How low can gas prices go, before they shoot up again?

OPEC Policy Ensures U.S. Shale Crash, Russian Tycoon Says

By Will Kennedy and Jillian Ward
Nov 27, 2014 9:04 AM CT


At today�s prices of just over $70 a barrel, drilling is close to becoming unprofitable for
some explorers, Leonid Fedun, vice president and board member at OAO Lukoil, said in
an interview in London.

OPEC policy on crude production will ensure a crash in the U.S. shale industry, a Russian oil tycoon said.

The Organization of Petroleum Exporting Countries kept output targets unchanged at a meeting in Vienna today even after this year�s slump in the oil price caused by surging supply from U.S shale fields.

American producers risk becoming victims of their own success. At today�s prices of just over $70 a barrel, drilling is close to becoming unprofitable for some explorers, Leonid Fedun, vice president and board member at OAO Lukoil (LKOD), said in an interview in London.

�In 2016, when OPEC completes this objective of cleaning up the American marginal market, the oil price will start growing again,� said Fedun, who�s made a fortune of more than $4 billion in the oil business, according to data compiled by Bloomberg. �The shale boom is on a par with the dot-com boom. The strong players will remain, the weak ones will vanish.�

Oil futures in New York plunged as much as 3.8 percent to $70.87 a barrel today, the lowest since August 2010.

At the moment, some U.S. producers are surviving because they managed to hedge the prices they get for their oil at about $90 a barrel, Fedun said. When those arrangements expire, life will become much more difficult, he said.

Saudi Arabia

While some OPEC countries including Venezuela pushed for a reduction in output quotas at today�s meeting, Saudi Arabia, the group�s dominant member, argued for the status quo.

In Russia, where Lukoil is the second-largest producer behind state-run OAO Rosneft (ROSN), the industry is much less exposed to oil�s slump, Fedun said. Companies are protected by lower costs and the slide in the ruble that lessens the impact of falling prices in local currency terms, he said.

Even so, output in Russia, the biggest producer after Saudi Arabia in 2013, is likely to fall slightly next year as lower prices force producers to rein in investment, Fedun said.

�The major strike is against the American market,� Fedun said.

Penn Virginia just brought out another pioneer coil unit, i'm having a mixing plant brought in in the morning,(this makes 3 we have going) going to breakout two helpers on it. they will get to prove the can run their own jobs. haven't been home in 6 weeks. 20 more wells to complete before the end of the yr. I was told today to expect to work like this at least the next 2yrs

Things will bet ugly here in the short term for our drillers. No doubt. A lot of our energy "explosion" is very heavily leveraged in so much debt I don't think anybody knows the extent of it. The weak will get culled but many will emerge as supply diminishes in the long term and a few other things change.

They could drive it down to the 50's or lower. Who knows. Saudis know how to play the game well.

This perfect storm will create some tremendous buying opportunities if you have a 10yr + time horizon. Don't worry about a "bottom". Buy without fear and forget about it for a long time. Sustainable dividends are your friend.

I was thinking along these lines as well. I have significant positions with BP and Exxon Mobile and have been watching the price continue to decline. But the dividends keep rolling in on schedule.

If seeing red on your brokerage page causes you lost sleep, stay away from oil stocks for awhile.

Low oil prices may not be the great panacea for all that ails you. Low oil prices may curtail oil exploration and reduce oil jobs.

see: http://www.marketwatch.com/story/pl...he-world-of-its-economic-fuel-2014-12-05

Without having read the responses so far, I know that the general theme will be that in no way should we enjoy paying less, because it will hurt us in the long run. Never a reason to feel good about spending less for anything.

Going a bit further into what I think is the theme of your post...I saw an article the other day talking about how this presages a collapse of the economy because this is what happened in 2007. Perhaps, but IMO nearly the whole reason 2008's economy even happened was the extremely high fuel prices that we never recovered from. Fuel prices never recovered from the Katrina debacle when consumers took the hit for all the destruction by that hurricane, of vulnerable oil rigs and refineries. The main two reasons for gas never coming back down that were cited were the hurricane/epa regs precluding updating decayed infrastructure regarding refineries and China emerging as a huge oil consumer. To me, that's bogus. You can possibly use the first half of that in a stretch, to justify the outrageous jump in prices that continued from Katrina to 2007 when they bottomed out at about $1.50 a gallon for gas. The China thing is an ongoing source of price increases, but not to that extent as far as the way they jumped. It is still my opinion that the increase in oil prices during and after the recession in 2008 were mainly responsible for that recession. The low prices in 2007 were only there for a few months. Other than that, we've had just balls-to-the-wall oil prices since Katrina. And that's what's killing the economy.

