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

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Well thats true.

But its not the rest of the world's responsibility to pay high oil prices to sustain these one dimensional economies.

Its the old resource curse

 

The countries it hurts are countries like the US, Canada, Russia, etc. that have a high cost of production. The middle east's costs are so low it won't hurt them as much. Their actually populations are very small. Most of the people who do the actual work are imported and are disposed off to cut costs. Maybe they can only buy a lexus and not a ferrari. It will hurt the Houston economy especially all these independent companies.

 

The costs from fracking oil are much lower. That's what's Driving this.

 

More like relocating the bulk of them to thier Business Service Center in Manilla.

 

Globally, multitudes more millions benefit from lower oil prices than suffer. The net effect is a huge positive. But, certainly, it's awful the local populations of Venezuela, Iran, Russia and similar countries will bear the brunt.

 

Marathon Oil cutting down spending on projects

 

Happening across the board, here at BHP as well.

 

and I thought it was the genius of governor perry for this boom.

 

I work for a company that services the oil & gas industry, so a downturn could hurt companies like mine the most. I remain optimistic, but I have some reserves and continually watch what my company is doing.

I work in accounting though, so hopefully I can always abandon ship if needed.

 

I always wondered why their wasn't an oil import tax so that the US got a little bit of the mark up on Saudi; oil to support domestic production and encourage renewables. It would be nice if the Saudi's paid for their own Carrier Group.

Now would be a good time GOP. We can't let them crash their US competition.

 

I never considered that the cause of the drop in oil could be nothing more than people trying to dick over the Russians. They are a borderline rentier state, so a drop in price could really throw a wrench in their ambitions. If so, props to those who came up with that devious plan.

 

So glad I left my old company where I was clearly the last guy to be laid off in my department if it came to that. Now, I can enjoy fear of a lay off since I'm the only person in my department with less than fifteen years tenure (I started in September) and who doesn't really fit in (I'm not 50 and I know what a PDF is).

Oh well. I could use a year off I suppose.

 

Yeah, it's like "sanctions?! Ha! You want to see economic turmoil in Russia, watch this!"

Whether backing Vlad and his testosterone pills into a corner is a good idea, well...

 

It's still OK. Don't worry too much.

 

Hearing that it's already beginning to slow down new commercial real estate projects. A big boy in Houston cancelled contracts on 5 new properties this week.

http://www.bloomberg.com/news/2014-...north-dakota-as-regional-discounts-swell.html

Oil market analysts are debating if oil will fall to $50. In North Dakota, prices are already there.

Crude sold at the wellhead in the Bakken shale region in North Dakota fell to $49.69 a barrel on Nov. 28, according to the marketing arm of Plains All American (PAA) Pipeline LP. That’s down 47 percent from this year’s peak in June, and 29 percent less than the $70.15 paid for Brent, the global benchmark.

The cheaper price for North Dakota crude underscores how geographic and logistical hurdles can amplify the stress that plunging futures prices have put on drillers in new shale plays that have helped push U.S. oil production to the highest level in 31 years. Other booming areas such as the Niobrara in Colorado and the Permian in Texas have also seen large discounts to Brent and U.S. benchmark West Texas Intermediate.

“You have gathering fees, trucking, terminaling, pipeline and rail fees,” Andy Lipow, president of Lipow Oil Associates LLC in Houston, said Dec. 2. “If you’re selling at the wellhead, you’re getting a very low number relative to WTI.”

Discounted prices at the wellhead have been exacerbated by a 39 percent drop in Brent futures since June 19 to $69.92 a barrel yesterday. Prices have fallen as global demand growth fails to keep pace with surging oil production from the U.S. and Canada.


Much of that new output is coming from areas that are facing steep discounts. Bakken crude was posted at $50.44 a barrel Dec. 2. Crude from Colorado’s Niobrara shale was priced at $54.55, according to Plains. Eagle Ford crude cost $63.25, and oil from the Oklahoma panhandle was $58.25.

Location, Quality

Discounts for all crudes are based on two things, location and quality, according to John Auers, executive vice president at Dallas-based energy consulting firm Turner Mason & Co.

Most U.S. refiners are along the coasts, which gives them a choice between oil pumped from wells in the middle of the country or foreign crude that can be delivered to the plant on a tanker.

That means the producer has to charge less, to make up for whatever it costs to transport it to the plant. In the Eagle Ford, that just means a few dollars to get to a pipeline that can cheaply push it 100 miles or so to Corpus Christi, Texas.

It’s more complicated in places like North Dakota, Colorado or Wyoming, where there is limited pipeline capacity. Producers have to fill rail cars with crude and pay $10 to $15 a barrel for them to be pulled a thousand miles or more to the coasts.

Reallocating Capital

Brent fell 42 cents, or 0.6 percent, to $69.50 a barrel on the London-based ICE Futures Europe exchange at 110:25 a.m. New York time. WTI slipped 54 cents to $66.84.

“To a producer in Wyoming, if Brent’s $70 then I’m at $50, then I have to start asking does it economically make sense to keep drilling,” Auers said yesterday. “They might start reallocating capital, you might see projects slowed or shut down.”

Transportation discounts don’t last forever. WTI, priced at Cushing, Oklahoma, traded almost $28 a barrel below Brent in October 2011. Companies built new pipelines and reversed old ones to allow Cushing oil to cheaply get to the Texas coast, and now the discount is less than $3.

In West Texas’s Permian Basin, the nation’s largest oil field, prices at a hub in Midland dropped to as much as $21 a barrel less than WTI this year as production growth overwhelmed the pipeline system. It’s narrowed to less than $1 as new pipes recently came online.

North Dakota

The same thing is happening in North Dakota, where the Bakken shale produces 1.12 million barrels of oil a day. At the end of last year, there was only space for 583,000 barrels daily to leave the state on pipelines. That’s forecast to grow to 773,000 by the end of this year and to as much as 1.7 million barrels a day by the end of 2017, according to the state’s Pipeline Authority.

One possible effect of lower prices is that companies may focus their spending on places where the infrastructure already exists or is on the way, said Carl Larry, a Houston-based director of oil and gas at Frost & Sullivan.

“Places that are just starting to build up are going to be hit the worst,” Larry said by phone yesterday. “They’re going to get hit the hardest because it’s harder to get the oil out. Not out of ground, but out of the area.”

 

When will houses be cheaper so I can buy one?

 

I don't think we're going to see a big drop in residential real estate. People are still moving here in droves, and I think it's going to be a while before that changes. So much of this boom has been institutional instead of entrepreneurial as it was in past booms...Exxon and BP aren't going anywhere, even if they scale back some.

But commercial real estate will correct some. The asking prices for office space out on the west side is way more than it should be...and I think we'll see a correction in that soon.

 

How many people do Exxon and BP have? I am shocked people are willing to pay so much for house in houston. If you are paying 800k for a house in bay at least there are mountains and oceans and things to actually do.Maybe you can't get that nice of a house bay for 800k, but 600k for a house here just seems excessive.

 

This.

$400-500K gets you a nice house in Pearland (sedona lakes subdivision)..

that's a LOT of money to live 20+mins away from the city center. Well it's not like the city center is that much fun or anything.