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Page added on June 1, 2015
4 reasons oil will stay this cheap for years
Producers around the world—from embattled drillers in war-torn Iraq, to shale concerns in the U.S.—aren’t being scared off by cheap prices.
Leaders from some of the world’s most productive oil-exporting nations will meet this week in Vienna, just as oil prices have begun to stabilize at around $60 per barrel.
As we near peak summer driving season, American consumers would have worried a generation ago that such a meeting would be an impetus for a pullback in production, with oil exporters aiming to raise prices by limiting supply. But the world has changed a great deal since the height of OPEC’s power in 1979, when member nations accounted for 50% of global oil production, compared with less than one-third today.
When Fortune published its report on the collapse of oil prices in February, investors like Jeremy Grantham told us that oil would be heading back to a price per barrel of more than $100 in the long run. Other analysts, like economist Nouriel Roubini, argued that cheap oil would last just a year or 18 months before producers like Saudi Arabia had successfully flushed out higher-cost competitors like shale producers here in the U.S.
WTI Crude Oil Spot Price data by YCharts
While there’s still time for Roubini’s prediction to come true, the intervening months have shown that producers around the world—from embattled drillers in war-torn Iraq, to shale concerns here in the U.S.—aren’t being scared off by cheap prices. Here are four reasons why we can expect the era of cheap oil to continue, even as Americans consume more gasoline this summer.
1. Low interest rates mean cheap money for American producers. A report in The Wall Street Journal Sunday showed that despite falling prices, investors are still eager to fund oil exploration and extraction efforts here in the U.S. With interest rates so low and investors searching for anything that will provide decent returns, even oil companies facing high costs of production and low market prices are having no problem getting funding:
As crude prices began to plunge last year, many energy experts predicted a repeat of 1986 when U.S. oil companies lost their funding and the industry collapsed into a yearslong bust. Without money, companies had to slow or even stop drilling for the crude that helped create a global glut. Many were forced to sell out to rivals or go bankrupt.
But the gloomy scenario of that downturn hasn’t played out on a large scale this time. That is because banks, private-equity firms and institutional investors have continued to pour money into the sector even as oil companies slashed billions of dollars in spending from their budgets and laid off more than 100,000 workers.
2. Saudi Arabia has no choice but to keep pumping. Long gone are the days when Saudi Arabia acted as the so-called “swing producer” in the global oil market, when it would increase or decrease production to keep prices stable and profits high. A report in The New York Times delves into what has changed in the Middle Eastern kingdom over the last generation. For one, political instability has made maintaining employment in the oil industry more important than keeping government revenues from oil sales high. Second, the explosion in oil production elsewhere in the world means that Saudi Arabia’s production just isn’t as significant as it once was. And finally, over the previous 30 years, Saudi Arabia has increasingly relied on selling lower quality oil as its supply of “sweeter” crude has dwindled. To facilitate this, the kingdom has invested in its refinery capabilities, and that investment demands that it keep the oil flowing, even amid falling prices.
3. Iran’s oil could soon hit the global market. If Iran and the United States finalize an agreement on the latter’s nuclear enrichment program and lift an embargo against Iranian oil, we would see another increase in global supply. Analysts estimate that a sanction-free Iran could add another 1 million barrels per day of oil to global supply by 2016, providing a supply cushion if U.S. shale producers end up running out of financing.
4. Renewable energy continues to get cheaper. Earlier this month, an unnamed Saudi official told The Financial Times, “Saudi Arabia wants to extend the age of oil…. We want oil to continue to be used as a major source of energy and we want to be the major producer of that energy.” That logic is another reason why OPEC countries have less of an incentive to cut back production: renewable energy sources is starting to give fossil fuels some serious competition, and oil-exporting countries have an interest in keeping oil a cheap alternative.
