7 ms·

> I mean, this happened just a few years ago back in 2015, right? And 2008, and 2001, and 1998 The point here is that sub $40 oil is becoming the new norm. Whi

> I mean, this happened just a few years ago back in 2015, right? And 2008, and 2001, and 1998 The point here is that sub $40 oil is becoming the new norm. While these countries can weather a 2-3 year drop in oil prices, those short term drops are more and more frequent and the bottom keeps getting lower. Between electrification of transportation and reduced travel which may last for another 6 months (or much longer, it's not really clear), demand is down. On top of that, any time oil stays over $50/ barrel for a prolonged period of time, shale oil and oil sands production increases putting downward pressure on prices. Any way you look at it, there is no good news for oil-dependent states.

guepe 6y ago
Prices have dropped more frequently because of US shale oil. Electrification is a very small factor (yet).
- ogre_codes 6y ago
  Fair enough on all points. Electrification is the longer term existential threat. Even if 20% of vehicles are electric, the impact on demand and oil prices will be profound.
  - hinkley 6y ago
    You might sum it up as: These countries weather boom/bust cycles in oil prices, waiting for a 'someday' to refill their coffers, and every year there are more and more things trying to put off 'someday' a little longer. Essentially these countries have an antagonistic relationship with the rest of the world, as do quite a few corporations really. If you only get good news when everyone else gets bad news, then you've made an enemy of your customers. They just might know it yet. Lots of them will be working in an uncoordinated fashion to make their bad news a little better, making your good news worse and worse. Once word gets around they'll start teaming up.
    - ogre_codes 6y ago
      > Once word gets around they'll start teaming up. They were able to do this fairly successfully until shale oil and spoiled their intermittently successful collusion.
      - bluGill 6y ago
        They were only able to do it because Saudi Arriba was willing to take almost all of the cuts required. In the 1970s opec vot better compliance, but cartels tend to fail because it is the benifit of the individual to defect while everyone else makes cuts. Saudi Arriba is not able to make deep enough cuts alone though, and it is hard to see anyone else making them.
        hinkley 6y ago
        I've always wondered how much black market petroleum is state sanctioned. Unofficially, of course.
  - saalweachter 6y ago
    Eventually New England will also have to outlaw the use of #2 heating oil.
    - dougmany 6y ago
      I know it is the southern end of New England but a friend of mine in Connecticut just switched to a pellet stove for heating his large home. He plans to pay for the stove in two winters worth of heating.
jeffreyrogers 6y ago
As they say in the oil industry: the cure for low oil prices is low oil prices. In any case, if the developing world is really to develop as much as hoped for and claimed they will need a lot of oil. Even if it is all renewables based (which is a fantasy) those renewables require large oil inputs to be manufactured (those 400 ton mining trucks won't be electrified anytime soon). So while I expect oil to be down over the next year or so, I think the long-term trend is upwards, for better or for worse.
- lsaferite 6y ago
  > those 400 ton mining trucks won't be electrified anytime soon https://www.popularmechanics.com/technology/infrastructure/a30873539/electric-mining-truck/ https://www.popularmechanics.com/technology/infrastructure/a...
  - jeffreyrogers 6y ago
    I'm aware of these developments. I still don't think it's going to happen at scale. The economics are not favorable for electrifying these vehicles.
- margalabargala 6y ago
  The heavy trucks used in the mining industry are almost entirely electric. If a truck is going underground, much better for it to not be spitting fumes that will kill your workers, and if the mine is at the top of a hill, the regenerative braking from a loaded truck going downhill will charge the batteries so much that the trucks rarely, if ever, have to be manually charged. Some of the trucks in question: https://www.komatsuamerica.com/equipment/trucks/electric https://www.komatsuamerica.com/equipment/trucks/electric
  - GillBates666 6y ago
    Thanks for the comment. I took the previous poster's comment at face value (seemed like common sense). My internal db has been updated.
drocer88 6y ago
"The point here is that sub $40 oil is becoming the new norm" Crude is currently $41.74 as of 1:10PM EDT.
- ogre_codes 6y ago
  Also a fair point, but since most of these countries need oil to be at $70-80/ barrel to balance their books, do you think they will care about how that hair is split?
  - hinkley 6y ago
    Did I not hear that some of those high numbers either have to do with corruption or over-reliance of public services on socialized oil industry profits? Last time this came up someone was trying to make the argument that the reason some countries need 50% higher oil prices has less to do with the costs of extracting and shipping the oil and more to do with the cost of doing business in that country. If so, you may see some pressure to change the equation, for better or worse.
    - ogre_codes 6y ago
      I highly doubt reform will be high on the list of priorities for a corrupt regime in decline. I would expect that the poor and middle class would suffer far more and first.
      - hinkley 6y ago
        I did not mean to imply that the pressure would necessarily be orderly or civil.
- monocasa 6y ago
  Which is the highest WTI crude has been in months.
vbezhenar 6y ago
I don't think it's about demand. If oil price were regulated as a honest market, it would cost much lower. Oil price is regulated by OPEC cartel. They could make it $200 if they want. I think that they're manipulating price low enough to slow development of non-oil energetics as much as possible and high enough to stay profitable. Also they're interested to put a pressure on Russia and some other countries, because Russia spends much more to get oil from the earth, so their margins are much tighter.
- lostmsu 6y ago
  No, they most likely can't really make it $200 for any significant amount of time. As everyone else at the moment they have to navigate the market, that now has more producers.
- xoa 6y ago
  >If oil price were regulated as a honest market, it would cost much lower. No, if oil was regulated as an honest market, it'd have the CO2 externality priced in to make it carbon neutral. That'd make the price significantly higher.
- ogre_codes 6y ago
  > Oil price is regulated by OPEC cartel. They could make it $200 if they want. This is why oil prices have been high since the late 70s. Shale oil and oil sands have put a big damper on the OPEC's ability to set prices. The only control OPEC has on oil prices is by limiting supply. Limiting supply to control prices only works when you can reap the rewards. If OPEC drops prices and US shale oil companies turn up the volume, then OPEC only gets the downside of limiting supply while shale oil gets the profits.
- rconti 6y ago
  OPEC just doesn't have enough pricing power anymore.
rgbrenner 6y ago
Demand is temporarily down because of covid and the russia/opec dispute. Consumption was hitting records before that, and the EIA projects over 100m barrels/day next year: https://www.eia.gov/outlooks/steo/report/global_oil.php https://www.eia.gov/outlooks/steo/report/global_oil.php Also take a look at this inflation adjusted crude oil chart: https://www.macrotrends.net/1369/crude-oil-price-history-chart https://www.macrotrends.net/1369/crude-oil-price-history-cha... You have a high period from 1980-85 and from 2005-14... but those are the exceptions rather than the norm. I'm sure they got spoiled by the high prices, but $40-50 is a normal price for oil.. and they'll learn to adjust like they have in the past. The electrification of transportation is great and it'll eventually have the effects your mention... but right now, those effects are out weighed by the growth in developing markets. Very similar effect as renewables and coal. Coal use will keep growing through 2030, even though renewables are growing rapidly. The demand for these things (vehicles, energy) is much higher than what the clean economy can deliver at the moment.