I'm not a market guy...I don't have Hillary's magic touch. That said, if you go into a market with say $10,000 and within a few months you've turned it into $100,000, I don't think you can bitch too much or be too surprised when within the same amount of time it turns back to $10,000.

I keep hearing how all of these so called "Experts" tell us that low oil prices is bad for us.. and how it is going to destroy our economies etc....

I have to pause and reflect.....

if that is all true and so bad for all of us, how in the hell did our nation survive the 30s 40s 50s and 60s?

Less purchasing power, means it is better for me in the long run????

our problem is less competition, and more big business controls tied in with governmental corruption...sure we'll approve that for a big donation to our re election campaign...

Most of the supposed "controls" on big business were done at their own behest to stamp out competition rather than to control anything. Don't kid yourself. Big business owns both parties at the uppermost levels.

Teddy Roosevelt busted his truss to see that the oil business did not become a monopoly. Back in the fifties and sixties, we had numerous, "small" independent producers/refiners. Then somewhere along the line there was a change, and it was decided that anything other than "whoever has the most money can do whatever they damn-well please" was at least unAmerican and probably commie, and everything went to hell.

I agree with both of you. Our economy crashed when gas was $4-4.50 a gallon here. No coincidence.

I've lived in the Oil Patch most of my life and my Dad financed my education and upbringing with money from big oil. That said, the more money accumulates in a certain area, with a certain company, the more power that company wields and it can be used for good or...and we all know human nature, or at least those of us who ain't Democrats do.

Awful lot of earthquakes directly south and west of me. These weren't happening before the fracking started. Lots of Indians up north that don't want the pipeline going through tribal lands...Lot of people on here want to give the oil companies a free pass. Fracking...pipeline...I dunno. Oil companies just allowed free reign? Hell no.

When jobs were plentiful here in the NE USA gas was $0.25 a gallon and $0.179 in a gas war.

They would ask you how much you wanted, pump it for you and make change at your car window. Offer to check the oil and clean your windshield!

When I borrowed my late dad's Buick I would put up to the pump, say "Two dollars worth" and hand over the money.



My late dad ran his own tool and die shop and got a new Buick every year!

True that!!! So sad the "millenials" don't get it....

The article mentioned the large producers protected themselves from falling prices with future contracts.
Who will be the loser on those contracts? hmmm, maybe the too big to fail banks?
Could this collapse them and cause another government bailout?

Dangerous times!

Been fracking here since the '30's....haven't known of an earthquake here ever. Why is that?

Like I said in my first post on the thread ...

So we should hope for $10 a gallon gas, that will be good for everyone?

Make no mistake the American people could use the break we would get with cheaper gas prices.
If the big banks did speculate on this and lose, the deserve to go under.
The government bailing them out is a true crime against the people and free markets!

I don't know. Why all the earthquakes now if not fracking? I'm not saying that sarcastically, just being honest.

That's what I'm hearing other people saying, not me saying it.

With much cheaper crude available (from low-cost producers), the US oil surplus could fade. Bakken crude is more expensive to extract than Bakken crude. On Friday (12/5), Saudi crude was about $65/bbl, while Bakken crude costs about $85/bbl. How long will domestic extraction companies be willing to loose about $20/bbl? For every barrel they extract? What will they do with their workers?

Once the US producers shut down, oil price will rise and it will take time for US production to recover to the present level. This can't be good for our economy in the long run.

It seems, America, and all north America for that matter, had boom times after the Second World War.
I don't recall gas prices being all that high that time.

Cheap gas is good for the economy as a whole. I too think high gas had a lot to do with the crash.

So, really in the grand scheme of things, who cares if it puts some of our small producers out of business? When they all die out and oil goes up again, they'll be back. Oil has always been an up and down business. I know guys who have been multi-millionaires and flat busted (worse than that really as that they were in a lot of debt) several different times in the oil bidness.

In the grand scheme of things $2 gas for about five years would do more for the economy than anything the Republicans, Democrats, or anyone else could ever do.

Oil is like most other commodities. Goes up for awhile and generally goes back down.



Or so I've been told.

?

I meant to say Saudi crude. Should have written "Bakken crude is more expensive to extract than Saudi crude."

Saudi crude is more expensive to extract than Bakken crude?



Pretty sure I read that 'fact' somewhere on the internet....grin

Saudi crude is a lot more expensive to refine. Some of the Bakken stuff is practically ready to burn when it comes out of the ground from what I have read.

low oil prices will hurt a very few and help not only 99% of consumers, but those who benefit from consumers' ability to spend money

Depends on all kinds of circumstances but right now I say slow up a touch on our development and burn a little more foreign oil.


Hell they can't find enough help as it is around here and in North Dakota.


Wait until the price goes back up and drill some more holes.

