Watch leading energy expert Dr. Daniel Fine as he discusses the impact of falling oil prices (Video)

[bluewill67]

For the video of Dr. Fine use this link-->
Dr. Daniel Fine, associate director of the New Mexico Center for Energy Policy, discusses the impact of falling oil prices on the domestic energy industry. Fine offered these comments during an interview for Carolina Journal Radio (CarolinaJournalRadio.com) Program No. 640. Video courtesy of CarolinaJournal.tv.

 

[Mr. H.]

Not just unconventional, but conventional activity. It's killing us across the board.

Now if we were farmers, there would be a floor price on oil and we would get paid to shut in production.
We'd also have available insurance to guard against extreme weather conditions that often cause us to shut down operations in the winter or in the case of severe flooding. Plus, we would be allowed to export our product. There would be mandates that require refineries to use exclusively U.S. crude in their blends.

 

[waltky]

OPEC optimistic as the demand grows and non-OPEC supply contracts...

OPEC chief optimistic of balanced oil market in 2016
Sunday 11th October, 2015 - Abdalla Salem al-Badri, Secretary general of the Organization of the Petroleum Exporting Countries (OPEC), is optimistic of better days for the industry with a more balanced oil market in 2016 as the demand grows and non-OPEC supply contracts.

Projecting demand growth to reach 110 million barrels a day by 2040, Badri said at an oil and gas conference here on Sunday. "At OPEC, we are hopeful that the industry will see a more balanced oil market in 2016In recent months, there has been a contraction in production from non-OPEC producers and an increase in global demand." Brent crude, a global pricing benchmark, has dropped 41 percent in the last 12 months and more than 50 percent since the peak in June last year as the OPEC countries led by Saudi Arabia chose to protect market share instead of decreasing output to boost prices. OPEC and non-OPEC experts are to meet in Vienna on October 21 to discuss the market. Badri said OPEC is ready to cooperate with non-OPEC producers to deal with the market glut if they show similar willingness. World crude output is at 75 million barrels a day and other liquids add about 18 million barrels a day to global supply, he said. Stressing that stability in price is paramount to the crude market, which faces "extremely challenging times," the OPEC chief said the market remains oversupplied and stocks are above their 5-year average.

Badri added that OPEC is of the opinion that the current problem in the oil market has been created by all producers, but especially by non-OPEC states which raised their production sharply. "Non-OPEC (states) increased their output by 6.0 million barrels per day in the past six years, and OPEC believes this is the reason for the glut in the oil market," he said. Pointing out that global oil demand is projected to rise to 110 million barrels per day by 2040 from 93 million bpd now, Badri stated, "This requires investments of $10 trillion between now and then We need to keep investing; it is essential for our industry." However in the current scenario, Badri, stated that global investments in crude Oil is expected to fall by $130 billion this year, thus reducing the global supply glut. Kuwait Oil Minister Ali Al-Omair said OPEC's decision to keep its output target at 30 million barrels a day is the "ideal solution" to rebalance the market and support prices, The gap in crude oil supply and demand is due to close in the third quarter of 2016, Mohammad Ghazi Al-Mutairi, chief executive officer of state-run Kuwait National Petroleum Co, said at the same event.

In an emailed statement, acting OPEC president and Qatar's Energy Minister Mohammed Bin Saleh al-Sada expressed optimism that led by growing demand from emerging and developed markets, as well as the "substantially" lower supply from non-OPEC countries, will lead to price recovery. Already there are signs that oil price has "bottomed out" and would see a rise next year, he stated. Al-Sada projected a demand growth for OPEC oil to 30.5 million barrels per day next year from 29.3 million bpd in 2015 because of stronger appetite in both developed and emerging markets, even as the growth in supply from non-OPEC producers seen over the past five years had substantially decreased in 2015 and is expected to see zero to negative growth in 2016. Al-Sada pointed out that low oil prices have "caused oil companies to reduce their capital expenditure by almost 20 percent this year from $650 billion in 2014. This trend of reducing investment in the oil industry could result in production shortfalls down the line."

OPEC chief optimistic of balanced oil market in 2016

 

[waltky]

Russia, Iran go off the reservation on oil production vs. Saudi Arabia...

Iran, Russia reject idea of joint oil output cuts with Saudi Arabia
Thu Dec 3, 2015 | Oil-producing countries looked unlikely to reach a deal to lift languishing prices at a meeting on Friday after Iran, Iraq and Russia swiftly rejected a surprise proposal that appeared to have been floated by Saudi Arabia.

Saudi Arabia, the largest oil producer in the Organization of the Petroleum Exporting Countries (OPEC), was prepared to propose members cut oil output by 1 million barrels per day next year if non-OPEC countries joined in, industry publication Energy Intelligence reported. A Saudi source said later the report was "baseless" but declined further comment and a source at Energy Intelligence said it stood by its story. Oil prices rose 3 percent on Thursday but analysts said a global deal would be hard to reach. Saudi Arabia has long insisted it would cut production only if fellow OPEC members and non-OPEC countries joined in. The report quoted a senior OPEC delegate as saying the Saudis would agree to cuts if Iraq freezes production rises and Iran and non-members such as Russia, Mexico, Oman and Kazakhstan contribute.

