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 Elite Veteran
Posts: 1037
 
| Tdove - 2015-12-18 9:51 AM
MOTIVATED - 2015-12-18 9:46 AM
My boyfriend works in oilfield sales...large equipment, and his customers don't think the o/f will come back until 2017. I live in Midland, Tx. We have 2 rigs behind our house drilling in our back pasture right now. I am not sure why we are drilling with $37 a barrel oil prices...supply and demand apparently isn't a working concept right now.
The only reason the rigs are behind your house is that the oil companies have leases that require a certain minimum level of drilling. If they just quit drilling entirely, they will loose their leases and have no place to drill when prices get better. Also, they have to keep a certain level of skilled employees so that when things do improve, they will have a good base workforce to start up with. At $37/barrel, they are definitely loosing money to drill each well. Most wells around here are 10 million dollar plus pro positions. I am sure this doesn't apply to you, but actual drilling rigs look similar to pulling and rework units and some people get those confused.
And those companies havent seen the worst of it yet. Just now getting paid for "October" oil, which was around $44. When they take the 12-15% hit in February for this "December" oil, you will see the drilling slow down even more. Production realization takes 4-6 months to catch up. It will get way worse before it gets better. Not a fun place to be right now. | |
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BHW's Simon Cowell
   
Location: The Saudia Arabia of Wind Energy, Western Oklahoma | Nita - 2015-12-17 9:43 PM Jenbabe - 2015-12-17 9:40 PM Nita - 2015-12-17 9:34 PM I saw it for 1.99 here the other day!! The excuse for high grocery prices was that the price the truckers paid for fuel was passed on to the consumer. Sure would be nice if the prices fell back down along with the fuel prices! (Dreaming, I know.. ) Grain prices have dropped along with livestock prices. I don't know if that means we'll see a drop in grocery prices. But I noticed today at the grocery store the price of ground beef was down. That makes me smile.
Not me. The low cattle prices are going to take out a lot of people. Add in low crop prices and low oil, it is a disaster. | |
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 Veteran
Posts: 239
| veintiocho - 2015-12-18 8:26 AM kboltwkreations - 2015-12-18 7:24 AM bccanchaser16 - 2015-12-17 11:53 PM I'm still paying around $3.75/gallon up here which is nice but....... I'd rather be paying $4.50-5.00 if it meant oil would go back up to $60/barrel. These oil prices are killing us. You and me both. Its getting pretty scary. Same here. I work for a large oil company and smile everyday I go to work and still have a job. It's scary! Wish the cattle prices would go back up too...but guessing that wont happen for quite a while! 
I think you are blessed to be working for a big company, they can sustain operations for much longer than the little guys -- so you hopefully will be able to keep working
My husband and I operate a teeny tiny oilfield fluid hauling company. Needless to say we do not have the cash flow to sit for long. He has not worked since October and I am worried we will lose our business. | |
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Common Sense and then some
Location: So. California | MOTIVATED - 2015-12-18 7:46 AM My boyfriend works in oilfield sales...large equipment, and his customers don't think the o/f will come back until 2017. I live in Midland, Tx. We have 2 rigs behind our house drilling in our back pasture right now. I am not sure why we are drilling with $37 a barrel oil prices...supply and demand apparently isn't a working concept right now.
Supply and demand is working. There is a tremendous amount of supply on the open market, which in turn is driving the prices down. Mid $30's for Jan/Feb 16 pricing... For the every day Joe consumer, this is a great thing. For those in the industry it is not what you want to see. | |
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Miss Southern Sunshine
Posts: 7427
Location: South Central Florida | I completely understand both sides of this conversation, but for 80% of the population, it is a good thing...great thing.
I know that when we were payinb over $4 per gallon for diesel several years ago, the country was plumitting into a deep recession. I had very good friends in Texas that had seen zero effects of the recession.
Now this is effecting them hard. But that's part of any economy. My personal belief is that it was inflated too high. Now it is too low (for profit) but it will balance out. Every industry has gone through this, it's just a first for the Oil people.
If the mid east continus to flood the market, and drop prices...American companies will stop drilling because they can not profit. Then the middle east will raise prices.....when they get too high, American companies will start to drill again.
It is completely free market, that's how the free market works. A product is worth what someone will pay for it.
Unless, of course, the government steps in and forces you to buy something 
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Veteran
Posts: 239
| Swannranch - 2015-12-18 11:14 AM I completely understand both sides of this conversation, but for 80% of the population, it is a good thing...great thing.
I know that when we were payinb over $4 per gallon for diesel several years ago, the country was plumitting into a deep recession. I had very good friends in Texas that had seen zero effects of the recession.
