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Thread: What are we going to do when oil prices collapse?

  1. #101

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    Quote Originally Posted by Bill View Post
    In an economic downturn, does Edmonton and Calgary hit equally hard, or is one city better at weathering the storm?
    Good question!

    In the 80s both got hit hard but Calgary a little less thanks to more Ag and Tourism.

    But times have changed I would hate to make the call now.

    In my highly biased personal opinion

  2. #102

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    I would think Calgary takes hit first - head offices typically downsize; also lots of engineering in Calgary - projects are first to go.

    Edmonton would definitely see effects but a little later due to completion of construction projects. There is also sustaining capital that could keep us going a bit better.

  3. #103

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    Quote Originally Posted by moahunter View Post
    Quote Originally Posted by Titanium48 View Post
    Norway understands this, but Albertans seem far too short sighted to get it.
    If we had the money that is equalized to Quebec from Alberta, our fund would be bigger than Norways. The reality is, anything excess we make, gets clawed back, other provinces would never allow such a fund, equalization to them would go up, and health transfer payments to us go down. This is why Norway was smart to not join the EU, they didn't want all their fund clawed back by Greece or similar.
    Norway fund = ~$500 Billion

    Alberta fund = ~$15 billion

    I didn't realize that Quebec has received 485 Billion in transfer payments.

    Alberta stopped or drastically slowed the funds put into the Heritage fund decades ago. Trying to blame that on transfer payments is ridiculous. Maybe Alberta should have refused to accept money from Ottawa when it was a have not province, you remember, back before the Conservatives put all that oil under the ground.

  4. #104

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    Quote Originally Posted by kkozoriz View Post
    Norway fund = ~$500 Billion

    Alberta fund = ~$15 billion

    I didn't realize that Quebec has received 485 Billion in transfer payments.
    .
    They will receive 9.3 billion next year, they have been receiving since 1957, with compounding interest in a fund, doesn't take long to reach half a trillion. I'm not saying equalization is bad its a choice we make to be part of a cohesive Canada, I'm just saying, comparing Alberta to Norway is like comparing an apple to an orange, its just dumb, because Norway isn't obligated to bail out anyone else through federal tax redistribution. A better comparison, is to compare regions in countries, for example, Scotland. How much fund do they have?
    Last edited by moahunter; 07-10-2014 at 11:20 AM.

  5. #105
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    You can't blame transfer payments. The equalization payment formula looks at how much revenue provinces make from resources, not how they spend (or don't spend) it. Raising our provincial taxes and saving our oil revenue would have had no effect on the amount of money extracted from Albertans in the form of federal taxes or the amount of that money transferred to Quebec and other have-nots.

  6. #106

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    ^That's not true, last time Alberta built up a large fund, the code words to achieve this outside of Alberta were "fiscal imbalance", which lead to even more equalization payment / reduction in relative health transfers to Alberta / redirection of Alberta federal tax dollars to not be reinvest here, but rather, elsewhere. Like it or not, we can't appear to be too much richer than the rest of Canada with a big fat nest egg, or the rest of Canada will demand it gets clawed back as that would be "clear evidence" that we are getting too much support from the Federal government. It would be exactly the same for Norway if they were in the EU, they wouldn't be allowed to grow that fund they have. If we don't spend our resource money, other provinces will, as much as I moan about our big government spend, there is a logic to it. The idea of us saving a great big fund was nice in theory, and might have worked had we been an independent country (sort of the path Lougheed was heading down), but as part of Canada when other provinces are heavily in debt, when our population only comprises a tiny percentage of non-critical Federal votes, is politically absurd / impossible. It would simply mean we would get squat back for the Federal dollars we contribute, no assistance for LRT, no assistance for health, no assistance for an Expo (oh, that happened anyway), no asssitance for (why would you assist someone with a big savings fund?)...
    Last edited by moahunter; 07-10-2014 at 12:50 PM.

  7. #107

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    Quote Originally Posted by moahunter View Post
    when our population only comprises a tiny percentage of non-critical Federal votes, is politically absurd / impossible. It would simply mean we would get squat back for the Federal dollars we contribute, no assistance for LRT, no assistance for health, no assistance for an Expo (oh, that happened anyway), no asssitance for (why would you assist someone with a big savings fund?)...
    And why are our votes "non-critical"? Because everyone knows that they're pretty much guaranteed to go to the Conservatives. The Conservatives know they've got them sewn up regardless of what they do and the other parties can hope, at best, to take a small fraction of them.

    And who's fault is that?

  8. #108
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    /\ I would expect that it's the Liberals' fault.
    It isn't the job of a group of citizens to change their views to accomodate a political party.
    At least not in a free society.

  9. #109

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    ^I wonder if Trudeau will think of a creative way for Alberta oil to fund a national child care policy (in addition to the quebec child care we fund via equalization?), lol?

  10. #110

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    ....maybe we should currently think what to do as oil prices are going down. At this rate there wouldn't be much left for anyone to spend on equalization or otherwise.

    Feels like Saudis are drowning the market in cheap oil....market share protection? can be, but the cynic in me says they are giving uncle sam a b***job (to accomplish uncle sam's goal of hurting uncle Vlad) so that in return they hopefully agree to bomb Assad too (and if as a side, they also avoid a deal with Iran, all the better). If that's the case, we are going to have a few years of low oil prices on our hand, whether or not global economy rebounds...

  11. #111

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    Quote Originally Posted by DefinatelyMaybe View Post
    ....maybe we should currently think what to do as oil prices are going down. At this rate there wouldn't be much left for anyone to spend on equalization or otherwise.

    Feels like Saudis are drowning the market in cheap oil....market share protection? can be, but the cynic in me says they are giving uncle sam a b***job (to accomplish uncle sam's goal of hurting uncle Vlad) so that in return they hopefully agree to bomb Assad too (and if as a side, they also avoid a deal with Iran, all the better). If that's the case, we are going to have a few years of low oil prices on our hand, whether or not global economy rebounds...
    I'd say it's just the usual dynamics in a slowing global economy except this time around massive growth in China made all the difference in commodity prices.

    However, the US's shale oil business and the idea of US oil independence needs higher prices and the recent strong pricing has been fueling the shale expansion in the US, Australia and everywhere else. Saudi might want to slow that effort down. If this happens though, I imagine the majors could possibly benefit from a dip in prices to wipe out or just buy out all the upstarts.

  12. #112

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    Nothing new to see here folks, we've been here before many times, expect the same bone-headed leadership decisions (that's why they 'earn' the big bucks), move on...


    Collapse in oil prices could slam Canada’s resource provinces Add to ...
    MICHAEL BABAD, The Globe and Mail, Oct. 10 2014

    excerpt:

    "Mr. Kavcic noted that the three Canadian provinces have based their fiscal 2014-2015 budgets on oil prices of between $97 for WTI and $105 for Brent."


    http://www.theglobeandmail.com/repor...ticle21045772/


    Crude Oil Prices Extend Free Fall as OPEC Output Rises
    By CHRISTIAN BERTHELSEN, Oct. 10, 2014

    Excerpt:
    "Oil prices have been in a tailspin for more than three months as output from the U.S., Libya, Iraq and other countries soar while economic signals from Europe and China weaken, reducing demand. The surplus has become so great that even geopolitical crises around the world—normally a bullish driver for their ability to interrupt crude flows—have failed to halt the price slide. "

    http://online.wsj.com/articles/oil-p...nts-1412920881

  13. #113
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    Are there any rumblings of layoffs in the oil sector?
    The world is full of kings and queens, who blind your eyes then steal your dreams.
    It's heaven and hell!