It’s often said that cheap oil will not hurt the rise of renewables like solar because oil is used mainly to power things like automobiles, while renewables are mostly used for electricity generation. But expensive oil has been a boon to products like electric cars, too. Edmunds.com announced last month, for instance, that for the first time ever loyalty rates for electric car owners fell below 50%. “For better or worse, it looks like many hybrid and EV owners are driven more by financial motives rather than a responsibility to the environment,” said Edmunds.com director of industry analysis Jessica Caldwell.
46 Comments on "4 reasons oil will stay this cheap for years"
Makati1 on Mon, 1st Jun 2015 7:29 pm
Oil will remain cheap because fewer and fewer can afford to consume it at a higher price. As low price eliminates nonprofitable sources, the consumption will fall and economies will contract. This is already becoming obvious to the informed.
Nony on Mon, 1st Jun 2015 7:39 pm
So why is volume up instead of down?
dissident on Mon, 1st Jun 2015 7:42 pm
What bloody volume. Where is all that infinite spare capacity that the Saudis supposedly had. They should have been able to pump 12 million per day. But this has *never* happened.
Makati1 is right, there is enough demand destruction to keep the price from exploding and the world production is still hovering around a plateau.
nubs on Mon, 1st Jun 2015 7:50 pm
As has been pointed out here many times, historically speaking, $60/barrel oil isn’t cheap.
GregT on Mon, 1st Jun 2015 8:10 pm
“So why is volume up instead of down?”
As Short has attempted to point out many times, volume is up, but it has not increased at the rate that it has for the past several decades. The economy wants to grow, but it cannot grow at the rate needed, without injections of QE from the central banks. Economies would be growing much faster if the oil was priced at or below historical recessionary prices. 60 dollar a barrel oil is still too high.
rockman on Mon, 1st Jun 2015 8:12 pm
“…, historically speaking, $60/barrel oil isn’t cheap.” Exactly. Some folks have such short f*cking memories. LOL. Or too lazy to do a 30 second Google search: the current oil price is about the same as the inflation adjusted price in 2005. And 335% higher then the inflation adjusted price of 1998.
Makati1 on Mon, 1st Jun 2015 8:18 pm
Nony, look at NET ENERGY, not barrels consumed. Most of those ‘petroleum’ barrels are NOT high NET ENERGY petroleum. They are tar sand gunk, fraked ‘liquids’ and alcohol.
Think beer VS 12 year old scotch as a comparison. If you go to a bar and ask for a double Chivas on the rocks and the bartender slides a can of Coors lite in front of you and charges you for the Chivas, is that ok?
GregT on Mon, 1st Jun 2015 8:28 pm
If oil were priced low enough that the economy could continue to grow, there wouldn’t be enough supply to meet demand, which would in turn cause prices to rise, which again would stop the economy from growing. The oil age is coming to an end.
Plantagenet on Mon, 1st Jun 2015 8:46 pm
We’re in an oil glut. Too much oil and too little demand caused the price of gasoline to drop. When the oil supply drops or oil demand increases, the price will go back up.
BobInget on Mon, 1st Jun 2015 10:12 pm
Plant, AKA HRH is a teasing troll not worth
responding to.
I’ll offer four reasons why oil prices will continue to go higher.
1) There really is ‘peak (cheap) oil’.
2) Demand, from Asia continues to exceed
production.
3) There’s world oil wars going on with
no set goals, entrance or exit strategy. The fact that none of the ‘usual suspects’ will admit motive is proof.
China vs Vietnam, Korea, Japan, Philippines,
USA is a classic war scenario.
OPEC members KSA, Gulf States, USA vs
Iran and Russia. (going on five years)
China, Russia, Venezuela, Ecuador, vs
USA.
Iraq, Iran and USA vs Islamic State (ISIL)
Syria vs aQ, IS, Free Syrian Army, USA .
IS affiliate, Boko Haram vs Nigerian Army.
Two conflicted Libyan governments vs
IS, aQ, plus, at minimum, six militias.
South Sudan vs North Sudan
Saudi Arabia, USA vs Yemen vs AQ and IS
(Yes, USA is backing aggressor, KSA)
Russia vs Canada in the coldest war of the Arctic.