I don't think one can lose money one never had.

Richard, cheaper oil should mean cheaper fertilizer next Spring. And that would be nice.

Cheaper oil, cattle and grain currently holding steady.

Gas at $1.20 a gallon seems about right.

I should save at least $100 on an upcoming trip. I'll write out a check to Exxon for that $100 so they and the banks don't collapse

Nothin' greedy about us Sam.

Like the old guy that was not greedy, "All I want is the land that joins mine".

And let us not forget the widows and orphans who depend on their dividends!

They all walk do they?

I see numbers of what it costs for a barrel of oil to be produced on here. What I would like to know is , how in the world do you know these figures are accurate ? Unless you are way up on the corporate ladder, you don't know those numbers. If it is on the net it must be true ?

I remember (in the mid-1960s') when it was $0.19/gal (that's right, nineteen cents per gallon). Seemed expensive then, but I didn't have a lot of money.

I was working at Skelly Truck Stop on I-20.
I was 18 about 1971. They were price gouging
the cars at 32cents. No place else to get gas.

All I know I was spending between $90-$100 to fill my truck up when prices were up around 3.69-3.74 a gallon. Two days ago at $2.51 a gal $62 bucks to fill up.

When Bush left office, and O'bummer assumed command, gas was $1.87 gal. The libs want higher gas prices. Clinton told us gas wouldn't go lower than $3.50 a gallon!


DMc

Cheap gas will cause the GDP to drop significantly , because gasoline is a large portion of the goods bought. If it drops the Bastards in charge will say hey look our newly elected Congress and Senate members are returning us to Recession...... Obamas last two years are gonna be filled with Lower GDP numbers, which make people upset and cut back ( lay offs / spend less) which in turn lowers GDP more , which makes people upset , which lowers GDP .....ETC......
He may get ballsy enuff to say "hey there is a disaster looming ,I need to control this without disrupting "Our Fine Country" with elections"....
That is when your hoard of ammo and powder will come in handy.

If on the other hand we take everything away from the Middle East and bury them in production and take their nest egg away then ,all bright sunny skies..... at least for a little while. The Arab countries will be back to throwing rocks and screwing camels without American and European money to pay for American and European oil companies to drill and process their oil for them.

Just a thought.......

P.S. The Saudi's pay are Ex- U.S. Airmen a damn fine wage to maintain their military aircraft for them , because they do not know how or care to do it themselves. If they can not protect or provide for themselves without money too frigging bad. .I say let ISIS run amuck for a while then in Five years the Middle East will be back to the Biblical times as far as Technology goes and they will be a little easier to deal with.

On a Side note gas was .89 per gallon in Maryland in the fall of 1999. Cheapest I ever paid for it. How did we get to 4 bucks a gallon by 2009??????????

Oil Futures being sold ten times over to raise profit.
Long term predictions that change every 8 minutes.
Government treaties and contracts that are in the interest of those in power at the time.
Oil being traded in American Dollars When our largest banks operate on methods that would impress the most resourceful Mafia types.
Our Government willing to prop up the worst run institutions , just because they are to big to fail.
They list goes on .............

More oil industry bullchit the way I see it. On the way home from church today from one station to another gas price varied .020. Same gas, same brand and the higher price was at a station that historically has had the best price in the area. The oil industry has no credibility, just a bunch of lying, greedy thieves. Diesel prices are another story, growing up in the 50's and 60's diesel prices never exceeded gas prices. Today it is pretty common to see diesel .080 to 1.00 more than gas. Seems to me just a case of greed, making consumers pay more for diesel's increased mileage. Also costing the trucking industry more thus goods moved by truck and train cost more which is passed along to the consumer naturally.

Does the thought occur to any body that maybe money saved on lower energy prices will be spent on other sectors of the economy? Heaven forbid if lower energy prices help the bottom line of some other industry.

The way I look at it. Oil money has been the key funding source for the terrorist. Maybe if that well drys up a bit things will slow down in the middle east and abroad.

Yes , More money to spend elsewhere. My statement was made because of direct quotes you can already hear on business reports and what the government will be saying.when things like the last Quarter numbers come out. Like the Xmas shopping season was lower because the GDP was lower ETC. The gas price dropped fast, so fast that people did not readjust spending and also fast enough to scare the oil futures people into believing it can not stay that way.

Spot-on.

Did you really mean .020 and .080? I'm assuming you meant 20 cents and 80 cents?

Not really sure what you meant, but if it was cents then .020 is 2 cents.

Fracking been here in our area since the 70s more or less... still have not had an earthquake...

I'd think they would be very common anywhere wells are that fracking is used, not just in certain areas, if it was fault of fracking.

