$30 barrel oil?

[sputnik]

Originally posted by mazdavirgin
If we factor out Montana taxes(27cents per gallon) then it's a differential of 1.02CND$/litre states side price without including importation costs into Canada. I don't really think there is much horrendous gouging going on here. Most of the price difference is coming in the form of taxes.

Montana pays 46.15 cents per gallon.

Federal portion - 18.40 cents/gal
State portion - 27.75 cents/gal

https://en.wikipedia.org/wiki/Fuel_t..._United_States

[mazdavirgin]

Originally posted by sputnik


Montana pays 46.15 cents per gallon.

Federal portion - 18.40 cents/gal
State portion - 27.75 cents/gal

https://en.wikipedia.org/wiki/Fuel_t..._United_States

Thanks for that. So the redone numbers with taxes end up at 1.00CND$/litre. So a differential of 12cents between the current Canadian pricing and the cost in Montana. Again no clue what kind of duties are applied to fuel importation and whatnot but I don't think this is that out of line. If anything the big difference between Canadian and US pricing is our way higher tax on fuel. 24cents per litre of tax :\

[sputnik]

WTI - $40.82/bbl (down 4% today)

RBOB - 156.94/gal (down 4.7% today)

[ZenOps]

Oh the horror. Might end the week under $40.

[ExtraSlow]

Originally posted by Jackie Forrest - Arc Energy Ideas
Not 1986
The headlines say that we have seen this kind of collapse before. With the benchmark US oil price (WTI) nearing the $US 40/B floorboard, wide spread pessimism is taking root with a growing number of voices associating this downturn with the sickly era circa 1986.

The downturn of the mid 1980s was certainly grim. With the exception of a short-lived price spike when Iraq invaded Kuwait in 1990 (see Figure 1, point 3), it took about fifteen years for the price of oil to recover to its pre-1986-crash levels.

Although oversupply was the initial catalyst of both 1986 and current price crashes, with OPEC actions center stage in both cases, there are many differences between 1986 and today. The 1986 crash and the resulting decade and a half of low prices that followed was the result of a truly massive oil oversupply, unlike the situation we are now facing.

To understand the differences between the two events, let’s rewind the clock back to the 1970s. In response to the 1973 oil price shock, oil importing countries implemented legislation aimed at reducing demand. Over the next decade, the use of crude oil for electrical generation was substituted out by coal and nuclear power, and conservation measures were put in place to help reduce consumption.

Between 1979 and 1985, a weak economy and new government mandates reduced global oil demand by 5 MMB/d. At that time, OPEC’s policy was to hold the oil price near $US 30/B (almost $70/B in 2015 real dollars). To maintain this price in the face of declining demand, OPEC was forced to ratchet down their oil production by 14 MMB/d. Saudi Arabia bore a large part of the burden and their production dropped from near 10 MMB/d in 1979 to 3.6 MMB/d in 1985. At the same time, the artificially high oil price caused non-OPEC supply to surge; production from the UK’s North Sea took off, the Alaska North Slope grew, and Mexican oil production almost doubled.


When Saudi Arabia’s oil minister, Ali al-Naimi commented this past December on the “crooked logic” that a low cost producer keeps oil price high enough to support growing production from higher cost competitors, the situation of the early 1980s was likely front of mind. During the 1980s, al-Naimi was the president of Saudi Aramco, and he saw firsthand the dangers of ceding too much market share.

By December 1985, OPEC production levels were unsustainably low. Over the six year period, OPEC’s market share had dropped from 46% to 29%. Cutting more production was no longer an option and OPEC members decided to switch from a policy of focusing on price to one dedicated to regaining market share (see Figure 1, point 1). In the next year, OPEC’s average production increased by over 2 MMB/d. This higher production level was still only a fraction of OPECs full potential, and spare capacity at the time was pegged at over 12 MMB/d. Considering that the world consumed 61 MMB/d of crude oil back then, the spare capacity was equal to 20% of global demand.

By the end of 1986, OPEC members tried to boost oil price by making a collective cut of over 1 MMB/d (see Figure 1, point 2). But by that point, the level of oversupply was well beyond what OPEC could control. Frustrating the pace of the recovery were the newly commissioned non-OPEC projects, including those in the North Sea and Alaska that could expand their production at a low cost.

