Oil Prices

[17to85]

 

 

Yikes, that's a lot still. Must be just a prairie thing right now. Seems too good to be true though. They'll probably jack up the prices again in no time. That's what happened a several years ago iirc. Prices were like 70¢, and then they went all the way up to $1.40.

OIl is below 70 cents a barrel and still falling because there is an over supply globally, prices won't get jacked up until the price comes back up as supply gets cut and that will take some time to happen. Companies don't just shut down their production instantly. OPEC has already said they won't cut supply so the first to be cut will be American oil shale production, if a low price persists then you'll see oil sands production cut, but that would require several years to really see a big impact, too much investment already to just walk away from because prices are down.

Of course you mean 70 bucks. However OPEC has only said they are not cutting NOW. The higher cost producers within OPEC are outraged at that decision. OPEC made a decision but is far from unanimous. They have to revisit this issue in a few months as well. There is way more oil in the ground than just American shale that could be curtailed. What happens first is the capital drilling programs will be curtailed before any current producing rig is shut off. This stuff happens all the time in the resource industry. As an example Mines produce all the time during a dip in the Underlying commodity.

 

I know how the oil industry works, I'm part of it, I work in the production side of things. The reason I say that it's American oil shale will be the first cut is because it's the most cost and energy intensive kind of oil to produce and it's the newest player. The way they are getting a lot of that out of the ground it's pretty straightforward to postpone production there. There will be lots of production cut, but a lot of it depends on the company drilling it and the complexity of the play. 

 

Really this all came about because the United States has become more self sufficient and less reliant on mid eat oil. OPEC doesn't want their global market share impacted so they're willing to take on lower prices to drive some of the production from the higher investment sources down. That means Oil shales are first on the chopping block. 

[17to85]

why do people even bring up the word conspiracy> There's no conspiracy at all, it's pretty ******* transparent, it's just various entities trying to protect their market share. 

[tacklewasher]

I wish for double digit gas prices.  It's still $1.17 here in the lower mainland, where there are extra taxes so drivers can pay for the Skytrain and buses they don't use.

We are in the same ballpark and don't have to pay for Skytrain or busses etc.

 

Of course, my commute is 5 minutes each way so it really doesn't hurt me that much.

[tacklewasher]

why do people even bring up the word conspiracy> There's no conspiracy at all, it's pretty ******* transparent, it's just various entities trying to protect their market share. 

 

There are kinda 2 pictures here. There is the producers, and what they get for a barrel, then there is what the gas station charges. The 2 are only loosley connected and there sure seems to be some collusion amongst the retailers. That's what most people complain about. The lag from the drop in oil prices to the drop at the pump is not offset by how quickly pump prices move when the barrel price goes up.

[Rod Black]

why do people even bring up the word conspiracy> There's no conspiracy at all, it's pretty ******* transparent, it's just various entities trying to protect their market share.

 

There are kinda 2 pictures here. There is the producers, and what they get for a barrel, then there is what the gas station charges. The 2 are only loosley connected and there sure seems to be some collusion amongst the retailers. That's what most people complain about. The lag from the drop in oil prices to the drop at the pump is not offset by how quickly pump prices move when the barrel price goes up.

Your correct that the collusion is what most people talk about. But collusion is such a strong word when what folks witness is the result of competition and free market activity.

[Rod Black]

Yikes, that's a lot still. Must be just a prairie thing right now. Seems too good to be true though. They'll probably jack up the prices again in no time. That's what happened a several years ago iirc. Prices were like 70¢, and then they went all the way up to $1.40.

OIl is below 70 cents a barrel and still falling because there is an over supply globally, prices won't get jacked up until the price comes back up as supply gets cut and that will take some time to happen. Companies don't just shut down their production instantly. OPEC has already said they won't cut supply so the first to be cut will be American oil shale production, if a low price persists then you'll see oil sands production cut, but that would require several years to really see a big impact, too much investment already to just walk away from because prices are down.

Of course you mean 70 bucks. However OPEC has only said they are not cutting NOW. The higher cost producers within OPEC are outraged at that decision. OPEC made a decision but is far from unanimous. They have to revisit this issue in a few months as well. There is way more oil in the ground than just American shale that could be curtailed. What happens first is the capital drilling programs will be curtailed before any current producing rig is shut off. This stuff happens all the time in the resource industry. As an example Mines produce all the time during a dip in the Underlying commodity.

