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Oil Price

Old 11th Dec 2014, 12:00
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Oil Price

Looks like low or lower oil prices are here to stay for a while with the yanks nearly self sufficient.

I wonder how long it will be before the price at the pump starts to drop.

Currently we haven't seen much movement.

But a oil price of $60 compared to $100 has to be a win for aviation even if it is only short term?

Last edited by sillograph; 11th Dec 2014 at 12:02. Reason: Spelling
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Old 11th Dec 2014, 13:31
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I hope it is long term but I think its really about making unconventional oil sub-economic (again). I think a similar game is being played with iron at the moment.

At least we now know the stuff is more expensive than scarce eh?
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Old 11th Dec 2014, 20:13
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From what I've read most OPEC countries can make profit on their oil as long as they sell it for $40/bbl +. The shale oil crowd in the US need oil above $90/bbl.

Shale oil fields are very short lived, 2-3 years as opposed to conventional fields. They also require massive amounts of capital investment. These fields coming on-line have created a short term oil surplus, which in a world which followed economic theory would have resulted in OPEC cutting supply. However, their strategy is to continue to supply at their current output, causing over-capacity and a drop in the price.

To add to this the speculators have pulled there $$ taking the price even lower. What next? A lot of shale oil fields will either have to stop production or take massive losses. Expect a massive hit to the US banking system too that has been underwriting the whole Fracking mess…

The result. Oil will swing back to above $100/bbl, the speculators will jump in for the ride and take it even higher… hopefully the airlines bank at least one year of profit before the shit unwinds.

As for domestic prices, well we all know that price increases come through the pump the next day, while price decreases take a few weeks as we have to wait for the 'cheaper crude to be shipped over'.
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Old 11th Dec 2014, 22:18
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Oil Price Tumbles After OPEC Releases 2015 Forecast - NASDAQ.com

Actually with the oil price as it stands 10 out of 12 countries in OPEC are unable to balance their country's budgets. The exceptions are Kuwait and Qatar. Having said that Saudi are probably comfortable with this short term down turn as their treasury have three quarters of a trillion dollars in reserves. Enough of a cushion while they see off those nuisance shale oilers in the US.
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Old 12th Dec 2014, 06:54
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so jet is around 1.60 plus gst
and
Avgas around 1.82 plus gst

How low will these go, surely will we see 1.40 for jet and 1.60 for avgas.

How much discount do the big users get, somewhere around 25 to 30 cents?
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Old 12th Dec 2014, 06:56
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What is Avgas selling for at the bowser at places like MB/BK at the mo?
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Old 12th Dec 2014, 10:10
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It's 10% dearer in Shepparton than anywhere else I've been recently.

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Old 12th Dec 2014, 10:21
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It's 10% dearer in Shepparton than anywhere else I've been recently.
never mind about that, what is the actual price??
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Old 12th Dec 2014, 11:02
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$2.22 per litre at present
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Old 12th Dec 2014, 11:24
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It's not so much the cost of extraction that's involved in setting the price, it's the price needed for the producers to balance their budgets. Money needs to be spent on the population to prevent another Arab spring. Health services, education and secure government jobs need to be provided to buy off the general public.

Imports need to be paid for and bills met. Most producers have spending which requires an oil price in the $80 - $100 a barrel range to balance the books.
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Old 13th Dec 2014, 01:50
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It's not so much the cost of extraction that's involved in setting the price, it's the price needed for the producers to balance their budgets.
Crude oil is a traded commodity, the price is set by the market according to perceived supply and demand. The reason for the fall at the moment is as the early post stated related to the US production. Around 2007 the US only produced about 30% of its required oil with about 10million barrels a day of imports, now internal production achieves almost 60%% of required oil and around 7million barrels are imported per day. Possibly the OPEC countries are also trying to send the US producers broke by letting production run at a high surplus, pushing the price down. Maybe some of the mid-east countries have high production costs but have heard Saudi costs being sub $30 a barrel, I would say most others around that area would be similar.

As falling leaf has already posted a lot of the US production may be short lived and result in a spike in a few years time as things catch up again.

The price at the pump can sometimes have little to do with the barrel of crude it came from though. It is more related to the cost of getting to that point, where the original refining was done, index price, exchange rates and most importantly what the consumer is prepared to pay for it en masse.
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Old 13th Dec 2014, 04:40
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The price of oil is manipulated by a small elite of businessmen, politicians and bankers. Remember "Peak Oil" a few years ago when the price rocketed for no apparent reason ? Now we're in a glut.

OPEC was created to keep the price artificially high for the benefit of the producing countries, hence the oil shocks of the 1970s. The cost of production has little to do with it as the current price is well above what it costs to get it out of the ground.