The forth reason oil prices are bound to rise;
There’s no agreement on peak oil, global warming, or diplomatic solutions for world oil wars.
Without at minimum, some world wide ‘Manhattan Project’ to discover, market and install renewables, that piece of the energy sector will remain as it is, tiny.
ennui2 on Mon, 1st Jun 2015 10:17 pm
Peakers doing what they do best these days. Denying the fact of the oil glut.
Stop the spin and deal with it, folks.
GregT on Mon, 1st Jun 2015 10:59 pm
So back in 2002, before the run up in oil prices that caused the global financial crisis, when we weren’t in an oil glut, oil was selling for 1/3 of what it is today. Yet now that prices are 3 times higher, we are now in an oil glut. No consideration given for failing economies worldwide, trillions of dollars in QE money, the fact that we still haven’t recovered from the crisis, and that central banks still cannot raise interest rates.
Yup we are in an oil glut, we have all of this excess energy floating around, but the entire planet is just too fucking stupid to figure out what to do with it.
Energy Investor on Mon, 1st Jun 2015 11:43 pm
Meanwhile, in the far flung dominions of big oil, the likes of Shell and Chevron sell off the service stations that they know they will not have supplies for in five years…
http://www.stuff.co.nz/business/industries/69021068/Z-Energy-confirms-785m-acquisition-of-Caltex-from-Chevron
Getting ride of downstream assets while they can?
Energy Investor on Mon, 1st Jun 2015 11:45 pm
So Shell and Chevron have picked the peak oil losers in Australia and NZ.
Apneaman on Tue, 2nd Jun 2015 12:22 am
No difference between the big oil 1% and the big tech 1%. Socialism for the uber rich and dog eat dog capitalism for the rest of us. After the SHTF, Elon Musk And Rex Tillerson will be yuking it up over martinis in Patagonia or New Zealand while we tear each other apart over who’s ( left vs right) fault it is.
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
Elon Musk’s growing empire is fueled by $4.9 billion in government subsidies
http://www.latimes.com/business/la-fi-hy-musk-subsidies-20150531-story.html#page=1
Nony on Tue, 2nd Jun 2015 2:13 am
I agree that 60 > 30. In fact, I gave you all props for 100 for the last 4 years. However, you lack the grace or the honesty to concede that shale stopped 100 from going to 150. Or to concede that a change from 100 down to 60 sure as shit is significant.
This is because dishonesty and unwillingness to face facts is endemic to peakers.
SolarDave on Tue, 2nd Jun 2015 2:47 am
I’d say it was the trillions of USD funny money that enabled the shale boom that is what really brought the price down.
It’s not that we peakers didn’t anticipate conjuring up more oil to keep things rolling. Duh. The petro-glass is half empty/full. We know there’s lots more down there. We just didn’t anticipate the FED would print $1T to keep producing it.
Smear as you will, but it’s not “peak oil” in absolute terms, it’s “peak recoverable oil” in economic terms.
So we’re saying “Oil’s going to get too expensive to produce – ergo peak oil” and you’re saying “Oh yea? Well what if money is free? Now where’s your peak oil? ”
Who’da thunk it.
Davy on Tue, 2nd Jun 2015 6:26 am
NOo, there is more to it than your accusations and unsupported Monday morning quarterbacking of shale. While I admit shale may have helped oil from going to 150 it is likely the economic collapse and the meager recover post 08 crisis stopped oil from going higher. The diminishing returns and limits to QE and rate repression also brought oil down with some help from the malinvestment of shale over production.
Shale succeeded in creating a multiyear bubble from QE and rate repression. This shale bubble was actually a huge malinvestment that will cost the US economy dearly with bad debt. It will also cost the world dearly. It did extend peak oil a few short years giving the rich some significant enjoyment of growth from wealth transferring QE and rate repression.
