Economy 53,271 Posted November 28, 2014 Share Posted November 28, 2014 http://www.reuters.com/article/2014/11/28/us-opec-meeting-shale-idUSKCN0JC1GK20141128 you can read the full article for more details... But heres a few highlights basically because US shale and even oil sands from Canada are more expensive to produce, North American oil companies can be destroyed by lower prices while OPEC would stay standing and this a way to eliminate competition Saudi Arabia's oil minister told fellow OPEC members they must combat the U.S. shale oil boom, arguing against cutting crude output in order to depress prices and undermine the profitability of North American producers. Analysts said the decision not to cut output in the face of drastically falling prices was a strategic shift for OPEC. "It is a brave new world. OPEC is clearly drawing a line in the sand at 30 million bpd. Time will tell who will be left standing," "OPEC is always fighting with the United States because the United States has declared it is always against OPEC... Shale oil is a disaster as a method of production, the fracking. But also it is too expensive. And there we are going to see what will happen with production," he said. Link to post Share on other sites More sharing options...
Dolev 867 Posted November 28, 2014 Share Posted November 28, 2014 Isn't it hurting their own economies meanwhile? Link to post Share on other sites More sharing options...
Economy 53,271 Posted November 28, 2014 Author Share Posted November 28, 2014 Isn't it hurting their own economies meanwhile? yes. however if they cut production, prices will eventually drop again as the boom continues in Canada, Brazil and especially the United States if they bankrupt companies and destroy the industry, long term they can stabalize prices without cutting production Link to post Share on other sites More sharing options...
Cocaine Heart 4,768 Posted November 28, 2014 Share Posted November 28, 2014 yes. however if they cut production, prices will eventually drop again as the boom continues in Canada, Brazil and especially the United States if they bankrupt companies and destroy the industry, long term they can stabalize prices without cutting production I'm confused how will they be able to do this ? Can you explain it please We going to boo Link to post Share on other sites More sharing options...
Luiz 4,253 Posted November 28, 2014 Share Posted November 28, 2014 still waiting for you to post about the coal situation in the ukraine I disapprove of what you say, but will defend to the death your right to say it. Link to post Share on other sites More sharing options...
Goosey 3,017 Posted November 28, 2014 Share Posted November 28, 2014 Is this even legal? How are they allowed to deliberately harm US national interest like that "I am the world's greatest person that does not want to let people into the country."—US President Donald J. Trump Link to post Share on other sites More sharing options...
Economy 53,271 Posted November 29, 2014 Author Share Posted November 29, 2014 I'm confused how will they be able to do this ? Can you explain it please yes. most opec nations have normal liquid oil which is relatively cheap to produce The revolution the last few years has been oil sands (Canada and Venezuela have a lot of it), and shale from rock formations (the US has a lot of it). Anyway, shale and oil sands has become a thing the last few years because #1 we now have technology that can extract those sources, and #2 prices have been high enough to support it shale and oil sands are a much more intensive process than simply pumping liquid oil from the ground and as such its much more expensive to produce. So if prices fall too low, oil sands and shale will become unprofitable because it will cost more to make it then companies can sell it for OPEC Countries can still sell oil at $40 a barrel and make a profit. Canada's oil sands companies or US shale companies on the otherhand cannot. In fact some of the smaller companies are already unprofitable with oil below $70/barrel Is this even legal? How are they allowed to deliberately harm US national interest like that OPEC has manipulated prices for many years. nobody ever stopped them before Link to post Share on other sites More sharing options...
Cocaine Heart 4,768 Posted November 29, 2014 Share Posted November 29, 2014 yes. most opec nations have normal liquid oil which is relatively cheap to produce The revolution the last few years has been oil sands (Canada and Venezuela have a lot of it), and shale from rock formations (the US has a lot of it). Anyway, shale and oil sands has become a thing the last few years because #1 we now have technology that can extract those sources, and #2 prices have been high enough to support it shale and oil sands are a much more intensive process than simply pumping liquid oil from the ground and as such its much more expensive to produce. So it prices fall too low, oil sands and shale will become unprofitable because it will cost more to make it then companies can sell it for OPEC Countries can still sell oil at $40 a barrel and make a profit. Canada's oil sands companies or US shale companies on the otherhand cannot. In fact some of the smaller companies are already unprofitable with oil below $70/barrel Thank you for the explanation, I understand now We going to boo Link to post Share on other sites More sharing options...
Sebastien 16 Posted November 29, 2014 Share Posted November 29, 2014 How low do experts think crude prices will drop? Link to post Share on other sites More sharing options...
craig 680 Posted November 29, 2014 Share Posted November 29, 2014 yes. however if they cut production, prices will eventually drop again as the boom continues in Canada, Brazil and especially the United States if they bankrupt companies and destroy the industry, long term they can stabalize prices without cutting production Even if the North American industry goes into recession, surely it will bounce back as soon as profits rise again. Enjoy the cheap Arab oil while it lasts, in future we have our own to fall back on. I guess Keystone can take it's time, no rush. Link to post Share on other sites More sharing options...
Economy 53,271 Posted November 29, 2014 Author Share Posted November 29, 2014 Even if the North American industry goes into recession, surely it will bounce back as soon as profits rise again. Enjoy the cheap Arab oil while it lasts, in future we have our own to fall back on. I guess Keystone can take it's time, no rush. oil is cyclical in nature. Invest takes time and there are long delaying factors Even with the sharp price drop in oil shale production hasnt decreased yet because investments in new wells a were already made. It will take a long time once they stop investing for production to actually decline. But it will also take a long time to rebound once prices increase again especially if many companies go bankrupt and there are fewer of them Opec knows exactly what they are doing As for keystone it will take at least 2 years to build it. No sense delaying it. At least Canadas oil sands provide oil longer omce investment im an area is made. Were probably not as much at risk as the US although our companies will still be squeezed big time :( How low do experts think crude prices will drop?the average concensus is $60 to $65 a barrel which is a bit lower than it is now But opinions vary. Some think it will drop all the way to $50/barrel and some think weve already hit a bottom $60 to $65 is the most common opinion among experts tho Thats low enough to make many shale and oil sands companies unprofitable btw, especially smaller companies that are less competitive :MANiCURE: Link to post Share on other sites More sharing options...
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