Saudi Oil Price Cut: an attempt to freeze US oil production?

[Tiny]

Wouldn't this also effect Canada? They've spent some time and dollars to make the Oil Sands produce oil?

I would think lower Opec prices would be a blow to that industry (and stocks) as well.

Is it really just the Saudi's? aren't nigeria, venzuela, ecuador, etc also part of OPEC? Aren't the lowered oil prices also effecting China?

Isn't oil a 'fungable' resource?

[The Captain]

40% of the US oil consumption is from net imports.  Of that amount 13% is from Saudi Arabia.  So about 5% of the US oil consumption overall is from Saudi.  I don't believe that's enough to put pressure on US producers.  In fact, I think Canada may be the only country in a position to be able to do so.

AND I think we've reduced our dependence on foreign oil even more since the last survey (that I could find) was published. 


www.eia.gov/energy_in_brief/article/foreign_oil_dependence.cfm

[Deleted]

All I know is I'm enjoying gas at $2.70 a gallon right now... that's actually a reasonable price.

[billisonboard]

Nov 4, 2014 18:36:36 GMT -5 @richardintn said:

All I know is I'm enjoying gas at $2.70 a gallon right now... that's actually a reasonable price.

I had a store discount and filled up at $1.99.

[Tiny]

I'm seeing it all as a Sale on Energy stocks (well atleast the oil related ones I own). It looks like I'll be purchasing some shares of the individual stock I own (it's a legacy stock from my childhood... I feel obligated and duty bound to keep it... it doesn't hurt that it's been a good company to own. )

[Virgil Showlion]

Nov 4, 2014 9:26:41 GMT -5 deminmaine said:

Move paves way for further price falls, pressures U.S. energy producers

Oil prices tumbled to their lowest point in more than two years after Saudi Arabia unexpectedly cut prices for crude sold to the U.S., likely paving the way for further declines and adding to pressure on American energy producers.

The decision by the world’s largest oil exporter sent the Dow industrials into negative territory for the day amid concerns about the pace of global growth.

Is this really a play to close down the Bakken?  It doesn't make sense to just "pressure" American producers.  I don't know if Saudi could maintain such along term cut. 

It makes me wish (in my fantasyland) that we could offset it with a per bbl tax on Saudi crude on a sliding scale, the proceeds of which were tagged to American highway spending.  Win win, for all but the Saudis.  On the other hand, as pointed out in the article, lower energy costs are obviously a boon to the rest of the economy.

www.msn.com/en-us/money/markets/saudi-oil-price-cut-takes-market-by-surprise/ar-BBcTcG7?ocid=HPCDHP

It's an interesting theory. OPEC basically acting like Walmart. Move in. Drop prices just enough to massacre the competition. Raise prices to existing level.

Have a nice day!

[EVT1]

Although I know shit about how it all works- I do hope the folks that were responsible for storing oil on barges in order to drive up prices get their ass handed to them.

Heard another interesting bit- a lot of the companies in the shale are being eyed by the bankers that are financing the operations now. 

And of course the gem from my local RW radio nut- that people are going to start driving more   Really?  I did not have the urge to take the long way home from work today and am not planning on a weekend cruise either.

But I could see it for boat gas

[Tiny]

The other piece to consider is that the American oil companies don't just produce 'oil', I'm sure they own the 'transport' for said oil. We've got refineries and ships and trains and storage...

I'd guess if the Saudi's where really trying to 'kill' the American Oil companies they'd have to keep oil prices low for a very long time. The American oil companies can just raise the price of transport and refining and whatever else they to do to/with oil to keep a steady price and income.

It then becomes a waiting game. And as has been pointed out America is getting more of it's oil from other places.

I'd personally like there to be a sale on energy stocks.

[fairlycrazy23]

Yes. Saudi is trying to force the price per barrel below the break even point for all the 'alternative' ways to extract oil, especially shale-oil.
But they are a bit stuck because they need the price pretty high too, which is why they are trying to cut just the US and raise elsewhere. This will probably help the US in the long run.

[fairlycrazy23]

Nov 5, 2014 9:22:08 GMT -5 deminmaine said:

Why do they need the price so high? Their production cost is the lowest in the world right? Stick a pipe in the ground and it gushes oil?

Do they need higher prices because they have come to depend on the revenue stream to fund their society rather than to cover production costs?

Yes, they have become dependent on the high price to fund there lavish public works to make sure Saudis stay happy.
They probably hope they can crush all the new us production and then bring back up the price.
The problem is that not all of the new production is so pricey some is economical at about 50 a barrel, other are at about 80.