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OfflineAll We Perceive
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what can OPEC actually do to raise oil prices
    #22176056 - 09/01/15 09:46 PM (8 years, 4 months ago)

I've been following the OPEC story for the past week or so.  I thought for sure that Saudi Arabia would tell Venezuela to fuck off when Venezuela demanded an OPEC meeting to discuss oil prices but it did not do so.  In addition, Russia, Mexico, Nigeria, and Kazakhstan--all non-OPEC nations-- are getting killed by the oil price plunge and China's weakening economy and Iran entering the market further force a downward price trend.  Consequently, pretty much all of them attempting to crush out max oil volume with little other choice and with the US now crushing out shale oil with no end in sight, is there really anything OPEC can do to stem the tide?  Seems like most American firms are cutting off new exploration and just trying to weather the tide with at least one major bankruptcy so far -- Hercules -- and likely more to come.  Seems like natural gas firms are performing slightly better but still not great with energy across the spectrum at decade plus lows.  Is this the end for energy speculation?  Thoughts?


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"plus they atually think jambands are good or sumthing, so they clearly know absolutely nothing about music, clearly lol" -Bassfreak


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OfflinegeokillsA
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Re: what can OPEC actually do to raise oil prices [Re: All We Perceive]
    #22176125 - 09/01/15 10:03 PM (8 years, 4 months ago)

It's a transitory phase, I believe, that is making OPEC less relevant.

With new sources of energy (i.e. renewables) becoming economically viable, economic stagnation thereby reducing aggregate demand, and high production from non-OPEC sources such as the shale plays you have noted, it will be difficult for OPEC to have a major influence.  On the other hand, if OPEC nations were able to collectively cut production in a major way, that would bump the price of the commodity almost without question, but that strategy is problematic as it becomes difficult for those nations to tighten their spigots on hopes of future price inflation when they are already dealing with a big reduction in cash flow, in conjunction with the fact that a higher oil price makes the alternative shale and oil sand plays increasingly viable, thus bringing more competition into the market and further reducing their influence.

So, while OPEC could play a card to affect prices near term, in the long run, they seem to be becoming an outdated institution.


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OfflineAll We Perceive
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Re: what can OPEC actually do to raise oil prices [Re: geokills]
    #22176258 - 09/01/15 10:30 PM (8 years, 4 months ago)

Quote:

geokills said:
It's a transitory phase, I believe, that is making OPEC less relevant.

With new sources of energy (i.e. renewables) becoming economically viable, economic stagnation thereby reducing aggregate demand, and high production from non-OPEC sources such as the shale plays you have noted, it will be difficult for OPEC to have a major influence.  On the other hand, if OPEC nations were able to collectively cut production in a major way, that would bump the price of the commodity almost without question, but that strategy is problematic as it becomes difficult for those nations to tighten their spigots on hopes of future price inflation when they are already dealing with a big reduction in cash flow, in conjunction with the fact that a higher oil price makes the alternative shale and oil sand plays increasingly viable, thus bringing more competition into the market and further reducing their influence.

So, while OPEC could play a card to affect prices near term, in the long run, they seem to be becoming an outdated institution.




Yea, I agree.  What long term trends do you see for oil?  I think over the next year, we will see a large amount of M&As as companies get increasingly cheaper.  I read an intriguing article earlier today suggesting that BP is ripe for acquisition given its cheap price and poor reputation along with Transocean which has plummeted.  Some commentators are suggesting that prices will rebound moderately through 2017 outlook given the 2-3 year lifetime of land-based oil sources, however, that seems suspect given the new players on the scene.  What do you think about that?


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"plus they atually think jambands are good or sumthing, so they clearly know absolutely nothing about music, clearly lol" -Bassfreak


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InvisibleLunarEclipse
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Re: what can OPEC actually do to raise oil prices [Re: All We Perceive]
    #22177153 - 09/02/15 06:31 AM (8 years, 4 months ago)

Fracking is a horrible practice that is literally destroying our country and poisoning our aquifers where they are dumping massive quantities of toxic water with unknown "proprietary" chemicals.  Even the USGS had to admit fracking is causing many earthquakes as "well".  (pun intended).

There is SO SO SO much oil in the world, it's good that we don't have to listen to the peak oil idiots.  That alone made it worthwhile.  Some seriously HUGE finds are just sitting there, waiting.  And then we have the deep oil that blew up the BP rig with so much pressure they couldn't stop the leak.

Russia is now the leading oil producer.  OPEC is no longer carrying surpluses as pointed out by Geo so don't expect production cutbacks, if anything the opposite as for them it's literally like sticking a straw into the ground (sand?) in Iran, Iraq and Saudi Arabia.


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