oil prices.
Following a meeting of OPEC in Vienna, the oil minister of leading member Saudi Arabia, Ali Al-Naimi, was asked whether the group had decided not to reduce its output from 30 million barrels per day. He responded: "That is right".
... Brent crude oil fell more than $3 to under $75 a barrel - a fresh four-year low - on news.
Read more: http://www.cnbc.com/id/102222286
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belzabubba333
(1,237 posts)yeoman6987
(14,449 posts)It was under a dollar when President Clinton was President and 1.86 when President Obama took office and most thought that was outrageous prices then. Not a dang thing cheap about gas today. I don't care about gas prices in Europe. I lived in Italy 5 years and glad to be back to good old USA regardless of our expensive gas.
Spider Jerusalem
(21,786 posts)the USA has the lowest fuel prices of any developed country, and indeed the lowest fuel prices of any country where fuel isn't heavily subsidised by the government. Americans don't in fact have a god-given right to cheap gasoline, and if higher fuel prices get people to drive less and drive more fuel-efficient cars and live closer to work and change the destructive and stupid patterns of development and consumption of the last 70 years or so? That's a good thing.
yeoman6987
(14,449 posts)100 percent disagree with every word.
Spider Jerusalem
(21,786 posts)I live in the UK. Petrol is over £1.20 a litre. (More than six bucks a gallon, in other words.) Which is in line with what it costs in the rest of Europe, in Canada, Australia, New Zealand, Japan, etc. You can disagree that the US has lower fuel prices than the rest of the developed world; you're wrong.
yeoman6987
(14,449 posts)Country on Earth. You are welcome to gas prices but we thank goodness don't accept them. Have fun! I drove 4 hours back and forth to visit relatives for Thanksgiving meal. Why would I want it to cost more? Doesn't make sense.
DisgustipatedinCA
(12,530 posts)And yes, I'm being serious. Consider it.
Spider Jerusalem
(21,786 posts)You sound like a caricature of the Ugly American.
olddots
(10,237 posts)
Exultant Democracy
(6,594 posts)Bohemianwriter
(978 posts)I live in Norway, and we have the most expensive gasoline in the world.
And we export tons of oil, and have the largest oil fund in the world. It just tipped a trillion dollars this week.
I'm not complaining. I take public transportation. It's cheap. It gets you where you want, and it's fuel efficient. I want it to be expensive as hell. I wouldn't mind a larger portion of it being spent on things we need in Norway. Like a better healthcare system. Better schools. Unfortunately we have ourselves a government that wants to copy many of the GOP policies we know have failed miserably. Hopefully these will be gone in 3 years.
But I digress.
Spider is absolutely right. I would ad that I think it's petty whining about high gas prices. Also when you know that most of those goes to the pockets of the few instead of shared by all. Personally, I couldn't give a tuss about oil prices.
I want people to start thinking about alternative energy and transportation. This oil addiction is more destructive than dirty heroin addiction.
It's also partially responsible for plenty of wars the last 60 years.
"In Russia you can choose between commie A or commie B. In USA we have democracy"....
Right! Between two parties?
In which both parties are running the errands of the same corporations?
Be proud and be free! Choose between
corporatist A or corporatist B!
Give it up for Democracy!
As long as we have cheap oil and plenty of it.
Funny. I have the same feelings towards weed.
It also seems that your tax dollars are being vaporized into Pentagon and handouts to Wall Street.
P.S. I was an exchange student in Kansas 25 years ago, and felt Fundie- land right to the core. It seems that they were a tad bit more informed back then than now. Still indoctrinated in many ways though. Bragging about the two party "democracy" in USA, comparing it to the commie system of the falling Soviet Union. Three years after returning to Norway, I served during the Bosnian genocide during Clintons' "intervention" in former Yugoslavia.
ForgoTheConsequence
(4,868 posts)Fact is, you're wrong. You not liking the price and thinking that you're entitled to cheaper gas doesn't mean that gas prices in the United States aren't comparatively cheaper than the rest of the developed western world.
Response to ForgoTheConsequence (Reply #19)
roamer65 This message was self-deleted by its author.
djean111
(14,255 posts)prices.