  14. #114

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    I work in industry, a lot of sites are busy, still projects going forward and a few hitting the pause button.

    None of the workers are talking about oil prices, things are good for alberta for another 20 years, least till I retire lol

  15. #115

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    Fortunately there is a bit of momentum behind Alberta's economy right now, the committed capitals for Oil Sands projects and the construction boom, which should support us for a little while.

    For either DefinatelyMaybe or KC's theories on why Oil prices are dropping to hold true, I think a much lower price of oil (say in the $50-$60 range) is needed, low enough to have an impact (in DM's case on Russia, in KC's case on Shale producers) but high enough not to disrupt too much oil production, as it will cause supply disruption and thus supports increas in oil prices.

    Right now, markets still are more concerned on global growth, as forward oil prices (price of futures contracts to buy/sell oil by producers and consumers to hedge their costs as well as speculators to express their expectations of future trends) is stable around $80 (see for example: http://www.cmegroup.com/trading/ener...eet-crude.html). We should wait a few days, if not weeks, for the markets to stabilize before making too much of daily price swings. If downtrends continues however, sooner or later we will feel the impacts.
    Last edited by FamilyMan; 10-10-2014 at 12:35 PM.

  16. #116

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    Quote Originally Posted by FamilyMan View Post
    Fortunately there is a bit of momentum behind Alberta's economy right now, the committed capitals for Oil Sands projects and the construction boom, which should support us for a little while.

    For either DefinatelyMaybe or KC's theories on why Oil prices are dropping to hold true, I think a much lower price of oil (say in the $50-$60 range) is needed, low enough to have an impact (in DM's case on Russia, in KC's case on Shale producers) but high enough not to disrupt too much oil production, as it will cause supply disruption and thus supports increas in oil prices.

    Right now, markets still are more concerned on global growth, as forward oil prices (price of futures contracts to buy/sell oil by producers and consumers to hedge their costs as well as speculators to express their expectations of future trends) is stable around $80 (see for example: http://www.cmegroup.com/trading/ener...eet-crude.html). We should wait a few days, if not weeks, for the markets to stabilize before making too much of daily price swings. If downtrends continues however, sooner or later we will feel the impacts.
    Actually I hope I didn't convey any sense that I know one iota about what drives oil prices. . I just gather information and opinions and try to anticipate all the various scenarios and prepare for anything, good or bad, to come true. I really try hard to avoid those painful learning experiences so many people seem to embrace.

    Additionally, I abhore the idea that we pay people big bucks to do what any old Joe could do - just plowing ahead until a crisis hits and then hitting the panic button (while telling others not to panic) and then slashing budgets, positions, etc. I could do that, anybody could do that. No one deserves outrageous pay, benefits and bonuses for being idiots.
    Last edited by KC; 10-10-2014 at 06:11 PM.

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    Don't fret, when the next crunch occurs, the rich will get richer. It's literally designed for them.

  18. #118

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    Alright people, tighten your seat belts and prepare for a wild ride.

    After both I creasing their oil production AND slashing prices in Asia, Saudies are now aggressively targeting European markets. I think we would have a couple of weeks before oil hits $60. Enjoy it while it lasts.

    http://online.wsj.com/articles/saudi...NewsCollection

  19. #119

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    Quote Originally Posted by DefinatelyMaybe View Post
    Alright people, tighten your seat belts and prepare for a wild ride.

    After both I creasing their oil production AND slashing prices in Asia, Saudies are now aggressively targeting European markets. I think we would have a couple of weeks before oil hits $60. Enjoy it while it lasts.

    http://online.wsj.com/articles/saudi...NewsCollection
    "Remember that history always repeats itself. Every great bubble in history has broken. There are no exceptions." - Jeremy Grantham

    Note: Grantham has also said that oil might be an exception since its a depleting resource.

    My view is that just like running a business, even if you have the long term trend right, that doesn't mean you'll survive the short run.
    Last edited by KC; 13-10-2014 at 07:04 PM.

  20. #120
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    Just think about the last 30 years with oil prices. It's all over the place and NO ONE has even come close to half assed accurately predicting what has happened.

  21. #121

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    The more things change...

    From 2007 but always something to think about.
    1980s: Please God let there be another Oil Boom I promise not to **** it all away next time. TODAY: Are we throwing it away again?

    http://www.canada.com/calgaryherald/...8-372a4b0a4774

  22. #122

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    Great article I'll agree no one has a clue, the USA is finally turning a page crawling slowly out of the recession oils going up in my opinion this is a little speed bump by next year be back up to $95 a barrel

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    Quote Originally Posted by Swillv8 View Post
    Great article I'll agree no one has a clue, the USA is finally turning a page crawling slowly out of the recession oils going up in my opinion this is a little speed bump by next year be back up to $95 a barrel
    The IEA is actually reducing it's oil demand forecasts: http://www.cbc.ca/news/business/iea-...next-1.2797790

    Which is why oil prices are declining at the moment. But no one truly has a crystal ball, for all we know there could be supply disruptions in the Middle East, or a large uptick in economic growth that cause the price to go up. Or alternatively, things could settle down in the Middle East and/or Libya, or the EU could head back in to recession, causing more supply and further declines in prices.

  24. #124

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    Hilarious isn't it (see quote that follows). Benjamin Graham said that 'in the short run the market is a voting machine but in the long run it is a weighing machine'. I think he was wrong (thanks to a piece by Jeremy Grantham). We can never escape the short run, so the market is always a voting machine:

    "In light of the current outlook for oil prices, such decisions aren’t a surprise."




    Plunging oil prices a game-changer for major pipeline projects
    JEFF RUBIN, The Globe and Mail, Oct. 14 2014

    excerpt:

    "In the last several months alone we’ve seen two major announcements of shelved or cancelled projects. Total SA is walking away from its Pierre River project, while Norway’s Statoil is doing the same from the Joslyn mine. In light of the current outlook for oil prices, such decisions aren’t a surprise."

    http://www.theglobeandmail.com/repor...ticle21085820/

  25. #125

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    ^ I question the journalism from article above.

    Firstly joslyn mine is owed by total,the mine is still operating, they are not expanding.
    As for Pierre river a quick google search shows it as a shell lease.

    Total, and statoil have done very little in this province and are run by indecisive corporate puppets to scared to go ahead with projects

    When total sa announced they were shelving joslyn mine expansions they also laid off over 150 white collar jobs in calgary. The true cost overruns are mismanaged companies paying good wages for little or no work getting done.

    I applaud companies like cenovus and cnrl for having smart business strategies not gambling on what today's oil price is
    Last edited by Swillv8; 14-10-2014 at 12:25 PM.

