[Plantagenet]

Look like we're going to experience a period of very cheap oil in the world.

At first glance this seems like a good thing---people save money, car sales go up, etc. But if you look at critically, you can see trouble with cheap oil

New Yorker: The Trouble with Cheap Oil

Basically, its pretty hard to tell the world to get off oil when oil is cheap. Everybody is too busy driving their new cars and going cruising.


Hey! Gas is cheap---Lets go cruising again!

[Paulo1]

In the article it says: "Fracking technology has transformed the United States from an importer of gas and oil to an exporter."

Did you post this article as another example of the lies media likes to repeat....over and over. Or was it the drive in photo? I'm just curious.

Personally, I miss drive-ins. There really isn't any difference between driving to a sit down restaurant and hitting the drive in. Ahh, being 19, case of beer in the vw van, stereo going, and getting the boot for being obnoxious to the car hop. It was a lot of fun. I don't know how on earth we survived? No seat belts, too many brews, greasy food, and the weekend bush parties. Lots of fun. For awhile we all had dirt bikes and would hit the trails as soon as the cops showed. One Friday night a kid actually stole the cop car when the rcmp got out to break up a fight and left his car running because it was cold and snowy. They chased him for hours and finally got him on a dead end road. They got him with a german shepherd. Those days are long gone.

[SeaGypsy]

Any jerk who publishes anything presuming the USA to have become a net exporter of oil is not worth paying the slightest bit of attention to. There is no serious likelihood of any sustained drop in prices. As soon as the damage has been done to the US frackers, prices will skyrocket again & probably we will have a 'new new normal' price above the $100 it just got stuck at for a couple of years.

[GregT]

So WTI has fluctuated between 15 and 30 dollars per barrel from the 80s all the way up until 2004, and now some of us believe that prices 3 times the historical average equate to a 'period of very cheap oil'. Unbelievable.

[dolanbaker]

So WTI has fluctuated between 15 and 30 dollars per barrel from the 80s all the way up until 2004, and now some of us believe that prices 3 times the historical average equate to a 'period of very cheap oil'. Unbelievable.

=1

Most commentators conveniently forget that point, well except here of course.
Important to remember though that fuel economy has improved considerably so the miles per $ (inflation adjusted) are probably on a par with those in the 1970s

[SeaGypsy]

So what? Won't be going there again for longer than a few days.

[Revi]

I think it will stay down long enough to wreck the economy, then pop back up over $100, or maybe stay down because everyone will lose their job and stop driving. We're at peak oil, so things will start happening now.

http://peakoil.com/production/the-eias- ... on-numbers

[ROCKMAN]

Gypsy - " As soon as the damage has been done to the US frackers, prices will skyrocket again & probably we will have a 'new new normal' price above the $100 it just got stuck at for a couple of years." From your lips you Dog's ear. LOL

But:

In 1998 the world was producing 65 million bopd @ $11/bbl with inflation adjusted price of $17/bbl
In 2013 the world was producing 91 million bopd @ $91/bbl with inflation adjusted price of $92/bbl

How much oil the shale players and the KSA do or don't produce doesn't concern me nearly as much as the health and consumption of the global economy.

[Plantagenet]

In 1989 the price of oil crashed. Within a year GM had cancelled its EV-1 electric
car model, recalled them all, and crushed them to blot out the horror of ever
having built a successful electric car.


Its 1989 all over again. How long until GM cancels the Volt, just like they cancelled the EV-1 in 1989.

Similarly, the push for mileage efficiency and alternative energy suddenly seemed a
lot less urgent when oil and gasoline were cheap in 1989.

The trouble with cheap oil now is that the same thing can happen again. Its going to be like 1989 all over again.

I predict GM is going to cancel the Volt. Tesla may very well go bankrupt (they are waaaaaaaaaay overextended on credit). Energy efficiency efforts can get sidelined. The government can reverse course yet again on energy policy (as if they actually have an energy policy).

We are going through another stupid cycle of cheap oil, and its going to be like 1989 all over again.

[shallow sand]

Yes. All because our economy is apparently set up for asset bubbles of some kind or another. Had the development of these reserves been done somewhat responsibly, I think we would be in good shape. Now we are looking at major decrease in CAPEX, which will lead to the next super spike. But that is capitalism, you take the bad with the good.

[ROCKMAN]

But look on the bright side shallow: it will be a long time before we're threatened with windfall profit taxes again. In fact, don't you think we should start the registration process with FEMA soon? LOL.

[efarmer]

Capitalism is like a guy riding a pogo stick being incentivized by a hot dog on a string, he has
to boing up to get the next bite of weeny, and then thump back down to slam it into his belly.
When the hot dog is all gone, he stops hopping until another one gets put on the string.

[Tanada]

In 1989 the price of oil crashed. Within a year GM had cancelled its EV-1 electric
car model, recalled them all, and crushed them to blot out the horror of ever
having built a successful electric car.


Its 1989 all over again. How long until GM cancels the Volt, just like they cancelled the EV-1 in 1989.

Similarly, the push for mileage efficiency and alternative energy suddenly seemed a
lot less urgent when oil and gasoline were cheap in 1989.

The trouble with cheap oil now is that the same thing can happen again. Its going to be like 1989 all over again.

I predict GM is going to cancel the Volt. Tesla may very well go bankrupt (they are waaaaaaaaaay overextended on credit). Energy efficiency efforts can get sidelined. The government can reverse course yet again on energy policy (as if they actually have an energy policy).

We are going through another stupid cycle of cheap oil, and its going to be like 1989 all over again.

You are a decade off there champ. http://en.wikipedia.org/wiki/General_Motors_EV1

1989 vs 1999 is quite a wide miss. Volt sales this year were up through October the best for any calendar year since it was introduced. No doubt if low gas prices last more than a few months that will change, but GM was doing very nicely on the Volt TYVM.

[SeaGypsy]

To what extent can frackers play dead? Rock? Hopefully consumers & auto manufacturers have learned something & don't take anything for granted about a lull in prices coz for sure that is all it is & for sure it's a manipulation

[Plantagenet]

1989 vs 1999 is quite a wide miss.

Shimata---I have erred. The EV-1 was axed in 1999.

Volt sales this year were up through October the best for any calendar year since it was introduced. No doubt if low gas prices last more than a few months that will change, but GM was doing very nicely on the Volt TYVM.

That was then, this is now.

Oil prices have plummeted since then and gas prices are coming down fast. You can get gas for under $2.00 a gallon in a few places already. Of course low gas prices won't last, but they may hang around long enough to kill the Volt and/or Tesla and/or Leaf. In particular, I wouldn't be surprised to see GM cancel the Volt if the sales start to trend down----the sales are WAAAAY below what GM expected and these low gas prices won't help EV sales at all. At these pathetic sales levels--only about 5-10% of what GM projected for the car ------ GM loses a boatload of money on every Volt they sell.

[ROCKMAN]

"To what extent can frackers play dead? Rock?" Two fold answer...maybe three. First the number of economically projects will decrease but there will still be some holes to poke. There is no "one price fits all" in any play: never has been and never will be. Second, even if companies still control viable prospects some won't have sufficient capex to drill them all. And third, even pubcos that are still viable may disappear when the shareholders decide to cash out and take the best take over offer pitched to them. Very common in every down turn. It's not uncommon for healthier companies to be gobbled up for that very reason: they are sound but have a limited future potential.