Yay! I can drive a bit more on my fixed income - but I am a wee bit afraid I smell more oil subsidies in the near future - paid for by more cuts to social services.
kelliekat44
(7,759 posts)
samsingh
(17,595 posts)
Champion Jack
(5,378 posts)samsingh
(17,595 posts)
NeoConsSuck
(2,544 posts)GliderGuider
(21,088 posts)Here's a link to an explanation:
http://euanmearns.com/the-2014-oil-price-crash-explained/
We're now into a regime of extreme price sensitivity, where the oil markets respond to small fluctuations in demand with large price swings. Mearns believes that a variation of demand up or down by only 1 million barrels per day (a range of +/- 1.5%) can drive the price through a range of $60 to $100. It's because the world has been on the Peak Oil plateau for a decade, so supply is constrained.
Yo_Mama
(8,303 posts)We haven't peaked yet. Rapidly rising oil production in the US is driving the current price moves.
GliderGuider
(21,088 posts)Especially given the amount of capital investment that has been thrown at it - globally, more than a trillion dollars a year.
The recent burst in US production is shale oil, not crude. At $80/bbl a third of US production is uneconomical. At $70 I think the proportion will be more like half.
happyslug
(14,779 posts)https://rbnenergy.com/can-mont-belvieu-handle-the-ngl-supply-surge-part-I
http://en.wikipedia.org/wiki/Natural-gas_condensate
NGL are produced with Natural Gas, but are treated as oil. So much of the recent increase in Oil, is a result if increased production of NGL. Thus NOT an increase in oil production, but natural gas production. It can inflate oil production numbers and has.
There are other sources of the increase in oil production independent of actual oil production. Fracking is the most famous. Shale Oil production from Canada is more mining, i.e. you mind the product then remove the oil, then refine the oil.
One aspect no one wants to talk about is, outside Texas and Louisiana, most oil refineries can NOT handle Heavy Sour oil, yet that is the oil that is increasing in Saudi Arabia and Venezuela (Thus increase production cost more to refine).
Yes, oil production has increased since 2008, but most of that has been from oil wells (In North Dakota and Texas) which have been known for decades but also known NOT to be profitable at prices less than $80 a barrel.
Yes, a lot of liars are saying how much oil is being produced, the lies have to be close to the truth but it does affect the details.
Worse, except for US "Tight oil" (The actual preferred name for US Shale Oil production), oil has actually DECLINED since 2008. With production in those Tight Fields expected to drop starting in 2017 (Assuming the present rate of drilling will be maintained, and given the drop in the price of oil it will not be) expect higher prices come 2017 to 2018 period.
If you study ANY energy industry, you will find that there are price peaks and bottoms unless you have someone controlling the price at a point between those two ends. The general rule is prices increases leads to more supply AND less demand. Sooner or later the drop in demand leads to a cut in prices, which leads to a cut in supply. The drop in prices, leads to an increase in price, which leads to an increase in supply and a drop in demand. This goes on over and over again.
At the same time, people want a stable price and will pay a premium for a stable price,
Standard oil saw this in the late 1800s. People's need to budget leads to them wanting a stable price and will pay a premium for a stable price. Thus people will give up getting oil at the cheap end, in exchange for lower prices at the high end AND will pay a premium for this "Service". i.e. Will pay 90% of the high end price, even if the low price is 50% or lower then the high end. This is how Rockefeller made his money, by providing a stable price in an unstable price market. This lasted till 1912 when Standard Oil was broken up, but given WWI followed right after ward followed by the boom of the 1920s (as people wanted gasoline for cars) you did not have a real problem with supply till the 1930s. Come the 1930s oil hit one of its low points, the first time since the breakup of Standard oil.
Into this situation stepped in the Texas Railroad Commission (TRC). The Texas Railroad Commission (TRC) was formed to regulate railroad, it later was given the authority to regulate the pumping of oil. By the 1930s the later power was much more important then regulating Railroad (Which had become increasingly subject to Federal Regulations). Anyway, starting in the 1930s the Texas Railroad Commission (TRC) started a policy restricting how much oil could be pumped in Texas. The Texas Railroad Commission (TRC) had a two fold policy, one was to keep the price of gasoline down, the other was to make sure the oil companies made money. Given that Texas was the single largest oil producer between 1920 and 1960, this gave the Texas Railroad Commission (TRC) the ability to set world wide oil prices by determining how much oil would be produced in Texas (it was so bad, it was a joke that OPEC was formed in 1960 so the Seven Sisters only had to go to one place to tell them what the Texas Railroad Commission (TRC) had set as the price of oil).