guepe 6y ago

Prices have dropped more frequently because of US shale oil. Electrification is a very small factor (yet).

ogre_codes 6y ago
Fair enough on all points. Electrification is the longer term existential threat. Even if 20% of vehicles are electric, the impact on demand and oil prices will be profound.
- hinkley 6y ago
  You might sum it up as: These countries weather boom/bust cycles in oil prices, waiting for a 'someday' to refill their coffers, and every year there are more and more things trying to put off 'someday' a little longer. Essentially these countries have an antagonistic relationship with the rest of the world, as do quite a few corporations really. If you only get good news when everyone else gets bad news, then you've made an enemy of your customers. They just might know it yet. Lots of them will be working in an uncoordinated fashion to make their bad news a little better, making your good news worse and worse. Once word gets around they'll start teaming up.
  - ogre_codes 6y ago
    > Once word gets around they'll start teaming up. They were able to do this fairly successfully until shale oil and spoiled their intermittently successful collusion.
    - bluGill 6y ago
      They were only able to do it because Saudi Arriba was willing to take almost all of the cuts required. In the 1970s opec vot better compliance, but cartels tend to fail because it is the benifit of the individual to defect while everyone else makes cuts. Saudi Arriba is not able to make deep enough cuts alone though, and it is hard to see anyone else making them.
      - hinkley 6y ago
        I've always wondered how much black market petroleum is state sanctioned. Unofficially, of course.
- saalweachter 6y ago
  Eventually New England will also have to outlaw the use of #2 heating oil.
  - dougmany 6y ago
    I know it is the southern end of New England but a friend of mine in Connecticut just switched to a pellet stove for heating his large home. He plans to pay for the stove in two winters worth of heating.