  26. #126
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    Quote Originally Posted by Swillv8 View Post
    ^ I question the journalism from article above.
    It was an opinion piece, not a journalistic one.

  27. #127

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    Quote Originally Posted by Swillv8 View Post
    ^I applaud companies like cenovus and cnrl for having smart business strategies not gambling on what today's oil price is
    I find CNRL interesting, they run a tight ship (per people I know there), but also seem to have a "contra" business model of buying when others are selling, and selling when others are buying.

  28. #128

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    Quote Originally Posted by moahunter View Post
    Quote Originally Posted by Swillv8 View Post
    ^I applaud companies like cenovus and cnrl for having smart business strategies not gambling on what today's oil price is
    I find CNRL interesting, they run a tight ship (per people I know there), but also seem to have a "contra" business model of buying when others are selling, and selling when others are buying.
    Quite a few interesting opportunities are showing up as prices take a dip.

  29. #129

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    News

    Stocks tumble again, Canadian dollar plumbs five-year depths on oil price collapse
    Where Canada is concerned, the slump in oil prices is playing into both stocks and the fortunes of the Canadian dollar.

    The loonie, as Canada’s dollar coin is known, moved in a wide range today, as low as 87.83 cents U.S. and as high as 89.06 cents.

    By midday, it sat at 88.6 cents.

    This came as West Texas Intermediate, the U.S. oil benchmark, hit a low of just over $80 a barrel, though later rose. And the U.S. dollar, which has been on a roll, softened up somewhat after that retail sales report.

    “We’ve seen a collapse in oil prices on the demand and supply outlook,” said chief currency strategist Camilla Sutton of Bank of Nova Scotia, noting the slump helped drive the loonie to a five-year low and Norway’s krone to its lowest in about four and one-half years.

    The collapse in oil prices is, of course, a two-sided story. While it plays itself out in the oil market, it’s also driving down pump prices, which is good news for American consumers, and thus the broader economy, by “putting more money in people’s pockets,” Ms. Sutton said.

    A decline of $20-a-barrel in the price of oil means a rise of about 8 per cent in the U.S. greenback against the Canadian dollar, JPMorgan Chase foreign exchange strategist Kevin Hebner noted in a study of the loonie.


    MORE
    http://www.theglobeandmail.com/repor...ticle21104360/
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  30. #130
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    The majors, the folks with deep pockets that can finance oil sands or deep water projects take a very long-term view of prices.

    $60 a barrel next week, next month is meaningless to them.

    BUT, it hits the juniors pretty hard and that's when you start to see acquisitions.

    Acquisitions do mean layoffs, mostly at head office in Calgary though, and most of the people affected have skills that will see them re-employed quickly.
    ... gobsmacked

  31. #131
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    Quote Originally Posted by Marcel Petrin View Post
    Quote Originally Posted by Swillv8 View Post
    ^ I question the journalism from article above.
    It was an opinion piece, not a journalistic one.
    Some people's opinions are worth paying attention to. Other people's opinions (aka Mr. "Get ready for $200 per barrel oil" Jeff Rubin), not so much.
    Last edited by East McCauley; 15-10-2014 at 06:57 PM.

  32. #132

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    Quote Originally Posted by McBoo View Post
    The majors, the folks with deep pockets that can finance oil sands or deep water projects take a very long-term view of prices.

    $60 a barrel next week, next month is meaningless to them.

    BUT, it hits the juniors pretty hard and that's when you start to see acquisitions.

    Acquisitions do mean layoffs, mostly at head office in Calgary though, and most of the people affected have skills that will see them re-employed quickly.
    You've forgotten all the majors' cancelled, delayed (often restarted and then delayed again) and mothballed plans of the 1980s and 90s.

  33. #133
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    I remember 1998 early 1999 when it was scraping $18.00. And 2005 when it cracked $60.00 and how it was the new benchmark (and everything would be good). Now it's "crashing" at $82.00...

    Something stinks

  34. #134

    Default Fusion reactors on back of trucks

    "If" Lockheed Matin are right, our Oil Sands, and even our Gas, is going to be worth squat soon:

    http://www.forbes.com/sites/williamp...world-forever/

  35. #135

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    Quote Originally Posted by moahunter View Post
    "If" Lockheed Matin are right, our Oil Sands, and even our Gas, is going to be worth squat soon:

    http://www.forbes.com/sites/williamp...world-forever/
    It's great news but I imagine the promise of nuclear power plants half a century ago also seemed like a dream come true. Reality proved otherwise. So I can't see oil and gas falling out of favour any time. Oil and gas still have great uses (plastics, fertilizers, etc) and plus practical power utility (cheap, portable and relatively safe).

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    Quote Originally Posted by Kitlope View Post
    I remember 1998 early 1999 when it was scraping $18.00. And 2005 when it cracked $60.00 and how it was the new benchmark (and everything would be good). Now it's "crashing" at $82.00...

    Something stinks
    Inflation is what stinks, particularly in construction costs. We should have been using higher taxes and royalties to control growth (and build up a much bigger surplus) when prices were high.

  37. #137

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    Quote Originally Posted by Titanium48 View Post
    Quote Originally Posted by Kitlope View Post
    I remember 1998 early 1999 when it was scraping $18.00. And 2005 when it cracked $60.00 and how it was the new benchmark (and everything would be good). Now it's "crashing" at $82.00...

    Something stinks
    Inflation is what stinks, particularly in construction costs. We should have been using higher taxes and royalties to control growth (and build up a much bigger surplus) when prices were high.
    I'd guess that depletion is also a factor. Possibly no one looking for, or finding, cheap conventional pools of oil and so higher cost resources (oil sands, shale oil, etc) have to be accessed at higher cost.

    Also a couple decades of relatively cheap oil pumped up demand via a continuation of rather conventional building practices, massive numbers of autos adopted in lesser developed countries, increased shipping, etc.

    So real costs may have risen as well as real demand so $40, 60, 80, 100 or some price range is the now new normal under some momentary "equilibrium".
    Last edited by KC; 16-10-2014 at 07:42 PM.

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    ^ I assumed Kitlope's comment was referring to the minimum price for profitability for oilsands extraction. In the mid-1990s that price was ~$30/bbl, so when oil hit double that the industry took off. Now $60/bbl is barely enough to keep existing operations profitable, and if the price drops to that level or below all expansion plans will be cancelled.

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    Last figure I remember hearing for break even was $72

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    Depends on how quickly that's going to happen. Not sure about Edmonton specifically but Alberta's economy has been diversifying and energy sector isn't as big as it once was.

    Doesn't it only make up like 2% of Canada's GDP. We're not Fort Mac, it'd definitely hurt us but it's not the end of the world.

  41. #141

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    Quote Originally Posted by Drumbones View Post
    Last figure I remember hearing for break even was $72
    Do you mean $72 for for proposed developments?

