Since the 1st of March 2005, the price of oil has never drop below $47 dollars a barrel.
So if I'm a producer of oil and the price get close to $47, I would just shutdown the wells and let my competitors sell their oil at the low rate.
I will preserve my oil until the price hits above $52 before starting selling again. Only a fool will sell oil at close to $47 dollars a barrel.
What's wrong with my strategy?
PeakOil is You
Never below $47
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Never below $47
by ohanian » Fri 17 Jun 2005, 09:48:48
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ohanian - Heavy Crude
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by aahala » Fri 17 Jun 2005, 10:23:21
Turning an oil well on and off is not like your water faucet.
What's the significance of March 1, 2005? Why not March 1, 2004 or
2003, or December 7, 1941?
And why wait to shut down? Won't oil sometime in the future be higher
than now?
What's the significance of March 1, 2005? Why not March 1, 2004 or
2003, or December 7, 1941?
And why wait to shut down? Won't oil sometime in the future be higher
than now?
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aahala - Tar Sands
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by bobbyald » Fri 17 Jun 2005, 10:33:18
This has always been the case.
Why sell below $50 or $100 or $200.
OPEC hold all the aces except for one thing - They will be invaded if they don't sell.
Why sell below $50 or $100 or $200.
OPEC hold all the aces except for one thing - They will be invaded if they don't sell.
Life results from the non-random selection of randomly generated replicators
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![[smilie=new_popcornsmiley.gif]](https://udev.peakoil.com/forums/images/smilies/new_popcornsmiley.gif "new_popcornsmiley")
by bruin » Fri 17 Jun 2005, 14:52:25
$this->bbcode_second_pass_quote('NEOPO', 'I') know addiction.
I know a few real addicts
damn ....that means minus a miracle .....were fooked!!!
I know a few real addicts
damn ....that means minus a miracle .....were fooked!!!
That avatar of yours certainly proves your point.
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Re: Never below $47
by agni » Sat 18 Jun 2005, 16:54:55
$this->bbcode_second_pass_quote('ohanian', 'S')ince the 1st of March 2005, the price of oil has never drop below $47 dollars a barrel.
So if I'm a producer of oil and the price get close to $47, I would just shutdown the wells and let my competitors sell their oil at the low rate.
I will preserve my oil until the price hits above $52 before starting selling again. Only a fool will sell oil at close to $47 dollars a barrel.
What's wrong with my strategy?
So if I'm a producer of oil and the price get close to $47, I would just shutdown the wells and let my competitors sell their oil at the low rate.
I will preserve my oil until the price hits above $52 before starting selling again. Only a fool will sell oil at close to $47 dollars a barrel.
What's wrong with my strategy?
Did you learn about Fixed Cost in economics? Not to say that you couldn't make profit off it, just that you need to have deep pockets to indulge in this sort of holding off.
-A
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agni - Peat
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Re: Never below $47
by spot5050 » Mon 20 Jun 2005, 21:21:35
$this->bbcode_second_pass_quote('ohanian', 'S')ince the 1st of March 2005, the price of oil has never drop below $47 dollars a barrel.
So if I'm a producer of oil and the price get close to $47, I would just shutdown the wells and let my competitors sell their oil at the low rate.
I will preserve my oil until the price hits above $52 before starting selling again. Only a fool will sell oil at close to $47 dollars a barrel.
What's wrong with my strategy?
So if I'm a producer of oil and the price get close to $47, I would just shutdown the wells and let my competitors sell their oil at the low rate.
I will preserve my oil until the price hits above $52 before starting selling again. Only a fool will sell oil at close to $47 dollars a barrel.
What's wrong with my strategy?
You're running a company that employs 100's of people and when the price of oil drops below $47 you're going to stop selling, so you have no income but you still have to pay salaries and other running costs.
Would you shut off the wellheads, or pump the oil and store it somewhere?
How long would your shareholders tolerate your decision to stop selling the product that you are employed to sell? If the price stayed below $47 for 2 weeks, how would your current account look? What about if it was 2 months?
- spot5050
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by JohnDenver » Mon 20 Jun 2005, 21:47:11
The best way to implement ohanian's strategy is not to stop, but to slow down. Pump less, or just stop drilling. Leave the reserves in the ground.
Yes, you will be selling less oil, but the price will go up, so revenue can stay constant (or even increase).
Another way to do it is to speculate and hoard. Buy the pumped out oil on the open market, and then sit on it. Ain't no outstanding liabilities/fixed costs/employees/griping shareholders in that case.
$this->bbcode_second_pass_quote('bobbyald', 'O')PEC hold all the aces except for one thing - They will be invaded if they don't sell.
Yes, you will be selling less oil, but the price will go up, so revenue can stay constant (or even increase).
Another way to do it is to speculate and hoard. Buy the pumped out oil on the open market, and then sit on it. Ain't no outstanding liabilities/fixed costs/employees/griping shareholders in that case.
$this->bbcode_second_pass_quote('bobbyald', 'O')PEC hold all the aces except for one thing - They will be invaded if they don't sell.
They hold the ace there too, if they're ruthless enough to use it. Just booby trap the infrastructure, and blow it to smithereens. Blow it up with dirty bombs, and pump PCBs or some other suitably nasty substance down the wells. Take the poison pill. Saudi Arabia is holy ground, and it would be unacceptable for infidels to desecrate it, and get away with thievery.
$this->bbcode_second_pass_quote('spot5050', 'H')ow long would your shareholders tolerate your decision to stop selling the product that you are employed to sell?
Most oil in the world is nationalized, and the companies which pump it don't have shareholders.
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