Cheap Oil Is An Economic Time Bomb For America!

[BullKurtz]

Why would we object to the Saudis selling us cheap oil?

Uh, because their intention is to run our frackers out of business maybe? I'm surprised you ask me such a question....you alright?

 

[Roadrunner]

Why would we object to the Saudis selling us cheap oil?

Uh, because their intention is to run our frackers out of business maybe? I'm surprised you ask me such a question....you alright?

The oil ain't going anywhere.

This is the third boom in 40 years over in Texas.

They stop sometimes, price goes up, they pump it out again.

Always deeper, always another boom coming.

 

[Ernie S.]

It is really surprising that the American people are not hearing from national politicians or economic leaders that the dramatic drop in oil prices the world is seeing holds potential grave danger for America's economy and calls for government action protection. The major concerns aren't being properly appreciated. First, there is no floor on the price of oil; today, WTI is trading at around $46/ barrel. In the next three months the country could see WTI trading in the $30 to $40 range. The super serious problem about this drop is that it will at some point result in the dramatic reduction in domestic production because the price will not provide sufficient profit considering the cost of drilling for oil. This is super serious because it will expose the country to skyrocketing spikes in oil prices if something happens to the world-wide supply of oil which could easily happen with a serious negative geo-political development with a major oil producing country or if OPEC and Russia can begin agreeing to control production!

The public debate is really not taking place on the issue of is this out of control decrease in oil prices really good for the medium and long-term well-being of America and if not can the American people do anything about it. Prudent thinking indicates the American people should be alarmed as all get out with this development. People should be asking themselves what happens after two more quarters of this $30 to $50 barrel of oil, does danger lurk here? After two more quarters of this retail businesses, airlines and health care companies earning are going to be up significantly because the American consumer will have a lot of additional money to spend because of lower petroleum and natural gas prices. In this six months OPEC countries and Russia will have learned their lesson crystal clearly that they are cutting their own throats not controlling production because now oil is half the price it could be with production controls. In two quarters from now, Saudi Arabia will find it as easy as pie to do what they wanted to do around three months ago which is to get a universal agreement amongst these parties to cut production and return the price of oil to the $100 range.

Now what do you think is going to happen in six to nine months when Saudi Arabia engineers a return to $100 barrel of oil? A recession for the United States because all these retail and other corporations that have been recording high jumps in quarterly earnings from increased U.S. consumer spending their executives can't just say sorry investors sales dropped due to the return of $100 a barrel oil no they are going to layoff employees big time scrambling to try to generate the investor expected revenue numbers. The resulting layoffs and other economic fallout from a return in oil prices will cut economic demand thus cutting GDP resulting in a recession. It is unbelievable that the country's political and economic leaders aren't warning of this likely recessionary outcome from this precipitous drop in oil prices and offering leadership on how this can be avoided.

There is another disastrous development from this sinking of oil prices. The size of the U.S. domestic oil producing industry is going to be substantially reduced as oil producing companies have to sell themselves because with such low oil prices they cannot generate the revenue to survive. Further bond investors and lenders for these producers are going to be economically hurt so severely during this period they won't get over this for at least the short to medium term already many of these producers bonds are trading at large discounts over concerns the producers won't have the revenue to repay the bonds. Therefore, from this oil price roller coaster ride Congress and the President is letting take place in America the country is going to be left with a smaller and weaker oil producing industry that is less able to get credit to drill for more oil and natural gas and meet America's needs.

Common sense indicates clearly what the answer to this problem is which is that Congress and the President need to pass a law putting a floor on oil prices. The legislation could start with a floor of $45.00/barrel and give the Secretary of the Energy Department, with the Senate Energy committee having veto power, the power to raise the floor up to $75.00/barrel - the standard for the Secretary should be that the floor price should be such that in all major oil fields in America, whether shale, off-shore or other, the floor price would still make such drilling profitable so such production does not stop. The legislation could have a time limit of five or seven years so if there is bad repurcussions from this legislations the harm would be limited and this period of time would give the oil industry and the country time enough to prepare for a market with no controls and stop the economic earthquakes that are currently going on!