    In the 1990s when Syncrude switched to truck and shovel I heard a $25/bbl figure. How much could those operations have increased in costs in 20 years? In fact this link to a 2012 book says; "Since 1997 operating costs for Suncor and Syncrude have been generally been in the range of $12-18 per barrel..."

    http://books.google.ca/books?id=dfb9...ude%22&f=false



    Canada's Oil Sands Shifting to Second Generation Reclaimation, Mammoth Machines Being Retired
    August 10, 1999

    http://www.oilandgasonline.com/doc/c...-generati-0001


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    Last edited by KC; 17-10-2014 at 09:48 AM.

  42. #142
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    Quote Originally Posted by moahunter View Post
    "If" Lockheed Matin are right, our Oil Sands, and even our Gas, is going to be worth squat soon:

    http://www.forbes.com/sites/williamp...world-forever/
    The article says within a decade a nuclear fusion reactor small enough to fit on the back of a truck will be developed.

    Darn. Just about to ask Moa if I could take a spin in his nuclear fusion powered truck in 10 years time.

    So far as the claims made by the fellow who works for Lockheed Martin, they should be taken with two huge blocks of salt. Claims that commercial scale nuclear fusion is just around the corner have been around for over a half century.

  43. #143

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    Quote Originally Posted by East McCauley View Post
    Quote Originally Posted by moahunter View Post
    "If" Lockheed Matin are right, our Oil Sands, and even our Gas, is going to be worth squat soon:

    http://www.forbes.com/sites/williamp...world-forever/
    The article says within a decade a nuclear fusion reactor small enough to fit on the back of a truck will be developed.

    Darn. Just about to ask Moa if I could take a spin in his nuclear fusion powered truck in 10 years time.

    So far as the claims made by the fellow who works for Lockheed Martin, they should be taken with two huge blocks of salt. Claims that commercial scale nuclear fusion is just around the corner have been around for over a half century.

    I'm still waiting for a good old working Cone of Silence.

    http://www.allledlighting.com/author...&doc_id=563084

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    This is an interesting and somewhat amusing read

    A Canadian Oil Conspiracy
    http://arcfinancial.com/research/ene...il-conspiracy/
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  45. #145

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    Quote Originally Posted by Sonic Death Monkey View Post
    This is an interesting and somewhat amusing read

    A Canadian Oil Conspiracy
    http://arcfinancial.com/research/ene...il-conspiracy/
    Like Warren Buffett has said, with commodity like products, it's the lowest cost producer that wins. ...and with parafinic froth treatment, oil by rail, etc. I hope we're becoming very competitive.

  46. #146
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    I am hearing rumblings of oil hitting $70 next year.
    The world is full of kings and queens, who blind your eyes then steal your dreams.
    It's heaven and hell!

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    ^That's what Goldman Sachs is predicting, FWIW.

    http://www.reuters.com/article/2014/...0SM08A20141027

  48. #148

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    ^ just another near useless forecast. The value is only in forcing reasonable probabilities into people's minds so that they aren't blindsided by groupthink. Since $70/bbl is still well within very reasonable expectations for a boom bust commodity driven economy there's no way any highly paid officials should be saying that unexpected market conditions are forcing us to slash budgets, lay off thousands, ruin lives, cut programs, shutter projects and otherwise behave as if they are mindless fools. The good old "where's the plan" shortcoming (except in reverse) that we experienced just 10 years ago.

  49. #149

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    What are we going to do when oil prices collapse?

    I'm going to Disneyland.
    "The man who does not read has no advantage over the man who cannot read." –Mark Twain

  50. #150

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    Quote Originally Posted by Gemini View Post
    What are we going to do when oil prices collapse?

    I'm going to Disneyland.
    Excellent news! Did you finally decide to change careers and pursue your dream?

  51. #151

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    ^Yup, I'm going on Vay K. If you want to join me I can drop you off at the gates, Disneyland could always do with more clowns.
    Last edited by Gemini; 28-10-2014 at 10:42 AM.
    "The man who does not read has no advantage over the man who cannot read." –Mark Twain

  52. #152

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    Quote Originally Posted by Gemini View Post
    ^Yup, I'm going on Vay K. If you want to join me I can drop you off at the gates, Disneyland could always do with more clowns.

    Hmmm, or do you think I might make a good Eeyore?


    "It's snowing still," said Eeyore gloomily.
    "So it is." said Christopher Robin.
    "And freezing."
    "Is it?"
    "Yes," said Eeyore. "However," he said, brightening up a little, "we haven't had an earthquake lately."


    Which Character Are You? Eeyore
    http://www.youtube.com/watch?v=LBRCWAn4QKU
    Last edited by KC; 30-10-2014 at 06:42 PM.

  53. #153

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    Quote Originally Posted by DefinatelyMaybe View Post
    Alright people, tighten your seat belts and prepare for a wild ride.

    After both I creasing their oil production AND slashing prices in Asia, Saudies are now aggressively targeting European markets. I think we would have a couple of weeks before oil hits $60. Enjoy it while it lasts.

    http://online.wsj.com/articles/saudi...NewsCollection
    Ok, the $80 WTI price floor which resisted for a while, broke today...next stop $70..

    http://www.bloomberg.com/news/2014-1...-discount.html

  54. #154
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    ^ Sounds like oil will stabilize around $65
    The world is full of kings and queens, who blind your eyes then steal your dreams.
    It's heaven and hell!

  55. #155
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    A few fun (or not so fun) facts depending on your point of view.

    Here's a link to a chart/table on rising US crude oil production:

    http://www.eia.gov/dnav/pet/hist/Lea...s=MCRFPUS2&f=M

    In the past 6 years, US crude oil production has increased by 3.6 million barrels per day. The US production increase equals total Canadian crude oil production measured in barrels per day in 2013, and is about double the production from the Alberta oil sands.

  56. #156

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    I am in New Jersey this week

    Local price of gasoline



    $2.60/9/us gallon
    Advocating a better Edmonton through effective, efficient and economical transit.

  57. #157

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    Interesting... may be a great opportunity for any low debt oil companies... below is also a link to the Alta Gov'ts situation. Ho hum predictable stuff...

    Crashing oil prices and rising interest rates make this a scary chart
    By Business Insider | 4 Nov, 2014,

    http://economictimes.indiatimes.com/...w/45032605.cms



    Dropping oil prices, now at under $80 per barrel, are impacting how the Government of Alberta budgets 26
    BY MATT DYKSTRA, EDMONTON SUN, NOVEMBER 03, 2014

    excerpt:

    "Over the next six to eight weeks, ministers from all departments are meeting with the Treasury Board to prepare for next year’s budget, said Campbell, leading to early discussions about increasing revenue and cutting costs.

    Part of the financial picture is the government’s plan to go $21 billion in debt by 2016, a number that makes even Campbell twist in his seat.

    The West Yellowhead MLA says the government will borrow “with caution” to deliver on Premier Jim Prentice’s promise to build new schools and long-term care centres but will also pay it off at a faster pace.

    “I wouldn’t want (the debt) to get much higher,” said Campbell, adding the $21 billion in red ink is “pretty close” to a “comfortable” maximum debt that he would like to see paid down within 20 years, as opposed to the planned 30 years. ..."

    http://www.edmontonsun.com/2014/11/0...lberta-budgets




    It's actually pretty hilarious listening to them talk... Of course we all know that they "have a plan" and the public is fully aware of what it is - because we live and die on the volatility of oil prices .


