Lower Oil Prices Are a Free-Market Victory

[Busybody]

Im a member of MENSA

 

[Que]

So.

Which "big words" that you used were you under the impression that surpassed m vernacular? Which of my incomplete sentences led you to the conclusion that it was my sparse lexicon that caused me to think that you had not answered the question posed?

Or were you just wanting to add "Have someone explain the big words" to your list of 27 well-rehearsed, canned phrases?

If you are thinking of publishing a style guide you might want to carp on the above sentence. I started it with a preposition. Bad form, indeed.

 

[Que]

Im a member of MENSA

I'm holding out for three nines. I don't know what happened to my invitation. I keep checking my mailbox. I think they don't know I exist.

 

[Que]

Fifty posts and almost 4 hours ago, Otios KnobendDownSouth appealed to authority with the sweeping pronouncement that the esteemed (by him) Paul Krugman "is a professor of economics at Princeton, a columnist in the New York Times and was awarded the Nobel prize in Economics."

As if that settled all matters economic including those in direct conflict with one another.

He still hasn't reconciled his support for Krugman's insane assertion that he could definitively say we had reached the absolute last time we would ever see inexpensive oil again while Rob simultaneous asserts that because of the current low price for oil (that he says will last a week more) there is no need for the pipeline or fracking because those will not be economically viable.

Pretty obviously, mutually exclusive positions. Instead of picking which one of his positions are incorrect he insists that they both have merit.

 

[Beco]

We can ALL thank the President for lower prices, and more cash in our pockets

Thank you President BUSH

Weak economies is what is driving the price down.....not Bush

 

[Que]

Weak economies is what is driving the price down.....not Bush

I agree that it is not bush and obviously he is being facetious, but it is not the weak economy. We had rising prices when the economy was worse. It is the strength of domestic production that is over-riding what should be fears about the mid-east.

We are not self sufficient but it is easy to project that with Canadian oil sands and a more favorable future administration on the horizon, we might get there. Knowing that it is possible (if actually unlikely) is preventing the Sauds from rolling the dice towards pushing us that way with insistently higher prices. The could singlehandedly still bump the price up 20-30 dollars a barrel if they simply cut their production dramatically, but they would suffer on volume too.

As it stands, they can pump oil at these prices and pocket their billions.

 

[RobDownSouth]

Weak economies is what is driving the price down.....not Bush

That's half the equation...probably the biggest half.
The other big piece is the tremendous advances in technology in the past half dozen years. Fracking is now relatively commonplace.

It's the combination of both of the above occurring simultaneously, however, that is driving the price of oil spiraling downward.

Dullards may splutter about prices staying high in the Bush recession, but fail to recall that a) the technology wasn't as advanced back then and European demand was still relatively high. It's also worth pointing out that prices dropped tremendously for a two month period at the very end of the failed Bush regime. You might recall the mouthbreathing Fox News watching demographic braying about "$1.80 gas when Bush left office", conveniently overlooking the near-$4 a gallon average during the last two years of his regime.

 

[Beco]

That's half the equation...probably the biggest half.
The other big piece is the tremendous advances in technology in the past half dozen years. Fracking is now relatively commonplace.

It's the combination of both of the above occurring simultaneously, however, that is driving the price of oil spiraling downward.

Dullards may splutter about prices staying high in the Bush recession, but fail to recall that a) the technology wasn't as advanced back then and European demand was still relatively high. It's also worth pointing out that prices dropped tremendously for a two month period at the very end of the failed Bush regime. You might recall the mouthbreathing Fox News watching demographic braying about "$1.80 gas when Bush left office", conveniently overlooking the near-$4 a gallon average during the last two years of his regime.

BFD, Obama had $4 a gallon on his watch. Prices rise and fall....its a commodity

 

[Ishmael]

Fifty posts and almost 4 hours ago, Otios KnobendDownSouth appealed to authority with the sweeping pronouncement that the esteemed (by him) Paul Krugman "is a professor of economics at Princeton, a columnist in the New York Times and was awarded the Nobel prize in Economics."

