The Oil Price War - OPEC Driving down prices

[TGHusker]

This is good for the consumer of course. Everyone likes lower fuel costs - cars, airplanes, over the road trucks, trains etc. The economy moves on petro.

Of course the lower prices has a diverse affect on the oil industry - less rigs in operation, oil industry jobs. Lower prices also keep us dependant on OPEC oil and is a dis-incentive in exploring/developing other energy sources.

 

Some suggest that we need to impose a tariff to keep the price of foreign crude in the $80/barrel range. Thus keeping the price high enough for the domestic energy producers (not just the Exxons but also all of the small companies that work in and supply the oil fields) to keep production going and employees employed. I know we still import oil, which OPEC is needing us to do. I'm not sure where our domestic production vs consumption is at this time. I know we cannot live on domestic oil alone.

 

So is a tariff a good or bad idea?

 

 

http://www.bloomberg.com/news/2015-01-09/why-opec-is-talking-oil-down-not-up-after-48-selloff.html

[deedsker]

Let them sell us oil as cheap as possible. Our oil will still be there tomorrow. We still have incentives to utilize alternative energy sources.

[Stumpy1]

Let them sell us oil as cheap as possible. Our oil will still be there tomorrow. We still have incentives to utilize alternative energy sources.

Keeping our oil in the ground and not pumping/drill it will cost a lot of people their jobs. I have some friends that work up in North Dakota in the oil fields and they said that if prices continue to fall, they will end up having to shut down. It is kind of a good and bad situation, good for the consumer, bad for the people that work in the oil industries, such as drillers

[strigori]

Oil back to prices of several years ago means layoffs? How about lower exec salaries.... oh, wait, that would be the ethical thing to do...

[ZRod]

 

Let them sell us oil as cheap as possible. Our oil will still be there tomorrow. We still have incentives to utilize alternative energy sources.

 

Keeping our oil in the ground and not pumping/drill it will cost a lot of people their jobs. I have some friends that work up in North Dakota in the oil fields and they said that if prices continue to fall, they will end up having to shut down. It is kind of a good and bad situation, good for the consumer, bad for the people that work in the oil industries, such as drillers

Price of oil goes up, auto industries lay people off, airlines down size/prices go up. It's all a trade off.

[tschu]

Low oil prices are basically great for 95% of America. No, I'm not going to shed any tears for any energy companies that struggle - especially while the Exxon-Mobils of the world were making record profits as gas hit $4 a gallon.

 

We have to get our oil from somewhere. If OPEC wants to hand it to us for cheap, it means they're desperate. I have no problem eating up all of their cheap oil right now - I'd much rather pay these corrupt bastards low prices than high ones. Added bonus; if our drilling gets cut back, we keep more of our domestic reserves for the long-term. Yes I realize that drillers in North Dakota will be laid off - there's always a trade-off. Again, if a low oil situation results in what is estimated to be an extra $550 in the pocket of your average American household this year which is huge, then I am not going to be too upset about a few thousand people being laid off, especially when they're up there making $95K/yr already for manual labor.

[HuskerNBigD]

Lower oil prices will lead to a trillion dollar loss to the global economy. While the decrease in prices at the pump might be nice, it is a bit narrow sighted to think there will be no ramifications. That amount of loss to a fragile global economy is a scary thing.

[deedsker]

Lower oil prices will lead to a trillion dollar loss to the global economy. While the decrease in prices at the pump might be nice, it is a bit narrow sighted to think there will be no ramifications. That amount of loss to a fragile global economy is a scary thing.

Less money goes over seas. People loss jobs in the US. Money saved on gas will be pumped back into the economy because the U.S. doesn't save anything. Businesses have incentives to move overseas short term due to low cost shipping. How long does that last? Don't know. But overall, we will be fine.

[strigori]

Lower oil prices will lead to a trillion dollar loss to the global economy. While the decrease in prices at the pump might be nice, it is a bit narrow sighted to think there will be no ramifications. That amount of loss to a fragile global economy is a scary thing.

So, damned if its high, damned if its low? I call BS. What it is doing is bringing down stock prices is some industries and thus the spreadsheet value of the wealthy. Higher gas prices are not just at the pump, they get passed along to every other consumer product as well. Everything is delivered by a gas/diesel powered truck. If oil prices were the only thing a country's economy is based on, then that's their own damned fault.

[HuskerNBigD]

 

Lower oil prices will lead to a trillion dollar loss to the global economy. While the decrease in prices at the pump might be nice, it is a bit narrow sighted to think there will be no ramifications. That amount of loss to a fragile global economy is a scary thing.

 

So, damned if its high, damned if its low? I call BS. What it is doing is bringing down stock prices is some industries and thus the spreadsheet value of the wealthy. Higher gas prices are not just at the pump, they get passed along to every other consumer product as well. Everything is delivered by a gas/diesel powered truck. If oil prices were the only thing a country's economy is based on, then that's their own damned fault.

