# $40 Oil?



## Vol (Jul 5, 2009)

Here's a look at $40 a barrel oil.

Regards, Mike

http://www.agweb.com/article/oil-at-40-and-below-gaining-traction-on-wall-street-blmg/


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## Tim/South (Dec 12, 2011)

I am wondering how long to wait before I fill my off road tank?


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## Lostin55 (Sep 21, 2013)

Tim/South said:


> I am wondering how long to wait before I fill my off road tank?


I usually fill mine in Feb. That being said, I think that you have a few month window this time around.


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## haybaler101 (Nov 30, 2008)

My supplier told me Monday that oil would get real cheap possibly $30 before it goes back up, way up. He has been told that OPEC is flooding the market knowing that most US oil is not feasible to produce under $60.


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## deadmoose (Oct 30, 2011)

Didn't something similar happen in the 70s?


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## 8350HiTech (Jul 26, 2013)

haybaler101 said:


> My supplier told me Monday that oil would get real cheap possibly $30 before it goes back up, way up. He has been told that OPEC is flooding the market knowing that most US oil is not feasible to produce under $60.


That makes no sense. Why would the US even want to produce oil if someone else is willing to sell it for $30? We can leave ours in the ground until later.

That'd be like if someone from out of state was dumping round bales into my market for $10 per bale. I wouldn't be mad. I'd be finding a way to use them to make money.


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## deadmoose (Oct 30, 2011)

8350HiTech said:


> That makes no sense. Why would the US even want to produce oil if someone else is willing to sell it for $30? We can leave ours in the ground until later.
> That'd be like if someone from out of state was dumping round bales into my market for $10 per bale. I wouldn't be mad. I'd be finding a way to use them to make money.


So you aee saying someone undercuts your price, and you just say "oh well"?

I will just give up now. What are you going to do with your investment in the meantime?


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## 8350HiTech (Jul 26, 2013)

deadmoose said:


> So you aee saying someone undercuts your price, and you just say "oh well"?
> 
> I will just give up now. What are you going to do with your investment in the meantime?


I'll say "I'll feed it". 
These oil companies are such mega corporations they have other places to invest in the meantime.


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## Tim/South (Dec 12, 2011)

The bankers and investors backing our shale oil need a return on their investment. Put domestic oil out of business and you are on the throne alone again.


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## somedevildawg (Jun 20, 2011)

^ that's exactly what they are doing ^

@moose, how soon we forget.......crazy


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## hog987 (Apr 5, 2011)

Something that makes some sense to me.

Cover story is opec is flooding the market(which is true) to stop North American oil production. But the U.S. might be in on it to help drop the price of oil to really hurt Russia!

Could have some truth to it.


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## Grateful11 (Apr 5, 2009)

8350HiTech said:


> That makes no sense. Why would the US even want to produce oil if someone else is willing to sell it for $30? We can leave ours in the ground until later.
> 
> That'd be like if someone from out of state was dumping round bales into my market for $10 per bale. I wouldn't be mad. I'd be finding a way to use them to make money.


8350 now you done went and made some sense. Oil producers are a lot like some other people I know, farmers, price goes up everyone jumps on the bandwagon, floods the market and the bottom falls out.

Haybaler's supplier said OPEC flooding the market, OPEC isn't the ones flooding the market this time, it's us. They've already projected US output of Crude to rise again this year. OPEC just hasn't closed their valves any, they don't have anywhere near the cost of extracting Crude that we do. They finally saw us as a threat to their high and mighty lifestyle and decided hey we're going to leave the taps where they are.

Also the economies in many parts of the world are on very shaky ground right now, even ours is showing some signs of slowing down.

Crude will definitely go back up the big question is when. Don't ask me why because I don't know either but I've been tracking Crude and Gasoline prices for over 20 years and this is biggest continual drop I've ever seen. Just wish Diesel would get down to what it should be, some places are still almost a $1 more than Gasoline.

I've actually seen on other forums people complaining about their "inherited" OIl Royalty checks not being what they were. Well I say tough, what about that family or single parent that's struggling to make ends meet, this might help put a little more food on the table for their family by saving some money at the pump.


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## rjmoses (Apr 4, 2010)

Tim/South said:


> The bankers and investors backing our shale oil need a return on their investment. Put domestic oil out of business and you are on the throne alone again.


Yepp!

The OPEC guys have kept the prices way high because they could, until competition showed up.

Now that they have all of our money, they can drive prices down to nothing in order to drive our producers out of business, then jack it back up to $gazillion/barrel once our local businesses are shutdown/bankrupt/gave up.

You don't need a Harvard MBA to understand this move.

Boy, this sounds just like the banks and saving account interest rates in 2008.

Ralph

It's not paranoia--they really are out to get me; at least my money!


