Winners and losers in the new age of cheap oil

20 Comments on "Winners and losers in the new age of cheap oil"

penury on Mon, 3rd Nov 2014 3:48 pm 



Either I am an idiot (don’t say it) or this is one of he more shallow attempts at increasing the rising spirits of the consumers, We really need someone with knowledge and expertize to aquaint people with how many and whom will suffer from falling oil prices for an industry heavily levered with cheap debt. Baring that I really feel that during the next three months this sucker is going down. Keep an eye on NATO’S military activities in E. Europe.

Dave Thompson on Mon, 3rd Nov 2014 3:49 pm 



“Consumers will benefit” the hollidaze are here.

ghung on Mon, 3rd Nov 2014 4:08 pm 



“new age of cheap oil”…. jeez, is that an entire age, like the “age of dinosaurs” or something?

Northwest Resident on Mon, 3rd Nov 2014 4:14 pm 



Consumer spending is down. But the Christmas consumer-frenzy shopping season is what retailers all across the land depend on for a majority of their annual profit. If we have a really lousy “shopping season” this year and a resulting string of high profile retail closures, it will be very bad for public moral. They’ll do whatever they can to boost consumer spending this X-Mas season, without doubt.

“Christmas is typically the largest economic stimulus for many nations around the world as sales increase dramatically in almost all retail areas. The United States’ retail industry generated about three trillion U.S. dollars during the holidays in 2012. These holiday sales reflected about 19.3 percent of the retail industries total sales that year. As a result, just over 720 thousand employees were hired throughout the United States to compensate for the holiday rush. The Christmas shopping season can start as early as September and some consumers begin even earlier.”

dissident on Mon, 3rd Nov 2014 5:03 pm 



Ages are now apparently measured in months. Soon they will be measured in days, then hours and so on. We are accelerating to oblivion.

wildbourgman on Mon, 3rd Nov 2014 6:35 pm 



Let North Dakota and Texas rigs stack for a year and you’ll see those shale wells with high decline rates go from a steady flow to a drip.

I think prices fall, bottom and then climb fast once the percieved glut is gone.

Davy on Mon, 3rd Nov 2014 7:09 pm 



Wild man, that has been the tradition with a glut. We should at least acknowledge that one of these days the markets may not react as we are accustomed. Will this be that time? Nothing to do but wait and see. Forcasting a paradigm shift is like forcasting PO we will do it in hindsight.

rockman on Mon, 3rd Nov 2014 10:44 pm 



“…and who are set to be the winners and losers?”. Another easy answer: the winners: companies selling 85+ million bopd for $80/bbl…more than twice what they were getting not that long ago (the Rockman thanks you, BTW). The losers: the consumers who are buying refined products made from 85+ million bopd costing $80/bbl.

Was that a trick question? LOL.

Northwest Resident on Mon, 3rd Nov 2014 10:50 pm 



rockman — Too funny. I felt the vibration from your big hammer hitting the nail on the head all the way up here in Oregon.

Kenz300 on Tue, 4th Nov 2014 12:11 am 



The global economy will recover sooner with lower oil prices. That will help Japan and Europe recover sooner. That will help poorer countries lower their fuel bills.

Russia, Iran, and any high risk oil plays are the losers.

Holiday shoppers will be the winners……..

How long lower prices will last is the question. Lower prices will help the world economy grow which will increase demand and cause oil prices to rise.

Enjoy the lower prices while they last.

Nony on Tue, 4th Nov 2014 2:27 am 



The incentive of price led to more drilling which led to price stopping going up (it did not hit the 200+ levels that peakers like Simmons predicted cf Simmons-Tierney bet). And it did lead to the drop from 110 to 80.

Oh…here’s an article saying drill, baby, drill won’t work to lower gas prices. 😉

http://money.cnn.com/2011/04/25/news/economy/oil_drilling_gas_prices/index.htm

Davy on Tue, 4th Nov 2014 6:35 am 



NOo last I heard oil was a sector of the greater economy. You act like oil is in its own little supply demand fairy tale world. NOo it is much more than price it is bubble economics of the many QEees and corrupt wealth transferring financial repression.