Let’s compare the 1986 situation to 2015. Using the latest figures from the IEA, OPEC spare capacity now sits at 2.2 MMB/d, and even when you add the 1.8 MMB/d of crude oil that is being produced above current demand levels, the amount of “spare oil” is at most 4 MMB/d or 4% of global demand. Compare this to 20% in 1986. If it took fifteen years to sort out a 20% oversupply, assuming that all else is equal, a mere 4% glut should take far less time

Of course, not everything is equal, some things are better. Today’s non-OPEC production sources are not as amiable to low cost expansion as in 1986. Tight oil declines quickly and needs constant investment. Expanding oil sands or deep water is not economic at current prices; and, even assuming a markdown in the cost for building new projects, it is tough to imagine how they could become profitable at today’s oil price.

And some things are the same; notably the law of supply and demand still holds. Low price stimulates more consumption. Even though conservation efforts reduced demand in the early 1980s, between 1986 and 2000 cheap oil spurred consumption to grow by 2% per year. The IEA now expects oil demand to grow by 1.7% this year, more than two times last year’s pace.

This is not a 1986 rerun. With the exception of OPEC’s policy curveball, by many measures the situation is not as dire today (although it feels like it). Even without a wildcard such as a major supply outage (from a civil war or a terror attack for example) or a voluntary cut by OPEC, robust growth in global oil demand along with an inevitable slowdown in global supply growth should conspire to strengthen prices much faster than 1986.

[HiTempguy1]

Let’s compare the 1986 situation to 2015. Using the latest figures from the IEA, OPEC spare capacity now sits at 2.2 MMB/d, and even when you add the 1.8 MMB/d of crude oil that is being produced above current demand levels, the amount of “spare oil” is at most 4 MMB/d or 4% of global demand. Compare this to 20% in 1986. If it took fifteen years to sort out a 20% oversupply, assuming that all else is equal, a mere 4% glut should take far less time

So this guy's analysis does or doesn't take into effect that the US can be a big swing producer now? And add on 1 or 1.5 MMB/d from Iran, that gets us up to 5.5% alone and still doesn't account for the US (which ramped up from 5.5MMB/day to almost 9.5MMB/day in the last 5 years). And the decline rates in the USA are WAY slower than anyone ever though, as they are still producing above 9MMB/day (from the info I can find with a brief look).

So I dunno. His case doesn't seem very strong, especially if the global growth rate of oil demand is decreasing, we might simply be seeing the beginning of the end. I personally think if solid growth returns to the EU, USA, and China that prices will go through the roof again.

[ExtraSlow]

Decline rates on individual wells are as steep as everyone is saying. The basin-by-basin declines are much less because of all the new wells that are still being drilled, even at these prices. I don't have the numbers at my fingertips, but even at their lowest this year, there were 600 or more rigs in North America drilling for Oil, plus another couple hundred chasing Natural Gas.

I'm not an economist, and I do suffer from confirmation bias, so stories like this really resonate with me. Still, I don't think he's that far off.

It'll be a wild ride either way.

As always, my nightime prayers will be: "God please give me another oil boom, I swear I won't piss it away this time."

[kobe tai]

fuken US fucking it up for everywhere again

[ZenOps]

Before I go to sleep looks like $39.

Markets might just fall off the cliff tomorrow. Get your bomb shelters ready cause its on like donkey kong!?

[ZenOps]

Nickel down 10% pre-market opening. Several markets have halted trade before start.

Its ugly out there folks.

[jdmXSI]

Originally posted by ZenOps
Before I go to sleep looks like $39.

Markets might just fall off the cliff tomorrow. Get your bomb shelters ready cause its on like donkey kong!?

Blew my mind when I had seen opening losses...

http://www.marketwatch.com/story/us-...nts-2015-08-24

[sputnik]

$37.96/bbl

[killramos]

Well happily that didn't last to long.

I'm not sure 30 dollar oil actually benefits anyone. I don't see any motivation from anyone to actually keep it there.

[ZenOps]

8.5% rally so far today.

So lets talk economic collapse:

http://theeconomiccollapseblog.com/a...es-of-momentum

[403ep3]

up 9.22%.. hit 10!

[bjstare]

Originally posted by killramos
Well happily that didn't last to long.

I'm not sure 30 dollar oil actually benefits anyone. I don't see any motivation from anyone to actually keep it there.

It'll be back down, don't worry.

[roopi]

$0.80/litre in St Catherines due to price wars.

[suntan]

By my calculations, oil should be over $80/bbl in 10 working days.

[Mitsu3000gt]

Originally posted by 403ep3
up 9.22%.. hit 10!

Up just over 10% to $42.64

[sputnik]

Originally posted by suntan
By my calculations, oil should be over $80/bbl in 10 working days.

I think you might have a case of "premature evaluation".