I've said before that I think there are several basic causes for this:
1. China economy cooling (this might be the biggest cause of lower oil prices right here.
2. Saudi Arabia and other oil nations need the price of oil low to defund ISIS so their governments don't fall from too much oil money going into ISIS funding.
3. U.S. and other developed countries companies cannot afford to stop producing shale oil because if they do they will lose all their investments into shale oil and that money might not be there later if they shut down production.
So, this is an International game of "Chicken" to see who can outlast who. However, the Saudi's and other middle eastern oil producers will likely win this game because they are the best funded and have the lowest overhead in oil production and everyone else might lose like in the late 1980s when the Saudis did this and the Soviet Union Collapsed then because of them doing this then. Possibly the Saudis think that Russia might walk away from what Assad is doing to Sunnis at the very least now in Syria.
4. The sooner the standing army of ISIS is defeated the sooner oil prices might return as the Saudis and others reduce production when ISIS is no longer an invading army threat to the governments of the Middle East.
5. In the meantime the world is getting more used to lower oil prices. However, if prices rise it might create a worldwide recession or depression as people stop buying gas and diesel almost completely in reaction to higher prices again worldwide. Also, alternative energy like solar and wind is gangbusters around the world as well. And higher prices only will incentivize solar and wind many many times more than now when prices rise again too.
- www.cnbc.com/id/102505215 Cached
The dramatic drop in oil prices and the transfer of wealth to consumers is going to be very painful for the oil and gas industry, Bob Dudley, CEO of BP, told CNBC ...
Oil and GasThe dramatic drop in oil prices and the transfer of wealth to consumers is going to be very painful for the oil and gas industry, Bob Dudley, CEO of BP, told CNBC Saturday.
Speaking at Egypt's Economic Development Conference in the resort town of Sharm el-Sheikh, Dudley said that oil prices - which have fallen around 60 percent since last June - had been a "huge shock" for companies like his.
The industry had been living in a "world of luxury" over the last few years, he said, when prices were above $100 a barrel.
Andrey Rudakov | Bloomberg | Getty ImagesBP CEO Robert Dudley speaks during a plenary session at the 21st World Petroleum Congress in Moscow."We're back into the normal world of volatility for oil and gas prices," he said on a CNBC-hosted panel. "Anything that happens that fast can have unintended consequences."
BP was the first European major to sound the alarm on tumbling oil prices - on December 10, it warned that it was implementing a cost-cutting program as a result.
In December, oil majors in Europe also received a stark warning from credit ratings agency Standard & Poor's (S&P), which placed BP, Total and Shell on a negative watch. It means the three firms are more likely to have their debt rating downgraded over the next three months.
In January, BP announced job cuts in its onshore operations in the U.K. It told CNBC that it expected a reduction of around 200 staff and 100 contractor roles in light of "major reshaping" for the business and "toughening market conditions."
Speaking on the same panel in Egypt, Philippe Boisseau, president of marketing and services at Total, said the price of oil was going to stay where it is.
He added that speculators were trying to bet where the price will be in the future, but stressed that nobody had the answer.
"We have both lower demand...and also we have global oversupply," Boisseau said.
Egypt investment
Speaking at the investment event in Egypt, Dudley added that BP had operated continuously in the country for the last 25 years.
His comments come after the oil giant signed an deal to develop gas resources in Egypt, with investment of around $12 billion from BP and its partners. The company said the project underlined its commitment to the Egyptian market and was a vote of confidence in the country's investment climate and economic potential.
Three days later, BP also announced a gas discovery in the East Nile Delta which it said was expected to be the deepest well ever drilled in Egypt.
"I think the time is absolutely right," Dudley said about investing in the Middle Eastern nation.
"(Egypt) really is the lynchpin...it's the largest market in the Middle East."
On Saturday, Dudley said the investments would increase in gas production in the country by 25 to 30 percent.
end quote from:
No comments:
Post a Comment