Shale is a Ponzi scheme for the carry trades and speculators. It is a prime example of individualized profits at the expense of the whole. It is plain and simple capitalism at its worse. Yet, it has saved our ass for a few years so something good came out of something corrupt.

I am not saying the whole industry is corrupt only the connection with the Wall Street gold rush portion. We know at some point lots of people are going to lose lots of money. The fat cats have already realized their profits and have moved on to new fish to filet.

NOo you enjoy Ponzi schemes because they are a rush. NOo I picture you in your porsche after a half bottle of fine cab with some hottie stroking your leg flying down the freeway back to the cornstead to lay some pipe.

marmico on Tue, 4th Nov 2014 7:29 am 



oil was a sector of the greater economy

Petroleum & natural gas extraction is a minor component of the greater economy but has the highest multiplier of any sector. Oil and gas is by far the largest subsector of the mining sector which was 2.7% of nominal value added and grew less than the total economy in 2013 on a real added value basis.

For comparison, the value added of the mining sector is approximately the same as the accommodation and food services sector.

Bureau of Economic Analysis.

Davy on Tue, 4th Nov 2014 7:37 am 



Marm, it made my family and me indirectly lots of money. Thanks for the analysis that explains 4 generations of our family business.

rockman on Tue, 4th Nov 2014 8:36 am 



“Russia, Iran, and any high risk oil plays are the losers.” Hmm? Russia, at current prices, it’s receiving about $300 billion/yr. But 10 years ago they were pulling in about $100 billion/yr. So I’ll ask again: who would feel like a loser if the salary had increased 300% in the last 10 years?

And: “The incentive of price led to more drilling which led to price stopping going up. And it did lead to the drop from 110 to 80.” True. And equally true: The incentive of prices increases from $30/bbl to $100+/bbl led to more drilling and thus more domestic production.

No matter how some folks try to escape the reality of the dynamics it doesn’t change the COMPLETE story.

Davy on Tue, 4th Nov 2014 8:54 am 



Rock too bad Putt and the Ollleeegarchs are pissing away all that windfall. To be fair to Russia the rich in all the large economies are gutting the global economy. It is economic cannibalism by the parasitic 1%’ers.

marmico on Tue, 4th Nov 2014 9:35 am 



But 10 years ago they were pulling in…

Hey, Rockman, here’s your test; you being a member of the little-bitty 2.7% tribe.

Since 2004, which seems to be the limit of your way back time machine, how much did nominal world GDP increase?

My guesstimate is $30 trillion USD at purchasing power parity (PPP). So Russian USD PPP net exports of black gold increased by $200 billion divided by $30 trillion or 0.67%. It is not a big deal in the big picture.

nemteck on Tue, 4th Nov 2014 2:03 pm 



Could it be a coincident, that, one day before an election, the Saudis announced a crude price cut for the US? Or was it arranged by Kerry’s recent visit to SA? It sure will be appreciate by the voters.

Northwest Resident on Tue, 4th Nov 2014 2:37 pm 



nemteck — All the die-hard liberals are driving fuel efficient and/or electric powered vehicles anyway — the gas saving won’t matter worth a hill of beans to them and they’d be voting liberal anyway. All the die-hard conservatives are driving 4-wheel monster trucks, dual-cab diesel pickup trucks and SUVs of all varieties — and even though they really appreciate the gas savings, there is no way in hell they will be voting for any flaming fag liberals even if it meant they’d get their gas for free. So, I doubt that the Saudi move was intended to influence the mid term elections, and even if it was, I doubt that it would have any effect whatsoever. But that’s just my opinion.

rockman on Wed, 5th Nov 2014 7:20 am 



marmi – ” It is not a big deal in the big picture.” Thanks for helping make my point: higher oil prices tend to be detrimental to any economy. Russia’s oil patch might have benefited from those higher prices. But the rest of their economy has to buy that same oil to function. With the exception of a country like the KSA GDP should look rather skimpy over the last decade as oil prices increased so rapidly.