Topic: Long term OIL - page 25. (Read 91747 times)

Debt clock is pretty good for ballparking, especially if you're looking for an overall debt level in the economy. But including state and local debt in the national debt numbers isn't realistic, since state-level debt doesn't get tacked on the national debt. There's no precedent for doing so, at least. For exact numbers, I like the Treasury's website. They publish the federal debt (to the penny!) every day that takes in to account all the notes the federal government issues to fund itself.  It includes public and intragovernmental holdings:  http://www.treasurydirect.gov/NP/debt/current

I went and I looked. I'm assuming you're talking about buying calls and not shorting puts? The call side requires 70% appreciation in the next 3 months to pay off, although the calls are dirt cheap (which reflects the very real possibility this doesn't happen) and the puts are trading reflecting a likely price in the $11 range by January. I don't see anything jumping out at me screaming DO THIS NOW on either side of it.

Indeed, government is not a productive enterprise. Just like the board of directors of a company ain't either. It is the nation which is an enterprise that produces goods and services. And the government is, as you might have already guessed, its board of directors. Regarding the size of the US national debt (which was used in my analogy), you can take it from here. I can't say how authentic their figures are, but they should account for the total national debt, including the debt held by the public and the debt held by government accounts as well as intragovernmental debt...

As I understand it, the latter two should be excluded from consideration

Western industry nations have in avg.not more then 3% growth because their economy has such a big size.

I.e. measured in $ their 3% is more worth or equal chinas 10%.
Debt to GDP ratio is usually a measure of fiscal politics. If you are smart and safe instead of dumb and taking debts everywhere then it is much lower.

Examples are skadinavian nations or germany with the no debt policy (at federal level).

Yeah, the US debt is around 19.5T dollars, my fault (I can't recall where I got the wrong number from). Other than that, I still consider this analogy quite sensible (though it may require a stricter definition). The companies you mention and which have the ratio of stock value to stream of cash they generate (or quantity of goods they produce, "GDP" of sorts) annually significantly higher than unit can be considered healthy because they may be highly profitable, and their investors may get ROI in the two-digits range yearly. Consequently, their stock would be trading higher than what is thought as a fair price based on the value of the company. On the other hand, the growth in the GDP of developed countries is usually in the range of 1-3% annually, that's why their debt to GDP ratio should be close to or slightly above 1...

There are a lot ways to value a business, though, so it gets a little bit vague how we can draw an analogy between a company and a nation

I hope this argument never catches on, government is not a productive enterprise.   Its main function is to oversee, also I think you've not considered all the debt of public bodies.   If you include the entire nations GDP then you have to include all the debt as well


My main take of an unleashed OPEC production was that it was allowed to cause losses to Daesh profits from stolen oil production.   The current oil price also causes Russia problems, who are subject to sanctions from their invasion of the Ukraine

Oil rallies after Opec ministers announce output cut

The oil producers cartel Opec has agreed a preliminary deal to cut production for the first time in eight years, sending crude prices surging.
The major oil exporting nations struck the deal at talks in Algeria on Wednesday to ease fears of oversupply.
"Opec made an exceptional decision today," Iran's Oil Minister Bijan Zanganeh said.
Brent crude, the international benchmark for oil, rose almost 6% to nearly $49 a barrel on the news.
While oil saw only small gains in early Asian trade, energy firms across the region soared.
Oil ministers said full details of the agreement would be finalised at a formal Opec meeting in November.
Output will fall by about 700,000 barrels a day, although the cuts will not be distributed evenly across the cartel, with Iran being allowed to increase production.
Disagreements between Iran and its regional rival Saudi Arabia had thwarted earlier attempts to reach a deal.

Many of Opec's smaller members pushed for the cut after seeing oil prices plunge from $110 a barrel over the past two years due to oversupply and slowing demand.
Nigerian Oil Minister Emmanuel Ibe Kachikwu said it was a "very positive deal", while Algerian Energy Minister Noureddine Bouarfaa said: "The decision was unanimous, and without reservations."
The outline deal will limit output from Opec countries to between 32.5 million and 33 million barrels a day, said Mohammed Bin Saleh Al-Sada, Qatar's energy minister and current president of Opec.
Current output is estimated at 33.2 million barrels per day, although Iraq questioned on Wednesday how Opec measures the oil production of its members.
'Sceptical'
Some oil traders remain sceptical about the deal, saying they want to see the full terms, including the cuts agreed by individual members states, before passing judgement.
Jeff Quigley, director of energy markets at Stratas Advisors, said it was "too preliminary" to get excited.
"The devil's in the details here," Mr Quigley said. "And for them to say it's going to start in November is very suspect to me. We don't know yet who's going to produce what."

For anyone who trades normal stocks and has option approved account, go to USO and look at options for Jan 17 for a strike price of 17-20. Thank me later.

