Topic: The reason that crude oil price crashed (Read 12508 times)

Fracking was bringing growth to the US. If it brings 0.5% it's huge because it's 0.5% MORE than what would have been.

Drill a hole into the water/ground put high pressure get oil
Pollute the water for future generations and create the jobs of tomorrow by forcing them to purify the reservoirs we contaminate today for a lower barrel cost.
FORWARD THINKING ^^
(Water wars are next someday in the future) Or we build Saline Filters.

That said if fracking takes a break for a while that's fine gives scientists more time to analyze watershed impacts, technically it uses a whole different grade in the ground but I've seen some youtube vids so their are still kinks to figure out.

Yes and i contact houston court because i whant bay this company.but this company don't bankrupcy because have finacial problem,bankrupcy because family-partner problem.
I spent 2000$ for nothing.

Some fracking companies will not open new fracking zones of production at a price that low.

I've heard of fracking actually, it's where they drill into the ground with high pressure right?

Sure just take a shot at zerohedge
http://www.zerohedge.com/news/2015-01-07/first-shale-casualty-wbh-energy-files-bankruptcy-many-more-coming
The First Shale Casualty: WBH Energy Files For Bankruptcy; Many More Coming


And I can't find any 60 day drilling returns mind showing me where it said that.

IMO, before 2008, banks loaned out money to pump up house price, and eventually those houses did not worth that much because of low cost and oversupply, and then they can not dump to consumer since the consumer would just default. So they have to dump to FED (MBS)

However, once those houses were sold to FED, they are holding lots of fiat money and those money have no where to go due to low return in the general economy. And they dare not to let those money into economy either, since that will trigger heavy inflation. So they decided to send those money oversea and pump the raw material and commodities, petroleum etc...

Now after QE stopped, commercial banks' large income (sell houses to FED) also stopped, they ran low on USD, so they have to reduce the commodity purchase at other places. This affected all the industry raw material and commodities, not only petroleum



Unlike last time, FED have no interest in supporting the price of these things, so it is very likely they will fall sharply until below the manufacturing cost (market can be irrational much longer than you can imagine), just like bitcoin did. Since a high price will create investment demand, when price crashed, many investments will fail, just like blindly built mining farms during the bitcoin price rally last year

It is all pump and dump when fiat money can be created out of nothing and directed to any thing that have value. And the sad thing is that people blindly use fiat money to measure value. What a freaky era we are living in, just like Austrian economists predicted, when money supply can be manipulated, it will always give a wrong signal of market supply and demand, thus create waves of wrong investment and redistribute wealth in the process. It is very likely the next pump and dump target is bitcoin, be prepared

the US imported just 189 million barrels of crude oil and also export derivate net importi is smaler.

http://www.theguardian.com/environment/2015/jan/06/oil-price-casts-shadow-over-frackings-future
some well return invest for driling in 60 days,and now any price over 12 $ is profit.All big company can return loan/bond overnight.
If you find some shale company bankruptcy i am intereted for baying i pay 1-5$ to 10$

In regard to your second point on import duties to promote competition.
I am not sure they would do it to defend their fracking operations, but that is what donations to the right political parties is for.

Duties make little economic sense they get West Texas Intermediate price and don't pay Brent so there is already a discount supporting a high oil price makes little economic sense especially when you consider manufacturing and truck sales.
http://www.eia.gov/dnav/pet/pet_move_neti_a_EP00_IMN_mbblpd_m.htm

Imports have been decreasing because of fracking so a duty is not going to be the solution.
http://qz.com/323571/us-oil-imports-are-back-where-they-were-in-the-late-1970s/

US imports of crude oil have tumbled to levels that were the norm back in the late 1970s. In November, the US imported just 189 million barrels of crude oil, versus 188 million barrels in November 1976. The last time we’ve had readings this low was in 1994.


Main issue with bond default is contagion but the risk is likely priced in just took some of the notes from the guardian article it takes a few different factors to end up with that end result from later posts I mentioned.

http://www.theguardian.com/environment/2015/jan/06/oil-price-casts-shadow-over-frackings-future

Weak demand and healthy production.

first fracking operations  $200bn of borrowings  is simple one small peanuts in usa economy.FED delivery in couple year to ECB bank $3300bn also ECB delivery to FED 2500bn euro only for emergency use.and borrowings is not $200 bn ,about 120-130 bn.but bank credit is about $40 bn long term interest very low.
Second USA in any time can introduce import duties for crude oil 20-180% excluding Mexico and Canada.

Because of Russia. Will be interesting to see what happens over the coming weeks.

In short: Yes.

Real reason is weak demand.

We bought their oil, they bought our lie: "deficit spending works"

(is diplomatical a word?  I'd have stopped at the "c")

They get less money out of oil and they now have a deficit every year which means they spend more than they make from oil productions and other direct revenues. It is not good for their long term political and diplomatical weight.

True enough I discount the Saudis too much, they have a large fund they can rely on so its not a big deal to them economically they can just stick it to their geopolitical interests to the benefit of other countries.

The Saudis do care about sticking it to Iran and by extension Russia. I doubt they need a whole lot of US encouragement.

Bingo,

The US gets blamed either way which seems to suit everyone, I lean towards the Russian Conspiracy side myself, with Obama using his magical wand to stop the Russian aggressors (US view) in the Ukraine by pushing oil prices down, so that they can occupy it later (lol we know its still pipeline politics in the end), of course Putin is smarter than 1998 and built up a hedge to play the long game and see if the Europeans will yield before he does. (Spain and the weaker links taking the big hits here and even Germany has East German influences that may moderate after a while)

Indirectly the US are playing the Saudi's who don't give a damn about the oil price and at the same time the Americans do not care much about the US Shale industry since they have enough oil and natural gas stockpiles and will develop other projects instead with lower fuel and wait it out, then when the dust settles they can just restart production so its not a big deal for them.

(Going at this rate we will have Netanyahu and Israel in here soon enough )
http://qz.com/304742/the-worlds-first-pipeline-war-has-officially-come-to-an-end/
But at least Russia had a Plan B (Turkey and the Balkans) wasn't a complete waste of money like the Americans project
http://www.bloomberg.com/news/2014-12-01/putin-halts-south-stream-gas-pipeline-after-pressure-from-eu.html

But of course...
The Saudis are NOT CUTTING production as ordered by their US masters to hurt Russia which just set a new oil production RECORD .

Oh the constipaty.....