As if that settled all matters economic including those in direct conflict with one another.

He still hasn't reconciled his support for Krugman's insane assertion that he could definitively say we had reached the absolute last time we would ever see inexpensive oil again while Rob simultaneous asserts that because of the current low price for oil (that he says will last a week more) there is no need for the pipeline or fracking because those will not be economically viable.

Pretty obviously, mutually exclusive positions. Instead of picking which one of his positions are incorrect he insists that they both have merit.

Fracking is here to stay and the pipeline will be built.

The low prices today will increase in the future. The Saudi's have a purpose and a plan regarding their dumping oil on the market and that is to utterly destroy the Iranian economy. And they're doing an admirable job at that. As a by-product we get to see the Russian and Venezuelan economies destroyed. Couldn't happen to a nicer group of fellows. Yes, it is going to hurt some domestic producers, but not as badly as some pundits seem to think, or want.

In the mean time the lower energy prices are to a great extent responsible for the jump start in the economy. I can't think of a more graphic illustration of the relationship between energy costs and economic health. Energy IS the life blood of every nation on the face of the earth and those nations that use their available energy in the most efficient manner will enjoy good economies. Administrations that attempt to force their nations to use inefficient and unreliable energy sources do so at the risk of inflicting grave damage to their economies. Spain and Australia have already learned that lesson and Germany is in the process of doing so now. Pissing away tons of national treasure is NOT going to make wind or solar a viable economic alternative. Their turn will come, but they aren't there yet.

We have the technological means to scrub the stacks of coal fired plants as clean as clean can be, yet we are saddled with an administration hell bent for leather to destroy an entire industry and drive the price of electricity higher. This places a huge burden on those lowest on the economic rung of the ladder. So what's the solution there? Subsidies. So instead of a healthy, vibrant, tax paying industry we replace it with more burdens on the taxpayer. I'm sure that Krugman has a column that explains how that all makes sense.

Ishmael

 

[Que]

Thats more or less what I was attempting to point out to Rob. If prices are low now, that has little to do with those technologies being viable in the near future as they were certainly viable last month. All of the technologies were in place and producing when Krugman wrote that we had seen the last of inexpensive oil. He made his little prognostication on a whim, having done no research into the oil industry, production capacity or any of it. He just "knows" things because he used to be an economist. Allegedly.

Every time Krugman writes it has holes you can drive a truck through because he is stupid and lazy and entitled.

If greenies were not so devoutly anti-science they would be pro-nuke. If bleeding heart liberals were not so anti-mathematics they would be in favor of the lowest cost energy source available both to power the homes of our poor here, but to get them to jobs, to move them if needed, and to send to developing world to lift those poor people as well.

The playground wheel water pump is a great stop-gap measure, but wouldn't a factor with jobs, or some agricultural machinery be a better gift to Africans?

 

[4est_4est_Gump]

Oil is a cartel not free market. In regards to free market; nobody knows what a free market system is anyway. Our country runs a post Kaynesian economy. In the 30s we left capitalism and free market to a more mixed economy. Its the closest to afree market but still not there. Also the falling gas prices are to weaken Russia.

The cartel has been broken; the Saudis have admitted as much. It was always Oil Black and the Seven (ten) Dwarves...

I agree with your economic comment, but have to wonder who in the hell would be directing an effort to weaken Russia when Occam would suggest the simpler solution that when given the opportunity to provide substitute goods at a profit, markets are preferable to government diktat.

 

[4est_4est_Gump]

I wonder how long the price dive will continue? Because nothing good lasts forever...

I think if we keep pouring it on, shale, pipeline, etc., we can have cheaper oil for the next 100 years. That is, if they want that....cheaper oil hurts Iran....

It cannot continue past the cost of production; hard economic law.

