Saudi Arabia to lower oil prices, the houston boom is over

I guess it would depend on where you're trying to buy. Ain't happening anywhere but in the boonies. Established areas like SL, Katy, Woodlands, Pearland, etc. are simply booming.

In the city, a 2 story (2k sq ft, new build) costs 350 + and I don't see that going anywhere but north.

 

There are plenty of those. Sorry, had to.

 

Open the ability for the US to export oil and it's game-set-match.

 

If things keep rolling, this will happen with the next president no matter who it is.

 

Exports are just a matter of when, not if.

 

I don't get the export argument. Why would we want to export some of our domestic oil only to import more foreign oil? It's not like we have a surplus of production.

 

Did you read that article I quoted?

 

Because not all oil is created equally. U.S. buyers want a different kind of oil.

 

The us does not make enough oil.

 

This article throws out numbers without checking their math.
It says Saudi needs oil at $110 to balance their budget and they pump 10 mb per day ? That's 3650 mb /yr.
IF their cost is at $10 like some sources say, they will make $365 billion.
IF their cost is double that, they still make $90 x 3650 = $328.5 billion.

Their 2015 budget is supposed to be just ~ $230 b which is probably the highest it ever was.

Oil has only been in the $100 range for 2, 3 years over the past 50 years. Counting inflation, if the article was any where near the truth, they would have been broke for many many years. Instead, they have a surplus reserve of ~750 billion dollars.

If you look it up more, the magic number is closer to ~$60-65 / barrel for them to break even.

Saudi will run a deficit this year, yes, but it's closer to $35-40 billion. At this rate, they can hold out for close to 20 years.

Guess where the shale oil industry going to be?

 

Los Cucos is a chain, small fry. Sorry.

 

Yes, but I still don't see any reasoning behind exporting US oil. Given that is a limited if not finite resource of national strategic importance, more rapidly depleting the domestic sources seems illogical.

Due to the availability of shale oil worldwide and the need to reduce the burning of oil resources it is beginning to look like the end of the age of oil as THE determinant of world politics. Indigenous energy sources look to be the new source of economic strength and freedom. The Middle East is about to burn down in a Shia/Sunni multi-national civil war, and as stated, we are still dependent on imports.

If US producers can sell everything they can produce in the US anyway, I don't understand why US oil companies are making such a big PR and political push for exports.

 

Here is some rough numbers for you to chew on (~2014, they change a little from year to year):

The world consumes 88 millions barrels of crude per day.
The world produces about the same amount.

The US consumes 19 mil barrels of crude per day.
The US produces 9, 10 mil barrels per day.
Hence it imports ~10 mil barrels per day.

If the US produces more, what happens? If everyone else keeps same production, price drops -> production (US included) drops. Did we just see that?

So you say, US can export some crude, question is: who is going to buy it? No one else in the world needs more, they already have their sellers.

Further more, if you export some of the crude produced here in the US, won't you have to import some right back to meet our needs?

The only time that we can affect the equation above is if we can produce crude cheaper than everyone else. Isn't that the simple truth for every product?

 

Because they think can get a better price for their oil if they put it up for sale in the international market, and since oil is a world wide commodity, it also means price of crude locally would also go up to match (adjusted for shipping of course).

But that is not going to happen, not as long as we cannot produce oil as cheap as other world producers.

 

You say oil as if all types of extracted crude is the same. It's not:
http://oilprice.com/Energy/Crude-Oil/A-Detailed-Guide-On-The-Many-Different-Types-Of-Crude-Oil.html

The crude being pulled out of the Permian is 'light sweet'. The crude coming out of the volatile middle east is not 'light sweet.' The proximity to the highly desirable light sweet extraction points to the refiners is very close (permian--->gulf coast). The proximity for less desirable crudes to refiners is very far.

Ergo, with technological advances in shale drilling, we are extracting the more desirable crude and the local refiners can make a killing flooding the market with an end product that is competitively priced when all costs of the supply chain are taken into account. Just because you can extract crappy crude in Iraq for $15 a barrel doesn't mean the end product is more cost effective than highly desirable crude extracted at $30 a barrel and refined locally in a more stable political and economic environment.

Say the word 'oil' is to assume all crude is the same. Simply not true--especially from a refiners perspective. It's like saying a guy is a professional basketball player to indicate all professional players are great. The next question to gauge how good he is if you're a basketball fan should be "in what league?"

Opening exports allows the US to become the World's premier provider of refined sweet crude products. From everything I read and from the people I talk to in mid-stream, the indications in that article are correct.

 

Let us know how that is working out in two years when you're still renting or decide to bite the bullet and buy a new house at the same market value as the one you just sold.

 

I just wanted to use the total number to keep it simple but you are certainly welcomed to break down the numbers for each and every type of crude you want.

The equation does not change. For WTI or any other types, there is a certain supply and certain demand.
1) If you increase production for type A without a demand increase, your price will drop.

2) If demand does not increase, the only way for you to sell your product is to do better then the next producer. If you can produce type A at lower cost than the next guy, great, if not, you can not export or sell it domestically even if the laws allow it.

3) If you increase demand for type A, does it mean a lower demand for type B? If it is, you also have a problem.

4) Who are the producers and who are the consumers? If your consumers are right here in the US, and you want to export your crude oil, where do they get their products from?

 

$44.00!!! This is getting out of hand. I mean, can it get any cheaper? What are y'all's forecasts for WTI this year and next? When can we expect the price to be back around $60- $70? Thanks.

 

Projections never account for factors they can't see: technological breakthroughs like the rapid fall of solar generation costs and battery storage, political upheavals like the Arab Spring or an incident in the Persian Gulf (peace or war) or agreement on Climate Change protocols, domino effects like a recession in China would have.

The factors are as interdependent and varied as factors in the weather, hell, weather is one of the factors.

 

In some short phrases, you mixed several things together and totally confused yourself in the process.

If you talk about proximity to refineries on the TX Gulf coast, then you are mixing crude oil with refined petroleum product and you are talking about selling US crude to US refineries.
That is fine, the laws allow that and you can export all your refined petroleum oversea too.

On the other hand, if you want to sell WTI crude to the Chinese, your cost of shipping to Shanghai, China, I am sure, is higher than to ship Iraq crude from a port on the Persian Gulf.

Crappy crude in Iraq?
Crude oil has many blends, and you have to meet a certain benchmark to fetch a certain price. You don't think the oil companies in Iraq are going to sell a barrel of oil mixed with sand, do you?
Do you know who drill in Iraq? BP, Exxon, some Chinese companies ( which their government trusts to get oil to them more than some Texas oilmen, btw).

The unstable environment in the Middle East does play a role, but only in a sense of disruption where and how and how much people pay for their oil and it affects everybody.

If they cut off the oil supply in Iraq, it's not like whoever gets oil from there are screwed and we here in the US are sitting pretty. These guys who sell WTI are going to jack up your price even just to deliver the oil to Baytown.