The irony of your last sentence.... you do realize that each of the 10 states in the US, where hydrocarbon production has increased since the recession, has experienced greater employment growth than the US overall? Not only that but were looking at a loss of nearly 1 million jobs related to the oil industry and these aren't the c-suite execs with money tucked away for years, no these are the GED/high school degree roughnecks working on the rigs. Foreign investors will all but exit and the Saudis will artificially keep the prices lower.

 

Then there is the whole Energy Junk bond crisis, where roughly 30% of the energy junk bonds will default. Energy junk bonds account for 22% of the junk bond market (hello banks, asset managers, and retirement plans). All at the same time, the wealth will just transfer from the energy industry to the airline industry - dont expect them to drop prices anytime soon - as they are expecting record profits this year.

[tschu]

You're telling me that the shale oil boom has resulted in large employment? You don't say. That's why it's called a boom. Okay, so several things...

 

The economy isn't a zero-sum game, but many times it operates somewhat under those principles. What I'm getting at is that the average consumer is going to have a lot more money available that would have been previously spent on petroleum products, namely gasoline. The estimates I've read range from $500-$1200 per household. Guess what? That money doesn't disappear into the ether. It gets spent. People use it to buy stuff, more stuff, other than gasoline. Buying goods and services. That spending literally is the economy. More spending = a big economic boost. And guess what results from greater demand for goods and services? Jobs. Any job loss to energy companies is likely to be offset by jobs elsewhere.

 

You're worried about junk bonds? Literally bonds that most investors won't touch, especially for retirement purposes? You're saying this is bad for the little guy and fine for the wealthy, but then suddenly it's 'won't someone think of the banks and hedge fund managers speculating on junk bonds?' Man, this is priceless.

 

Nobody is arguing that there won't be drawbacks in some areas. But the overall impact will be almost undoubtedly good for a nation that is a huge net importer of oil.

[strigori]

 

 

Lower oil prices will lead to a trillion dollar loss to the global economy. While the decrease in prices at the pump might be nice, it is a bit narrow sighted to think there will be no ramifications. That amount of loss to a fragile global economy is a scary thing.

So, damned if its high, damned if its low? I call BS. What it is doing is bringing down stock prices is some industries and thus the spreadsheet value of the wealthy. Higher gas prices are not just at the pump, they get passed along to every other consumer product as well. Everything is delivered by a gas/diesel powered truck. If oil prices were the only thing a country's economy is based on, then that's their own damned fault.

The irony of your last sentence.... you do realize that each of the 10 states in the US, where hydrocarbon production has increased since the recession, has experienced greater employment growth than the US overall? Not only that but were looking at a loss of nearly 1 million jobs related to the oil industry and these aren't the c-suite execs with money tucked away for years, no these are the GED/high school degree roughnecks working on the rigs. Foreign investors will all but exit and the Saudis will artificially keep the prices lower.

 

Then there is the whole Energy Junk bond crisis, where roughly 30% of the energy junk bonds will default. Energy junk bonds account for 22% of the junk bond market (hello banks, asset managers, and retirement plans). All at the same time, the wealth will just transfer from the energy industry to the airline industry - dont expect them to drop prices anytime soon - as they are expecting record profits this year.

 

So you still sit here and call it as 'economic collapse from lower oil prices' and higher oil prices were a factor in the recession. It can't run both ways. But by all means, keep running away with the alarmist BS crap spewed by the Murdock Empire.

 

And junk bonds deserved to be punished, they need to be illegal in the first place.

[tschu]

Maybe huskerfan120889 works on a North Dakota oil rig and used his earnings to make a bunch of terrible investments in junk energy bonds?

[Stumpy1]

I absolutely don't mind the price drop as a consumer and as an employee of the refined petroleum business. Like I stated earlier, I have friends with families that "might/could" lose their livelihood over the drop and it is a little upsetting.

 

I do agree with tschu that for every job lost in the oil business, one will probably appear in another part of the economy. It really is a teeter-tooter situation when it comes to oil prices and the economy.

[BigRedBuster]

Well, my first reaction to the idea of a tariff is..."What a dam stupid idea".

 

Yes, some oil industry jobs will be lost. But, it means SOOOO much more to the economy to have cheap energy that more jobs will be created. I know people in Williston ND and yes...the place is booming and there are jobs there. But, the place is hell on Earth right now. People who have lived their entire lives there are moving away.

There can be better jobs created elsewhere.

 

We did something absolutely fantastic with our oil boom. It made OPEC stand up and notice that we are serious about developing our own energy if they do nothing but sit there on $125 oil and laugh all the way to the bank.....while supporting terrorism against us.

 

Now, we have cheap oil. Our economy has the chance to rebound and grow. NOW, the government needs to do smart things and that is to continue to develop other energy sources. Just because oil is cheap now, doesn't mean it will always be cheap.

 

Well, I guess I still stand by my first opinion of the tariff idea. It sucks.