Why oil prices keep falling — and throwing the world into turmoil

From wikipedia:

"Eventually, the first artificial nuclear reactor, Chicago Pile-1, was constructed at the University of Chicago, by a team led by Enrico Fermi, in late 1942. By this time, the program had been pressured for a year by U.S. entry into the war. The Chicago Pile achieved criticality on 2 December 1942[11] at 3:25 PM. The reactor support structure was made of wood, which supported a pile (hence the name) of graphite blocks, embedded in which was natural uranium-oxide 'pseudospheres' or 'briquettes'.

Soon after the Chicago Pile, the U.S. military developed a number of nuclear reactors for the Manhattan Project starting in 1943. The primary purpose for the largest reactors (located at the Hanford Site in Washington state), was the mass production of plutonium for nuclear weapons. Fermi and Szilard applied for a patent on reactors on 19 December 1944. Its issuance was delayed for 10 years because of wartime secrecy.[12]

"World's first nuclear power plant" is the claim made by signs at the site of the EBR-I, which is now a museum near Arco, Idaho. Originally called "Chicago Pile-5", it was carried out under the direction of Walter Zinn for Argonne National Laboratory.[13] This experimental LMFBR operated by the U.S. Atomic Energy Commission produced 0.8 kW in a test on 20 December 1951[14] and 100 kW (electrical) the following day,[15] having a design output of 200 kW (electrical)."

Looks like the first nuclear reactors were built at universities and a national lab. So, I am still wondering how public sector funding has hindered nuclear power rather than helped it?

As for fusion, ITER is a multinational consortium, since even single nations can't seem to come up with enough funding to build the reactor. No private sector in sight. Do you oppose funding for fusion power as well?

 

other sectors of our economy has not done well the last few years..now maybe people will spend more in these areas and help those companies expand and create jobs...

 

You missed two others that are being very badly hurt. Iran, because oil is their only product, and ISIS which has been funding their operations on black market sales of oil. Iran is in basically the same bind as Russia and Venezuela, their budgets depend on oil selling at over $100 per barrel. and at current prices their budget deficits are growing at a staggering pace.

 

it's funny that a good thing is scaring people so much. Oil crashing because demand is low (like during 08 crisis) is something to worry about but oil crashing because supply has increased as a result of innovation? i'm not so scared. Isn't it about free markets or are some of you advocating price controls? Fracking has untapped oil and gas that couldn't be extracted in the past and i think i read that the US is slated to become a larger oil producer than Saudia arabia in the next few years.

Oil companies and Oil exporting Countries may be under the gun for a while but they will adjust to the innovation and weather the storm. I think that the benefits of cheap oil due to innovation outweighs the cons of the price decline. The economy is largely dependent on the consumer and low gas prices should spark consumption; moreover, manufacturing and businesses alike may thrive with the lower energy costs. Innovation sometimes hurts some industries but overall, it's a good thing.

 

Both you and Latherty have it right. The big reason for the current glut is that the U.S. has re-emerged as a top producer and the slowdown in the Chinese, European and Indian economies all at the same time have created a glut. Normally OPEC, especially Saudi Arabia would cut production to keep the prices up, but Saudi Arabia has always paid the price because while it did reduce production, it's erstwhile allies in OPEC would cheat and not reduce their production nearly as much as they were supposed to, and the Saudi's would always lose market share. So this time the Saudi's decided to see if they could gain some advantages even if it was going to cost them some bucks, first, they bitterly oppose the Syrian Regime as a puppet of Iran, and the Russians, both Iran's and Russia's economies depend on oil prices being above $110 per barrel, while the Saudi's can be quite happy at $40 pr $50 for quite a while. This also, as has been pointed out elsewhere, hurts ISIS which threatens the sovereignty of all Sunni states. As an added bonus, it will slow down development of new fields in North America which could be productive with fracking. Meanwhile, Saudi Arabia keeps it's market share. Right now the Saudi's are the Mouse that Roar's.

