Due To The Fall In Oil Prices, Saudi Arabia Is Now Running A $39 Billi

[donganaaK]

 

 

man whats this spamming .... write something productive or take it easy .... atleast dont do it in my threads

[arshad]

man whats this spamming .... write something productive or take it easy .... atleast dont do it in my threads

 

 

Thread lanni Gabbu lepadu.

 

Vadiki nuvvu nenu ani tedallevu. Sarvam Spam mayam.

[vaade_veedu]

Aithe prapancham antha Sharia law pettabotunnara ?

[donganaaK]

Thread lanni Gabbu lepadu.

 

Vadiki nuvvu nenu ani tedallevu. Sarvam Spam mayam.

 

lol atleast ippudu aapinattu unnadu inka ...

[arshad]

lol atleast ippudu aapinattu unnadu inka ...

 

4K complete chesadu. Last post of the day ani break vesadu.

 

Malli repu start emo.

[arshad]

Aithe prapancham antha Sharia law pettabotunnara ?

 

 

Prapancham gurinchi telvadu bayyo

[mukunda1]

Oil Firms’ Predicament: Who Should Cut Output? Companies Act Against Collective Interest by Waiting for Rivals to Turn Off Tap First

 

 

If the global glut of oil that has sent crude prices plunging has come largely from the U.S., why aren’t American energy companies turning off the tap?

The answer can largely be explained by simple game theory. In short, even though it’s in the collective interest of the country’s oil producers to cut production, the interests of any of those producers is the opposite. Each one of them is waiting for a rival to make the change.

This behavior—hoping someone else will cut production so you don’t have to—is a classic example of the “prisoner’s dilemma,” says Roger McCain, a professor in Drexel University’s economics department.

“If you can’t coordinate, you may as well go for what you can get, and make decisions on the basis of self-serving rationality,” he says.

U.S. law bars companies from acting in concert to influence prices, so an organized response from the oil industry is all but impossible, experts say.

“If there was ever a time for cooperation, it would be now,” said Fred Julander, president of Denver-based Julander Energy, who has been in the oil business for more than 40 years. “But I don’t see that happening.”

U.S. oil production has grown by 1.1 million barrels a day just in the last 12 months, according to federal data, and is over 9.1 million daily barrels. And there is no sign of a slowdown yet. Federal data show that at the end of November U.S. oil companies were pumping 641,000 more barrels a day than they were at the end of June, after crude prices peaked.

Estimates of the sheer amount of excess oil sloshing around the globe ranges as high as Barclays PLC’s 1.4 million barrels a day; and as low as 600,000 barrels a day, according to Chris Lafakis, senior economist at Moody’s Analytics. Growing demand for crude won’t absorb the glut and push prices up, he said, so “most of the adjustment will have to come from lower supply.”

For nearly three decades, when oil prices rose too high, or fell too low, Saudi Arabia adjusted its output to stabilize the market. Now the Kingdom says it is done being the world’s so-called “swing producer.” Russia, in the midst of an oil-driven economic crisis, can’t step into that role, and other oil-producing countries say that the U.S. caused the problem and should fix it.

But for the U.S., reducing oil production by a million barrels a day would require an enormous shift. If the cuts were shared equally, every U.S. producer would have to trim 11% of its output. Or Exxon Mobil Corp. ,Chevron Corp. and EOG Resources Inc. would all have to turn off their U.S. production.

Dozens of small U.S. companies could close in all their oil wells at once without really making a dent. But they probably won’t, until their funding dries up, says Jim Burkhard, vice president of global oil research for IHS Corp.

 

Some North American companies have said they plan to cut their capital spending next year and dial back on exploring for new oil. But at the same time, they say their oil output will rise. Continental Resources Inc. this week announced a 41% cut to its capital spending next year. Even so, its annual oil and natural gas output will increase by 16% to 20% next year, said Continental, which is a major crude-oil producer in North Dakota and Oklahoma.

Other companies are waiting until early next year to disclose spending plans. Pioneer Natural Resources Co. President and Chief Operating Officer Tim Dove said earlier this month the company hadn’t issued any guidance on production or spending for 2015—and likely wouldn’t until February. Rather than focusing on drilling fewer wells, he said, “We are seeking out cost reductions from all our suppliers.”

Cutting back on oil production would be risky for companies, which could lose market share, not to mention the cash they need to pay off debt and drill new wells. If they drop rigs and crews, companies run the risk of not being able to ramp up when crude prices improve, said Daniel Katzenberg, an analyst at Robert W. Baird & Co. “You want to wait as long as possible to let them go because you don’t know if you’ll get them back,” he said.

Eric Otto describes it using a theory called the “tragedy of the commons,” in which everyone who has access to a pasture grazes as many cattle there as possible—a rational decision that leads to the field being overgrazed and ruined. An analyst at CLSA Americas LLC, the North American arm of a Hong Kong-based brokerage firm, Mr. Otto says that U.S. oil companies with a lot of debt, oversized spending plans, and little liquidity are locked in a game of survival, each vying to be the last to cut back.