    Prentice sounds wary note about oil prices and Alberta’s economy
    BY JAMES WOOD, CALGARY HERALD OCTOBER 29, 2014

    http://www.calgaryherald.com/busines...048/story.html
    Last edited by KC; 04-11-2014 at 10:16 AM. Reason: add the Prentice link

  58. #158

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    Schools, long term care & hospitals are the sort of thing the proceeds of the Heritage fund could have been taking care of if we hadn't shifted away from growing it. Instead, we're stuck with trying to build during the most expensive time to do so and crying pauper when the oil price decreases.

  59. #159

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    Quote Originally Posted by kkozoriz View Post
    Schools, long term care & hospitals are the sort of thing the proceeds of the Heritage fund could have been taking care of if we hadn't shifted away from growing it. Instead, we're stuck with trying to build during the most expensive time to do so and crying pauper when the oil price decreases.
    Well, a friend of a friend is selling their house in southern Alberta for in the low-to-mid 8-figures. A very nice big shack. It shows a small degree of their entrepreneurial success in taking the initiative to capture the moment (of the latest oil price bubble.) I guess we could say we all knew the rules of the game and we know how it will play out if oil prices fall from over supply, much like they did with gas prices.

    You can't fault people like the business people above for playing by the rules and winning. However you can fault those that make up the rules and get paid big bucks along the way, get great golden handshakes, great pensions and then profess; 'shock and ahhh - we have to slash your jobs, funding, your family support in tough times - because sorry we just don't have any money left'.

  60. #160

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    Hearing of three companies cutting alot of jobs already out in fort sask. Look out below

  61. #161

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    Some break-even figures in this article...

    Cost-cutting fever grips Big Oil
    BY YADULLAH HUSSAIN, FINANCIAL POST AUGUST 22, 2014


    http://www.calgaryherald.com/busines...#__federated=1



    Plus here's an exceptionally high break-even indicator for Canadian Oil Sands / Syncrude:

    Prepare for a gusher in Canada’s oil sector with these ETFs Add to ...
    JOSH EHRLICH, ETFinsight.ca, Jan. 31 2013
    excerpt:

    "Further complicating Canadian Oil Sands’ prospects was a research report released in July 2012 by a Bank of America Merrill Lynch analyst that warned that high production costs, specifically at Syncrude, would require oil prices of $113 per barrel to provide enough cash flow for the firm to break-even."
    http://www.theglobeandmail.com/globe...rticle8031492/

  62. #162

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    I wonder if that was more just good luck? Plus, how long can those reserves last?


    Putin says Russia preparing for 'catastrophic' oil price slump

    Excerpt:

    "Russia, with $421 billion in international reserves, has a "big enough" buffer to meet all social commitments and maintain budgetary and economy stability, Putin said."
    http://www.dailyherald.com/article/2...ess/141119071/


    And in North America (2007 deja vu so maybe time to start watching those spreads):

    Plunging oil price triggers warning of defaults and ‘distress’ in the energy sector

    Excerpt
    “A scenario where average B/CCC energy name will start trading at 65% D/EV, [implies] a 30% default rate for the whole [high yield] segment,” the analysts said. “A shock of that magnitude could be sufficient to trigger a broader high yield market default cycle, if materialized.”

    http://business.financialpost.com/20...ergy-distress/



    .
    Last edited by KC; 14-11-2014 at 09:59 AM.

  63. #163

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    Cross-ref to a new and related thread:


    Annual Economics Outlook Conference

    Matthew Schoenhardt, Senior Associate, Stantec Project Economics,

    Selling the Alberta Advantage: Comparative Petrochemical Plant Economics in North America


    http://www.connect2edmonton.ca/forum...ad.php?t=36449

  64. #164
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    Quote Originally Posted by KC View Post
    I wonder if that was more just good luck? Plus, how long can those reserves last?


    Putin says Russia preparing for 'catastrophic' oil price slump

    Excerpt:

    "Russia, with $421 billion in international reserves, has a "big enough" buffer to meet all social commitments and maintain budgetary and economy stability, Putin said."
    http://www.dailyherald.com/article/2...ess/141119071/
    Putin is blowing smoke. What's he going to do? Dip into in foreign exchange reserves to pay for the pensions and health care for Russia's rapidly aging population. Might be okay for a short period of time but not for a prolonged downturn in oil prices. Longer term using currency reserves to pay the bills would further erode the rouble's value, destabilize the entire Russian banking sector, and reduce the living standards of ordinary Russians.

    As for North America, there will be winners and losers. The US is likely to be a net beneficiary as they are still a net oil consumer though states like Texas and North Dakota will feel the pain.

    In Canada, the oil producing provinces will lose and the oil consuming provinces will be winners reversing what has been an almost 15 year trend. They're probably breaking out the champagne glasses at Queen's Park as we speak.

  65. #165

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    Quote Originally Posted by East McCauley View Post
    Quote Originally Posted by KC View Post
    I wonder if that was more just good luck? Plus, how long can those reserves last?


    Putin says Russia preparing for 'catastrophic' oil price slump

    Excerpt:

    "Russia, with $421 billion in international reserves, has a "big enough" buffer to meet all social commitments and maintain budgetary and economy stability, Putin said."
    http://www.dailyherald.com/article/2...ess/141119071/
    Putin is blowing smoke. What's he going to do? Dip into in foreign exchange reserves to pay for the pensions and health care for Russia's rapidly aging population. Might be okay for a short period of time but not for a prolonged downturn in oil prices. Longer term using currency reserves to pay the bills would further erode the rouble's value, destabilize the entire Russian banking sector, and reduce the living standards of ordinary Russians.

    As for North America, there will be winners and losers. The US is likely to be a net beneficiary as they are still a net oil consumer though states like Texas and North Dakota will feel the pain.

    In Canada, the oil producing provinces will lose and the oil consuming provinces will be winners reversing what has been an almost 15 year trend. They're probably breaking out the champagne glasses at Queen's Park as we speak.
    Well ISIS says it's going after Saudi Arabia. Maybe Putin foresees supply disruptions.

  66. #166

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    If you can't make it on price, then you need to make it on volume...

    Shale Drillers Keep Output High Despite Oil Price Decline
    By Asjylyn Loder Nov 18, 2014
    excerpt:
    “There’s a lot more production coming online this year and in the first half of 2015,” said Jason Wangler, an analyst at Wunderlich Securities Inc. in Houston. “This isn’t a machine that you can turn on and off with a switch. It’s going to take months, if not quarters, to turn it around.”
    http://www.bloomberg.com/news/2014-1...e-decline.html

  67. #167

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    Not much new in this old article but it's well written and an interesting read 8 years later. Discusses China's needs.

    The VIEW from BURGUNDY
    Burgundy Asset Management Ltd, June 2006

    pgs 5 - 7, includes historic charts
    excerpt:

    "Oil, Like All Commodities, Responds to Price"

    "The new supply will come, with a time lag, just like in the past. The following chart shows non-OPEC production in grey and the oil price in black. See how rising prices in the 1970s and early 1980s led to big production increases. This jump in competing barrels forced OPEC to slash production in half in the early 1980s.

