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

What export is Saudi Arabia going to tax, the fighter jets we give them?

The auto industry was doing pretty well with $100 oil.

It's good for National security. It's good for carbon reduction. It promotes domestic jobs, in O&G, infrastructure construction and renewable energy technologies. It provides some stability and predictability to the economy.

But don't blow a gasket, our Congress couldn't agree on a name for a Post Office, much less far reaching legislation.

http://money.cnn.com/2015/02/03/investing/oil-price-rebound-opec-200/index.html
OPEC leader: Oil could shoot back to $200

...That said, he's not saying that OPEC will come in and rescue the oil market by reversing its previous decision to hold steady on production. Instead, he sees the signs that the oil market is self-correcting as oil companies have made deep cuts to spending, which will eventually lead to lower production growth.
Further, the rig count in the U.S. is plunging, which is usually a key to a bottom in oil prices. However, in the midst of cutting back as the industry works through the current oversupply the Secretary-General is now warning that the industry is putting future oil supplies at risk by under investing today....

 

How do I buy oil commodities while they're cheap?

The price won't stay low. As soon as we get involved in the ME again, prices will soar.

I want my piece of the pie.

 

Over here responsibilities are being reassigned, with those who are obviously out the door giving stuff to people who are probably staying. So far nothing has been taken from me, but nothing's been given to me either.

 

And it's bad for every other sector and for 300 million Americans. You're asking the whole country to subsidize one sector of the economy.

Over the last 3 months - when the oil price has been collapsing - the economy has been booming. 1 million new jobs in 3 months is basically the fastest pace in a decade. This month, incomes went up faster than any month since 2008. People are finally starting to return to looking for work. No telling if there's any causation here, but the evidence does fit the theory that the US net benefits from lower oil prices. The O&G sector will be a drag on the economy as layoffs happen, but the rest of the economy is going to benefit far more.

I don't even understand the idea that we should artificially raise oil prices not worry about the Middle East. If we don't care if oil prices go up, we don't have to worry about the Middle East anyway. We can always just let it go, and if all hell breaks loose there, then oil prices go up and we produce our own again. There's no need to preemptively do it and pay extra for no reason. The reason we engage in the Middle East is specifically to prevent oil prices from going up.

 

Major dropping bombs once again

 

Same reason we subsidize the financial sector. Too big to fail .

That or lobbying money.

 

I don't think $70 would slow anything down, and it's not subsidizing just one sector. It sustains domestic energy over foreign energy... do you not think once shale production has been crushed the Saudi's won't back off the taps and raise prices? It sustains innovation in renewable technologies, new cleaner jobs and stable energy prices for the long term. Spending on infrastructure is the route to job growth and it needs to be funded. It allows for international policies that make sense for American ideals instead of being beholden to militarily defend autocratic and theocratic regimes, even from reform movements within their own populace (like training secret police).

Boom and bust is cycle (look at the article above). Just as oil prices have crashed, they will soar again and if we don't take measures to protect our vital interest and long term sustainability, we are going to get caught in the panic, and your worries about slowing job growth will appear silly.

 

If they back off the taps, then the shale sector reactivates. Oil was in the $40's during the 2008-2009 period. It didn't stop the shale sector from developing or coming online when prices went up. The only way to keep the shale sector away is to sustain the low oil prices.

No it doesn't. Your import tax won't raise any revenue. If you tell a seller that their US customers are going to pay $70 for your oil no matter what price they sell it for, they'll just sell it for a minimum of $70. The seller will get 100% of that additional money - nothing will be raised for infrastructure or renewable technology or anything else.

 

Try googling US Saudi trade.

Plus you can't impose tariff on just Saudi, you'll have to do that to at least the rest of OPEC. If not, they will simply send the oil to the country that you don't tax and split the difference.

You also risk an oil embargo. Try google that and Tariff war and you see that it is not good for National security or anything else.

These claims are quite dubious, they don't base on any facts.

Congress can't agree on many things but this will be one thing they will, no one is stupid enough to think tariff will solve anything.

 

huh? tanker loads are bought on the world market, if you develop and favor domestic oil, the supply to the rest of the world goes up and prices come down. You don't add the duty until it comes ashore in the US where it becomes unavailable to other users.

And Shale exploitation doesn't ramp back up instantly, idled rigs degrade or get sold offshore, workers move on, banks are reluctant to make loans, service companies scale back, innovations don't get funded.

What I want to do is mitigate the boom and bust cycle so the US has a stable domestic energy industry.

 

That's not entirely true. For example, Saudi discounts its oil to China:

http://www.bloomberg.com/news/articles/2015-02-06/saudis-deepen-asia-oil-discount-to-a-a-record-low


Saudi Aramco, as the producer is known, cut differentials on each of the four other grades it sells to Asia, its largest market, and raised them to the U.S., northwest Europe and the Mediterranean region, according to Thursday’s statement. The discount on Extra Light crude to Asia also dropped to a low of at least 14 years and Arab Medium was cut to within 10 cents of its record discount for buyers in Asia.

...

Persian Gulf oil producers sell most of their crude under long-term contracts to refiners. Most of the region’s state oil companies price their oil at a premium or discount, also known as the differential, to a benchmark. For Asia the benchmark is the average of Oman and Dubai oil grades.


I don't know the ins and outs of oil contracts, but the market will ensure that if there is an artificial flat price support to raise prices to a certain level, the government will not be the beneficiary. In the example above, there is zero incentive for Saudi Aramco to sell to a Texas refinery for less than $70 if the refinery is going to pay $70 regardless.

 

Not import tax but sales tax, income, and property taxes have all pushed revenues up pretty high. Federal revenues are back to where they should be, maybe even breaking some records and this was before the collapse of energy prices. The money is there to spend on renewable energy and infrastructure but the political will isn't. Renewable energy requires higher energy prices to be viable plain and simple.

 

The US and to a greater extent all of North America needs better policies in relation in production and export. We could become the largest producing and exporting region in the world, especially if nat gas starts to become more widespread. Global demand won't be down forever and we still have India and Africa (a billion people each) to explode like China.

 

Supreme gas is still almost 3 bucks a gallon at a bunch of gas stations around Houston. So much savings!!! I don't know what to do with all of this extra cash.

 

Why should the US allow crude exports? It's a vital, finite national resource that we still have to import from volatile nations.

Just saying exports would stimulate production (not when production costs are higher than imported oil) doesn't account for the fact that eventually, we will use it all.

 

Just buy some deep out of the money call options on crude oil. Basically fund a futures trading account and purchase these options.

 

Found this article interesting:

http://online.barrons.com/articles/SB51367578116875004693704580443772734531324

 

Just raise the price of food to them.

DD

 

Ha. What, gas is cheaper? **** those guys.