News1 min ago
Lower Fuel Prices Not Such Good News For The Snp ?!
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It looks as if petrol may drop below £1 a litre early next year. While this is
good news for us all, where would it have left the Scots, if there had been a
Yes vote recently ? Their whole case for independence was based on being able to rely on high oil prices for their oil. Is the financial and business case now in tatters ?
It looks as if petrol may drop below £1 a litre early next year. While this is
good news for us all, where would it have left the Scots, if there had been a
Yes vote recently ? Their whole case for independence was based on being able to rely on high oil prices for their oil. Is the financial and business case now in tatters ?
Answers
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Prices are low because most of those in OPEC need to maintain income to balance their national accounts (Venezuela, for example), and those that don't, appear to want to undermine USA fracking. Namely Saudi. At $60 a barrel, the new fracking companies won't last long before going bust. USA oil output is close to that of Saudi right now.
Saudis may also be unimpressed by some aspects of Russian foreign policy.
Saudis may also be unimpressed by some aspects of Russian foreign policy.
One would hope the financial case wasn't dependent on a limited resource anyway. All rather moot after the 'no' vote anyhow.
No idea what prices fluctuate. Is there a surplus in global stores at present ? Has one or two places desperate for cash started a price 'war' ? Has any new suppliers come on board ? Maybe the Arab countries are cheesed off with Putin (or the Scots) ?
No idea what prices fluctuate. Is there a surplus in global stores at present ? Has one or two places desperate for cash started a price 'war' ? Has any new suppliers come on board ? Maybe the Arab countries are cheesed off with Putin (or the Scots) ?
Exactly what I was going to ask.
One main reason for low prices is the much increased production of oil / gas in the USA from 'fracking' and shale oil. This is set to increase further so oil prices are going to stay low for a while yet. There is also a huge new oil field off the North coast of Australia coming into production.
One main reason for low prices is the much increased production of oil / gas in the USA from 'fracking' and shale oil. This is set to increase further so oil prices are going to stay low for a while yet. There is also a huge new oil field off the North coast of Australia coming into production.
Worse news for Osborne. Fuel Duty brings in £30billion to the Exchequer. If the price drops by half, he rakes in billions less. He has also given the oil companies a £halfbillion tax consession.
The case for Scottish Independence was never based on the price of oil. It is a deminishing commodity and will eventually run out.
The case for Scottish Independence was never based on the price of oil. It is a deminishing commodity and will eventually run out.
Yes the main reason for the low prices is the so-called US "oil boom", lower demand in some Asian countries as governments there cut subsidies, and the fact that OPEC has not got its act together to cut production as it usually does in situations like this. In fact oil exports from Libya have increased sooner than expected which adds to the woes of OPEC members hoping to pull the usual stunt.
And, of course, pessimistic economic forecasts for Europe generally.
Add all that up and it doesn't look like the price will rise any time soon. Some argue it may never do so to its former levels.
Of course to build an economy based on the export of one product, even something like oil, is hugely risky, something Russia - which has been a glorified oil refinery for the past few years, and has been dependent on high oil prices even going back to the days of the Soviet Union, is now finding. They are doomed, that should be a lesson for Scotland, although the Scots have whisky, which tastes a lot better than vodka :-)
And, of course, pessimistic economic forecasts for Europe generally.
Add all that up and it doesn't look like the price will rise any time soon. Some argue it may never do so to its former levels.
Of course to build an economy based on the export of one product, even something like oil, is hugely risky, something Russia - which has been a glorified oil refinery for the past few years, and has been dependent on high oil prices even going back to the days of the Soviet Union, is now finding. They are doomed, that should be a lesson for Scotland, although the Scots have whisky, which tastes a lot better than vodka :-)
The price of oil has gone down because of over production.
The US has increase production by Fracking, so it no longer needs as much Saudi oil.
Instead of lowering production, the Arabs are still producing the same. Which means there is over supply and therefore the price drops.
The reason the Arabs want to drive down the price is to make Fracking uneconomical. Fracking needs oil to sell at $80 a barrel to be a via operation. Today it is less than $60 a barrel. Which means Fracked oil is not viable. When they go bankrupt, the Arabs will engineer the price up again.
The US has increase production by Fracking, so it no longer needs as much Saudi oil.
Instead of lowering production, the Arabs are still producing the same. Which means there is over supply and therefore the price drops.
The reason the Arabs want to drive down the price is to make Fracking uneconomical. Fracking needs oil to sell at $80 a barrel to be a via operation. Today it is less than $60 a barrel. Which means Fracked oil is not viable. When they go bankrupt, the Arabs will engineer the price up again.
I'm not an expert in these things but I doubt if the non-viability of fracking per se is a factor. Certainly not in the foreseeable future. A further point as far as I know is that the US could export more oil, as well as having to import less crude - so the issue could get a lot worse/better depending on who you are
^^ It's a bit more complicated than that
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Saudi is increasing production mainly to harm Russia as a punishment for support for Syria and their supply of weapons to Iran.
Saudi can afford low prices for oil as it is an established producer with all the reserves , infrastructure and capacity in place. Saudi can increase production to over 25 million barrels per day just by 'turning up the taps' That was the production level when I worked there in the 1980's.
Saudi has more proven oil reserves than the whole of the rest of the world put together (and $750 Billion in the bank)
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Saudi is increasing production mainly to harm Russia as a punishment for support for Syria and their supply of weapons to Iran.
Saudi can afford low prices for oil as it is an established producer with all the reserves , infrastructure and capacity in place. Saudi can increase production to over 25 million barrels per day just by 'turning up the taps' That was the production level when I worked there in the 1980's.
Saudi has more proven oil reserves than the whole of the rest of the world put together (and $750 Billion in the bank)
this article in Forbes isn't convinced by the shale oil argument
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It also suggests that it may indirectly provide impetus for Isis. (But it doesn't actually answer the question.)
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It also suggests that it may indirectly provide impetus for Isis. (But it doesn't actually answer the question.)
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