    "Finally, Saudi Arabia concluded that its market share loss was big enough, so OPEC oil production was increased. This drove the price of oil down, causing the decline in non-OPEC volumes that you see in the mid-1990s. ..."

    http://www.burgundyasset.com/data/ne..._Oil_Slick.pdf

  68. #168

  69. #169

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    Grantham's comments about all the good that oil has brought us aligns exactly with what the oil companies are now saying via there soft ad campaign (the cupcakes campaign, etc.). ...but I think there their ideas diverge.

    Jeremy Grantham Calls the Next Market Top
    By JEREMY GRANTHAM, November 18, 2014, Barrons

    excerpts:

    "The Beginning of the End of the Fossil Fuel Revolution (From Golden Goose to Cooked Goose)"

    "As a sign of the immediacy of this problem, we have never spent more money developing new oil supplies than we did last year (nearly $700 billion) nor, despite U.S. fracking, found less – replacing in the last 12 months only..."

    "Thus we owe almost everything we have had in the way of scientific and economic progress and the growth of the world’s food supplies and population to fossil fuels. And not simply to the availability of these fuels, but more precisely to the availability of those fossil resources that could be captured extremely cheaply."

    "Rising Oil Costs Begin To Squeeze the Economy
    Starting around the year 2000 a remarkable change in the relationship between oil and the economy began: the..."

    "The Demise of Oil-burning Engines
    Working in exactly the opposite direction to the rising costs of finding new oil is the accelerating progress in oil replacement technologies. ...I personally witnessed a two-minute recharging of electric batteries (without any damage to the life of the battery). Interestingly, this was described to us a week later by a leading battery expert as being “against the laws of physics.”...

    http://online.barrons.com/articles/j...ash-1416334236

  70. #170
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    For the first time, in 2013, US natural gas production from shale exceeded conventional production:

    "Total U.S. natural gas gross withdrawals reached a new high at 82 billion cubic feet per day (Bcf/d) in 2013, with shale gas wells becoming the largest source of total natural gas production. Natural gas gross withdrawals are a measure of full well stream production including all natural gas plant liquids and nonhydrocarbon gases after oil, lease condensate, and water have been removed. According to the Natural Gas Annual, gross withdrawals from shale gas wells increased from 5 Bcf/d in 2007 to 33 Bcf/d in 2013, representing 40% of total natural gas production, and surpassing production from nonshale natural gas wells. New technology has enabled producers to shift production to resources that are now easier to reach and have lower drilling costs. These trends have been reflected in a lower market price of natural gas."
    http://www.eia.gov/todayinenergy/detail.cfm?id=18951

    As a point of comparison, total Canadian natural gas production in 2013 was 14 Bcf/d.

    Could something similar happen with US crude oil production, only delayed by a few years? Something to think about as the Alberta government prepares to release its second quarter (September 30) fiscal update tomorrow.

  71. #171
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    Not sure what you mean, but US crude oil production is up something like 75% in the past 5 years or less. That increased production is more than any OPEC member other than Saudi Arabia. It's already happened.

  72. #172
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    ^The US is still importing about 3 million barrels per day from OPEC countries, about half of what they were importing just 6 years ago. In addition, the US still imports 4 million barrels per day from non-OPEC countries (of which close to 3 million barrels/day is from Canada and 700 million barrels/day from Mexico). See here:
    http://www.eia.gov/dnav/pet/pet_move...0_mbblpd_m.htm

    Once rising US crude oil production eliminates that 3 million import gap, the link between North American oil markets and the OPEC controlled market in the rest of the world would be broken. Similar to what happens with natural gas pricing, North American crude oil pricing would be based on supply and demand, rather than OPEC cartel pricing.

    It is worth noting that, in the past five years or so since the shale gas revolution really took off, Northern American natural gas prices are on average about one-third of what they are in Europe and Asia. Prior to that they were much closer to par.
    Last edited by East McCauley; 26-11-2014 at 10:28 AM.

  73. #173
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    Quote Originally Posted by East McCauley
    Once rising US crude oil production eliminates that 3 million import gap, the link between North American oil markets and the OPEC controlled market in the rest of the world would be broken. Similar to what happens with natural gas pricing, North American crude oil pricing would be based on supply and demand, rather than OPEC cartel pricing.
    Oil is already priced based upon supply and demand, since it's a fairly easily transported commodity. At least compared to natural gas. That's reflected by the fairly small differentials between various types of crude benchmarks around the world that don't differ by much more than 10-15%. The natural gas market is very, very different because up until the last decade it was not easily transported, and even now transporting it requires building plants that cost tens of billions of dollars. The US increasing it's crude oil production is not going to fundamentally change how the oil market works. And like it or not, OPEC still controls 30% of the world's oil production. If they chose to cut back on production, that will have an affect on global oil prices. Hence why everyone is waiting on what their meeting tomorrow will result in.

    Quote Originally Posted by East McCauley
    It is worth noting that, in the past five years or so since the shale gas revolution really took off, Northern American natural gas prices are on average about one-third of what they are in Europe and Asia. Prior to that they were much closer to par.
    That's because North America has a very limited capacity for LNG exports, there's nowhere for the increased production to go. The US is in the process of converting several LNG terminals to export it, but that's costing billions and takes time.

  74. #174

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    Quote Originally Posted by Marcel Petrin View Post
    The US increasing it's crude oil production is not going to fundamentally change how the oil market works.
    Wrong! It has already created a "new normal" oil regime. Basically, US Shale has offset Saudi "swing" effect. Thus, oil prices will remain low for a considerable time. Just look at what market is pricing oil for delivery 5-10 years from now. See data here. Dec. 2018 WTI last priced ~$80.


    Quote Originally Posted by Marcel Petrin View Post
    And like it or not, OPEC still controls 30% of the world's oil production. If they chose to cut back on production, that will have an affect on global oil prices. Hence why everyone is waiting on what their meeting tomorrow will result in.
    Again, incorrect. Any price jump due to production cuts by OPEC is self-defeating, and they know it. Any price upswing basically allows Shale oil production to be hedged at a higher markup, thus immunizing the producers from short term market volatility. As such no investment professionals expects any cuts from OPEC, and you see the price volatility since yesterday. WSJ yesterday reported the most likely OPEC meeting oucome is they declare they adhere more closely to their quota.

  75. #175
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    Quote Originally Posted by FamilyMan
    Wrong! It has already created a "new normal" oil regime. Basically, US Shale has offset Saudi "swing" effect. Thus, oil prices will remain low for a considerable time. Just look at what market is pricing oil for delivery 5-10 years from now. See data here. Dec. 2018 WTI last priced ~$80.
    A reduction in price due to an increased supply coupled with stagnant demand due to slow growth in most of the world economy is not a "fundamental change" in how the oil market works. That means the market is doing it's thing same as it has been when demand was skyrocketing and production was stagnant, but in reverse.