jeffreyrogers 6y ago

As they say in the oil industry: the cure for low oil prices is low oil prices. In any case, if the developing world is really to develop as much as hoped for and claimed they will need a lot of oil. Even if it is all renewables based (which is a fantasy) those renewables require large oil inputs to be manufactured (those 400 ton mining trucks won't be electrified anytime soon). So while I expect oil to be down over the next year or so, I think the long-term trend is upwards, for better or for worse.

lsaferite 6y ago
> those 400 ton mining trucks won't be electrified anytime soon https://www.popularmechanics.com/technology/infrastructure/a30873539/electric-mining-truck/ https://www.popularmechanics.com/technology/infrastructure/a...
- jeffreyrogers 6y ago
  I'm aware of these developments. I still don't think it's going to happen at scale. The economics are not favorable for electrifying these vehicles.
margalabargala 6y ago
The heavy trucks used in the mining industry are almost entirely electric. If a truck is going underground, much better for it to not be spitting fumes that will kill your workers, and if the mine is at the top of a hill, the regenerative braking from a loaded truck going downhill will charge the batteries so much that the trucks rarely, if ever, have to be manually charged. Some of the trucks in question: https://www.komatsuamerica.com/equipment/trucks/electric https://www.komatsuamerica.com/equipment/trucks/electric
- GillBates666 6y ago
  Thanks for the comment. I took the previous poster's comment at face value (seemed like common sense). My internal db has been updated.

drocer88 6y ago

"The point here is that sub $40 oil is becoming the new norm" Crude is currently $41.74 as of 1:10PM EDT.

ogre_codes 6y ago
Also a fair point, but since most of these countries need oil to be at $70-80/ barrel to balance their books, do you think they will care about how that hair is split?
- hinkley 6y ago
  Did I not hear that some of those high numbers either have to do with corruption or over-reliance of public services on socialized oil industry profits? Last time this came up someone was trying to make the argument that the reason some countries need 50% higher oil prices has less to do with the costs of extracting and shipping the oil and more to do with the cost of doing business in that country. If so, you may see some pressure to change the equation, for better or worse.
  - ogre_codes 6y ago
    I highly doubt reform will be high on the list of priorities for a corrupt regime in decline. I would expect that the poor and middle class would suffer far more and first.
    - hinkley 6y ago
      I did not mean to imply that the pressure would necessarily be orderly or civil.
monocasa 6y ago
Which is the highest WTI crude has been in months.

vbezhenar 6y ago

I don't think it's about demand. If oil price were regulated as a honest market, it would cost much lower. Oil price is regulated by OPEC cartel. They could make it $200 if they want. I think that they're manipulating price low enough to slow development of non-oil energetics as much as possible and high enough to stay profitable. Also they're interested to put a pressure on Russia and some other countries, because Russia spends much more to get oil from the earth, so their margins are much tighter.

lostmsu 6y ago
No, they most likely can't really make it $200 for any significant amount of time. As everyone else at the moment they have to navigate the market, that now has more producers.
xoa 6y ago
>If oil price were regulated as a honest market, it would cost much lower. No, if oil was regulated as an honest market, it'd have the CO2 externality priced in to make it carbon neutral. That'd make the price significantly higher.
ogre_codes 6y ago
> Oil price is regulated by OPEC cartel. They could make it $200 if they want. This is why oil prices have been high since the late 70s. Shale oil and oil sands have put a big damper on the OPEC's ability to set prices. The only control OPEC has on oil prices is by limiting supply. Limiting supply to control prices only works when you can reap the rewards. If OPEC drops prices and US shale oil companies turn up the volume, then OPEC only gets the downside of limiting supply while shale oil gets the profits.
rconti 6y ago
OPEC just doesn't have enough pricing power anymore.

rgbrenner 6y ago

Demand is temporarily down because of covid and the russia/opec dispute. Consumption was hitting records before that, and the EIA projects over 100m barrels/day next year: https://www.eia.gov/outlooks/steo/report/global_oil.php https://www.eia.gov/outlooks/steo/report/global_oil.php Also take a look at this inflation adjusted crude oil chart: https://www.macrotrends.net/1369/crude-oil-price-history-chart https://www.macrotrends.net/1369/crude-oil-price-history-cha... You have a high period from 1980-85 and from 2005-14... but those are the exceptions rather than the norm. I'm sure they got spoiled by the high prices, but $40-50 is a normal price for oil.. and they'll learn to adjust like they have in the past. The electrification of transportation is great and it'll eventually have the effects your mention... but right now, those effects are out weighed by the growth in developing markets. Very similar effect as renewables and coal. Coal use will keep growing through 2030, even though renewables are growing rapidly. The demand for these things (vehicles, energy) is much higher than what the clean economy can deliver at the moment.