Now this is effecting them hard. But that's part of any economy. My personal belief is that it was inflated too high. Now it is too low (for profit) but it will balance out. Every industry has gone through this, it's just a first for the Oil people.
If the mid east continus to flood the market, and drop prices...American companies will stop drilling because they can not profit. Then the middle east will raise prices.....when they get too high, American companies will start to drill again.
It is completely free market, that's how the free market works. A product is worth what someone will pay for it.
Unless, of course, the government steps in and forces you to buy something
Not sure about in the US, but Alberta has definitely seen an oil based recession before - 2007/2008 was terrible for us also. It was not this bad, but it was bad. I definitely agree with you that the price of oil was ridiculously inflated. We are suffering the effects of how quickly it fell.
Here in AB we are also hurting from the poor value of our dollar combined with the fact that so much of our province depends on this industry, it is trickling down to other industries as well (because nobody can afford to buy things).
We are trying hard to get out of oil, but our economy is such that nobody else is hiring trucks right now. 
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 Texas Tenderheart
Posts: 6715
Location: Red Raiderland | Tdove - 2015-12-18 9:46 AM Gas prices are too darn low. It really isn't good. Think of it this way folks. The reason why oil prices are low is because the world economy is bad. Trucking prices have not dropped because trucking has fallen off, due to less goods being shipped. In places that oil is produced, the economy is trickled through with the effects of oil profits, or lack thereof. Additionally, oil needs to be at a certain price point for drilling to occur. We are well below that price point and less drilling, means less production. You cannot have increased production (read less imported oil) and low prices. Low prices are just as harmful, in the big picture, as extremely high prices. This just proves the point that oil prices are not a conspiracy, as well. Many people have lost their jobs and oil companies are hurting right now. So much for Hillary taking their profits! Finally, the government receives huge amounts or funds from oil taxes, which have dramatically fallen off.
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Texas Tenderheart
Posts: 6715
Location: Red Raiderland | Swannranch - 2015-12-18 12:14 PM I completely understand both sides of this conversation, but for 80% of the population, it is a good thing...great thing.
I know that when we were payinb over $4 per gallon for diesel several years ago, the country was plumitting into a deep recession. I had very good friends in Texas that had seen zero effects of the recession.
Now this is effecting them hard. But that's part of any economy. My personal belief is that it was inflated too high. Now it is too low (for profit) but it will balance out. Every industry has gone through this, it's just a first for the Oil people.
If the mid east continus to flood the market, and drop prices...American companies will stop drilling because they can not profit. Then the middle east will raise prices.....when they get too high, American companies will start to drill again.
It is completely free market, that's how the free market works. A product is worth what someone will pay for it.
Unless, of course, the government steps in and forces you to buy something
It's certainly not a first for the oil/gas business. My family has been involved in the Texas energy sector since the 1960's and we have seen these peaks and valleys before. It does come back. "When?" is the crystal ball question.   | |
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"Heck's Coming With Me"
Posts: 10794
Location: Kansas | I found it interesting that Social Security recipients were denied a COLA raise this year (always very small anyway) because the cost of fuel is down. That should have nothing to do with Social Security benefits.
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 BHW Resident Surgeon
Posts: 25351
Location: Bastrop, Texas | I'm working at a clinic/ER here in Stanley, ND until Monday, and I've been coming here for quite a while now. Stanley is in the Bakken, and the talk has been in anticipation that the local economy is expecting to be hit hard in 2016. That's the nature of the industry, I'm afraid.....boom and bust. The recent legislation that allows crude oil exports should help quite a bit, I would think, but the impact of that won't be as immediate as people would like to see. The Keystone will eventually become reality, I think. When that happens, the only immediate impact will be seen with investors, but I think the impact on the overall economy will lag. That might be a good thing, though. | |
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 Elite Veteran
Posts: 851
Location: West Texas | Swannranch - 2015-12-18 12:14 PM
I completely understand both sides of this conversation, but for 80% of the population, it is a good thing...great thing.
I know that when we were payinb over $4 per gallon for diesel several years ago, the country was plumitting into a deep recession. I had very good friends in Texas that had seen zero effects of the recession.Â
Now this is effecting them hard. But that's part of any economy. My personal belief is that it was inflated too high. Now it is too low (for profit) but it will balance out. Every industry has gone through this, it's just a first for the Oil people.Â
If the mid east continus to flood the market, and drop prices...American companies will stop drilling because they can not profit. Then the middle east will raise prices.....when they get too high, American companies will start to drill again.Â
It is completely free market, that's how the free market works. A product is worth what someone will pay for it.Â
Unless, of course, the government steps in and forces you to buy something Â
A few points:
Low oil prices are not a good thing. Reason being. Oil has to be at a certain level for sustainable oil production. No oil company can make long term money at today's prices. No oil production means no US oil. That is really really bad for the US economy.