    Quote Originally Posted by FamilyMan
    Again, incorrect.
    What specifically was incorrect in the quote? I said that IF they chose to cut back on production, it would have an affect on global prices. That's it. And that's a fact. I never addressed what the follow on consequences of that would be, nor did I say that OPEC would definitely cut production. You're absolutely right that OPEC is very divided right now about it, and that higher oil prices will support higher cost production investment like shale oil, oil sands, and deepwater drilling that competes with OPEC countries for market share.

  76. #176

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    Quote Originally Posted by FamilyMan View Post
    Quote Originally Posted by Marcel Petrin View Post
    The US increasing it's crude oil production is not going to fundamentally change how the oil market works.
    Wrong! It has already created a "new normal" oil regime. Basically, US Shale has offset Saudi "swing" effect. Thus, oil prices will remain low for a considerable time.
    I agree with your first sentence, technology has resulted in a new paradigm (tends to happen anytime a commodity is over priced for too long, something the peak oil guy failed to understand, there's plenty of oil for generations, but new technology will be needed to access it, which depends on higher prices for periods of time) but not your second. Demand is also going to dramatically increase as China and India continue to grow their middle classess / need a lot more oil. I think this will to a large extent offset the increased supply and better fuel economy impacts longer term.
    Last edited by moahunter; 26-11-2014 at 11:15 AM.

  77. #177

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    Quote Originally Posted by Marcel Petrin View Post
    Quote Originally Posted by FamilyMan
    Again, incorrect.
    What specifically was incorrect in the quote? I said that IF they chose to cut back on production, it would have an affect on global prices. That's it. And that's a fact. I never addressed what the follow on consequences of that would be, nor did I say that OPEC would definitely cut production. You're absolutely right that OPEC is very divided right now about it, and that higher oil prices will support higher cost production investment like shale oil, oil sands, and deepwater drilling that competes with OPEC countries for market share.
    I am referring to what happens IF OPEC cuts prices. As said in my first comment, market has already "priced in" the effect of any possible cuts, and their verdict is low prices as far as the eye can see.

  78. #178

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    Quote Originally Posted by moahunter View Post
    Quote Originally Posted by FamilyMan View Post
    Quote Originally Posted by Marcel Petrin View Post
    The US increasing it's crude oil production is not going to fundamentally change how the oil market works.
    Wrong! It has already created a "new normal" oil regime. Basically, US Shale has offset Saudi "swing" effect. Thus, oil prices will remain low for a considerable time.
    I agree with your first sentence, technology has resulted in a new paradigm (tends to happen anytime a commodity is over priced for too long, something the peak oil guy failed to understand, there's plenty of oil for generations, but new technology will be needed to access it, which depends on higher prices for periods of time) but not your second. Demand is also going to dramatically increase as China and India continue to grow their middle classes / need a lot more oil. I think this will to a large extent offset the increased supply and better fuel economy impacts longer term.
    Two things here. First technology is a deflationary force, the tech cost goes down over time as its usage spreads and technology is refined. Many people expected Shale oil production to get a sever hit when prices dropped below $80. But see what happened? Now people talk about $60 oil as where Shale will be hit hard....

    Secondly, the growth of China is not going to be what it was. The effect of middle class there would be mainly on agriculture products as the consume more, as I discussed a few years back in another thread. Also energy efficiency, not just in cars, but on everything that consumes energy is already showing its effect. So I am not holding my breath for China or India coming to the rescue of energy markets.

    BTW, interestingly they are the main winner of this oil price war. They have bought oil with hand and foot and are building up strategic reserve similar to US. (http://www.bloomberg.com/news/2014-1...arks-boom.html) That will also dampen the effect of any major supply disruption in future. So, all in all, oil will remain in a much lower price range for a considerable amount of time.
    Last edited by FamilyMan; 26-11-2014 at 11:49 AM.

  79. #179
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    Marcel, you are correct that crude oil is a more easily transportable commodity than natural gas. Once at tidewater that is.

    However, the US currently prohibits large scale crude oil exports and Canada is not able to export its landlocked crude bitumen any place other than the US market. Until either of both of these change (likely years away), looming North American oil self-sufficiency could mean disconnecting from the OPEC cartel influenced global oil market.

  80. #180
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    Family Man, if no one is actually willing to commit to buying or selling a barrel of oil to be delivered ten years from now can they not just put any number there as the price?

  81. #181
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    Can someone tell me who actually pays world price for oil. I know oil producers must pay governments a royalty to take the oil from the ground but as for this world price thing, isn't it just a fake number anyway.

  82. #182

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    You guys are all splitting hairs. Oil prices are going to be volatile and with the thousands of large supply contracts out there, hedging, strategic reserves, currency fluctuations, hundreds of large independent and integrated producers, etc. you can expect at least some to do well to extremely well in any environment. Edmonton, and Edmontonians however face a much narrower range of outcomes as prices fluctuate. Traditionally over the past 70 years or so I'd say we've done very well in most periods however, the 1970s, 1980s and 1990s revealed how badly we can behave. Moreover, historically we have not been very successful at predicting the future, relying more on luck than anything else, so the challenge is acting intelligently and responsibly with that in mind.

  83. #183

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    Quote Originally Posted by SP59 View Post
    Family Man, if no one is actually willing to commit to buying or selling a barrel of oil to be delivered ten years from now can they not just put any number there as the price?
    Not sure who "they" refers to in your question, but to have a market price you need a buyer and a seller. In the link of CME I posted, you can actually see trading volume, if you are interested. These prices change of course as market participants digest new info as they are learned and thus why at least in theory markets act as a fair price discovery mechanism. There are a lot of theories and models on the "shape" of forward curve, that is whether future prices should be higher or lower than today's spot price and producers, consumers and speculators all hedge their positions or express their views of future via these financial instruments, among other available products.

  84. #184

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    Quote Originally Posted by Drumbones View Post
    Can someone tell me who actually pays world price for oil. I know oil producers must pay governments a royalty to take the oil from the ground but as for this world price thing, isn't it just a fake number anyway.
    These are benchmark prices. Their main purpose is to provide a reference point from which the actual prices (physical commodity to be delivered) are negotiated between buyers and sellers. There are many different blends of oil in each location, say in Mid East or North America. The buyer and seller negotiate a discount or a premium wrt the relevant benchmark, based on the quality of oil etc. But also note that the financial products, like the futures contracts, are based on these benchmarks and these financial products are used for hedging or speculation by market participants.
    Last edited by FamilyMan; 26-11-2014 at 09:07 PM.

  85. #185

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    Has anyone actually seen grocery prices go down in the supermarkets because oil is less to buy. You would think the savings on transportation would be passed down to the consumer, you would think.
    "The man who does not read has no advantage over the man who cannot read." –Mark Twain

  86. #186
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    Quote Originally Posted by FamilyMan View Post
    Quote Originally Posted by SP59 View Post
    Family Man, if no one is actually willing to commit to buying or selling a barrel of oil to be delivered ten years from now can they not just put any number there as the price?
    Not sure who "they" refers to in your question, but to have a market price you need a buyer and a seller. In the link of CME I posted, you can actually see trading volume, if you are interested. These prices change of course as market participants digest new info as they are learned and thus why at least in theory markets act as a fair price discovery mechanism. There are a lot of theories and models on the "shape" of forward curve, that is whether future prices should be higher or lower than today's spot price and producers, consumers and speculators all hedge their positions or express their views of future via these financial instruments, among other available products.
    The "they" would be whoever made the chart. In the link you posted the volume was zero for every month of the last five years it has posted. Which would leave me to speculate that no one has any idea what the price will be in the long term.

