$2.39 Gasoline !!!

[KissMy]

The Obama administration & Saudi's are using oil price as a weapon against Iran, Syria, ISIS & Russia. Way to go Obama! $50 Oil & $1 Gasoline coming soon.

 

[edthecynic]

The Obama administration & Saudi's are using oil price as a weapon against Iran, Syria, ISIS & Russia. Way to go Obama! $50 Oil & $1 Gasoline coming soon.

Obama wants to stick it to the Ruskies, but the Saudis want to bankrupt the shale oil producers, who need a barrel of crude selling for at least $80 to male a profit. The Saudis are prepared to sell crude for as little as $50 a barrel to regain the market share they lost to the frackers.

Oil Price Fall Threatens US Oil Production

Oil Price Fall Threatens US Oil Production By STEVE AUSTIN for OIL-PRICE.NET, 2014/11/04

A falling oil price is good for the US consumer and good for the US economy. Transport costs feed into the price of every physical product, so if oil gets cheaper, everything gets cheaper. If the oil price falls too far, however, the USA's recent fracking boom will come to an end. Forces are at play to end the USA's projected energy independence and return the country to dependence on the Middle East for its fuel supplies. The USA's long-term key supplier, Saudi Arabia, doesn't want to lose grip on its best customer.

snip/

The expansion of fracking in the United States has contributed to over-supply. Fracking is only viable at a certain oil price level, so, in many ways, by forcing over-production, hydraulic fracturing oil producers have contributed to their own problems. Investments were made in low-margin extraction and loans were secured to finance them, based on the convention that no matter how much oil the US produced, price levels would be maintained by OPEC cutting production. Financiers did not have to worry about the dangers of supply and demand because OPEC would ensure price stability.

New Normal
Saudi Arabia has put its foot down. In the face of triumphalist crowing about energy independence in North America the country has turned to the classic economic model of price being determined by the equilibrium between supply and demand. Not only are they not reducing their prices, they are actually cutting them. They are not lowering production levels, they are increasing them. The Kingdom has large cash reserves and they seem to be prepared to coast on their savings for as long as it takes for their competitors to go out of business. Fracking is vulnerable and will not survive a price drop unless the US oil industry reorganizes.

Challenges
Thanks to financing costs, new hydraulic fracturing sites are unlikely to be opened up if oil stays at less than $90 per barrel for any length of time. Each extraction project is different and incurs different plant investment costs, returning different profit margins. The banking industry, however, works on a blanket level of a need for $80 per barrel for a project to turn a profit. The extra $10 is needed to ensure the banks get paid back.

 

[Geaux4it]

Gas is only $2.35 !!!!!!!!!!

No its not. The liberal machine in California causes gas here to be $3.35 right now

-Geaux

 

[KissMy]

Gas is only $2.35 !!!!!!!!!!

No its not. The liberal machine in California causes gas here to be $3.35 right now

-Geaux

Whatever Dude!