The Texas Railroad Commission (TRC) opened all of the oil fields of Texas between 1942 and 1945 and again in 1969. Between 1930 and 1969, except for the WWII years, the Texas Railroad Commission (TRC) refused to permit full production of Texas Oil. In 1969 the Texas Railroad Commission (TRC) did open all the fields, but it did NOT bring down the price of oil, Texas was NO longer the "Swing" producer of oil and with the lost of being the "Swing oil Producer" the Texas Railroad Commission (TRC) could no longer set the world wide oil price by controlling the Supply of Texas oil.
I remember sitting in my father's truck as he complained about the price of Gasoline. THe price he was complaining about was 35 cents a gallon, he said it was much to high. My older brother remembers 25 cents a gallon gasoline, the price the Texas Railroad Commission (TRC) wanted gasoline to be. Notice all of this is PRE 1973 oil embargo.
The 1973 Oil Embargo shocked not only the US, but the Arabs. The Arabs had embargoed oil in 1956 and 1967, but both times the US liked it for the US was a net oil exporter and thus made money during those embargo. The 1973 Embargo was the first time the US faced oil shortages during an oil embargo and caused a Panic in the US. Worse it caused a Panic in OPEC, it was the first time they realized they controlled the price of oil based on how much oil their produced. Saudi Arabia quickly realized in controlled the price of oil, for it was the new "Swing" producer, i.e. Saudi Arabia could set world wide oil prices by how much oil Saudi Arabia Produced. The best example of this was in the mid 1980s. In the early 1980s the North Sea and North Slope of Alaska came into production. These fields had been discovered in the 1960s but not in production till the early 1980s. Thatcher wanted to use that oil to fund her government and destroy the coal mining unions AND help defeat the Soviet Union by denying the USSR markets for its own oil. To do this, Thatcher kept on undercutting the price of oil Saudi Arabia was selling. Every time Saudi Arabia would set a lower price for its oil, Thatcher would under cut that price. This became an almost monthly cut in prices, till Saudi Arabia finally said enough was enough and cut prices below the cost of production of North Sea Oil. That Thatcher was looking at raising taxes to bail out the oil companies, and with such a bail out her money to crush the coal union would be gone. A month later Saudi Arabia raised its prices to just above the cost of North Sea Oil prices, Thatcher had received the message, she just match the price Saudi Arabia was charging, not under cut it.
I bring this up, for it shows the power of the Swing producer as long as they can increase production to reduce the price of oil. Saudi Arabia appears to have lost this ability around 2002, it tried to control the price of oil, but demand exceeded the amount of oil Saudi Arabia could supply on a short term basis. Saudi Arabia did increase production all during the 2002-2014 period but never enough to meet demand, till the recession of 2008. In 2008 price peaked then dropped, then increased again and is now dropping again. This is typical of a non controlled price market. Rapid ups and downs in price.
Now, the North Dakota and Texas "Tight" oil fields have been known for decades but only became profitable to pump just a few years before 2008. It took a few years for that Tight Oil to get into production, but once it started it has increased tremendously. The problem with both fields is that a typical field well peaks in 18 months and then go into rapid decline and is no longer producing oil within five years. This was NOT a problem as long as prices remained over $80 a barrel, but once price per barrel dropped below that number those wells became unprofitable. Now, given the huge investment into those wells, the producer can NOT cut them off and wait for prices to raise, instead they have to pump and sell the oil and from what ever proceeds they get pay off the person who owned the oil, the crew that pumped the oil, and finally pay the bank on the loan made to finance the well. Often they is NOT enough money to pay off the bank, but the person who own the oil MUST be paid, so must be the crew. Thus to minimize loss, the oil has to be sold and the driller and the bank take the loss (but as pointed out, this loss is less then the loss of just shutting down the well, remember the old saying "Maximize profits, and if you can NOT do that minimize losses).
The significance of this is the Shale, Tight oil plays that are producing oil today, will continued to do so, even as a loss. This will keep the price of oil low for the next few years. On the other hand no one will drill a new well til the price of oil goes back up. Thus till the price of oil goes up, few if any new wells will be drilled, which means once the present wells dry up, it will produce an increase in the price of oil, but only after 2017 (Through the price may start to go up in 2015, if enough oil wells goes dry, but I am leaning to 2016, through 2017 was the date if production of new wells do NOT slow down).
Please remember the 2017 estimate is based on an assumption that wells will be drilled in 2014, 2015 and 2016 at roughly the same pace as it was done 2010-2013). I do NOT expect that to be true, the price of oil is already to low. On the other hand, oil production will increase this year and 2015 do to the existence of the wells already drilled for thus the exact date when these tight fields start to go into decline will be hard to determine. The existence of these fields will spread out Peak Oil, before we start to see the decline, but it is looking like 2020 will start the rapid decline (with a slight decline after 2017).