The American people are really not being lead to appreciate how vulnerable they are to oil prices shooting back-up. It would only take Opec and Russia agreeing for just four years to take one to five million barrels a day off the market an easy deal for them to reach to reverse things. They could start with a cut of one million barrels a day and meet on monthly basis to increase it to raise the price of oil to their desired level. Remember Opec and Russia don't have to reduce supply to exactly world-wide demand to get their desired price; oil prices are driven hugely by the efforts of speculators so Opec and Russia only have to convince the speculators they have the power to control prices and they will be back in the drivers seat on price and Opec and Russia with a deal like outlined above and implementing it will achieve this needed objective. The bottom line is that a return to a hundred dollar a barrel of oil is easily possible and anyone that says otherwise is a huge fool!

The other thing is that below $50 a barrel of oil is not good for America not by a long shot. America has invested heavily in electric cars, smaller cars, natural gas trucks, fuel efficient planes, etc. to succeed in a world with high priced petroleum. Cheap oil throws these plans into disarray and will thus cause significant economic impact and at minimum medium term harm as this transformation falls into a state where the economic sense of such transformation is very much hurt as demand for this transformation falls off because of low oil prices. Leaders of America need to lead America off its dependency on oil and the mantra need to be no turning back, America long-term well-being depends on it!

The super serious problem about this drop is that it will at some point result in the dramatic reduction in domestic production because the price will not provide sufficient profit considering the cost of drilling for oil. This is super serious because it will expose the country to skyrocketing spikes in oil prices if something happens to the world-wide supply of oil which could easily happen

We need high oil prices, today, to protect us from high oil prices in the future? Seriously?

Yeah, that was my immediate reaction. No matter what the price of oil is, libturds will find some way to claim it's a bad thing. It's hard to believe anyone is stupid enough to claim that low prices are bad. These are the same numskulls who are always trying to raise the minimum wage to a "living wage." It's a lot easier to live on your wage when prices are low.

Quite right. Going back to 2006, the left took control of Congress screaming from the mountain tops that the economy was in a shambles and a 4.6% unemployment rate was a catasprophe. Eight years later, 5.6% is Utopia all thanks to Dear Leader and obamacare.
So. 4.6% when Democrats took over Congress. 2 short years later the rate stood at 7.6% when barack obama became President.
Nine months later we topped 10% unemployment where it hung pretty steady until November of 2010 when we wisely elected a GOP House.
In the 4 years since the rate has dropped to 5.6% and you dunces give obama the credit

YeahOK....

 

[SAYIT]

After the shale and fracking industries fail Saudi Arabia will have a monopoly and we'll see 10, 15 maybe 20 dollar a gallon gasoline.

Who should I thank for that? Obama? Saudi Arabia? Veterans?

Not a chance in Hell....Saudi's can't live under $40...our frackers still make money at that price.....the a-rabs will blink first....if they don't we should consider it an act of war and light up their fields....there is a report that's being hidden about the Saudi involvement in 9/11....there are forces trying to open that report...it's supposedly a death warrant for the kingdom when the American public finds out.

Thing is, neither war nor the threat of war is necessary. We have a flexible, resilient and very diverse economy. We can easily subsidize our frackers ($.05/gal fed tax) and keep our economy humming along on cheap fuels. Like many OPEC members (and Russia), Saudi Arabia is a 1-trick camel and a few years of $40/bbl oil will break their economy. Most other OPECers (and Russia) won't last 2 years.

 

[theHawk]

The progressives have to bitch about low gas prices because it's killing their "green" energy bunk. Remember Obama thinks we should all be paying Euro prices for gas.

Cheap oil ruins the progressive plans to get everyone hooked on expensive elecric cars.

I'm glad I kept my V8.

 

[Ernie S.]

The progressives have to bitch about low gas prices because it's killing their "green" energy bunk. Remember Obama thinks we should all be paying Euro prices for gas.

Cheap oil ruins the progressive plans to get everyone hooked on expensive elecric cars.

I'm glad I kept my V8.

I'm looking at an F-250 with the V-10. It's 4 wheel drive and should get every bit of 8 miles to the gallon.

 

[bripat9643]

Why would we object to the Saudis selling us cheap oil?

Uh, because their intention is to run our frackers out of business maybe? I'm surprised you ask me such a question....you alright?

If they go out of business, they will start right back up again once the price of oil get's over $40.

 

[william the wie]

The whole energy issue is simply spinning a wheel. While nuclear energy is efficient and cheap, most plants were given a 30 year lifespan....that's overdue so I guess nuclear will be abandoned in another 10-15 years. I've always thought ocean tides and river currents should have been exploited...tremendous amount of wasted energy in moving water.