The real factor is how much the producers need to sell it for to balance the national budget, most of the producing countries have little if anything else of value to export.

You would only see a true price without OPEC and its production quotas. If each producer pumped out as much oil as it liked and sold it on the open market then you would know the true value.

The free market would decide the price based on production costs, demand and the price of other forms of energy. This price would be well below what OPEC members need to keep their oil dependent economies going.

Cartels are illegal in most first world countries, try setting one up in the US to control the price of bread and you will end up behind bars.

OPEC get away with a business practice which has been outlawed for good reason.
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Old 13th Dec 2014, 06:02
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The price of oil is manipulated by a small elite of businessmen, politicians and bankers. Remember "Peak Oil" a few years ago when the price rocketed for no apparent reason ? Now we're in a glut.
The price of oil is dictated by the market and at the moment it is being flooded with oil by certain OPEC countries. So yes, it is being manipulated but at the supply side, not the price side as you maintain.

The reason there is a glut is that OPEC wants to keep the price of oil below the cost of oil that is produced from shale oil and from fracking. OPEC have been able to do this because new drilling techniques have enabled previously unrecoverable oil to be recovered. Further, oil consumption by the West has declined.

The Middle East wants to keep the US and Europe dependent on its oil. To do that it has to make its oil cheaper than that which can be produced from domestic sources and as shale oil and fracking supplies were becoming competitive the decision was made to flood the market and drive the price down.

An interesting side note to this is the damage that it is going to do to the Russian economy which really is a one-trick pony. What Russia is going to do about that is very uncertain given Putin's recent record. What it will do to the AVGAS price is very little I suspect. The finished product is imported into Australia in such small quantities that the oil companies would love to get rid of but its highly profitable and for that reason alone I can't see the price reflecting the fall in crude oil prices.
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Old 13th Dec 2014, 12:58
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The reason there is a glut is that OPEC wants to keep the price of oil below the cost of oil that is produced from shale oil and from fracking.
Correct, once the price goes below around $70 a barrel fracking becomes uneconomic at present. As the technology improves and economies of scale come into play, that price could easily drop.

Producing countries got used to living on the income from $80-100 a barrel oil and are now in a bind, reducing production to drive up the price makes fracking worthwhile but increasing production reduces prices even further.

The Saudis have deep pockets and can afford a few years of belt tightening but not the Russians.
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Old 14th Dec 2014, 03:11
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Putin

An interesting side note to this is the damage that it is going to do to the Russian economy which really is a one-trick pony. What Russia is going to do about that is very uncertain given Putin's recent record.
You all make a very serious mistake in underestimating Putin and Russia.

Hitler's war ended at the Battle of Kirsk and the bulk of his armies were already destroyed when the Americans arrived. Putin couldn't give a rats arse about selling oil and gas to the Europeans because he knows they are insolvent and cant pay for it anyway. More damage will occur to the European economies than to Russia. Meanwhile pipelines to the new economic order in China are being constructed at a furious pace. The Arabs have had a gutful of America's interference in the Middle East on behalf of Israel and are dumping cheap oil on the market to further destabilise the value of the US petro dollar which is only accepted as a measure of value at the moment by virtue of the American Military enforcing trade in oil only in US dollars. How else do you think the Federal Reserve can keep stealing from everyone by money printing and currency manipulation? Perhaps the Yanks might ask the Chinese for a loan to fund their war against Russia PMSL!

Who is building the best fighter jet in world at the moment? err Russia? Suhkoi? Russia will not relinquish Sevastopol (deep water all winter port)and why should they. It is a legitimate part of the Russian sphere of influence and national interest. (remember the Crimean war fought in 1850s?)This will be a trigger for World War.

China is rising, America will fall unless radical political change occurs. Hope you all have been taking your Mandarin lessons!
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Old 14th Dec 2014, 12:29
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An interesting side note to this is the damage that it is going to do to the Russian economy which really is a one-trick pony. What Russia is going to do about that is very uncertain given Putin's recent record.

You all make a very serious mistake in underestimating Putin and Russia.
Um....I don't see any underestimating in what I said.

Hitler's war ended at the Battle of Kirsk and the bulk of his armies were already destroyed when the Americans arrived.
Actually it was the Battle of Kursk and I don't see what it has to do with anything here.

Putin couldn't give a rats arse about selling oil and gas to the Europeans because he knows they are insolvent and cant pay for it anyway. More damage will occur to the European economies than to Russia.
They have been paying for it up to now, especially the Germans and they aren't exactly paupers at the moment. The Russian economy is in free fall and it needs money, now.

