Oil Under $50 a barrel

[Punx0r]

Yep, this week the price passed this milestone and is currently trading at $49.

Back when it was $60 the lowest U.S. price I heard of was $1.77/gal, which works out at 27p/litre.

My local Tesco was at £1.09 yesterday. Fuel duty is £0.58p and VAT at 20% So the actual fuel price is 29p/litre.

Prices are rumoured to fall further.

Remember that time not so long ago when oil was $150/barrel?!

OPEC is deliberately refusing to cut production to offset a slump in world demand and an increase in U.S. production from shale fracking. Due to supply and demand, this forces down the price, with OPEC hoping to bankrupt the U.S. producers before going bust themselves, as the current prices are below production cost.

[mg-richard]

I cant help but wonder if OPEC and its associates arent going to acquire the assets of said companies when they are struggling?

[maestrovdpt16]

It is mainly the force of the US working with the house of Saud to drive the price of oil right down so that the Russian rubel falls further and further into ruin. This also targets Iran who still have sanctions stopping them borrow any international money to bail themselves out. With all the international sanctions Russias only remaining export is oil. So the plan is to up production so the price drops to create crisis in Russia, it's working!

Russia's break even price is $100, Iran's though is $136 Even Saudi's break even price is much more than $49 though at around $94

Do you guys not read the news?

Read more here is you need to:
http://www.economist.com/news/internati ... ea65f756e0

[mg-richard]

Not convinced the US would risk unemployment and oil riches to spite russia or iran who are already suffering.

A happy conincidence perhaps.

[maestrovdpt16]

It has all been written about in depth in the papers, whether you believe it or not.

Not convinced the US would risk unemployment and oil riches to spite russia or iran who are already suffering.

A happy conincidence perhaps.

[Punx0r]

The Economist article does not appear to support the theory of a U.S. led conspiracy to screw Russia and Iran. It's hard to imagine the U.S. and the Saudis co-operating on anything...

The summary of the article is:

Iran & Venezuela = stuffed
U.S. = badly hit
Russia = slightly hit
Saudis = Overall winners

No one really knows what's going on, but my speculation is towards a Saudi plot because they don't like the idea of the U.S. now being the World's largest oil producer, reduced short-term global demand and a medium-term move away from oil to alternative sources of energy. I think they are trying to protect their monopoly. The Saudis have also appeared very shrewd before when it comes to business.

[rpatten]

I agree with mastro, the USA and UK are all up for getting rid of Putin by busting russia. Russia have been too aggressive lately and land grabbing slowly, its away of nipping it in the bud.

Also don't forget IS have some oil fields and have been selling oil to fund themselves up until the oil price drop, so it makes sense to make it unappealing to them to march into neighbouring countries swiping more oil fields for quick cash and unstabilising the west.

The US wanted more sanctions from euro on Russia and more effort against IS they didn't get it so I think it safe to assume that the oil price drop has been orchestrated especially seeing as the UK and USA are trying to do more fracking to insulate themselves from oil supply problems

All I can say is its lucky the Scottish stayed part of the uk, their economy would of been proped up by oil and with out it, it could of spelled disaster

[Marty]

It makes you wonder what issues Fracking will cause in the future give it a few thousand years time this world will have nothing left to offer it would of been sucked dry of oil,gas,coal ect be interesting to look forward say 1000 years to see where it's all heading.

When you look back at the past I would say my generation ( if you in your 30's now ) will agree we have had it easy with technology, vehicles and general lifestyles. I often watch documentarys showing back in like the 50's ect and people then had a lot less yet where happier and more content and you had a true community spirit not like nowerdays where you have to lock your doors and bolt down valubles.

Sorry for going a bit of topic but just shows how things in this world is now driven by greed and money and how it's all changing and for the worse.

[maestrovdpt16]

Care to explain this?

http://en.wikipedia.org/wiki/House_of_B ... se_of_Saud

The House of Saud showered Bush jnr with so many accolades it is bizarre! They are and will always be in bed with the US. At times of strife and when it suits them we will always be in debt to them as well. We sell huge amounts of arms to the Saudis, probably America does too.

And just in case you thought it was just Bush who cosy's up the the Saud here is obama receiving some highly prised accolade from the King too:

It's hard to imagine the U.S. and the Saudis co-operating on anything...

[maestrovdpt16]

If you look at the charts on the Economist page again you'll see the saudis break even price at $94 , selling out at $49 is far from winning, that prize goes to the UAE where somehow their price is nearly nothing?

But then if there is a country that can afford to loose money at the rate of 2:1 it's the Saud!

Saudis = Overall winners

[rpatten]

Its on the news today that fuel could drop bellow a £1 a litre, happy days right now but that wont last long

[mg-richard]

Yes and the Queen honoured Robert Mugabe, doesnt mean they are planning to take over the world together.
Its called diplomacy.

[Punx0r]

True. I was thinking of when Blair went kissing Gadhafi's boots...

The Saudis are/were suspected of financing Osama Bin Laden's operation and more lately of ISIS, hence I wouldn't have thought the U.S. would have much to do with them. I could well be wrong on both points.

The Economist article seemed to suggest the Saudis stood to gain the most in the long term, even if they lost money in the short term.