I know how the oil industry works, I'm part of it, I work in the production side of things. The reason I say that it's American oil shale will be the first cut is because it's the most cost and energy intensive kind of oil to produce and it's the newest player. The way they are getting a lot of that out of the ground it's pretty straightforward to postpone production there. There will be lots of production cut, but a lot of it depends on the company drilling it and the complexity of the play. 

 

Really this all came about because the United States has become more self sufficient and less reliant on mid eat oil. OPEC doesn't want their global market share impacted so they're willing to take on lower prices to drive some of the production from the higher investment sources down. That means Oil shales are first on the chopping block.

It is most accurate to say that it depends on the company drilling it, and the complexity of the play. If broken out to finding costs and lifting costs of oil, the U.S. energy Information Administration may not be specific enough. But what comes is lifting produces income, and finding is a must do for continued growth. http://www.eia.gov/tools/faqs/faq.cfm?id=367&t=6

[tacklewasher]

 

 

why do people even bring up the word conspiracy> There's no conspiracy at all, it's pretty ******* transparent, it's just various entities trying to protect their market share.

 

There are kinda 2 pictures here. There is the producers, and what they get for a barrel, then there is what the gas station charges. The 2 are only loosley connected and there sure seems to be some collusion amongst the retailers. That's what most people complain about. The lag from the drop in oil prices to the drop at the pump is not offset by how quickly pump prices move when the barrel price goes up.

Your correct that the collusion is what most people talk about. But collusion is such a strong word when what folks witness is the result of competition and free market activity.

 

Still don't buy it. At least not locally. Price fixing at the pump still seems to be what is going on with retail prices moving pretty slowly. We don't have an aggressive retailer in Kelowna like I've seen in the Lower Mainland and our prices reflect that.

[iso_55]

I wish for double digit gas prices.  It's still $1.17 here in the lower mainland, where there are extra taxes so drivers can pay for the Skytrain and buses they don't use.

Crazy that people in the Lower Mainland allowed the politicians to do that.

[Rod Black]

why do people even bring up the word conspiracy> There's no conspiracy at all, it's pretty ******* transparent, it's just various entities trying to protect their market share.

 

There are kinda 2 pictures here. There is the producers, and what they get for a barrel, then there is what the gas station charges. The 2 are only loosley connected and there sure seems to be some collusion amongst the retailers. That's what most people complain about. The lag from the drop in oil prices to the drop at the pump is not offset by how quickly pump prices move when the barrel price goes up.

Your correct that the collusion is what most people talk about. But collusion is such a strong word when what folks witness is the result of competition and free market activity.

Still don't buy it. At least not locally. Price fixing at the pump still seems to be what is going on with retail prices moving pretty slowly. We don't have an aggressive retailer in Kelowna like I've seen in the Lower Mainland and our prices reflect that.

Not buying it is certainly your prerogative. In fact, most folks agree with you.

[17to85]

 

why do people even bring up the word conspiracy> There's no conspiracy at all, it's pretty ******* transparent, it's just various entities trying to protect their market share. 

 

There are kinda 2 pictures here. There is the producers, and what they get for a barrel, then there is what the gas station charges. The 2 are only loosley connected and there sure seems to be some collusion amongst the retailers. That's what most people complain about. The lag from the drop in oil prices to the drop at the pump is not offset by how quickly pump prices move when the barrel price goes up.

 

Gasoline and crude oil are not the same thing that's the biggest thing to keep in mind. Gasoline is a product of refining oil, the oil is paid for before the gas is sold that is why there is a lag between the price of oil dropping and the price of gas dropping. Yeah retailers will keep prices in line with each other but that's not a conspiracy, just setting a price point at what the market will pay. 

[blueandgoldguy]

Yikes, that's a lot still. Must be just a prairie thing right now. Seems too good to be true though. They'll probably jack up the prices again in no time. That's what happened a several years ago iirc. Prices were like 70¢, and then they went all the way up to $1.40.

Did you read some of the posts above yours?  I could be wrong, but your post seems to imply gas prices are rigged.

[Fraser]

As far as I understand it, there are flat taxes on gas that do not change with input prices. So if oil goes down, the tax keeps prices from going down porportiantly

[blueandgoldguy]

We sure don't seem to have the local gas wars among the local gas stations like we used to prior to the the year 2000.

[Noeller]

Fwiw, filled up at 88.9 tonight at Costco in Red Deer. Love....

[Mark F]

Norway which has oil, has put a lot of revenue from oil into a government fund, value is close to a trillion dollars.

[Fraser]

Bit of a rout on today for oil stocks with it at 65 a barrel now.

[The Unknown Poster]

I think people see collusion because different companies raise prices at the exact same amount at the exact same time.