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## swmnhay (Jun 13, 2008)

I think the diesel price will lag behind from falling as fast as the crude as suppliers have product on hand or contracted at higher prices so they will keep the price higher as long as possible.A supplier that is out of his higher priced inventory will sell for less.Whay I've always seen these lower prices go to the BTO's buying tanker loads.The guy buying a few hundred gallons at a time gets the shaft.


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## sethd11 (Jan 1, 2012)

Now if I could just find a way to store a tanker load of fuel, I'd be set for 2-3 years! I wonder what kind of discount they give on loads like that?


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## 8350HiTech (Jul 26, 2013)

They could put every US oil producer out of business (which they can't) and then raise the price to $150/barrel. Wouldn't take long before we'd have new producers (likely the same as the old producers) coming out of the woodwork to produce oil for $60.


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## Mike120 (May 4, 2009)

8350HiTech said:


> They could put every US oil producer out of business (which they can't) and then raise the price to $150/barrel. Wouldn't take long before we'd have new producers (likely the same as the old producers) coming out of the woodwork to produce oil for $60.


Not likely, but possible. Most of the easy oil has been found, so drilling the cheap wells we did in the past is no longer a reality. My wells in Iraq were running around $40-50MM each. Saudi (and Texas) happen to sit on top of some big formations but the economics are different in the shale. I expect the oversupply to start running down around the forth quarter and the prices to start rising, but it'll be a long while before we see $100/bbl oil again. It will likely stabilize around the $60-70 range.


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## Tim/South (Dec 12, 2011)

8350HiTech said:


> They could put every US oil producer out of business (which they can't) and then raise the price to $150/barrel. Wouldn't take long before we'd have new producers (likely the same as the old producers) coming out of the woodwork to produce oil for $60.


No smart investor would try it again after they saw how quickly they can be shut down. Fracking is not as simple as drilling and pumping.

Our government should be buying all their oil from domestic sources. They are going to waste money anyway, may as well do it supporting our country and keeping competition alive.


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## dubltrubl (Jul 19, 2010)

Mike120 said:


> Not likely, but possible. Most of the easy oil has been found, so drilling the cheap wells we did in the past is no longer a reality. My wells in Iraq were running around $40-50MM each. Saudi (and Texas) happen to sit on top of some big formations but the economics are different in the shale. I expect the oversupply to start running down around the forth quarter and the prices to start rising, but it'll be a long while before we see $100/bbl oil again. It will likely stabilize around the $60-70 range.


I have to agree Mike. It's going to be volitile for several months, then stabilize. This is simply about capturing market share. Nothing more, nothing less. No global conspiracies either, however, there may be a few good things come of it simply as a bonus. (like Russia, Iran, Venuzuela becoming a bit less intransigent)

Tim, I also agree somewhat, but differ maybe some on what should be priority. I'd like to see our government begin to re-fill all that has been removed from our strategic reserves these last few years while the price is cheap. Seems a no-brainer to me.


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## Mike120 (May 4, 2009)

dubltrubl said:


> I'd like to see our government begin to re-fill all that has been removed from our strategic reserves these last few years while the price is cheap. Seems a no-brainer to me.


Completely agree! In fact, we probably should increase it, I'm sure we've got a lot more salt domes in your neck of the woods. With the price of oil down, the E&P guys are taking a break and the Petrochem bunch are all starting to ramp up spending. Saudi (and the rest of the Middle East) are busy trying to shift their PC industry to liquid feedstock 'cause they've hit the wall on gas. Iraq is really the only place that still has a lot of gas, but it's going to take 3-4 years (if they do it right) just to stabilize the place. Up in Kurdistan where I was, they have very little infrastructure for gas and are running their power plants on what they can collect or using diesel. I know of one power plant that's black because they can't feed it gas and cannot produce enough low-sulfur diesel for the GTG's.


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## Lostin55 (Sep 21, 2013)

As Schlumberger lays off 9000 people........

I don't know how to post the link or I would.


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## deadmoose (Oct 30, 2011)

Copy and paste


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## Grateful11 (Apr 5, 2009)

Just a sign of the times, anytime an industry sees a hit to it's bottom line they're going to layoff. Early 2000's the many railroads laid off about 20% of non-transportation people don't recall that making the news though. All is well as long the CEO's are making $25-100mil.

http://www.usatoday.com/story/money/2015/01/15/crude-oils-collapse-will-cost-9000-jobs-at-schlumberger/21826189/

Deere laid off a 1000 last Fall which was about the same percentage as Schlumberger's 9,000 out 120,000.

I just keep thinking about all those hardworking folks with long commutes that are barely making ends meet. Lower gas prices might allow them to put a little more food on the table for their family. Don't get me wrong I don't want to see anyone get laid off but the Crude Oil industry has always been on a big damn roller coaster ride. There was never any realistic reason for Crude to cost over $100/barrel.