There has been an aggregate economic decline for the majority of the US and global economy for that matter. Only Asia has seen a steady increase but with a current stagnation from off the chart credit creation hitting diminishing returns. Asia is one huge bad debt being kicked down the road with a population off the chart in overshoot to carrying capacity. It is Asia that is now a big influence on demand destruction with oil. Europe is broke with too many people sandwiched between a militarist Russia and a collapsing Africa. Europe is in much the same league as the US being unable to stoke real growth.
NOo, shale is such a small amount of global production that you put way too much weight upon. It made a small difference for a short time and now it is a retirement party that will cost many dearly for the profit of a few. It has damaged the ecosystem and put the US into a worse energy situation by giving the population a false sense of energy security. You are a broken record of bullshit on the subject. I admit I am redundant but you are off the chart on one subject a subject that is all that matters to you. What a shallow personality.
shortonoil on Tue, 2nd Jun 2015 6:30 am
“As has been pointed out here many times, historically speaking, $60/barrel oil isn’t cheap.”
$60 is cheap if it cost $65 to get it out of the ground! The price of oil is not a fixed quantity, it is relative to what it cost to produce, and how much the consumer can afford to pay for it. Just because Saudi Arabia could pump oil for 50 cents a barrel in 1962 has no relevance to today’s cheap. As the world’s fields are depleted out the cost of production will, and is increasing. Cheap oil in 2015 was expensive oil in 1980. Comparing one year to another without adjusting for changes in production costs, and consumer affordability gives completely erroneous results. It is the old two oranges, and a pear equals five apples routine.
“As Short has attempted to point out many times, volume is up, but it has not increased at the rate that it has for the past several decades.”
In the later half of 2014 (after the price crash) there was a jump in production. It was the result of lower prices as producers attempted to maximize their cash flows in a price environment that had declined by 50%. It seems likely that every producer in the world is now producing at their absolute maximum rate. With prices now in a long term downward trend, when producers can no longer increase their debt levels, production will have Peaked. It is now a matter of how fast, and how far the banking industry is willing to go at converting assets into liquidity to keep production flowing. We have now entered the era of energy cannibalization that we have been discussing for some time.
http://www.thehillsgroup.org/
rockman on Tue, 2nd Jun 2015 6:30 am
“Peakers doing what they do best these days. Denying the fact of the oil glut.” Folks can argue about the definition of “glut” and whether we have one or not. That’s of no interest to me. What can’t be argued is that oil prices have significantly fallen. And if one understand the POD: high oil prices brought about increased drilling. Which brought about increased production. Which ultimately brought about a decline of oil prices which are still 2X historic average.
Then one would realize, as the Rockman does, the current decline in oil price is one of the best metrics indicating we are at or close to global peak oil. Difficult to appreciate for folks who compartmentalize the dynamics and try to explain each aspect as though they happen independent of the POD. High/low oil prices, increasing/declining production, increased/decreased drilling, increased/decreased fossil fuel consumption, political stability/chaos: they are all cogs in the same giant global machine.
I know it’s a worn out analogy but it is still the truth: so many “blind” folks analyzing just one piece of that huge energy elephant are sure it’s a snake…or a tree…or a big rock…etc. Without taking their blindfolds off and stepping back they’ll never see the entirety of the situation and will be lost in endless debates..
GregT on Tue, 2nd Jun 2015 9:25 am
“However, you lack the grace or the honesty to concede that shale stopped 100 from going to 150. Or to concede that a change from 100 down to 60 sure as shit is significant.”
Shale oil stopped 100 from going to 150, and a change from 100 to 60 is significant. No argument there. A complete no brainer Nony.
60 is still almost 3 times the price that the economy can afford. That is the part that you refuse to understand. Oil is not like any other commodity. The energy derived from oil drives economic growth. Without a certain amount of growth the economy stalls, or contracts. A Ponzi scheme must keep growing at a certain percentage, or it will collapse. The economy does not run on faith, human exceptionalism, or ingenuity, it runs on energy.
steve on Tue, 2nd Jun 2015 11:27 am
$60 is cheap if it cost $65 to get it out of the ground! The price of oil is not a fixed quantity, it is relative to what it cost to produce, and how much the consumer can afford to pay for it.