Of course this all plays into the hands of the U.S. as well. It greatly magnifies the sanctions that the West has placed upon Russia for it's actions in the Ukraine, it jams up the government in Venezuela which is also dependent on high oil prices to keep it's budget afloat and the socialist government in power. This could well have been a factor in the new willingness of Cuba to begin a normalization process, without aid from Russia and Venezuela, they had little choice. And to those of you who think these negotiations with the Cubans a bad thing, I think you are fools. The policy we had for over 50 years had failed completely. And we can look at China and VietNam who for decades we did not recognize and sanctioned, and then we normalized relations with them, and over time their peoples have gained some freedoms, and their lives have improved, not perfect, not even good for many, but on average they are a little freer, they are economically better off. They are definitely better off than they were, and that is because our influence is increased through trade and economics, the rule of law (especially in China) is starting to slowly infiltrate into the Chinese system (they are finding it necessary in order to do business with the West and capriciousness hurts the bottom line). We opened up to China in the 1970's, 40 some years ago, today we are interdependent with them, they dare not get too testy with us, nor we them, because the reality is if we did, both economies would be totally crushed. I would argue that makes the world a little bit safer for the average joe and his family.

 

Iran had already reduced production from 2.5 million bpd BEFORE this dramatic drop in oil prices .. down to 1.2 million bpd.. (That was the result of sanctions) So yeah.. they are in a world of hurt..

Tricky times.. No telling what might happen.

 

Yes.

barack obama, nancy pelosi, and every other lying progressive communist who cries out in the night, over the horror of the global warming boogieman, under your bed.....

 

Poses a paradox.

There are CONSERVATIVE economists who don't want oil to go lower, fearing deflation.

BUT, according to other rightwingers, we need to build the Keystone Pipeline....to make oil prices go lower.

Who's right???

 

So in other words, you ain't got nothin.

 

Nope, Ive got plenty of proof, I just didnt really think you actually needed it, because its so freakn obvious.



[video=youtube;t4Tmi_fpUHs]https://www.youtube.com/watch?v=t4Tmi_fpUHs[/video]

[video=youtube;eRuXrbjlrRg]https://www.youtube.com/watch?v=eRuXrbjlrRg[/video]

Are High Gas Prices A Plot To Cut Consumption? GOP Says Yes

Obama also gave another interview that year about his support for cap-and-trade, noting that it would necessarily cause the price of electricity to skyrocket. But in neither interview did Obama say he favored higher prices.

On the other hand, says John Kingston, director of news at Platts, Obama's current energy secretary did say something like that, remarks he has since disavowed.

"Steven Chu definitely did say it. He was quoted in 2008, so that was before he was secretary of energy, as saying we need to get back to European prices," Kingston says.

Among environmentalists, Chu's thinking is pretty orthodox. Europeans pay a lot more than Americans do for gasoline. And some experts think Americans won't conserve more until they're forced to pay more for the energy they consume.

"The discussion about the benefits of raising gasoline prices really [reflects] that ..." says David Victor, a professor at the University of California, San Diego, who studies energy policy. "It's really hard to do much about the demand for gasoline without doing something about price."

Victor says the problem is energy prices keep fluctuating, but if consumers knew prices were going to stay high and could plan for it they'd change their behavior more than they do now. That was the thinking behind President Clinton's failed attempts to impose a BTU tax on energy.

But that effort ran into resistance in Congress, and since then "the conventional wisdom in Washington has been new energy taxes are dead on arrival," Victor says.

Obama’s oil flimflam

This is the very same Dr. Chu who famously said in 2008 that he wanted U.S. gas prices to rise to European levels of $8-$10 a gallon — and who on Tuesday, eight months before Election Day, publicly recanted before Congress, Galileo-style.

 

BTW, something else to consider....a lot of Rightwing pundits have been hyping "all the good jobs in North Dakota due to drilling"....in fact, Sean Hannity made it a project to convince people to move there (if even for auxilliary jobs)

But what happens when oil prices DROP? The oil companies don't want to see supply still going up, and prices go down....so they're going to start to LAY OFF all those people Sean and other RW pundits sent to North Dakota.


Oh, and another thing....the Right has claimed for years that the "only" way to get oil prices lower was "Drill Baby Drill"....i.e. drilling on preserved public lands.

Welll, they're dropping....and there hasn't been ANY boost in drilling on public lands. And all they're left saying is "But, but, but....they'd be EVEN LOWER if we'd just drill up Yosemite and the Grand Canyon!!!!"