If it is a Western plot to counter Putin then it might be worthwhile, assuming it doesn't go wrong. Putin certainly seems a clever and dangerous man, although bankrupting Russia might well put a greater extremist in charge, like last time. The West missed an opportunity after the fall of the USSR to bring Russia on side (The assistance given to Poland is supposed to be an example of what could have been).

[maestrovdpt16]

Yes and the Queen honoured Robert Mugabe, doesnt mean they are planning to take over the world together.
Its called diplomacy.

Untrue:

http://en.wikipedia.org/wiki/Order_of_the_Bath

A more controversial member of the Order was Robert Mugabe, whose honour was stripped by the Queen, on the advice of the Foreign Secretary, David Miliband, on 25 June 2008 as "as a mark of revulsion at the abuse of human rights and abject disregard for the democratic process in Zimbabwe over which President Mugabe has presided."[82]

[rovermadman4825]

But it was true tho

[maestrovdpt16]

Yes but the title was stripped away, that causes more shame than not having the title in the first place? Mg Richards point was it was only given for diplomacy, well stripping it away surely shows our true feelings? The title was given in 2004 At which time Mugabe's atrocities were already considerable. TBH I fear the title was only stripped away when Mugabe's gangs were forcing white farmers out of their houses and land.

But anyway I'm certainly not here defending our government! Or Queen for that matter.

[rovermadman4825]

I was just nit picking lol

[mg-richard]

Stripping him of it doesnt make the fact it was given not true.
If you apologise for something you still did it.

'Not true', a bit like allot of stuff on Wikipedia?
and Journalists are allowed to express opinions!

Personally I think USA and OPEC are complicit but not causing this issue.

[shen]

Just to throw a little in to the mix....Palestine has offshore gas and oil reserves.
Of course this will be of no concern to the U.S or ever has been

[Punx0r]

Down to $45/barrel.

Several petrol stations in the midlands have reportedly reduced prices to just under £1/litre. At the moment this is estimated to be only a marketing ploy as the price of wholesale unleaded is currently around 99p/litre. However, average petrol price is predicted to break the £1 barrier soon.

The pound is currently weak against the U.S. Dollar and this is making oil more expensive than it would otherwise be (apparently by around 4p/litre).

Oil prices are predicted to bottom out around $40-$45/barrel and could stay low for around a year, which is much longer than I thought it would last. The upswing is likely to go very high, though, as by then production will have decreased, reducing supply and once the price starts rising speculators will jump on board and keep pushing it upwards, potentially into a bubble.

Enjoy it while it lasts, but count on getting screwed as hard as ever afterwards...

[mg-richard]

To drag this back up,
A quote from BP today:

The reason BP expects the oil price to stay in the range of $50 to $60 for some years is for reasons you have read about here - it is persuaded that the Saudis, Emiratis and Kuwaitis are determined to recapture market share from US shale gas.

This means keeping the volume of oil production high enough such that the oil price remains low enough to wipe out the so-called froth from the shale industry - to bankrupt those high-cost frackers who have borrowed colossal sums to finance their investment.

[maestrovdpt16]

Well in that case I'm doubly all for it. Fracking is one of the most stupid ideas I've ever encountered! Even when the oil fields have run dry it seems beyond common sense to pretend we are that desperate to extract oil in such a dangerous way.

[mg-richard]

Yes, I agree.
We are not that desperate but will be one day

[maestrovdpt16]

looking at it sensibly I'd like to disagree. Fracking potentially causes many problems, among the most important are potential seismic shifts, dangerous chemicals being used at hydraulic pressures (hence the seismic risk) and the potential water contamination. As the UK is riddled with underground waterways the potential of chemical pollution of our drinking water is too critical.

Hydrogen has to be the rational solution, I think if it were an answer manufacturers could produce vehicles and power plants AND control the fuel supply we'd have gone over to hydrogen as a fuel years ago. Problem is hydrogen has great potential for very cheap motoring, which isn't interesting to industry.

But my view isn't going to be listened to so yes the chances are fracking will be a short term way of getting the dregs of oil.

[Punx0r]

Interesting to hear BP predicting this could last for years. I didn't think any party had enough cash to sit it out that long. It's not just shale and tar sands that are unprofitable at current oil prices, lots of deep-water stuff is as well. Most North Sea production is also unprofitable. OGUK are calling for the UK government to reduce taxes to help them out.

There's already been a significant upswing in the U.S. sales of big SUVs and pickup trucks.

If anyone thinks the principal of fracking is nuts, it's worth knowing that the U.S. performed several experiments to achieve the same effect as fracking (well stimulation) using nuclear bombs. It was only after several explosions that the programme was scrapped as someone worked out that despite increased production from the well, they would never cover the cost of the nuke...

Hydrogen for road transport is favoured by the oil industry as currently the only remotely cost-effective way to produce hydrogen is from fossil fuels, which doesn't really solve anything. I think Honda is the only car manufacturing pursuing hydrogen (using fuel cells to produce power for an electrical drive-train), all others are going pure-electric.

[rovermadman4825]

Hydrogen is the way forward, my personal opinion is battery powerd cars is just a stepping stone/ cash cow. Its going to be the oil companies that will take the hydrogen fuel production on when oil starts getting scarce.

But bring on £1 a litre.......

[Marty]

The carbon footprint to actually make an electric car is huge not forgetting the extra load it will put on power stations ect. I know that from when I built the hydrogen fuel cell taxi's at Lotus

[mg-richard]

here's my prediction
Chuckle chuckle vision...