 

[4est_4est_Gump]

Thats what I thought. You want to be able to claim the high ground on both sides of the argument.

Just as when you assert that Obama's noble bias against fossil fuels and his policies that tend to restrict exploration and development have absolutely zero impact on the price of gasoline, but when he has done nothing to reverse any of those policies and private sector innovation has increased production despite his rhetoric and whatever actions he has taken to back his rhetoric, he should get credit for price reductions that follow.

Ever once in a while you have to actually take and defend a position and have it be consistent with your other positions.

 

[4est_4est_Gump]

If Bush did things that tended to increase production he only did it to benefit Haliburtan, and it had nothing to do with the price of gas during his term.

If Obama did things to decrease production he only had the best interest of the planet and our green energy economy in mind and it had nothing to do with the price of gas increasing under his watch.

If Obama then did nothing to change or reverse the course of his policies and production increased despites his wish that it not happen, it is because he turned a magic spigot because he is a geopolitical genius and wanted to hurt our enemies in the middle East, and the reduction in the price of gas is entirely to his credit.

Simple.

*chuckle*

You're on fire...

 

[Sean]

It cannot continue past the cost of production; hard economic law.

Bullshit. Cartels will sell at a loss if it means driving a competitor out of business. They'll recoup the loss later. Supermarkets do it all the fucking time in order to destroy local shops.

 

[RobDownSouth]

It cannot continue past the cost of production; hard economic law.

This may be the stupidest thing you've said this entire month.
We're talking query-class stupid here.

 

[BotanyBoy]

Bullshit. Cartels will sell at a loss if it means driving a competitor out of business. They'll recoup the loss later. Supermarkets do it all the fucking time in order to destroy local shops.

Only short term though and only because they have the resources to hold them up while they do it.

This may be the stupidest thing you've said this entire month.
We're talking query-class stupid here.

How many companies out there exist in the red? Not making any money.....

Without gubbmint funding they don't exist....not for long.

But hey I'm open to new things, maybe you can show me a company that was built into a major success selling it's products/services for less than it cost to produce/provide them??

 

[Ishmael]

The cartel has been broken; the Saudis have admitted as much. It was always Oil Black and the Seven (ten) Dwarves...

I agree with your economic comment, but have to wonder who in the hell would be directing an effort to weaken Russia when Occam would suggest the simpler solution that when given the opportunity to provide substitute goods at a profit, markets are preferable to government diktat.

Not necessarily forever. The Saudi's are out to fuck the Persians.

Ishmael

 

[coastal-boy]

You cannot possibly always be this goddamned, fucking obtuse.

Money NOT going to OPEC is a WINDFALL. A BOOST to the ECONOMY.

Your IDIOTIC plan to SQUANDER that WINDFALL that is NOT going to OPEC on an ill-advised increase in the gasoline tax will not cause any increase in economic activity in the short term and over the long haul, the dollar amount will have to be adjusted downward as the money is fed into the maw of the Federal Government to then be re-distributed.

Your idea has the same effect as if money rained down from heaven tomorrow and the recommendation was that we raise taxes because if the money is given to government is is magically MORE after the government gets its sticky, inefficient fingers on it than when it fell from heaven.

Wonder where the jobs will come from to expand the infrastructure he is referring to? Never heard of a multiplier huh? Doesn't surprise me.

 

[RobDownSouth]

Only short term though and only because they have the resources to hold them up while they do it.



How many companies out there exist in the red? Not making any money.....

Without gubbmint funding they don't exist....not for long.

But hey I'm open to new things, maybe you can show me a company that was built into a major success selling it's products/services for less than it cost to produce/provide them??

Don't be stupid. That's query's job.
Many firms, particularly commodity firms and especially those in volatile commodities like oil, can withstand fluctuations in price that cause them to operate in the red for a while. That's the whole point of companies having reserves. Thinly capitalized firms will fail first, we've already seen one major oil driller (the Australian billionaire, I forget his name) default on his bank credit line loans.