  87. #187

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    Quote Originally Posted by DefinatelyMaybe View Post
    Quote Originally Posted by DefinatelyMaybe View Post
    Alright people, tighten your seat belts and prepare for a wild ride.

    After both I creasing their oil production AND slashing prices in Asia, Saudies are now aggressively targeting European markets. I think we would have a couple of weeks before oil hits $60. Enjoy it while it lasts.

    http://online.wsj.com/articles/saudi...NewsCollection
    Ok, the $80 WTI price floor which resisted for a while, broke today...next stop $70..

    http://www.bloomberg.com/news/2014-1...-discount.html
    Hmmmm, we are almost there, hang in there...$70 floor also broke today, might come back by day end, but the path is cleared...
    Last edited by DefinatelyMaybe; 27-11-2014 at 10:03 AM.

  88. #188

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    Quote Originally Posted by SP59 View Post
    Quote Originally Posted by FamilyMan View Post
    Quote Originally Posted by SP59 View Post
    Family Man, if no one is actually willing to commit to buying or selling a barrel of oil to be delivered ten years from now can they not just put any number there as the price?
    Not sure who "they" refers to in your question, but to have a market price you need a buyer and a seller. In the link of CME I posted, you can actually see trading volume, if you are interested. These prices change of course as market participants digest new info as they are learned and thus why at least in theory markets act as a fair price discovery mechanism. There are a lot of theories and models on the "shape" of forward curve, that is whether future prices should be higher or lower than today's spot price and producers, consumers and speculators all hedge their positions or express their views of future via these financial instruments, among other available products.
    The "they" would be whoever made the chart. In the link you posted the volume was zero for every month of the last five years it has posted. Which would leave me to speculate that no one has any idea what the price will be in the long term.
    I tried to describe how things work, sorry if not clear enough for you. I just reiterate that professionals have many tools to form an opinion, and also mentioned that this opinion changes in light of new info. For instance it was clear to me, from a while ago, that this week we would see carnage in oil markets, today alone circa -6% drop in WTI prices as of few minutes ago....see this thread for example, post #23 from 5-11-2014: http://www.connect2edmonton.ca/forum...ad.php?t=34583

  89. #189

  90. #190

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    Quote Originally Posted by Gemini View Post
    Has anyone actually seen grocery prices go down in the supermarkets because oil is less to buy. You would think the savings on transportation would be passed down to the consumer, you would think.
    Oh, please don't be ridiculous, we are not living in China. We should all be happy corporates are pocketing the extra profit and not pass it through to customers. If your budget is squeezed, you can always go a little bit more in debt you know, all groceries now offer credit card that give you brownie points to borrow at say 19% APR. Enjoy!

  91. #191

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    This is hilarious: "Oil this low is not “business as usual” for Alberta".

    Sounds like the words of someone new to Alberta and new dealing with commodities, or at least a verifiable green-horn when it comes to oil. It's neat how they talk of tax increases when private sector starts to suffer. Isn't that generally seen as suggesting that we'll kick the economy when it's down?
    Braid: PCs use OPEC to build case for possible tax hike
    DON BRAID, CALGARY HERALD, November 27, 2014

    "The message has been pounded home with a public relations jackhammer since Prentice first broached it Nov. 15. Oil this low is not “business as usual” for Alberta, he keeps saying."
    ...
    "He wants the possibility of higher taxes widely understood, so there can be no claims later that hikes to fees and taxes were a surprise."

    http://calgaryherald.com/news/politi...sible-tax-hike



    ...And talk of increases not being a surprise - well, that talk should have been made when oil was around $100 barrel, not as a panicked, knee-jerk reaction to tumbling oil prices. - - - - - - - - Were's the plan?





    ~
    Last edited by KC; 27-11-2014 at 01:03 PM.

  92. #192

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    ^ I like dark humor, but only when it is intentional...

    It is just sad how many time we repeat the same mistakes....just a few months back we were all patting each other on the back for how strong our economy is, how many people are moving into this province, how we are about to attract companies from Quebec and Ontario with our "low tax" etc...

    Suddenly, people migrating to Alberta have become a double-edge sword (we have to pay for the infrastructure, right?), we are about to raise taxes and so on....what a difference a few short months make....

  93. #193
    C2E Stole my Heart!!!!
    Join Date
    Dec 2009
    Location
    Downtown Edmonton
    Posts
    9,553

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    I don't know if they're preparing the way for tax increases necessarily. What it sounds like to me is that Prentice, long term, is intending on bringing back the Heritage Fund, or something similar to it, as the primary destination for some or most energy royalties, in order to stabilize government revenues and spending. Which is nothing but a good thing. Moahunter's equalization paranoia notwithstanding.

  94. #194

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    Rinse, rather, repeat.


  95. #195

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    ^ Yeah, that's a classic!

    Russian oil oligarch: '$60 and below is possible'
    Reuters

    "We expect that a fall in the price to $60 and below is possible, but only during the first half, or rather by the end of the first half (of next year),'' Sechin told the Die Presse newspaper."

    http://www.cnbc.com/id/102222703
    Last edited by KC; 27-11-2014 at 11:26 PM.

  96. #196
    C2E Hard Core Contributor
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    Crawford Plains, Millwoods since 1985
    Posts
    2,687

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    How did our province possibly survive the first 50 years? Or, for that matter, Canada?

  97. #197
    C2E Hard Core Contributor
    Join Date
    Jan 2008
    Location
    Edmonton
    Posts
    2,384

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    ^You really don't have to go back that far. Between 1983 and 1999, WTI never went above $30US/barrel, except for a few months during the first Gulf War. For most of that period, oil prices were much lower than that. As recently as February 1999, WTI was $12US/barrel.

    Historical prices here: http://www.indexmundi.com/commoditie...ate&months=360
    Last edited by East McCauley; 28-11-2014 at 08:48 AM.

  98. #198

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    ^ and ^^: well, here is another classic diagram:


    Source:http://www.thefinancialphilosopher.c...k-to-hope.html

    I think we are between "denial" and "fear", right now....

    "Survive" is the correct word, it is not like we will die, just will go through a bit of hardship. People will get layoff, less money going around meaning services, restaurants etc will feel the pinch, house prices start to tumble and you know, eventually, we will see the light at the end of the tunnel. Will we do anything differently this time around? If history is any guide, we will have this same discussion 10-15 years down the road again.

  99. #199

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    If it matters to anyone...

    Here Are The Breakeven Oil Prices For Every Drilling Project In The World
    MYLES UDLAND, nov 28, 2014

    http://www.businessinsider.com/citi-...prices-2014-11

  100. #200

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    Alberta vows to get off the ‘oil train’ yet again. But it won’t.
    By Kelly McParland | November 27, 2014

    http://fullcomment.nationalpost.com/...#__federated=1

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