 

I always found (and this could be my imagination) that when oil prices are reported to be lowering, we dont see an immediate lowering of gas prices and the explanation is that the supply was bought at the higher price so it will take down to reflect lower at the pumps.  But when the oil price goes up, we seem to see a pretty immediate raising of gas prices rather than waiting for supply to work its way through.  I also cringe everytime I see media report "so-and-so expert says expect higher gas prices" because I see it as conditioning the public so when they price jumps everyone shrugs and says 'well they did tell is this would happen'

[Mark F]

Bit of a rout on today for oil stocks with it at 65 a barrel now.

 

 

what do you think the odds are that the saudis are making back whatever they lose per barrel, by betting on the rout in oil stocks.

[Rod Black]

Bit of a rout on today for oil stocks with it at 65 a barrel now.

 

 

what do you think the odds are that the saudis are making back whatever they lose per barrel, by betting on the rout in oil stocks.

Interesting theory, mark F.

Fraser, with the benefit of 9 hours after your post, looks like oil is opening the day in Asia at 62.25. Could be capitulation. High volume today in the North American markets, but not very huge volumes. Would expect huge volume to coincide with a hammer to signal a bottom.

[iso_55]

Saudis want to shut down all oillsands & shale gas production & explorations so they (OPEC) can control the price like they used to. We'll see.

[Fraser]

Bit of a rout on today for oil stocks with it at 65 a barrel now.

what do you think the odds are that the saudis are making back whatever they lose per barrel, by betting on the rout in oil stocks.

Interesting theory, mark F.

Fraser, with the benefit of 9 hours after your post, looks like oil is opening the day in Asia at 62.25. Could be capitulation. High volume today in the North American markets, but not very huge volumes. Would expect huge volume to coincide with a hammer to signal a bottom.

I don't think we are at capitulation. If they are going to put a bunch of long term investments out of business it's going to take a prolonged period of low prices. I think there is still some pain to be felt. Oil nipped at 40 bucks in 2008 and that was just demand/fear based. Over supply, slowdown in Asia, Europe never really got back on the rails. Should be interesting.

I wouldn't be surprised if OPEC hedged things before they announced a supply cut wasn't coming.

[Fraser]

Down 3.00 to 61 TSX down 10% from it's peak, Any guesses on this being capitlation Rod Black? Personally I'd ratehr ty to catch a falling knife.

Also BOC souding the alarm that Housing prices are quite elevated, at risk to be corrected by slowing ecomony due to falling oil prices and a slowdown in asia.

[Rod Black]

Fraser. The volume on oil stocks doesn't appear to be sending any telling signals, indicating capitulation. In fact, the EIA oil inventory report shows a significant increase as opposed to a consensus decrease. That indicator might suggest that your theory is valid on this dive in prices is based on fundamentals, supply, rather than traders doing what traders do.

So, is the federal tax value per litre of gas a fixed cent rate or a percentage rate?

[Fraser]

Fraser. The volume on oil stocks doesn't appear to be sending any telling signals, indicating capitulation. In fact, the EIA oil inventory report shows a significant increase as opposed to a consensus decrease. That indicator might suggest that your theory is valid on this dive in prices is based on fundamentals, supply, rather than traders doing what traders do.

So, is the federal tax value per litre of gas a fixed cent rate or a percentage rate?

according to this http://retail.petro-canada.ca/en/fuelsavings/2139.aspx 10 cents to the feds, 14 to the province, a flat tax regardless of price. Naturally, gst floats.

With the TSX falling below 14K on pretty pedestrian volume, I wouldn't be surprised to see it test support at 12 or 11.5 in the next few months.

[Rod Black]

Fraser. The volume on oil stocks doesn't appear to be sending any telling signals, indicating capitulation. In fact, the EIA oil inventory report shows a significant increase as opposed to a consensus decrease. That indicator might suggest that your theory is valid on this dive in prices is based on fundamentals, supply, rather than traders doing what traders do.

So, is the federal tax value per litre of gas a fixed cent rate or a percentage rate?

according to this http://retail.petro-canada.ca/en/fuelsavings/2139.aspx 10 cents to the feds, 14 to the province, a flat tax regardless of price. Naturally, gst floats.

With the TSX falling below 14K on pretty pedestrian volume, I wouldn't be surprised to see it test support at 12 or 11.5 in the next few months.

So GST generated in dollars from gasoline sales should drop, right? The Federal budget could be affected.

What did everyone miss in May when oil prices were flying? Did the supply and demand issues just materialize? Is the very rapid rise in the U.S. Dollar influencing the oil price, unduly?