It's already been demonstrated that these technologies kill tremendous quantities of ocean life.

Even without killing aquatic life taking energy from ocean would freeze Europe on the east coast and cause major detrimental effect to half the planet on the west coast.

 

[Toddsterpatriot]

The whole energy issue is simply spinning a wheel. While nuclear energy is efficient and cheap, most plants were given a 30 year lifespan....that's overdue so I guess nuclear will be abandoned in another 10-15 years. I've always thought ocean tides and river currents should have been exploited...tremendous amount of wasted energy in moving water.

It's already been demonstrated that these technologies kill tremendous quantities of ocean life.

Even without killing aquatic life taking energy from ocean would freeze Europe on the east coast and cause major detrimental effect to half the planet on the west coast.

Using tidal energy wouldn't cool down the oceans.

 

[SAYIT]

Rather than an "Economic Time Bomb For America" as the thread title proclaims, oil at current prices means an extra $125 - $150 BILLION boon to the American consumer, a non-military way to limit Russia's adventurism in Ukraine and a robust spanking to those who have been boinking the planet (OPEC) by arbitrarily setting the price of oil at whatever they chose it to be. What's up with these Chicken Little party-poopers? What's wrong with enjoying our good fortune? Geez.

 

[Flopper]

The whole energy issue is simply spinning a wheel. While nuclear energy is efficient and cheap, most plants were given a 30 year lifespan....that's overdue so I guess nuclear will be abandoned in another 10-15 years. I've always thought ocean tides and river currents should have been exploited...tremendous amount of wasted energy in moving water.

The U.S. fleet of nuclear power plants will likely run for another 50 or even 70 years before retirement -- long past the 40-year life span planned decades ago. However, that is not to say that the plants will ever be retired since ever single component within a plant, including the reactor can be replaced. If CO2 and pollution requirements on power generation are increased, these plants may be around a really long time.

How Long Can a Nuclear Reactor Last - Scientific American

 

[Flopper]

I don't get any of this...First of all, isn't cheap ANYTHING ( let alone petroleum) good for the consumer? Second of all, didn't oil companies push for fracking, and isn't that partially responsible for the low prices of petroleum? What is good for the economy is bad for it, cheap goods hurt us, we need to get used to high prices and bite the bullet and not do what's good for us because it's really bad for us.....WHAT? This sounds like the mad hatter's tea party here...

If petroleum is your only major product, then low energy prices are not good for the consumer or anyone else in the country. In a country such as Russia where the oil and gas sector accounted for 16% of the GDP, 52% of federal budget revenues and over 70% of total exports falling energy prices are bad, very bad.

 

[Toddsterpatriot]

I don't get any of this...First of all, isn't cheap ANYTHING ( let alone petroleum) good for the consumer? Second of all, didn't oil companies push for fracking, and isn't that partially responsible for the low prices of petroleum? What is good for the economy is bad for it, cheap goods hurt us, we need to get used to high prices and bite the bullet and not do what's good for us because it's really bad for us.....WHAT? This sounds like the mad hatter's tea party here...

If petroleum is your only major product, then low energy prices are not good for the consumer or anyone else in the country. In a country such as Russia where the oil and gas sector accounted for 16% of the GDP, 52% of federal budget revenues and over 70% of total exports falling energy prices are bad, very bad.

Yeah, Putin can suck it.

 

[Ernie S.]

The whole energy issue is simply spinning a wheel. While nuclear energy is efficient and cheap, most plants were given a 30 year lifespan....that's overdue so I guess nuclear will be abandoned in another 10-15 years. I've always thought ocean tides and river currents should have been exploited...tremendous amount of wasted energy in moving water.

It's already been demonstrated that these technologies kill tremendous quantities of ocean life.

Even without killing aquatic life taking energy from ocean would freeze Europe on the east coast and cause major detrimental effect to half the planet on the west coast.

You have evidence to back that up? Or more computer models?

 

[Ernie S.]

I don't get any of this...First of all, isn't cheap ANYTHING ( let alone petroleum) good for the consumer? Second of all, didn't oil companies push for fracking, and isn't that partially responsible for the low prices of petroleum? What is good for the economy is bad for it, cheap goods hurt us, we need to get used to high prices and bite the bullet and not do what's good for us because it's really bad for us.....WHAT? This sounds like the mad hatter's tea party here...