I thought it was about $80 to get it out of the ground? at least in fracking sense
BC on Tue, 2nd Jun 2015 11:56 am
US oil production is at the fastest 5-year rate of growth since the peaks in 1927-28 and 1937.
The 9-year rate is at the highs of the late 1920s to early 1930s and prior to Pearl Harbor.
Despite the boom/bubble in production, US oil production per capita is at the level of 1945-50, down 40-45% since 1970, and down 25% since 1985.
Had US oil production continued growing with population after 1970 and 1985, US oil production today would be 13-16Mbd.
Seen another way, the ~4Mbd increase in production of costlier, lower-quality crude substitutes since 2008-09 occurred at a 5-year average real, constant-US$ price of around $100, which is 50-100% higher than during the recession of the early 1980s; 25-50% higher than during the recession of 2007-09; 4 times the price during the recession of 2000-02; and 4 times the price in 1945-50 when US oil production per capita was at the same level as today.
Thus, despite the so-called “glut” of oil, the current price of oil is being unprofitably produced at 3- and 5-year average prices that are two-thirds higher than the current market price.
Plantagenet on Tue, 2nd Jun 2015 12:40 pm
ennui2 is right. Many folks here are sticking their heads in the sand and ignoring the reality of the oil glut.
Of course the problem with that kind of detachment from reality is the development of a world view that increasingly deviates from reality.
shortonoil on Tue, 2nd Jun 2015 1:04 pm
“US oil production is at the fastest 5-year rate of growth since the peaks in 1927-28 and 1937.”
The average rate of increase between 1960 and 2009 (50 years) was 2.51% (20.99 mb/d to 72.26 mb/d). For 2013 it was 0.23 %, or about 1/10th the 50 year average.
http://www.indexmundi.com/energy.aspx?product=oil&graph=production
It sped up in 2014 after the price drop until December. That was the result of producers attempting to maximize revenue with higher production in the lower price environment. It is now falling again
http://ycharts.com/indicators/world_crude_oil_production
Unless the Central Banks can extract another rabbit out of their beaten up old hat, it will continue to fall from here forward. They have pulled that rabbit out of the hat so many times already it’s a wonder that it has any fur on its ears. Chances are that on a yearly production bases petroleum (C&C) will go into terminal decline in 2016.
http://www.thehillsgroup.org/
Jim on Tue, 2nd Jun 2015 1:12 pm
Thanks plant for once again trolling is with your simplistic interpretations. Get a life. A glut and a peak are not mutually exclusive. You’re a moron.
Plantagenet on Tue, 2nd Jun 2015 1:26 pm
@Jim
No one ever said a glut and a peak are mutually exclusive. You’re either delusional or intentionally making things up.
If you’ve got something substantive to contribute here, then lets hear it, but rry not to make things up.
Cheers!
GregT on Tue, 2nd Jun 2015 1:36 pm
Jim has already contributed ‘something substantive here’.
You are a complete moron planter.
Outcast_Searcher on Tue, 2nd Jun 2015 1:41 pm
Since oil sat near $100 for FOUR YEARS recently and the global economy did just fine in a slow recovery trend — WHY is it that oil at $50 or $60 is “unaffordable”?
If oil is so unaffordable, why is it that when the price goes down meaningfully, the response from consumers on average is to buy larger, more expensive, and much less efficient cars like sports cars and large SUV’s and trucks in droves?
If oil is so unaffordable, why have savings rates increased significantly in the US? Because consumers in general are pocketing the savings from buying $2.50ish gasoline vs. $3.50ish.
But by all means, let’s pretend people can’t afford oil at $50 to $60 a barrel — it’s the only way to feed the doomer narrative and not sound insane, given the track record for the past 10 or 40 years.