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## Lostin55 (Sep 21, 2013)

http://abc13.com/business/schlumberger-confirms-9000-layoffs-coming/476864/

Schlumberger

http://www.forbes.com/sites/christopherhelman/2015/01/14/layoffs-hit-the-oilpatch-with-worst-yet-to-come/

Oilfeild in general

https://www.google.com/search?q=ensign+layoffs&sourceid=ie7&rls=com.microsoft:en-US:IE-Address&ie=&oe=&gws_rd=ssl

Ensign

I could go on and on, but it would be similar to Ford, Chevrolet, Dodge and all of the tractor companies laying off at the same time. The thing to remember is that this is just the beginning. Wait another 2 months and tell me it won't effect the economy.

Industry insiders are forecasting up to 10 million jobs lost in this downturn.


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## Vol (Jul 5, 2009)

I do hate to see folks lose their jobs.....many folks lost their jobs in 2007 and 2008 and after in the US econonmic downturn, while the gas and oil were thriving. It is just part of "as the world turns".

One good thing to come out of this rapid drop in crude is that these rogue middle eastern countries will have less $ to fund terrorism......that is good for sure.

Regards, Mike


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## Mike120 (May 4, 2009)

Vol said:


> I do hate to see folks lose their jobs.....many folks lost their jobs in 2007 and 2008 and after in the US econonmic downturn, while the gas and oil were thriving. It is just part of "as the world turns".
> 
> One good thing to come out of this rapid drop in crude is that these rogue middle eastern countries will have less $ to fund terrorism......that is good for sure.
> 
> Regards, Mike


This one will likely have a more lasting effect. There were already large numbers of people leaving the industry for retirement and I read a couple of years ago that the UK was going to be short over 150,000 engineers by the end of 2015 (old platforms in the North Sea and old infrastructure need a lot of maintenance). The industry calls it the "great crew change" but there aren't as many going into the industry as are retiring. We joked in Kurdistan that the place was like a geriatrics ward because a large number of us in senior positions with all the companies over there were brought out of retirement or semi-retirement to build our "last" projects. I had a serious ongoing problems recruiting experienced people and the engineering and fabrication companies I was using around the world were struggling as well. Everyone had the same issues and I've watched the problem building over the last 15-20 years. Not sure what will happen long term but typically, during a downturn a percentage of working age people who leave the industry, never come back.

You are very correct on the terrorism issue. The bad guys (ISIS, ISUL, daesh or whatever else you call them) were getting less than $40 a barrel for the oil they sold on the black market. Now it's significantly less and a lot of the little topping plants they were using to make diesel have been destroyed. Because, in reality, terrorism is nothing more than a business, they are having more trouble making payroll and are already starting to fray around the edges. Unfortunately, now they'll have to shift to other revenue producing activities like kidnapping, extortion, robbing banks, etc. but their main revenue stream is almost gone. The problem is that the government oil revenue streams are also cut back and the US taxpayers will end up paying to correct the huge mistakes made by a couple of US administrations that got us to this point in the first place. The Law of Unintended Consequences is always out there, and bites well-intended folks in the butt on a regular basis.


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## Grateful11 (Apr 5, 2009)

Lostin55 said:


> Industry insiders are forecasting up to 10 million jobs lost in this downturn.


Any link to this because I haven't heard anything close to that number. That would be like losing almost every non-farm job in the state of Texas which has 11.6 million workers total non-farm jobs. Sounds like scare tactics from the oil industry.

I've been tracking Crude and Gas prices for close to 30 years. This recent savings at the pump is going to put about $75 billion in the pockets of Americans this year at the current rate. That's a lot of money that will be spent in other places besides pissing it away to an industry that has been gouging the crap out of us for far too many years.

http://www.fool.com/investing/general/2015/01/11/gas-prices-are-plummeting-heres-how-much-the-avera.aspx


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## Lostin55 (Sep 21, 2013)

With all due respect Grateful, I have lived it almost as long as you have watched it. I agree, it is helping a bunch of folks put more on the table and that is the bright side of the issue.

http://www.wsj.com/articles/job-engine-running-low-on-gas-as-energy-costs-tumble-1419619419

This is an article in the Wall Street Journal.

The thing to remember in this situation, is that several of us are privy to information that is not public to date.

The interesting thing to me is the amount of hate being spewed around by those that are not in any way associated with the oilfield. The overall lack of compassion for those losing their jobs is staggering. I can distinctly remember having a lot of compassion for those hurt in the '07 crash, the auto debacle etc. I have never wished bad on those in another industry or with different viewpoints.

There seems to be an underlying assumption that oilfield people are all hitting it big, that they all drive jacked up diesels with 7" exhausts, and that they are cutting a fat hog.