Meanwhile pipelines to the new economic order in China are being constructed at a furious pace. The Arabs have had a gutful of America's interference in the Middle East on behalf of Israel and are dumping cheap oil on the market to further destabilise the value of the US petro dollar which is only accepted as a measure of value at the moment by virtue of the American Military enforcing trade in oil only in US dollars.
China is going to face its own problems shortly as its economic boom time cools considerably and it has its own oil supply. Not perhaps sufficient to fuel their ever increasing needs but China would be very wary of putting itself in the power of Russia. The Chinese have very long memories and they would not have forgotten that Russia at one time was hinting that it would be prepared to use nuclear weapons on the Chinese.

The US dollar is hardly being destabilised. In fact it is rapidly increasing in value vis-a-vis the only other currency that could possibly be considered a world trading currency - the Euro. There is nothing to suggest that the US military is enforcing the use of the US$. It is the only currency in world wide circulation in such quantity that it can be used as a trading currency for the present.

Yes, a lot of the Middle East would rather see Israel disappear although not necessarily have it replaced by the Palestinians but they also want to be protected from their own insurrections and the best policy for that is don't pee off the US. Where does the Middle East go to for arms - the US.

Who is building the best fighter jet in world at the moment? err Russia? Suhkoi? Russia will not relinquish Sevastopol (deep water all winter port)and why should they. It is a legitimate part of the Russian sphere of influence and national interest. (remember the Crimean war fought in 1850s?)This will be a trigger for World War.
Relevance?

China is rising, America will fall unless radical political change occurs. Hope you all have been taking your Mandarin lessons!
Yes China is rising. Just how far it will rise will be very dependent on how it manages the next phase from industrial to service based economy. The initial suggestions is that it will have the same problems that affected Japan. It, however, may also have to face a disaffected populace who have been given a taste of the high life and now want a political say in the country.

That the US will fall unless it has radical political change is mere poppycock. I have beside me an article entitled, "Glowing Prospects - The Giant Awakens" which runs the premise that..., "Not so long ago the US was being written off as having lost its financial and strategic might. But now the economy is turning around just as other countries go into retreat. The consequences are significant..." The country has been written off before and it still hasn't happened.

And I still don't see that there will be any significant drop in the price of Avgas.
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Old 14th Dec 2014, 14:42
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Believing your own Bullshit

Keep believing the lies you are fed. The points I have raised about the Russian nation and its capability throughout its history is entirely relevant to you calling the Russian economy a one trick pony. That is blatant underestimation.

Actually it was the Battle of Kursk and I don't see what it has to do with anything here.
Arguing semantics isn't relevant, are you questioning my literacy? What is relevant will be Russia's military capability to deal with America's interference in European politics, just like they dealt with Hitler. Those who fail to learn the lessons of history repeat the same mistakes.



The Russian economy is in free fall and it needs money, now.
Thanks to the wanton interference, without thought of consequence of the warmongers in Americas leadership. Consider the size of the Russian economy. It is the world’s No. 2 producer of natural gas and No. 3 producer of oil. In terms of nominal gross domestic product — standard measure — Russia’s economy, at $2.1 trillion, is slightly larger than Italy’s. Another measure, purchasing power parity, values Russia’s economy at $3.5 trillion, but never mind: Even by nominal GDP, Russia is the world’s No. 8 economic power.

Comfortable now with the sanctions regime, are we? Its called cutting of your nose to spite your face.

The Russians will not yield. They will bunker down just like always, do you think these puny sanctions are doing the same damage as Hitler did to the Russian nation? They survived Napoleon and Hitler and beat both. They will sell the oil elsewhere.

They have been paying for it up to now
Incorrect there have been defaults and the Russians have restricted supply till monies were paid.

Germany is solvent despite being milked by the rest of Europe (through the fiat currency the Euro) because they are master engineers that still lead the world despite their nation being split in two since the end of WW2


It is the only currency in world wide circulation in such quantity that it can be used as a trading currency for the present.
Pure Parochialism. It is already being replaced replaced in the Asian bloc, by the Renimbi and Yuan and over time investors will choose a store of value that is reliable unlike the US$ which is subject to money printing

There is nothing to suggest that the US military is enforcing the use of the US$.
Try telling that to Iraq, Syria, Libya and Iran.

The US dollar is hardly being destabilised. In fact it is rapidly increasing in value vis-a-vis the only other currency that could possibly be considered a world trading currency - the Euro.
Both are fiat currency that are subject to money printing and are having their purchasing power destroyed through inflation, once a viable alternative becomes available, most likely as American Military and Political influence wanes consumers will abandon it.