Plantagenet on Tue, 2nd Jun 2015 1:52 pm
@gregter
your belief that calling names is “something substantive” just proves you are a moron.
Check out Outcast Searcher’s post for a chance of pace—the man has data, a premise, and a thoughtful discussion.
Now that post is “something substantive.”
Cheers!
Marty on Tue, 2nd Jun 2015 1:57 pm
“If oil is so unaffordable, why is it that when the price goes down meaningfully, the response from consumers on average is to buy larger, more expensive, and much less efficient cars like sports cars and large SUV’s and trucks in droves”
Because that’s what advertising tells us to do !
Jim on Tue, 2nd Jun 2015 2:09 pm
@plant
Every time someone mentions the peak you mention the glut. A glut is a market function of price discovery through measures of supply vs demand. The peak is the global maximum of oil production. Whether or not the market is in a glut at the time of peak is irrelevant to whether or not the peak exists. Go back to sipping your apple sauce through a straw on the porch you troll.
Davy on Tue, 2nd Jun 2015 2:10 pm
Outcast, start looking at the forest instead of the trees and then you will realize what is going on.
Davy on Tue, 2nd Jun 2015 2:16 pm
Planter, I like you but you must admit you irritate people.
shortonoil on Tue, 2nd Jun 2015 2:33 pm
“Thus, despite the so-called “glut” of oil, the current price of oil is being unprofitably produced at 3- and 5-year average prices that are two-thirds higher than the current market price.”
According to our calculations, using present price levels, almost 1/3 to the world’s producers are now operating below their full life cycle production cost. That indicates that reserves that are presently being used will never be replaced. Also, according to our calculations there is not much room for upward price movement.
http://www.thehillsgroup.org/depletion2_022.htm
The world of oil appears to be getting into a world of hurt. Depletion is one of those inevitable events; like the sun rising every morning!
GregT on Tue, 2nd Jun 2015 2:48 pm
“Since oil sat near $100 for FOUR YEARS recently and the global economy did just fine in a slow recovery trend — WHY is it that oil at $50 or $60 is “unaffordable”?”
WHY is the US economy in a slow recovery trend? Why has it not recovered? Why is it that many other countries are on the verge of collapse? Why is it that historical US federal debt alone, has over doubled in only 7 years? Why is it that the world economic forum in Davos spent so much time attempting to figure out ways to stop global economic collapse? Why can central banks not raise interest rates? Why, why, why?
“If oil is so unaffordable, why is it that when the price goes down meaningfully, the response from consumers on average is to buy larger, more expensive, and much less efficient cars like sports cars and large SUV’s and trucks in droves?”
Why is it that when oil prices were still around $100/bbl, the top 3 best selling vehicles for four years running in North America were pick-up trucks? Why do you ignore this fact, and pretend that a drop in oil prices is the reason?
“If oil is so unaffordable, why have savings rates increased significantly in the US? Because consumers in general are pocketing the savings from buying $2.50ish gasoline vs. $3.50ish.”
Consumer debt is at historical highs, 50 million Americans are now on food assistance programs, and the US now has one of the highest child poverty rates of any developed country in the world, yet you believe that saving 20 bucks on a tank of gas is making a difference?
“But by all means, let’s pretend people can’t afford oil at $50 to $60 a barrel — it’s the only way to feed the doomer narrative and not sound insane, given the track record for the past 10 or 40 years.”
Some people can afford oil at these prices, and some cannot. When enough people cannot, the trickle down effect causes damage to the overall economy.
Like Davy said; you cannot see the forest through the trees. Or probably more realistically, you do not want to see the forest. That is called denial.
