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I just read a news article on Fox news that said that Merrill Lynch is predicting that oil will fall to $25 a barrel next year. The article further commented that Gulf Oil commented that oil could drop to $20 a barrel and gasoline to under $1 a barrel.


This, to me, is great news as I prefer to drive a larger vehicle and really don’t want to take a chance on a hybrid or, God forbid, an electric vehicle.


Also, I got to believe that low oil process will do more to revive the economy than any government stimulus package.


At today’s low rates, we should cram full the national strategic oil reserve.


Also, the government needs to back off some of the environmentalist’s desires for reduced carbon emissions. If China, India, Brazil and other nations have weaker standards than we do, how can the USA compete globally?


Like Walt Kelly’s Pogo said, “We have met the enemy and he is us!”


Ed Ward
 

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The cartel is currently calling for production cutbacks to pre;vent your scenario.

It would be nice, but I don't think it will happen.

Especially with all the new money being printed and the resultant inflation.

HM
 

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Beware when many predict the direction of a commodity price. You'll likely see it go in the opposite direction!!
 

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Don't count on it. The cartel will cut production down to suit there needs. The towel heads were living large when oil rose above $125 a barrel and thought it would rise to $200 a barrel. They started alot of expensive projects that are now on hold. Thank god we don't have a food cartel.
 

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I am starting to believe we are in a position now to affect the global market, especially OPEC. Imagine, with oil below $50 a barrel, if we could cut our driving by 10-20%? We could effectively glut the market with oil.

I know it's a pipe dream. If all the single-person-per-car commuters would car pool one day per week, how much gas consumption would that cut?

Danny
 

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You could also talk your boss in telecommuting. We should introduce, and promote, a tax cut for every company that has a miniumum number of employees (say, 40%), that telecommute. That would save a ton of gas.

Many jobs can be done via the internet, and there are several ways to insure that the employee is working during working hours.
 

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There are too many variables floating around out there to make that kind of prediction with confidence.

If you understand the principle of supply and demand, then start off with the fact that a 2% change in the world supply will halve or double the price of oil, depending on which way the volume of oil is going.

World demand has dropped more than 2% in the last year, due mainly to cutbacks in the US (4-5%) and in Europe (2-6%, depending on the country). Third world countries are cutting back but the net effect is that their usage is not increasing as fast as before. So, overall, let's say demand has dropped.

Against that, we are seeing declining production (not cutbacks) from some of the export countries. Venezuala, Mexico, and Canada, big suppliers to the US, are high on the list. Additionally, in November OPEC announced they want to take 2% of the market. So overall, let's say supply is dropping. Tie score.

Globally, as oil slid below about $75/bbl, world exploration and development began to slow, so that is going to have an effect on both current and future supply. If oil goes much below $50, the privately owned oil companies will begin shutting things down hard. State-owned oil will persist longer. Really cheap oil may be good if your focus is to drive huge vehicles, but it will be at the expense of a domestic industry and the cost will be increased reliance on foreign oil

Another thing to remember is that much of the export oil is state-owned and oil is the linch-pin of their economy. Once oil goes below a certain point their economy is in the dumper. Venezuala needs about $90 to balance its budget, Russia (the world's largest producer) about $70, and Saudi Arabia (second largest producer) about $55. It will be in their best interest to see that the price of oil goes back up.
 

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There are a few Countrys that have bet 125-200.00 $ oil was here to stay. Those same folks are about to learn the lesson of not licking your chickens, before they'er in your pot.

Kenneth
 
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