But Russia and OPEC members Iran and Iraq quickly rejected the idea. OPEC and non-OPEC producers have not cooperated to tackle low oil prices since they joined forces 15 years ago to help the market recover from the 1998 financial crisis. Since then top non-OPEC producer Russia has repeatedly resisted calls for joint action and grown its output by 70 percent. Iran also wants to increase output after years of Western sanctions. OPEC's policy meeting will be held in Vienna on Friday. OPEC also held a rare informal meeting there on Thursday but the Saudis made no proposals, according to ministers and delegates. "We do not accept any discussion about increases of Iran production after the lifting of sanctions. It is our right and anyone cannot limit us to do it. We will not accept anything in this regard," Iranian oil minister Bijan Zangeneh told reporters in Vienna before the informal meeting. "And we do not expect out colleagues in OPEC to put pressure on us... It is not acceptable, it's not fair."

Iran will raise production by up to 1 million barrels per day following years of forced curbs because of the sanctions over its atomic program, he added. Russian oil minister Alexander Novak told local news agency RIA that he saw no need for Moscow to decrease oil production, adding that he did not expect OPEC to change output policies at its meeting on Friday. Iraqi oil minister Adel Abdel Mahdi said the country, which saw a spectacular rise in 2015 output, was also keeping its production plans.

BUDGET SQUEEZE

 

[SAYIT]

Not just unconventional, but conventional activity. It's killing us across the board.

Now if we were farmers, there would be a floor price on oil and we would get paid to shut in production.
We'd also have available insurance to guard against extreme weather conditions that often cause us to shut down operations in the winter or in the case of severe flooding. Plus, we would be allowed to export our product. There would be mandates that require refineries to use exclusively U.S. crude in their blends.

Yanno, on a political level I'm all for domestic oil production supports. I like the idea of fukin' OPEC members where the sun don't shine and low global oil prices means the world has more cash to spend on American products and services.

On an economic level however, how do your pains and probs differ from those of commercial real estate developers who got stuck in 2007 when the music stopped and all the chairs were pulled? There was no support for me as my holdings lost 60% of their value, the banks pulled the financial rug and there were few if any buyers.

 

[Mr. H.]

Not just unconventional, but conventional activity. It's killing us across the board.

Now if we were farmers, there would be a floor price on oil and we would get paid to shut in production.
We'd also have available insurance to guard against extreme weather conditions that often cause us to shut down operations in the winter or in the case of severe flooding. Plus, we would be allowed to export our product. There would be mandates that require refineries to use exclusively U.S. crude in their blends.

Yanno, on a political level I'm all for domestic oil production supports. I like the idea of fukin' OPEC members where the sun don't shine and low global oil prices means the world has more cash to spend on American products and services.

On an economic level however, how do your pains and probs differ from those of commercial real estate developers who got stuck in 2007 when the music stopped and all the chairs were pulled? There was no support for me as my holdings lost 60% of their value, the banks pulled the financial rug and there were few if any buyers.

Commercial real estate developers are allowed a tax deduction on 100% of their expenses which can be written off in the year that they are incurred.

For example, if they employ a landscaper or an architect then those expenses are deductible. Those services are not the development itself but they are supportive, or intangible, expenses.

But if I employ an intangible supportive service such as that of an engineer or geologist, then those costs must be expensed over several years. This ties up much needed capital.

 

[SAYIT]

Not just unconventional, but conventional activity. It's killing us across the board.

Now if we were farmers, there would be a floor price on oil and we would get paid to shut in production.
We'd also have available insurance to guard against extreme weather conditions that often cause us to shut down operations in the winter or in the case of severe flooding. Plus, we would be allowed to export our product. There would be mandates that require refineries to use exclusively U.S. crude in their blends.

Yanno, on a political level I'm all for domestic oil production supports. I like the idea of fukin' OPEC members where the sun don't shine and low global oil prices means the world has more cash to spend on American products and services.

On an economic level however, how do your pains and probs differ from those of commercial real estate developers who got stuck in 2007 when the music stopped and all the chairs were pulled? There was no support for me as my holdings lost 60% of their value, the banks pulled the financial rug and there were few if any buyers.

Commercial real estate developers are allowed a tax deduction on 100% of their expenses which can be written off in the year that they are incurred.

For example, if they employ a landscaper or an architect then those expenses are deductible. Those services are not the development itself but they are supportive, or intangible, expenses.

But if I employ an intangible supportive service such as that of an engineer or geologist, then those costs must be expensed over several years. This ties up much needed capital.

A minimal advantage at best. Oil is fungible and to the extent N. American producers can bring it to market at or near the price of the competition, you can sell it (usually at a profit) daily.

When an investor purchases property for development and something like the 2007 collapse occurs, not only does the market disappear but funding also dries up, leaving partially improved property, a lack of resources to complete and no buyers even if the project gets finished.

In other words, I own seriously devalued property on which I pay taxes and maintenance but have little chance of living long enough to turn a profit or even sell at a slight loss and the point remains maintenance, interest and taxes are deductible but without profit, useless.