Apneaman on Tue, 2nd Jun 2015 2:55 pm
Outcast_Searcher the reason people buy those vehicles is because, unlike what your religion preaches, humans are not rational actors. It is AKA – Jevons paradox. Where do you get the idea that anyone is saving anything and there ever was a recovery? US cities are going broke and filing for bankruptcy and old folks are coming out of retirement or not retiring at all, there are 47 million folks on food stamps, people now buy those vehicles on 6-8 year terms (something that would have been laughed at even ten years ago), very few young people are buying homes ( they already have mortgages called student loans), low wages, stagnant wages, inflation, P2P loans are the new lending bubble, payday loans, maxed out credit cards, refi’s, reverse mortgages and on and on and on. No one is saving shit – just you trying to save face for a dying system that you have put your life’s faith in. So did the rest of us to varying degrees until we could no longer pretend. Admitting when we are wrong, when our faith was misplaced – that we were fooled, yet participated – is called manning up.
joe on Tue, 2nd Jun 2015 6:35 pm
As clearly noted, money is cheap, mixed with massive oil output over demand we have more or less stabilised a comodity fundamental to our lives, as important as air. At 60pb it’s still high, not high enough to make it easy to go get the tough oil, but low enough to see us through the peak of easy oil, cheap money is the only thing that has people keeping the faith in capitalism. Imagine a scenario where Saudi Arabia and Opec lowered output while they fight ISIS and each other and bomb Yemen. What a disaster that would be. They want to fight, but the also want an economy. People don’t realise how weak the House of Saud really is I believe.
GregT on Tue, 2nd Jun 2015 6:47 pm
Joe,
“we have more or less stabilised a comodity fundamental to our lives, as important as air.”
Seriously? You sir, are completely delusional.
redpill on Tue, 2nd Jun 2015 7:54 pm
On the note of cheap money, anyone have their finger on the pulse of the sub-prime auto loan market?
My cat has a couple of dings on his credit report, can he still get an auto loan these days?
Makati1 on Tue, 2nd Jun 2015 8:42 pm
redpill,
Yes, we are happy to tell you that he is still eligible and can also get a 40 year ‘no docs’ mortgage on a nice home of his choice, no money down, if he applies now. We are also extending the line of credit on his Visa to six figures and giving him/her twelve months until the first payment is due on any of those offers. We can package them in any combination for your convenience.
Sincerely,
Your friendly local bank.
Davy on Tue, 2nd Jun 2015 8:48 pm
How about the pulse on Asia. Looks like all is not well in China.
http://www.zerohedge.com/news/2015-06-02/defaults-continue-china-duck-producer-sinks
rockman on Tue, 2nd Jun 2015 9:30 pm
“If oil is so unaffordable, why is it that when the price goes down meaningfully, the response from consumers on average is to buy larger, more expensive, and much less efficient cars like sports cars and large SUV’s and trucks in droves?” But that isn’t the response from “consumers”. That is the response od a very small percentage of the potential global consumers.
My owner could pay $100/gallon for gasoline and the fuel for his private vet and never give it a second thought. Seriously: this is a man who like to occasionally sail… so he had a $70 million sail boat built. So yes: oil is very affordable for him.
So what f*cking difference does that make? LOL. Not too long ago I saw a group of families have a combined yards sale to raise gas money for several of the dads that car pooled to work. It included selling some of their kids’ toys. I doubt any of them would agree that oil is affordable.
Nony on Wed, 3rd Jun 2015 5:09 am
Cost curves, segmentation, substitutes, short term and long term elasticity.
Lather, rinse, repeat.
Davy on Wed, 3rd Jun 2015 7:06 am
Please NOo, branch out from the failed 20th century econ 101. You are so boring and unenlightening with the same regurgitated bile daily. I don’t mind a little econ 101 it has a place in the discussion but from you it is excessive. From you it is propaganda and part of your proselytizing the 1%er establishment agenda of BAUtopian hopium that all is well. It ain’t well NOo and your message is very dangerous for many people. You make me sick NOo for this reason. You are telling the passengers of the sinking ship to remain calm and the ship won’t sink. People could be looking for lifeboats instead. If you would just moderate a little and seek some balance you would be a constructive contributor here instead you are just another flag waiver with a different color.
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