WTI $30?

Delta4Embassy

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Dec 12, 2013
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CNBC mentioned the possibility. Again. Anchor said if it drops below $50 30 becomes possible. Don't have a link, was during live chatter.
 
That is understated. With rig count edging up marginal cost must be below $30 even with the slow pace of pipeline construction..As more pipelines reach completion average marginal cost will sink. Many fields that were just opening up when the price started dropping like those in MS are relatively close to barge ports so their pipeline costs and timelines are relatively minor. $15/bbl, while theoretically possible, Brazil has two fracking fields in the CA/TX size range with what looks like easy barge access to the sea, is unlikely to be seen.
 
Factor in the possibility of Iranian oil flooding the market in the next six months, China and India's slowed down industrialization, our 85% energy suffiency, plus the above comments, yes, that is all possible.

What it may do is drive the easy money back into housing and security bundles, and we all know where that goes.
 
A major league problem is that cost projections are based on the crappy logistics of Bakken instead of fields with much better access to barge/ocean ports and pipelines heading towards the Mississippi. Also the reason for earthquakes near fracking fields is known:

Pumping waste water into shale that deep can cause steam explosions.

This is sold as a source of "renewable" energy, which technically it is, and the much higher levels of recoverable are sold as a sideeffect.

Syphon off the hydrocarbons, run the steam through turbines, sell any excess energy to the grid and excess water can be sold or given away as distilled water and in theory Marginal Costs can go negative.

I have seen the vaporware on this idea at various business sites but multi-kilo-tonne explosions underground do sound like it might have trouble getting regulatory approval.
 
If oil's price plummets and becomes a new steady pricepoint, oil rich states are going to become a concern as their power which came about by having lots of valueable oil diminishes.
 
Saw it below $50 yesterday. That online analyst said if it dipped below 50, then was possible. Should be an interesting week.

Also saw Facebook at like 98. Had a thread or post recommending it at 70 think it was. Knew it'd go up, but didn't think it'd go up that much that fast.
 
Just keep in mind two things:

A lot of productive fields are still working their way through bankruptcy.
Extraction costs using fracking are still declining.

That translates into a series of overshoots of epic proportions and massive deflationary pressure.
 

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