I'm not sure the analogy translates well. Some companies can be healthy at over 1 debt:equity depending on he industry, but most countries are not deemed healthy at over 1 debt:GDP. You have to compare nations to nations I think. Also, US debt is 19.5T, not 22.4T. Give us a few years, we'll get there.

http://www.cnbc.com/2016/09/28/opec-deal-shows-saudi-oil-strategy-has-backfired-says-john-kilduff.html

Saudi Arabia agrees to cut production, their strategy being portrayed as a backfire. They've been pinched on the low prices they helped usher in be refusing to cut production previously, their currency reserves have plummeted while they tried to ride out the low price environment while trying to drive out shake producers,, and they have given Iran a win by overplaying their hand.

If we consider a country as a public company while its debt as its stock, then, for example, the ratio of the national debt size of the US to the size of its economy will be somewhere around 1.2 ($22.4T debt / $18.6T economy size). As I figure it, this ratio is quite low if we compare it with similar ratios of most successful public companies out there. In this way, countries that don't have debt at all could be viewed as privately owned companies...

Saudi Arabia fits perfectly into this scheme as well as Russia, to a certain extent

Tell me a foreign strong power that is not swamped with debt. USA, European countries, Japan and China have very hight debt. Even Saudi Arabia has started to borrow money the first time after decades because of the low oil price.
Only Russia has a normal debt rate compared to the GDP. But I doubt that it is that powerful to dominate all the other countries or at least have major influence on those countries. So I would not be worry about it.

Oil seems to be rising, along with all asset classes.
The Fed can't hope to prop up stock and home prices, and not let oil price rise.

Bryant just doesnt know what he is talking about.
Oil production in the us is controlled by the government because it is one of their fundamental basis to produce energy.

And even though they are buddies with the sauds they still dont want to be dependent on their oil production especially with the coming clash of culture and other crisis in the middle east.

About lobbying: Did you people know that oil companies are allowed to do fracking in wildlife reserves/national parks?

Btw. The US had and has probaly by far the chepeast gasoline price in the western world even when a barrel was still 120+.

edit

http://www.citylab.com/commute/2015/01/the-real-reason-us-gas-is-so-cheap-is-americans-dont-pay-the-true-cost-of-driving/384200/

Right now, the American government is neither favoring the frackers, nor helping the deep sea oil producers. The current government strategy is to encourage American crude oil production, there by creating new jobs and boosting the local economy. However, things will get complicated once the administration starts favoring anyone from these two lobbies. The cartel at the receiving end will make such a hue and cry, which the authorities will not be able to ignore.

That said, my gut feeling is that the American government will never favor high oil prices. Even now, the American crude production lags behind the consumption by a large margin. High oil prices can cause a decline in the GDP growth, and probably an uptick in the inflation index. This can in turn affect their approval ratings.

Not being able is one thing and not wanting to is quite another. It's a difference that makes the difference. Do you really think that the deep oil producers which are in direct competition with the frackers have less lobbying capacity in the legislature and administration of the US? It just happens that right now the establishment is more interested in lower oil prices. Mainly due to political reasons and certainly not out of fear of being stigmatized as traitors. The same establishment recently allowed exporting of the US crude oil which had been banned for decades (and most likely for the same reasons)...

Have they been much afraid of being called traitors (which they were called)?

Theoretically, anything is possible. But the US government won't be able to harm the frackers... Almost a million American jobs depend upon shale oil drilling. Many of the powerful frackers are among the top donors to the Democrat and Republican parties. If the government tries to cut down shale oil production, then they will be branded as a bunch of traitors.

They definitely could control oil and gas production if they wanted to in the USA, I dont think they ever should or that it would be of benefit financially to the wider population.   I worry about western governments having so much debt they become politically liable to do what foreign powers want them to, thats not unprecedented.

We have central banking in most of the worlds richest countries, it could spread to other parts of the economy.   I hope OPEC is coming to an end, Saudi Arabia has big population growth with a majority under 25 so should see energy usage grow too.   I wont say never will it dominate again either.

Do you actually have no doubts that the authorities wouldn't find a way to get frackers out of business if they really wanted to? If you don't have any after all, think about protective tariffs that are enacted with the purpose of protecting this or that domestic industry. If it works one way, why shouldn't it also work in reverse? In fact, no one is going to issue orders for the sake of banning or limiting fracking oil out of hand, they could just tax it up to the hilt...

Though gold had already been banned directly once upon a time (which you seem to have forgotten)

The US is a direct rival of the OPEC cartel, and things will remain like that for the next 100 years. For starters, the oil production in the US is mostly controlled by private shale oil drillers, who are not dependent upon the government. This is different from the situation in OPEC nations, where the oil companies are nationalized. OPEC nations can cut their oil production. But the US government won't be able to reduce the American oil output, as the frackers are not required to follow the orders from the authorities.