“If you eventually have to cut, you want to be the last,” he says.

[mukunda1]

The politics of fluid oil prices

The last time the world witnessed such a steep and sustained drop in oil prices — from 1986 to 1999 — it had some profound political consequences for oil-dependent states and those who depended on their largesse. The Soviet empire collapsed; Iran elected a reformist president; Iraq invaded Kuwait; and, Yasser Arafat, having lost his Soviet backer and Arab bankers, recognised Israel — to name but a few. Admittedly, other factors were involved in all these events. But in each case, steep drops in direct or indirect oil revenues played a big role.

 

A prolonged drop in oil prices will impact Algeria, Iran and Arab Gulf states, where ageing regimes have used high oil prices to increase government salaries to buy quiet from their people during the Arab Spring. Also, in an age when machines and software are ensuring that average is over for workers in developed countries and everyone needs to be upgrading their skills, what happens to the developing Arab states and Iran, who have used oil money to mask their deficits in knowledge, education and women’s empowerment? Egypt’s military-led government is highly in need of Arab oil money to get through its crisis. A bit of good news: the Islamic State, which depends on oil smuggling, will fail at governing even faster than it already has.

 

Turkey’s increasingly tyrannical president, Recep Tayyip Erdogan, who has been arresting domestic opponents, is looking like “Vladimir Putin Jr”. Erdogan is a tragic figure because he did much to build Turkey’s economy into a powerhouse. But today, according to The Financial Times, Turkey now “needs more than US$200 billion (RM699 billion) of foreign financing a year, more than a quarter of gross domestic product, to maintain its current level of growth”. There will be less Arab and Russian oil money for that and, last week, with Erdogan being criticised by the European Union (a big source of investment income) for arresting his opponents, the Turkish lira hit a low against the dollar. Watch that space.

 

High oil prices covered many sins and fostered many sins. If they stay low again for long, a lot of leaders will have to pay retail for their crazy politics, not wholesale. The political and geopolitical fallouts will be varied, good and bad, but fallout aplenty there will be.

[donganaaK]

The politics of fluid oil prices

 

 

very interesting ...

[mukunda1]

very interesting ...

 

yah thats the pattern..see there was an article in NYT yesterday...US is doing this intentionally to teach everyone a lesson.

[mukunda1]

Oil’s Swift Fall Raises Fortunes of U.S. Abroad

nytimes

 

Hard-hit anti-American oil producers have blamed foreign machinations for their woes, suggesting that Washington, in cahoots with Saudi Arabia, has deliberately driven down prices.

This view is particularly strong in Russia, where former K.G.B. agents close to Mr. Putin have long believed that Washington engineered the collapse of the Soviet Union by getting Saudi Arabia to increase oil output, driving down prices and thus starving Moscow of revenue.

In many ways, the recent price fall really is the United States’ work, flowing to a large extent from a surge in American oil production through the development of alternative sources like shale.

By offsetting declines in conventional oil production, increases in shale oil output have allowed overall American crude oil production to rise to an average of about nine million barrels a day from five million a day in 2008, according to the United States Energy Information Administration. That four-million-barrel increase is more than either Iraq or Iran, the second- and third-largest OPEC producers after Saudi Arabia, produces each day, and it has put strong downward pressure on world prices.

[donganaaK]

yah thats the pattern..see there was an article in NYT yesterday...US is doing this intentionally to teach everyone a lesson.

 

cool man .... andariki kalipi okesari punch ga ... but y is Saudi arabia not backing off ?

 

Oil’s Swift Fall Raises Fortunes of U.S. Abroad

nytimes

 

 

yeah ive read this article some time ago..

[mukunda1]

cool man .... andariki kalipi okesari punch ga ... but y is Saudi arabia not backing off ?

 

 

yeah ive read this article some time ago..

 

saudi wants to keep its market share forever....now US companies are trying to grab saudi market share...thats the reason...but see the economics of US oil companies are different than saudi companies.

 

US companies generally starts fracking as funded project by capitol companies....as the funding goes dried up they cut producing...and they capitol companies orders us companies to store the oil to be sold in future........so they dont lose money.......thats the way it works with US

 

saudi companies almost invest themselves in any fracking. that's y they cant cut production otherwise they lose market share n future contracts.

[President]

cool man .... andariki kalipi okesari punch ga ... but y is Saudi arabia not backing off ?

 

 

yeah ive read this article some time ago..

may be Saudi Arabia is waiting for Iran to backoff on nuclear stuff

[CNR]

Saudi arabia defecit.. They have plenty of budget, valu kavalnte oil prices penchochoo kuda by stopping oil production but they want to do it