The oil prices above 90 are arbitrary and manipulated on the high side. If America starts production again, you'll see it fall back into place and the world economic situation will improve for people other than the politically connected oil barons.
U.S. field production of crude oil has been rising every year since 2008. 2013 saw the highest production since 1989. The US has overtaken Saudi Arabia as the world's largest oil producer.
If you add in natural gas, which obviously has been growing dramatically, US total petroleum production (as an industry term, petroleum includes both oil and gas) surpasses all records.
I respectfully suggest that you review your sources of information, and sh*tcan those that are feeding you propaganda. Reading/watching fictional "news" makes us stupid: for an example of this principle in action, see "Russian Federation".
Why would OPEC, whose life blood is oil, willing to accept low oil prices? I would agree reluctantly.
I have seen reports that VP Joe Biden conspired with the Saudis to flood the oil markets to lower the price. This sounds like Russian propaganda to me. Anything that goes against the Russians are blamed on the US.
The "bankruptcy threshold" was indeed $80 / bbl. I didn't post a link for this, because (as I recall) I didn't get this from a newspaper/magazine, but rather heard it from a "Russia expert" on a television news program.
Why is OPEC willing to accept low oil prices? Well, OPEC isn't all that willing, but Saudia Arabia is, and Saudi production is so vast that other OPEC members can't do much to resist a Saudi move. To be sure, some OPEC members (Venezuela, for example) are very unhappy about this prospect.
So, why do the Saudis want this? Reportedly, they are worried about losing market share. An awful lot of the world's petroleum reserves are VERY expensive to produce. For example, six of the tar sands reserves in Alberta, Canada are estimated to need oil more expensive than $125/bbl to break even. Two more of these Alberta reserves need $100+ oil to break even.
A giant oil reserve off the coast of Nigera needs $125 / bbl to break even (all these figures are from carbontracker.org).
Basically, high crude prices mean a lot more fields producing, which reduces Saudi Arabia's dominant market position. By keeping crude relatively cheap for a couple of years, Saudi Arabia can slow the development of these competing oilfields. It's a standard anti-competition maneuver; it means giving up some money now, with the intention of making more money in the future.
Just to be clear, if oil does reach $80 / bbl (which some analysts are now saying is likely) that doesn't mean that all of the lights go out in Russia. It DOES mean that Russia is likely to face a tough recession, and that Putin's grandiose spending plans will have to be sharply cut back.
Like many petro states, the Russian government has been on a spending spree financed by "free money" from what economists call petroleum rents. When they speak of Russia needing $100 / bbl for "break even", what that means is that this level is required to sustain Russia's federal budget.
Russia can survive with cheaper oil, but this puts it into an awkward corner. Cutting government expenses is likely to add to the economic malaise and hurt ordinary Russians. Deficit spending is a limited option: Russia could draw down its reserves for a while, but unlike the US, Russia doesn't have the creditworthiness and capital pool to borrow vast sums abroad or at home.
And yes, rb, in the Putin era all distressing news is blamed on the US. Conveniently, this means that Putin's government doesn't take blame for anything. In 2010, when Russia had a vast outbreak of wildfires (maybe you guys remember -- thousands died in Moscow from the effects of breathing the smoke), Russians were educated by their press that American satellites carrying "beam weapons" had started the fires.
Yes seriously. It is a drop in the bucket to the ability and the increased demand during the same period you speak. 40 years since the first oil embargo and only a larger percentage of foreign oil demand. It is a national security issue within the states and what is driving the world economy slowdown as a whole. Paste and post bullshit figures all day if you like. I have disposable income and oil prices have little effect on myself other than possible disruption in supply that will cause rationing AGAIN, but it is not my ass that is going to freeze this winter. This is a leadership and directional failure.
Look at the crude oil price at http://www.statcan.gc.ca/pub/62-001-x/2012010/ct023_en.gif. for the last 14 years and esp. the last 3. Total manipulation. I remember no mass sinking of tankers or well failures during this period. Leadership would level this graph, but studying it will only cause a person to bitch, complain and feel weak or be pleased,,, depending how connected you are.
Durak You are on to a major point, The cost of production. In the 80's Texas had a recession due to the falling price of oil, however the price was in the teens. Thus the need for technological advances and the emotional resistance to those advances. Make another study someone, with the outcome already decided, which ever side you are on. But to coin Al Gore's line , it is too important to debate, we must have the outcome we want. The new scientific method and don't forget to send me a dollar for my opinion and your negative foot print.
Back around 2008,,, give or take a couple of years,,, the price of fuel and gas spiked. We donít use all that much gas here,,, but it does affect the price of fertilizer. (N)
I had heard some 2nd hand info from guys that work on the rigs,,, and they said the only problem they had with gas,,, is where to put all of it!!
This last winter, prices for gas/LP was 1.75 for most,,, but some people that had contracts were getting it for 1.29 per gallon. With an early and long cold winter, prices jumped up to over 7.00 in the Midwest.
I'm taking your advice and chilling. I learned some more interesting facts today:
Though the US now ranks at the top in crude oil production, US proven reserves are actually pretty small. If US crude production kept up at its present rate, the last drop would be emptied from the proven reserves sometime in 2023. If the US continued the steep growth of production seen since 2008, proven reserves would be emptied much sooner -- probably before 2020.
Of course, that can't happen in real life, because product from wells diminishes as the remaining crude runs down.
In principle, there is vastly more petroleum lying about in the US, especially in the form of oil shale (which actually doesn't contain oil as the term is usually understood) and oil sands.
But because energy is a profit-making business in the US, oil companies won't extract the hydrocarbons unless they can sell the stuff for more than it costs to get it out. With the present trend of oil prices, wells now in US operation are approaching their break-even point.
Accordingly, the US is likely to see production decreasing year-by-year at least in the short term. For other reasons, most of the gooey black stuff will likely remain in the ground permanently. So it's possible that the US will never again produce crude oil at rates as high as today's.
Soros warned that preserving Ukraine was more important than fighting IS, as the collapse of Ukraine would see a victorious Russia posing a far wider threat and the EU become "even more divided and ungovernable."
"Putin was threatened, said Satter, by Ukrainians desire to connect with the European Union, a western alternative to a hopeless status quo. Despite the current nationalist fervor, Putin's Ukraine adventure, argues Satter, hastens his eventual demise. He makes no prediction as to when."
We in the west are less hobbled in expressing our views and approaching representatives. I ask that you contact your respective elected representatives and give your expectations of policy to the new government in Ukraine. It is a second chance to bring stability in a region that was ignored for far too long a time, especially after all the investment of the "Cold War". There is more at stake than just Ukraine and the FSU. Even danny has been voicing his cynicism towards Herr Putin's actions.