That the US will fall unless it has radical political change is mere poppycock. I have beside me an article entitled, "Glowing Prospects - The Giant Awakens" which runs the premise that..., "Not so long ago the US was being written off as having lost its financial and strategic might. But now the economy is turning around just as other countries go into retreat. The consequences are significant..." The country has been written off before and it still hasn't happened.
Utter bullshit the Americans are in the midst of a massive socio-economic decline and their political system is totally and utterly corrupt. It may take 20 years or more but unless the Americans change they will become a second rate power. Send me the article and I will expose it for what it is, toilet paper, more neocon bullshit. The only American turn around is bullshit figures regarding non existent job growth. Even the bullshit figures are a tiny blip. You can't have an economic turn around without manufacturing and the American plutocrats outsourced that so they could access slave labour in China. The Chinese still made a profit because of their massive and hard-working, homogeneous population, outsmarting the Americans.

Yes China is rising. Just how far it will rise will be very dependent on how it manages the next phase from industrial to service based economy.
So far the Chinese management of their economy has been highly competent, in sharp contrast to the west, sustaining 9% plus growth. The interest alone on America's debt to China is enough to fund the Red Army. Service economies is jargon for providing feelings and finance not hard goods.



China is going to face its own problems shortly as its economic boom time cools considerably and it has its own oil supply. Not perhaps sufficient to fuel their ever increasing needs but China would be very wary of putting itself in the power of Russia. The Chinese have very long memories and they would not have forgotten that Russia at one time was hinting that it would be prepared to use nuclear weapons on the Chinese.

The Chinese will do business with the devil himself if it suits them. They aren't putting their eggs in one basket and are buying up assets all over the world and unlike America put no conditions on their aid. They will buy oil from Iran the BRICS and whoever will take their currency which is backed by the production of consumer goods, something the average human needs, not weapons.

China is going to face its own problems shortly as its economic boom time cools considerably
Pure speculation by western academics unable to cope intellectually with the Chinese economic revolution.

Who is building the best fighter jet in world at the moment? err Russia? Suhkoi? Russia will not relinquish Sevastopol (deep water all winter port)and why should they. It is a legitimate part of the Russian sphere of influence and national interest. (remember the Crimean war fought in 1850s?)This will be a trigger for World War.
Relevance?

The American ability to competently manufacture arms (the only thing left they manufacture on a large scale) is waning thanks to the de-skilling of their entire economy. Think of the joke that is the F-35 and F-22

Relevance?

The Russians will fight a war over Sevastopol, is that what the world needs? The phony uprising in Ukraine is another farcical example of American foreign policy which has brought the world so many failed states, and ongoing war, funded by western taxpayers who are having their homes repossessed. This is directly relevant to the even distribution of energy to all the worlds population.

And I still don't see that there will be any significant drop in the price of Avgas.
One of only two accurate statements in your whole post. Don't get me wrong I don't mind a good war so long as it achieves positive outcomes for the nation state that wages it. The only reason to conduct war in the middle east would have been to supply cheap oil to the western economies which hasn't happened. It demonstrates that the Americans once again haven't properly prosecuted a war that they have initiated. Korea, Vietnam? Both proxy wars against the red army with no clear outcome. The only nation to benefit from the American presence in the middle east is Israel, which continues its unabashed expansionism, apartheid and genocide against the Palestinians, funded largely by the American taxpayer. No race deserves this.

In conclusion I am not against America or the west but I do advocate a complete and utter cleanout of corrupt western leadership. Only then will the west prosper.

Last edited by Oracle1; 14th Dec 2014 at 14:50. Reason: Spelling and Grammar
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Old 14th Dec 2014, 17:55
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The drop in oil prices is like the increase in value of the greenback, short term.

Some points worth considering:

There is a longer term trend unfolding that will see the collapse of the greenback, a shift towards higher oil prices and an increase in the price of precious metals.

There will be a dramatic shift in the balance of economic power from the former industrialized nations to the emerging markets in Asia. The middle class in most western countries is on the decline and one day will be a thing of the past.

Western markets have been propped up by the petrodollar system but that is coming to an end.

Iran, China and Russia as a co-operative have more cards than most westerners realize and the west is powerless to control them without all out conflict. Which may happen.

Most conflict in the ME stems from, is caused by or is associated with the imperative of the western banking system to continue trading oil in US dollars. Any attempt to undermine the petrodollar system will be dealt with swiftly. Iraq, Libya, Iran, Venezuela all know what happens when you screw with the petrodollar satus quo.
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Old 16th Dec 2014, 11:23
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Flicking back to russia as mentioned previously, I see interest rates there are now 17 percent after six interest rate rises this year. Yes thats 17 percent a rise of 6.5 percent...

Anyway back to topic now US$55 barrel for west texas crude.…...
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Old 16th Dec 2014, 12:08
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Yes thats 17 percent
Only another half persent to go and it will be equal to what we have had in Oz, and the interest rates that we paid on our housing loans.
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