Oil, Texas tea, bubblin crude. We're swimming in it. It's all around us even if you don't drive. Think not? Your keyboard mouse and monitor frame are made from oil. Bet there isn't much in the room around you that did come from oil and even if it didn't a trucker had to ship it to a store using oil. You bought it and drove it home using oil. Heck even the roads we drive on are made from oil (asphalt).
So what's all the fuss about? It's an oil war on top of a couple of real wars. Russian and U.S. oil companies were all set to do a 1/2 trillion dollar deal to drill in the Black sea. That's when the tug of war over the Ukraine started. Actually it started when the U.S. backed a pro west Orange party in the Ukraine. Ukraine being $15 billion in debt had the choice of accepting help from the EU or Russia. It was all set to take the EU deal when the president backed out against the wishes of parliament. That's when he was ousted from power and fled to Russia. Ukrainians have a love hate relationship with Russia. They have no love for the old soviet system (true there are still some communists in parliament) but the bulk of the Ukrainian economy relies on trade with Russia.
The Saudis are satisfied with market share. They know that it will hurt their enemies to keep prices low. It will also drive out the smaller competition in the west. All of which seems unusual as they're also funding extremists. So it's a safe bet that the country is a bit polarized, at least amongst the royal family who runs things. Deny all they want but they held fund raisers to bolster Al Qaeda which was proven in the days after 911. Whether they actually funded 911 we may never know unless the redacted pages of the CIA report are revealed. Don't hold your breath for that one.
What's happening to oil right now? The short term price is around $50 a barrel while the future 2016 price is just over $60. So while the short term price is low companies are racing to store oil then sell it later at a higher price. That in itself raised prices a bit. High cost low producing production rigs are being shut down. So the real price will depend on storage costs estimated at around .45 cents a barrel at present. So we may see an uptick in prices in the spring. Whether we see $100 a barrel again is open to debate. The Saudis have said no to that. We use 20 million barrels a day but that figure is going down due to better fuel milages. The tug of war of supply and demand goes on and at the moment it looks like supply is winning.
No bank fails this week
5 comments:
I never understood the Saudi's and their tendency to play both sides of the middle. I can remember an argument I had with a sibling during the first Gulf war when Bush the First was in charge. I contended then we were invading the wrong country. If we were going to waste men and materiel we should waste it one country to the south.
I hope these low oil prices won't inspire millions of Americans to run out and buy the nearest 2-ton land yacht that gets 5.3 miles to the gallon.
Things are what they are, yes?
tuhan itu adil,.sangat adil :)
ta peduli
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