The Middle East is not flooding the market. Two things have happened to make oil plummet. The first is increase US oil production, mainly from horizontal and shale oil extraction. Both of these are expensive to produce and can only occur at higher prices. The second thing, and most important, is that the global economy tanked! Oil is a global market. A bad global economy is a bad thing, especially with US debt levels as dangerously high as we are.......think playing with the risk of a US depression, not recession. Oil prices are a symptom or marker of a much bigger problem. OPEC has had nothing to do with this. OPEC is actually hurt worse than the US by low prices. They continue to produce existing wells, not increasing drilling and production (two different things).
Lastly, as others have pointed out, this is far from the first time oil has had to deal with this issue. Furthermore, this is FAR FAR from as bad as it has been in the past. If it doesn't improve soon, we are looking at harder times, but no way to tell at this point. The last US recession did hit oil fairly hard, but it came back up pretty quick because China was flourishing and global oil demand increased rapidly enough that we made it through. Still, not even remotely close to what happened in the mid 80's (that time it was OPEC that flooded the market). OPEC does not have the capability to do so anymore.
Trust me, too low of oil prices means other things that are really bad are lurking out there for us all. Then, it wont matter how cheap oil is, you will still be completely broke....IF... that were to happen. For example, do you know what happened during the Great Depression?....All goods plummeted...but it didn't make any difference because no one could afford them at any low price!
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Elite Veteran
Posts: 851
Location: West Texas | Bear - 2015-12-18 2:12 PM
I'm working at a clinic/ER here in Stanley, ND until Monday, and I've been coming here for quite a while now. Stanley is in the Bakken, and the talk has been in anticipation that the local economy is expecting to be hit hard in 2016. That's the nature of the industry, I'm afraid.....boom and bust. The recent legislation that allows crude oil exports should help quite a bit, I would think, but the impact of that won't be as immediate as people would like to see. The Keystone will eventually become reality, I think. When that happens, the only immediate impact will be seen with investors, but I think the impact on the overall economy will lag. That might be a good thing, though.
I don't see any way that exporting oil will do anything at all. Look at it this way, the US uses more oil than it produces. So we net import oil. Now that we are going to export crude just means that we will have to purchase the same amount for US consumption. With all oil trading on a global market, in US dollars, means that what we sell and what we purchase will be roughly the exact same price. There is no real benefit whatsoever. We should keep our current oil and use it. If we sell some of our oil, that just means we have to buy even more Saudi oil and that is pretty dumb to me. | |
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BHW Resident Surgeon
Posts: 25351
Location: Bastrop, Texas | Tdove - 2015-12-18 2:18 PM
Bear - 2015-12-18 2:12 PM
I'm working at a clinic/ER here in Stanley, ND until Monday, and I've been coming here for quite a while now. Stanley is in the Bakken, and the talk has been in anticipation that the local economy is expecting to be hit hard in 2016. That's the nature of the industry, I'm afraid.....boom and bust. The recent legislation that allows crude oil exports should help quite a bit, I would think, but the impact of that won't be as immediate as people would like to see. The Keystone will eventually become reality, I think. When that happens, the only immediate impact will be seen with investors, but I think the impact on the overall economy will lag. That might be a good thing, though.
I don't see any way that exporting oil will do anything at all. Look at it this way, the US uses more oil than it produces. So we net import oil. Now that we are going to export crude just means that we will have to purchase the same amount for US consumption. With all oil trading on a global market, in US dollars, means that what we sell and what we purchase will be roughly the exact same price. There is no real benefit whatsoever. We should keep our current oil and use it. If we sell some of our oil, that just means we have to buy even more Saudi oil and that is pretty dumb to me.
So are you saying that lifting the ban on selling US crude to foreign countries is a bad thing? | |
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BHW Resident Surgeon
Posts: 25351
Location: Bastrop, Texas | Very good thread, by the way. We all are guilty of only having concerns that our Ox isn't being gored, without looking at the big picture. | |
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BHW Resident Surgeon
Posts: 25351
Location: Bastrop, Texas | Frodo - 2015-12-18 1:53 PM
I found it interesting that Social Security recipients were denied a COLA raise this year (always very small anyway) because the cost of fuel is down. That should have nothing to do with Social Security benefits.