The Chief insinuated that any company suffering a loss will go tits up immediately, that is certainly not the case.

Oh and to answer your "gotcha" question, Standard Oil comes to mind.

 

[BotanyBoy]

Don't be stupid. That's query's job.
Many firms, particularly commodity firms and especially those in volatile commodities like oil, can withstand fluctuations in price that cause them to operate in the red for a while. That's the whole point of companies having reserves. Thinly capitalized firms will fail first, we've already seen one major oil driller (the Australian billionaire, I forget his name) default on his bank credit line loans.

Even the best capitalized firms can only withstand it for so long. And when they are willing to put that on the line to push competition out it's risky and expensive so you know they are feeling some fuckin' pressure if they are going that route.

The Chief insinuated that any company suffering a loss will go tits up immediately, that is certainly not the case.

That was your assumption, not his insinuation.

Oh and to answer your "gotcha" question, Standard Oil comes to mind.

Standard Oil never has and never will make a fucking penny hua?

I'm betting if I check the records they make plenty.....

 

[Que]

Maybe these economic geniuses know something that even a dolt like Krugman does not. I was always under the impression that is something cannot possibly go on indefinitely, it will end.

Lets say in their world, some Saudi prince brings them in for a consult. They mention this genius idea about forming a cartel, not to keep prices high but to collude in making prices low to "Drive their competitors out of business." Lets say it works. Every single oil well in America, Russia, Mexico, Brazil, the North seas, stops pumping.

Aha! They won! Time to jack those prices the fuck up!

Oh wait. The greedy bastards at the evil oil companies flip a switch and the oil wells start pumping in what maybe a month, tops? Little oil on the wear points, maybe flush out some lines. Just like in mining. Price of gold, copper, molybdenum too low? Stockpile it till the price meets at least your cost of production plus profit.

Maybe they can take losses on every barrel and make it up on volume?

 

[Que]

Don't be stupid. That's query's job.
Many firms, particularly commodity firms and especially those in volatile commodities like oil, can withstand fluctuations in price that cause them to operate in the red for a while. That's the whole point of companies having reserves. Thinly capitalized firms will fail first, we've already seen one major oil driller (the Australian billionaire, I forget his name) default on his bank credit line loans.

The Chief insinuated that any company suffering a loss will go tits up immediately, that is certainly not the case.

Oh and to answer your "gotcha" question, Standard Oil comes to mind.

They do no such thing. Why do you think the oil futures market exists? It dampens profits, but it also prevents losses. They know what the barrel of oil they have to deliver in February will net them.

Companies that depend on a steady stream of petroleum are the flip side of each of those contracts. An airline company has a contract for delivery of so much jet fuel at a given price. A refinery knows what they are paying next month for oil and can price the jet fuel accordingly. Futures contracts fluctuate by the minute during trading hours. Companies, balance sheets do not, they get into or out of the market when their analysts tell them to.

We not only have completely different laws on the books then the Standard oil days we now have a world of players each with its own economic and geopolitical needs.

Tell us again as you did today that Krugman was right in 2010 that oil prices were never coming down again.

So which conflicting position are you advancing at the moment? That the low oil prices will only last another week or so, or the above that the Saudis (who are not taking a loss) will take losses to drive competitors out of business?

Doesn't it get tiring arguing the wrong side of every issue even when they are mutually exclusive?

I can see why your usual modus operandi is to simply sit on the sidelines and tell people how wrong they are without actually wading in.

 

[4est_4est_Gump]

Not necessarily forever. The Saudi's are out to fuck the Persians.

Ishmael

They should hire more hackers...

 

[4est_4est_Gump]

Prices will shake out the bit players, but not the Persians or the Russians.

It will hurt companies actually trying to emerge in free markets, but it will not hurt nationally subsidized industries in the long-run, they're...,



TOO BIG TO FAIL.