I was reading an article based in OK yesterday , where the economy is heavily tied to oil, and the hate rants in the comments section were staggering. I don't understand if it is jealousy or what it is?

Either way, this is the 4th bust that I have lived through, the 3rd in my own career. It will level out at some point and will eventually pick back up again. It always does.

The WSJ article said 10 M total jobs related to oilfield, I will try to find the other articles.


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## Lostin55 (Sep 21, 2013)

In an effort to help some folks understand, it is in most contracts that notice must be sent in advance to stack a drilling rig. The advance notice required is typically 30 days and up. The company that I am working for has to date stacked 6 rigs in this district. They have publicly announced that they will stack right at 61 total by the end of January. Those Oil companies that were waiting around to decide what to do are just getting around to sending out notice of intent to idle rigs, with the aforementioned 30 days and up notice. By March, most of the damage, if you will, will have happened. Until a rig idles, all of the rig hands, salesman, mud engineers, directional and MWD hands, construction crews, completions crews, hotshots, waterhaulers, fuel haulers, etc will be employed. There is a ripple effect that takes months to come about.
Now with that being said, I am not saying that the sky is falling. What I am saying is that the depth of the downturn has yet to be determined, and as they stack more and more rigs, more and more folks lose their jobs. It takes time for the effects to be measured. Either way, by mid-summer the effects should be known.

http://www.naturalgasintel.com/articles/100717-houston-ep-ofs-job-losses-forecast-in-2015Aninteresting read at this link as well. It talks about the purchasing power of an oil related job vs other industries.


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## Grateful11 (Apr 5, 2009)

Don't get me wrong on the gouging comment. I'm referring to those on top not the guys and gals out there actually working in all kinds of weather and slop. My entire career was spent working as a Journeyman Machinist and Fabricator. Most of it for a Class 1 railroad. I know what it's like to put in 12 hours a day and sometimes 60 hours a week just make sure stuff was still moving on the rails. Luckily I always had enough seniority when all the numerous layoffs we had came along, I was very lucky there. Seems everytime there's a down turn the folks on the bottom always have to suffer the most while someone on top gets a bonus for saving the company money. I still remember on one layoff we were figuring what the CEO was making per hour if he worked a 40 hour week, came out a little over $6000/hr. sorry but I don't think anyone can do enough work to be worth that kind of money.


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## Lostin55 (Sep 21, 2013)

I agree whole heartedly Grateful.

These guys are putting in 12.5 hours a day and 87.5 hours a week. They do work a 2 week on and 2 week off rotation. They wouldn't hold up to the work otherwise.

I work 24/7 for the 2 weeks that I am here. Yes I sleep, but if operations dictate I am up at all hours. If something has gone wrong I am also up.

What frosts me is the fact that people associate the guys in the field who are slogging it out as "big oil". They get zero compassion from John Q Public when they get laid off. They are just another work-a-day joe like anyone else but for some reason people take glory in the fact that they have lost their job. I will be the first to say that these guys are paid well, but they have to be. Who would leave home, drive 1000 miles one way to work, or worse yet fly to work, and do it for 12 bucks an hour? It wouldn't work out for any of them.

Grateful, I know that you get my meaning because you were in the same shoes most of your career.


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## Mike120 (May 4, 2009)

Lostin55 said:


> What frosts me is the fact that people associate the guys in the field who are slogging it out as "big oil". They get zero compassion from John Q Public when they get laid off. They are just another work-a-day joe like anyone else but for some reason people take glory in the fact that they have lost their job. I will be the first to say that these guys are paid well, but they have to be. Who would leave home, drive 1000 miles one way to work, or worse yet fly to work, and do it for 12 bucks an hour? It wouldn't work out for any of them.


Sadly, for most of the "left" and the majority of the media, the oil industry is the "great satan" in this world. None of them would ever consider doing the amount of work it takes to succeed in the oil industry or any other industry that formed the basis for the industrial revolution. A downturn in any sector is usually brought about by market disruptions. This one was caused by more technology (innovation), more drilling, and more risk, all because the high prices and potential rewards increased the supply. Conservation, alternative sources of energy, and a crappy global economy lowered the demand and a lot of people's lives will be effected until a balance between supply and demand is re-achieved....then the cycle starts again as it has for many years. During the downturn the media will probably vilify the companies and people affected. Some companies will go belly-up, others will get bought out, and some individuals will leave the industry and never return because it's shrinking. However, a certain percentage of those people leaving the industry will do just fine because they take with them the adaptability, discipline, and willingness to work that made them successful in the past and will continue to make them successful throughout their lives. A smaller percentage, will go on welfare, cry about how they are owed a living, breed like rats, and become community activists. We will call them Liberals or Progressives..........


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