The Trouble With the Falling Oil Price

cells

carslet wrote: »

Down to $52 does anyone not think it is a good thing falling oil prices.

Yes its good if you are a net buyer and bad if you are a net seller

But we are now in the age of the Internet expert where there is a second more deep meaning and understanding we must uncover to show our credentials as Internet experts...

Kendall80

carslet wrote: »

Oil down to $56 and reports saying it will just keep falling.

Indeed it has.


As I type WTI Crude is 48.1 dpb
Brent Crude is 51.2 dpb.


Wish it would hurry up and find a floor so I can make some money out of it

Thrugelmir

carslet wrote: »

Down to $52 does anyone not think it is a good thing falling oil prices.

For exporters of oil it is bad and for importers good.

So will have an impact globally in different ways.

Bound to be some surprises along the way.

CLAPTON

Thrugelmir wrote: »

For exporters of oil it is bad and for importers good.

So will have an impact globally in different ways.

Bound to be some surprises along the way.

probably a long term benefit to most of the people of both the producing countries and the importers

Crashy_Time

CLAPTON wrote: »

probably a long term benefit to most of the people of both the producing countries and the importers

Bad for banks that have made the wrong bets on oil prices, bad for people wanting loans/mortgages from these banks. IMO.

Generali

Crashy_Time wrote: »

Bad for banks that have made the wrong bets on oil prices, bad for people wanting loans/mortgages from these banks. IMO.

Firstly speculation of that sort is a zero sum game: the winner gains what the loser loses. There is no net change for the banking industry as a whole. Secondly, holding open positions like that is now illegal.

Thrugelmir

CLAPTON wrote: »

probably a long term benefit to most of the people of both the producing countries and the importers

No benefit to the producing countries as their budgets will be based on higher prices. ( akin to Scotland's proposed plans). With lower income something has to give.

CLAPTON

Thrugelmir wrote: »

No benefit to the producing countries as their budgets will be based on higher prices. ( akin to Scotland's proposed plans). With lower income something has to give.

many of the oil producing countries have very unpleasant governments.
because oil provided adequate income to keep the elites happy there is little need develop their industry etc so many people of these countries are poor and unrepresented.

so a permanent fall in oil prices would, over the medium term, prove a real bonus for the majority of the people.

cells

CLAPTON wrote: »

probably a long term benefit to most of the people of both the producing countries and the importers

Yes hopefully those nations which are currently big net exports will have to develop and mechanise further to provide jobs and wealth rather than rely continously on overpriced oil.

cells

Crashy_Time wrote: »

Bad for banks that have made the wrong bets on oil prices, bad for people wanting loans/mortgages from these banksmight elseQUOTE]


How do you make wrong bets on oil?

There is only so much physical storage which is relatively speaking trivial so any bet is one guy saying to another lets make a bet. one bank might win a little and one lose a little

not the end of the world or anywhere close to it


As for the common other argument that banks lent money to shale driller they may never get back...more Internet crap. Shale production is rapid and upfront so payback is very quick. At 0.2 mil barrels production for first year wells of a rig its $10m income just in that first year which pays the debt back at $50oil very rapidly.