 

I'd support a flexible tax on gas that goes up as prices go down, and that goes down as prices go up. That would lead to a smoothing of the large swings in gas/oil price, resulting in less uncertainty and less destructive oil price manipulation through speculation, which has deleterious effects on energy source diversity.

If anyone thinks that low oil prices are here to stay, they are mistaken. What do you think OPEC will do once it has driven shale oil and alternative energy companies out of business? Keep prices low? I don't think so.

 

KSA is also in the alternative energy business..

This isn't about putting shale oil producers out of business and you're right... prices won't stay down.. Once this adjustment is over the ppb will likely return to $80.

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KSA is also in the alternative energy business..

This isn't about putting shale oil producers out of business and you're right... prices won't stay down.. Once this adjustment is over the ppb will likely return to $80.

 

It isn't speculation it's Opec in this case largely Saudi Arabia.

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So are Exxon and BP. But I tend to agree, This is more about limiting Isil's black market oil sales and hurting Russia and Iran than the US though they won't shed any tears that American shale oil take's a hit at least in the short term.

 

This is contrived, to bring Putin to his knees. It worked against the USSR, and now knowing that, we pulled it out of the bag again. We will even risk crashing other economies in doing so. If you think this is about the Saudis trying to push back US development of our own oil, take the red pill. We will owe the Saudis a favor, but since we are the military that will be used against Iran at some point, we know what that favor will be. Iran is a Shia nation. The Saudis are Sunni.

If we take down Venezuala, we get a twofer. Gotta bring these nations back into self interests of the western oligarchs. They were getting far to independent for that to be allowed to continue on

The group that gave us Global Neo Feudalism are involved in this. The group that hollowed out our middle class, the group that is using America as a prostitute, getting access to her markets while contributing nothing back. The Corporate State, consisting of some of our elites and our Gov't, who they have bought and bribed.

That it is playing with fire, a nuke nation, is the risk they are willing to take. Money is very intoxicating, and can even cause insanity. And it has.

 

My Ranger pickup truck was between 1/4 to 1/2 when I filled it up the other day. $33 bucks and it is now full. If that is turmoil, I need more of it, please.

 

LOL. The obvious reason for these prices is sitting right on the top of the ground. Yet you guys are digging deep. Now I know what we keep putting crooks back in office time after time My fellow americans don't know their asses from a hole in the ground.

Just remember 20 years from now if we are still around, that at least one guy knew what was going on I don't know why it is so difficult to see. Not like we didn't see oil prices and the old USSR go bottom up not that many decades ago.

The sanctions didn't work. So, we pulled out the trump card. You guys need to join in with this corrupt world, and understand you don't live in times when we actually had sane leaders running this ship. And things are NEVER as they appear to be. All of the signs are there, right in front of you. Yet you don't have the brains to pay attention. I am speaking of America now, americans. A few "get it", the ones who know what sort of world we actually live in.

 

With "speculation" I referred to as a cause of the large upswing in prices before the recession, which was probably as destructive as the current downswing in prices, which I agree is not caused by speculation, but rather by a combination of forces that cooperate to have an outsized effect. No matter how the price changes are caused, too much uncertainty and volatility in the price of the major energy commodity cannot be beneficial for economic stability. That's where a tax-based smoothing of price fluctuations would help.

 

Nice idea, how would you propose to solve the problem that the lowest tax would be zero? Say we put on a $20/bbl tax that reduces by $1 for every $1/bbl price increase above $80/bbl. When it hits $100/bbl, there is no more reduction available. So what do you do then? Well, what other governments that tried the same thing when oil traded violently between $5-10/bbl (think about it - that's a doubling of the price) got stuck subsidizing oil because the public came to expect flat oil prices.

I reckon we just let the market do its work. A low oil price shuts in marginal production until such a price is reached that can bring it on again.

 

Yep, oil price already up by $10 per barrel since the start of this thread. As predicted, oil price wouldn't stay as low. Of course, this doesn't mean that there will be more volatility and additional dips in price in the future.

The yahoos who ran and bought a new gas-guzzling SUV in January because they thought oil prices would stay down for good will have to pay for their bad decision in the future, though.