Yes a geopolitical like 9/11 or some type of terrorist attack on a large scale will spike up oil. And I wouldn't be surprised at all to see it happen in the next 2-3 years.
#truth And oil in the 70s isn't the worst thing. It will flush out some high cost shale producers and it helps the general economy. If oil stayed below 70 for months I would be very surprised.
You dont think Saudi can control the price of oil? They have such a competitive advantage when it comes to oil. Most countries try to boost oil production. They try to control the pressure to limit the amount of oil coming out.
I don't agree that the Saudis and opec in general doesn't have an effect on prices. Is it as much as 40 years ago? Clearly not. But they, Saudi in particular, can still move the needle... At least moreso than any one country can. Here's an interesting question... Does Houstons economy thrive on the premise of a weaker dollar? Clearly a weaker dollar bodes well for commodity prices and also creates a much stronger exporting market which our port thrives on.
Companies are going to need to have increased production to counter some of the revenue lost from falling prices.
Terrible timing, stock price at my company dropped like $20 in the past 1.5 months right as we are beginning year in evaluations that decide the bonuses company wide.
Wait. This doesn't make any sense. The COST of the crude has dropped. Ok, so the companies COSTS drop. This causes them to be able to lower their prices at retail for the refined crude. Ok. Revenue is irrelevant. Profit is what matters. Regardless of the price of raw crude, their profit should remain fairly constant. (I am talking about gasoline here, which is of course only a relatively small portion of overall crude production, so I'm sure that matters too) As long as costs drop, why is it hurting them or the economy if prices also drop? The thing which would hugely SUCK would be if their costs dropped and they did NOT also lower the costs to the public. THAT would be the worst thing.
You know it's a mixed bag. When oil prices drop the drillers are quick to start cutting but the refiners and products people make more. Also the mid-stream people still have billions of dollars of infrastructure to build so pipeline construction is blowing and going and the Master Limited Partnership (finance) industry too.
Here's an article written by an economist from a local hedgefund. http://nationalinterest.org/feature/the-federal-reserves-trade-war-stimulating-americas-energy-11476 Makes you think...
Can you elaborate on the bolded points? Costs haven't dropped at a 1:1 ratio. Margins (net income) are eroding so I'm not sure why you're thinking that profit should remain relatively consistent. The company I work for hedges about 40, 50 % of our production two years out at a time so that portion will remain stable. After thinking about it some more, increased production won't necessarily help make up some of the net income lost in the short-term due to falling oil prices. Capital expenditures to develop wells and increased LOE (lease operated expenses) will be higher in efforts to increase production.