If petroleum is your only major product, then low energy prices are not good for the consumer or anyone else in the country. In a country such as Russia where the oil and gas sector accounted for 16% of the GDP, 52% of federal budget revenues and over 70% of total exports falling energy prices are bad, very bad.

That's good, very good.

 

[M14 Shooter]

The environment recovers, and even if we have to buy it all from the Middle East, we'll still be better off than we will with so-called "green energy." It would be impossible to make enough bio-diesel to run the world economy. There is simply no way you can have a power grid running on 100% solar and wind. You always have to have 100% backup from coal or natural gas fueled power plants.

The best thing to do is use our fossil fuels for the next 50 years or so by which time we should have cost effective fusion power.

Sure it does. Sounds like the best plan for the Middle East, not us. Germany will be mostly solar by then and we will be way behind.

Germany will be mostly solar by then and we will be way behind.

Way behind on wasteful boondogles?
Excellent news!

Now if the Greenies wanted to throw their support behind nuclear energy, I'd be more likely to believe
their fear of CO2 was sincere, instead of just a plan to get more government control over our economy.

you aren't seriously suggesting more nuclear are you?

You mean a reliable, large scale source of power that emits no CO2?
Why not?

because with mother nature presently pissed off at us. throwing storms and rumblings around as punishment.

Thank you for illustrating you have no rational argument against nuclear power....

 

[M14 Shooter]

Do you think that when Exxon (et al) buys oil for $100/barrel it makes significantly more profit than when it buys oil for $40/bbl?
If so, why?

Exxon's earnings are falling due to lower profit margins and they will continue to do so in last the quarter '14 and first quarter of `15.

This does not answer either of my questions.
Please do try again.

 

[M14 Shooter]

FY2008 deficit: $458B
FY2009 deficit: $1412B
The Obama signed FY2009 budget into law in march 2009.

Actually that's not true.

It is true. Obama signed the FY2009 budget 11 March 2009.
And so.... FY2009 spending belongs to the FY2009 budget that The Obama signed.

The last budget the bush boy wrote....

Wrote? Meaningless. Signed into law? Meaningful.

The first budget Obama wrote was in 2009 for fiscal year 2010.

Wrote? Meaningless. Signed into law? Meaningful.

Funny how you have to lie to yourself to make your point.[/quote]

 

[hangover]

That's not counting the $1.2 trillion deficit for FY 2008

FY2008 deficit: $458B
FY2009 deficit: $1412B
The Obama signed FY2009 budget into law in march 2009.

Not true....The FY 2009 was signed by Shrub in Sept 2008!

Bush Deficits
FY 2009†: $1,413 bln
FY 2008: $458 bln
FY 2007: $161 bln
FY 2006: $248 bln
FY 2005: $318 bln

US Federal Deficit Definition - plus charts and analysis

 

[Dana7360]

FY2008 deficit: $458B
FY2009 deficit: $1412B
The Obama signed FY2009 budget into law in march 2009.

Actually that's not true.

It is true. Obama signed the FY2009 budget 11 March 2009.
And so.... FY2009 spending belongs to the FY2009 budget that The Obama signed.

The last budget the bush boy wrote....

Wrote? Meaningless. Signed into law? Meaningful.

The first budget Obama wrote was in 2009 for fiscal year 2010.

Wrote? Meaningless. Signed into law? Meaningful.

Funny how you have to lie to yourself to make your point.

[/QUOTE]




This will be my only reply to you. If you want to reply to it I won't read or reply to it.

The first budget that Obama wrote was in February 2009. That budget was for fiscal year 2010.

If you think it's possible to write a budget for fiscal year 2009 in 2009 then there is no hope for you.

The bush boy's last budget was written in 2008 for fiscal year 2009. That budget had a deficit of 1.4 trillion dollars which was a new historic high.

I understand why you want to put that huge deficit on Obama but to do that would be lying.

The bush boy wrote that budget with 1.4 trillion in deficit. Not Obama. The budgets that Obama wrote decreased the deficit every year but one and in that year it was the exact same deficit as the year before. Obama never increased the deficit. He only decreased it.

It's republicans who create and increase budget deficits.

You can change the subject all you want, you can try to belittle me all you want, it's not going to change the truth. The bush boy wrote the 2009 fiscal budget with the 1.4 trillion historically high deficit. It's three past republican presidents who are responsible for most of the debt our nation faces today. Those three are reagan, bush the first and the bush boy.

If you're too lazy to read the links I provided or do any of your own research, that's not my problem.

It's yours.