As to pipelines... bring it on, can come across us anytime they want. They are not a big deal and they help us maintain a certain amount of petro freedom still.

Are you saying we aren't having earthquakes up here? They are widely reported in local, state and national news. They are also widely attributed to Fracking, which as far as I know, wasn't common until about the past five or ten years...around here. I'm not saying Fracking is causing them. Something is though.

Sounds like the Global Warming folks.

I guess there could be a lot of explanations for the earthquakes, but it is a fact that they weren't happening until recently. They are disquieting.

Thing is even with the lowered gas price at the pump, probably won't spur better economic numbers. The economy is tanking again. The retail numbers are down from last year. Some Dems are already trying to get out in front of this.

Millions of people working part-time, or just sitting collecting benefits, are not spenders. I believe this is the main reason the libs are pushing for higher minimum wage, to make gainful employment more attractive than welfare. Currently, working is not a better living than unemployment.

They aren't happening here either....been fracking since the '30's. Why is that?

That's because people have no patience, skills, smarts etc etc.

One should go into a job thinking 'Sure, I'm at the bottom, but I'm going to run this place in 10 years'

Not 'Hey, I need enough money to purchase a new car, TV etc etc whilst saying DO YOU WANT FRIES WITH THAT'

I think motivation is lacking, also...

Obviously. They want the MOST for the LEAST.

Jobs that were for kids, ex-felons and for supplemental income aren't meant to sustain a family of 5.

This will be the perfect time for the lardazzzed politicians to raise the federal gas/diesel tax. You heard it here first.

Oh, I'm sure that's coming.

I am sure it won't be .20 or .30 cents a gallon either. We should be paying the same as the Europeans according to some Demos.......

price of oil will start going back up after the first of the year.

Mmmmm,.....TransOcean laid off 900 roustabouts last two weeks and is moth-balling 7 semi-submersibles. Projecting cold storage for 15-18 months.

we're going to slow down till the first but will pick back up, actual drilling might slow down but we will still be doing production work.

We are adding two rigs next month, just in my area, from 7-9.

I have read that our ability to refine crud is also an issue. If gas is cheaper, people will use more of it--spreading the money saved among other sectors of the economy. Does the U.S. have the ability keep up with demand (refineries)?

simple answer is more and better siesmographs in the ground than at any time in the past....Fracking is taking place way to shallow and in way to limited of an area to cause an earthquake....last 20 years a hell of alot were put in places they never were........the earthquakes were always happening but only a few scientists cared now that there can be an agenda thrown with them....well.....

http://www.tulsaworld.com/news/stat...15f6162-8e33-56d1-af6c-8a50532c4099.html

See link above. And no, there were not a bunch of earthquakes happening in Kansas and Oklahoma in the last twenty years.

Bump for all the honest world to feel.

$2.15 a gallon in South Ga.

Earthquakes and pipelines are a bad combination, it would seem. The spike in earthquakes in OK needs to be studied for sure. It's reasonable to allow that destabilizing what's under us could have major effects on top.

I'm all for oil independence but not at any price. It does little good to fuel the family car while the house and driveway collapse.

I think the jury isn't ready to make a decision, and more data needs collecting. Let's hope there is no direct correlation, and we are in position to tell the Ruskies and Rag-heads to GFO.

In 1 1/2 yrs gas will be over $3.00. I think this is a good avr. We need gas high enough to keep pumping our own oil. I will gladly pay $3.00 if it comes from the USA.

Do the wind generators vibrate enough to cause earthquakes. I've heard they won't put them close to an earthen dam because of vibrations may cause them to leak.

From CNN:
"Some companies won't survive the oil meltdown"
see: http://money.cnn.com/2014/12/16/investing/oil-fall-shale-impact/index.html?iid=HP_LN

So, just more of the government propaganda that keeps telling us that inflation is a good thing and that the real buggabear for the economy is deflation. Of course, it neglects to tell you that government is dependent on easy money and inflation in order to inflate its way out of the debt, no matter how such a course hurts the average rank and file American.

"Does the U.S. have the ability keep up with demand (refineries)? "

The US (refining industry) has traditionally run its refineries at very near full capacity (generally in the 90+% range); therefore there is only a slim reserve capacity. If demand peaks rapidly, the only way to get refined produce is by importing it.

see: http://www.eia.gov/dnav/pet/pet_pnp_unc_dcu_nus_m.htm

$2.10 in South GA. I'm taking a Christmas trip. I actually have money to spend on something other than fuel. Hope the economy can survive.

And others will emerge and thrive. Wealth is a closed loop, eventually it finds other avenues back to the source.

$1.98 in South GA

Curious. Anyone here invest in big oil?

Big Oil ????? I usually work for Little Oil, what about us !!???!!!??