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This short article is an interesting discussion of oil prices. It also has a chart showing what other countries need per barrel to make money on oil.

Our shale oil plays make money from $60 (maybe) to around $80 per barrel. Even the lowest OPEC country needs $80 minimum, and it goes up quickly from there.

Our ability to drill for cheap oil gives us the most political leverage of any country in the world.

http://www.businessweek.com/articles/2014-10-30/it-looks-like-80-oil-is-here-to-stay#r=read

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In June of 2008 oil topped out at 147.11 and it fell from there. A year later I was meeting with the chief economist from BP and he boldly proclaimed that the 147.11 is a high that will never be repeated. I stopped and asked him to clarify his definition of "never" and he said "never" was forever. I still have a hard time swallowing that. In a century we should get to just twice that by currency devaluation and inflation.

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Anyone know what the price of gas was the last time that oil was steady at below $80?


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If oil topped out at $147....lets say gas topped out at $4


Oil is at $80 now...54% of its high.


Gas is at, lets say $3....75% of its high.


I think maybe we are still getting 'lubed' by the oil companies.....


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Ya think?


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The price of oil ain't the only cost in a gallon of gas. Go look up how the share value of the oil majors have performed this year.


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Originally Posted by ingwe
If oil topped out at $147....lets say gas topped out at $4


Oil is at $80 now...54% of its high.


Gas is at, lets say $3....75% of its high.


I think maybe we are still getting 'lubed' by the oil companies.....


You have both fixed and variable costs in the production of gasoline. Oil is a variable cost, where the cost of operating the refinery is a fixed cost.


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Quote
oil to stay at/below $80 permanently


They haven't been around the oil business very long to even say that in passing, or they would know better...


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Originally Posted by WyColoCowboy
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You also have to figure in how much Federal and state sales and highway taxes have increased over the years. Those taxes have added greatly to the cost of a gallon of gas.


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Originally Posted by GunGeek
In June of 2008 oil topped out at 147.11 and it fell from there. A year later I was meeting with the chief economist from BP and he boldly proclaimed that the 147.11 is a high that will never be repeated. I stopped and asked him to clarify his definition of "never" and he said "never" was forever. I still have a hard time swallowing that. In a century we should get to just twice that by currency devaluation and inflation.
Oil might have been at a price peak, but gas at the time of the election win November, was about $1.89 gallon.


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yep, "permanent" has a shelf life shorter than commonly believed.

Imagine that once those pesky Ruskies and the ISIS have learned their lessons, oil could head north some...


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Originally Posted by WyColoCowboy
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Maybe that's the chart for Brent, not WTI which peaked at 147.11 on a single day in July of 2008; but some reports say it was 145.00. If you go to the DOE EIA web site you can download a spreadsheet with the closing prices each week for the past 50 or so years.

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Originally Posted by Mannlicher
Originally Posted by GunGeek
In June of 2008 oil topped out at 147.11 and it fell from there. A year later I was meeting with the chief economist from BP and he boldly proclaimed that the 147.11 is a high that will never be repeated. I stopped and asked him to clarify his definition of "never" and he said "never" was forever. I still have a hard time swallowing that. In a century we should get to just twice that by currency devaluation and inflation.
Oil might have been at a price peak, but gas at the time of the election win November, was about $1.89 gallon.

By the election in November we had a near complete collapse of the economy. The fall was fast and far.

Stock market investors have a saying. �The bull climbs the stairs, but the bear jumps out the window�.

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Just to say it, WTI will not forever remain under $80 per barrel.

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$4.00/gal was the tipping point in the U.S. Economy.

The ceiling was found, it was painful for all, and a realization that the whole economy would crumble if something didn't change.

Credit and mortgage failures were the first big indicators, followed by production drawdowns and higher unemployment.

The ripple effect is hitting China and the other low price labor markets now too, decreasing their demands for oil as well.

Everything gets rebalanced in time.

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Originally Posted by rockinbbar
Quote
oil to stay at/below $80 permanently


They haven't been around the oil business very long to even say that in passing, or they would know better...



Right on rockinbbar. In the oil patch you never say "never" or "forever".


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I have heard that stuff for 40 years,,,,, and I'm only 51. When it hit $1.00 they said it would never be less. That was around 1975. In 1999 it was $ .87 cents. Goes to $4.00 and would never be less than $3.00. That was Sept . 2005 after Katrina. I payed $ 2.96 today... My mutaul fund with 30% oil stocks did ok the last 2 weeks. Never know guys...... I hope it goes up some and then I might get out. If Israel gets in a cat fight with Iran or starts a good pissin match with Hamas instead of titt for tat it may go up again. Or another tough winter and walla.


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Extraction and refining cost in the US are higher than they ever have been due to what we are drilling for etc...

Currently it cost approximately $60/barrel to extract and refine a barrel of oil in the US.

Already seeing a pullback on the extraction side.

Of course this has all been in the short term.

Last edited by NathanL; 10/30/14.

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Originally Posted by ingwe


I think maybe we are still getting 'lubed' by the oil companies.....


Nah...competition is fierce in the oil industry, but they are going to make their profit. No matter what the government stacks on top of what the consumer has to pay.


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