Is that the reason they cited? Who said this? That's just nuts. | |
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Elite Veteran
Posts: 851
Location: West Texas | Bear - 2015-12-18 2:47 PM
Tdove - 2015-12-18 2:18 PM
Bear - 2015-12-18 2:12 PM
I'm working at a clinic/ER here in Stanley, ND until Monday, and I've been coming here for quite a while now. Stanley is in the Bakken, and the talk has been in anticipation that the local economy is expecting to be hit hard in 2016. That's the nature of the industry, I'm afraid.....boom and bust. The recent legislation that allows crude oil exports should help quite a bit, I would think, but the impact of that won't be as immediate as people would like to see. The Keystone will eventually become reality, I think. When that happens, the only immediate impact will be seen with investors, but I think the impact on the overall economy will lag. That might be a good thing, though.
I don't see any way that exporting oil will do anything at all. Look at it this way, the US uses more oil than it produces. So we net import oil. Now that we are going to export crude just means that we will have to purchase the same amount for US consumption. With all oil trading on a global market, in US dollars, means that what we sell and what we purchase will be roughly the exact same price. There is no real benefit whatsoever. We should keep our current oil and use it. If we sell some of our oil, that just means we have to buy even more Saudi oil and that is pretty dumb to me.
So are you saying that lifting the ban on selling US crude to foreign countries is a bad thing?
What I am saying is I don't understand how it is anything more than neutral. If you consider we will be buying more foreign oil from the middle east, then yes, it is marginally a bad thing the way I see it.
I would like to see oil around $75 a barrel and just sit right there, as long as the general economy is in good shape. Cheap oil prices right now are simply a reflection of a weak economy. That is not a good thing.
I would love for oil to be profitable at $35 a barrel, but the reality is that just isn't the case and never will be again. | |
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"Heck's Coming With Me"
Posts: 10794
Location: Kansas | Bear - 2015-12-18 3:20 PM Frodo - 2015-12-18 1:53 PM I found it interesting that Social Security recipients were denied a COLA raise this year (always very small anyway) because the cost of fuel is down. That should have nothing to do with Social Security benefits. Is that the reason they cited? Who said this? That's just nuts.
Reason being: "A decline in inflation caused by falling gas prices."
(taken from the internet)
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 Googly Goo
Posts: 7053
| Tdove - 2015-12-18 2:13 PM.... The Middle East is not flooding the market. Two things have happened to make oil plummet. The first is increase US oil production, mainly from horizontal and shale oil extraction. Both of these are expensive to produce and can only occur at higher prices. The second thing, and most important, is that the global economy tanked! Oil is a global market. A bad global economy is a bad thing, especially with US debt levels as dangerously high as we are.......think playing with the risk of a US depression, not recession. Oil prices are a symptom or marker of a much bigger problem. OPEC has had nothing to do with this. OPEC is actually hurt worse than the US by low prices. They continue to produce existing wells, not increasing drilling and production (two different things).
Technically, OPEC may not be flooding the market but they have everything to do with this. They don't technically have a monopoly but they are a large enough producer to control current prices. As competitive production has increased, OPEC refuses to lose marketshare. They are most certainly participating in predatory pricing through supply control to limit exploration and production while killing competition.
OPEC has everything to do with this. | |
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BHW Resident Surgeon
Posts: 25351
Location: Bastrop, Texas | TXBO - 2015-12-18 3:38 PM
Tdove - 2015-12-18 2:13 PM.... The Middle East is not flooding the market. Two things have happened to make oil plummet. The first is increase US oil production, mainly from horizontal and shale oil extraction. Both of these are expensive to produce and can only occur at higher prices. The second thing, and most important, is that the global economy tanked! Oil is a global market. A bad global economy is a bad thing, especially with US debt levels as dangerously high as we are.......think playing with the risk of a US depression, not recession. Oil prices are a symptom or marker of a much bigger problem. OPEC has had nothing to do with this. OPEC is actually hurt worse than the US by low prices. They continue to produce existing wells, not increasing drilling and production (two different things).
 Technically, OPEC may not be flooding the market but they have everything to do with this.  They don't technically have a monopoly but they are a large enough producer to control current prices.  As competitive production has increased, OPEC refuses to lose marketshare.  They are most certainly participating in predatory pricing through supply control to limit exploration and production while killing competition.
OPEC has everything to do with this.
This makes a ton of sense, Jim. What is your opinion of the lifting of the ban on oil exports and while you are at it, what is your position on Keystone and it's impact, assuming it ever comes to fruition? | |
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BHW Resident Surgeon
Posts: 25351
Location: Bastrop, Texas | Frodo - 2015-12-18 3:36 PM
Bear - 2015-12-18 3:20 PM Frodo - 2015-12-18 1:53 PM I found it interesting that Social Security recipients were denied a COLA raise this year (always very small anyway) because the cost of fuel is down. That should have nothing to do with Social Security benefits. Is that the reason they cited? Who said this? That's just nuts.
(taken from the internet)Â
Â
I would think that the CPI is much more multifactorial than that! | |
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