Saudi Billionaire: "Oil May Never Reach $100/Barrel Again"

[Better Day 5,766]

Thank god this is happening to the capitalist scum

[Economy 53,178]

Canada's oil sands need 90 dollars to break even and as we stand it has dropped to 89.9 cents in Toronto and lower in other parts of the country.

Our prime minster and other heads of government also said that they want to produce more oil 300,000 more barrels this year alone. Which is imo not smart since Canada's dollar has dropped and there is speculation that the economy is falling.

It is obvious there will be a surplus and when there is gas prices will continue to drop (canada's largest export).

Canadas oil sands have anlong cycle tho. Billions spent to set it up but once set up, each field will last 10+ years and they can make profit at $20/barrel once set up. 1 or 2 years of low prices wont make a project uneconomical

If anything US Shale that has shorter life-spans for each field and require constant drilling and reinvestments to maintain production will be more affected

And break-even costs are not typically $90/barrel. Its more like $60/barrel. $90/barrel to $100/barrel is the most expensive projects by the most ineficient companies

Suncor and Cenovus for instance have projects that at $40/barrel including the cost to set up, is already economical

[Economy 53,178]

Question, I don't really understand all this oil thingy, but, isn't it supposed to make the flights cheaper too? or any other product? because delivery needs to be cheaper now, if the oil is cheap, so why nothing is really changing and still super expensive?

well most business costs dont change with low oil

Workers wages, taxes, and other costs remain the same. Oil is ony a small portion of costs for most businesses which means even id companies eventually pass on savings to consumers, most thigs wont drop that much!

As for flights, airliners have had low profit margins for years. They may or may not pass on savings to customers

[Economy 53,178]

I'm no expert, but I think it could go up decently again tbh. Another conflict in Iraq, and a collapse of shale oil production would be obviously needed.

I think the whole shale oil thing is going to make it a lot more difficult for it to go up quite as high though.

well prices canot stay as low as now thats for sure cuz too much production would eventually disapear

But super high prices weve seen sometimes are unlikely to be the norm (although in the short term oil fluctuates a lot)

[River 129,229]

well most business costs dont change with low oil

Workers wages, taxes, and other costs remain the same. Oil is ony a small portion of costs for most businesses which means even id companies eventually pass on savings to consumers, most thigs wont drop that much!

As for flights, airliners have had low profit margins for years. They may or may not pass on savings to customers

 

I understand, thank you! :D

[LeoFameMonster 1,592]

Canadas oil sands have anlong cycle tho. Billions spent to set it up but once set up, each field will last 10+ years and they can make profit at $20/barrel once set up. 1 or 2 years of low prices wont make a project uneconomical

If anything US Shale that has shorter life-spans for each field and require constant drilling and reinvestments to maintain production will be more affected

And break-even costs are not typically $90/barrel. Its more like $60/barrel. $90/barrel to $100/barrel is the most expensive projects by the most ineficient companies

Suncor and Cenovus for instance have projects that at $40/barrel including the cost to set up, is already economical

well Canada is pretty inefficient when it comes to oil/gas.

[Economy 53,178]

well Canada is pretty inefficient when it comes to oil/gas.

well yeah cuz oil sands are expensive. But the issue isnt companies being inneficient

Again few areas cost $90/barrel. Only the most difficult and challanging geological areas cost that much and only with small inneficient companies. $90/barrel is the most expensive of the industry

The oil sands boom started before oil ever reached that high. Most projects from most companies break even cheaper than that. The average is about $60/barrel

But again, given oil sands fields yield oil for 10+ years. If prices are low for 2 years and then high for say 8 years then its fine

US shale is more vulnerable as fields last much less time. 2 years for shale is over half a fields life span so they are more affected by short term volatility

[freebit 6,264]

well prices canot stay as low as now thats for sure cuz too much production would eventually disapear

But super high prices weve seen sometimes are unlikely to be the norm (although in the short term oil fluctuates a lot)

 

Yeah, that's definitely true. 

 

I just wonder how much it's going to eventually stabilize at since the days of $100 a barrel seem out of reach. I personally think $80 a barrel would be ideal, but do you think that would be at all realistic (all things considered)? 

[Economy 53,178]

Yeah, that's definitely true.

I just wonder how much it's going to eventually stabilize at since the days of $100 a barrel seem out of reach. I personally think $80 a barrel would be ideal, but do you think that would be at all realistic (all things considered)?

$80? Yeah that sounds realistic

Its high enough that oil sands and shale producers will produce but not grow as quickly

The market has to find a new equilibrium and id say $75 to $85 will probably be the new norm... Although as i said, oil fluctuates a lot... There may be short periods of time in the future that it will surpass $100/barrel again but it wont be the norm like it has been for the past 5 years

Every time prices starts to spike, shale and oil sands will accelerate and compensate

Of course part of it also depends on US Dollar fluctuations, whether OPEC changes certain policies, and how quickly green energy takes over etc

Also money devalues so in 20 years oil could be $150/barrel simply cause of inflation. But in real terms or real value... Measuring in todays currency value, oil probably wont huver as high as it has been iver the past few years

Theres too much recoverable reserves and too many new players to have a shortage anytime soon

[Teal Ambition 47,805]

It's been at 79.4 cents here all week and its awesome! I filled up my car for 60$ (it uses supreme gas) which is extremely good! I usually pay 70-80$ depending how empty it is. 

[Economy 53,178]

It's been at 79.4 cents here all week and its awesome! I filled up my car for 60$ (it uses supreme gas) which is extremely good! I usually pay 70-80$ depending how empty it is. 

and premium gas didnt fall as much as regular on top of that

[Teal Ambition 47,805]

and premium gas didnt fall as much as regular on top of that

It didn't but still quite a lot, I filled up at 93 cents when it used to be around 125-130

[Economy 53,178]

It didn't but still quite a lot, I filled up at 93 cents when it used to be around 125-130

my point is if ur saving so much... immagine those with regular gas

 

diesel also hasnt fallen as much

 

ppl using regular gas are teh ones that have saved the most

 

my dads mini-van has a large tank and i filled it for $57 yesterday!

[Teal Ambition 47,805]

my point is if ur saving so much... immagine those with regular gas

 

diesel also hasnt fallen as much

 

ppl using regular gas are teh ones that have saved the most

 

my dads mini-van has a large tank and i filled it for $57 yesterday!

Oh yeah I know, my parents put regular gas. I'm still happy with what I saved anyways 

[Luc 4,776]

Good for the global economy, I guess. Bad for the environment.