Please remember all of the other "tight" oil fields have been re-estimated to much lower than industry claims as recently as 2010. It looks like peak will be in 2015 (if it was not in 2014), through if full production level of Tight Oil was maintained it could have been 2017. Peak production will be stretched out by the existence of the above two fields, but unless more wells are being drill today then being claimed is being drilled, peak oil will be 2014 or 2015.
Please note the above appears to be the case unless something else happens, someone finds a new oil field equal to the fields found in the 1960s (Since the 1960s the world has been using more oil then it has been finding, we are living on those fields found in the 1960s, when we were finding more oil then we were using). A another possibility is the West Antarctic Ice Sheet breaks up, and with it raise world wide sea level 20 feet within a period of a few weeks. Given that most, but not all, US Oil refineries are on the coasts of Texas, Louisiana and New Jersey, and that increase in world wide sea level, close all of those refineries, the US would be in a situation where it can produce more oil then it could refine. Oil production will have to drop, till new refineries are built and that may take years (and displacing the housing behind the present refineries). Just two possible situation that could change the above, I suspect the later of the two, the collapse of the West Antarctic Ice Sheet more likely then finding a 1960 era type new oil field)
jakeXT
(10,575 posts)Last edited Thu Nov 27, 2014, 06:04 PM - Edit history (1)
http://www.ft.com/intl/fastft/223482/post-223482
GliderGuider
(21,088 posts)Venezuela's troubles are legendary. Russia will get their turn next year. At today's price about half of all American shale oil production is uneconomical.
This is what the beginning of global hard times looks like.
quadrature
(2,049 posts)many countries benefit from low crude-oil prices.
Just look back to the US economy
during the Clinton era.
GliderGuider
(21,088 posts)I can't predict who the long-term winners and losers will be, but we're definitely in for a period of volatility.
FLPanhandle
(7,107 posts)I would think all three are in low cost labor markets.
Spider Jerusalem
(21,786 posts)happyslug
(14,779 posts)Notice the term "Budget Breakeven Prices". i.e. this is the price where the NATIONAL BUDGET can no longer be balances. i.e. something has to be cut (Welfare, Military etc) OR other taxes raised.
The the US Budget is not included for this reason, for the US Budget is NOT dependent on the price of oil. The countries on this list all use Oil to balance their own National budgets. They can still produce oil at lower prices and make profit on the sale of oil, but they have to cut other expenses of government if the price of oil goes to much lower for they are dependent on high oil prices to balance they budgets.
This is a problem for many of those countries keep their people from revolting using those pedro-dollars.
The price of oil needed to balance their budgets is one useful measure of their respective pain thresholds.
Monk06
(7,675 posts)Once it drives the spot price down as low as it will go it will cut production. The bounce will be huge. Billions can be made on even a $10 spread. On a $100 rebound six months from now you are talking Trillions of $ into Saudi pockets and anyone else in the game. The Saudis can increase production with a press release.
Shale and heavy oil will go to sleep and it will be difficult for them to get back on stream.
This could be another oil war but much smarter than the '70s, effecting producing nations rather than consumers in the short term.
daleo
(21,317 posts)Less opportunity for monopolists to manipulate markets and prices. The sun and the wind don't play along.
roamer65
(36,745 posts)Below $80, a lot will go out of business. An energy independent USA just may tell Riyadh to go "bugger" themselves. Can't have that now, can we? 
The House of Saud knows what it at stake and they are not going to let go without a fight.
roamer65
(36,745 posts)to cash in their investments to cover their fiscal deficits due to the loss of oil revenues.
QE to infinity and beyond!!!
21214.
Champion Jack
(5,378 posts)crash baby crash
nitpicker
(7,153 posts)Commodities
price change %
Brent Crude Oil Futures $/barrel 71.84 -0.74 -1.0
West Texas Intermediate Crude Oil Futures $/barrel 68.52 -0.50 -0.
ileus
(15,396 posts)I'm still waiting on 1.25 a gallon though.
I remember the good ole days of .76/ga for my 84 chevette.
Exultant Democracy
(6,594 posts)philosslayer
(3,076 posts)Driving a Chevette? Nothing about a Chevette was EVER good.
NickB79
(19,233 posts)Anyone who claims they care about the future of this planet's climate, and the world we're leaving for our children, yet still openly wishes for even cheaper fossil fuels, is a fucking hypocrite.