OK, I'm not an economic guru, or an energy industry guru... and I didn't stay at a Holiday Inn Express last night. What follows are just my own opinions.
All previous comments considered... the American economy literally lives on oil. Like it or not, oil has been the lifeblood of our economy for the last century. Our economy is very complex, and oil runs all through it... Not only for energy, but also for petrochemicals that are used in just about any product you can think of. Oil is so intertwined in our economy, and the impacts of its price are so far-reaching - it's difficult for anyone to predict what will happen in the next 6 months, year, three years, five years, or longer.
Cheap oil has been good for us in the past, but we must remember that OPEC still calls the shots because their oil is relatively clean and easy to get out of the ground. Now, I just read today that the Saudi fields have been predicted to run dry by 2030 or so. Don't know if that's true - but even if it is, they have a good 15 years to hold the U.S. economy by the short curlies... and they seem to have every intention of doing so. Even when we pump our own oil aggressively, it's not price competitve with Saudi oil because of the cost of getting it extracted and available. We are damned if we do and damned if we don't, it would appear.
And yes, I do think that oil prices are putting intense pressure on Russia. We'll have to see how that shakes out... but I think it will have a short-term destabilizing effect on the energy markets, and also on Russia's international behavior. Kinda scary with Putin at the helm there.
I said before, and I'll repeat... I think its time to implement oil price protection to protect US producers. Don't think that we are "being screwed" by Big Oil. Tech companies like Apple, Mocrosoft, Google, etc. make 35% to 50% profit on their goods - but no one seems to complain. Big Oil has historically made only about 7% to 10% profit, but everyone goes into a hissy fit about it. It's ludicrous. And no, I am not in the energy business - so I have no dog in that hunt.
DesertHOG asked about investing in energy. I personally would not at this time, due to the instability and unpredictability of the energy markets right now. I was considering an investment in Liquified Natural Gas (LNG) terminal operators... but with the precipitous drop in oil prices, the market for LNG will almost certainly be negatively affected.
Ditto renewables... solar, wind, geothermal, etc. I think this market will continue to grow - and that's a good thing - but a large part of the cost justification for renewables is the price of oil. Renewables have HUGE upfront capital investment requirements, and it's much more difficult to justify these investments when oil is at $50/bbl. Heck, oil could conceivably drop down into the 20s before price stabilization.
A related but not yet mentioned topic is electric cars. With oil cheap, electric cars make little sense. Frankly, I don't think they have ever made much sense, because electricity is a derived energy source. It must be generated by using some other fuel... in the US, mostly coal in the east and natural gas in the west (albeit with increasing wind power in the west). Since the current administration HATES coal and has had the EPA trying to put the coal business out of business, I don't think that burning more coal (or even natural gas) to produce electricity that is then used to charge electric cars makes much sense anymore - if it ever did in the first place.
Finally, in regard to "orchestration" of the recent oil price drop... that's anyone's guess. Let's just say that I wouldn't be surprised at much of ANYTHING anymore...
Ken
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Topic: Gas Prices Going Down in Your Town (Read 22202 times)