Explain why oil companies are loosing money?

[HTSS_TR]

Originally Posted By: grampi
I say it's a perfect example of controlling supply. OPEC wanted to flood the market and they have done just that...if that isn't controlling supply, then I don't know what is...

Why OPEC produces more oil to lower the price and in the end they got a lot less revenue even with higher volume ?

Clearly the oil industry is uncontrollable by any one group or several groups.

A real/actual controlling of any supply chain is limit it to less than demand to keep price high.

OPEC and Russian and other producing countries want higher price around $80-100 but they couldn't agree on volume, and the unexpected increase in US made oil price collapsed the last 12-18 months.

Can you tell me other industry that can control supply but flood market with so much supply such that the price went down the toilet ?

 

[grampi]

Originally Posted By: HTSS_TR
Originally Posted By: grampi
I say it's a perfect example of controlling supply. OPEC wanted to flood the market and they have done just that...if that isn't controlling supply, then I don't know what is...

Why OPEC produces more oil to lower the price and in the end they got a lot less revenue even with higher volume ?

Clearly the oil industry is uncontrollable by any one group or several groups.

A real/actual controlling of any supply chain is limit it to less than demand to keep price high.

OPEC and Russian and other producing countries want higher price around $80-100 but they couldn't agree on volume, and the unexpected increase in US made oil price collapsed the last 12-18 months.

Can you tell me other industry that can control supply but flood market with so much supply such that the price went down the toilet ?


Your example about keeping prices high is a form of controlling prices just as is flooding the market with supply...and no, I can't give an example of another industry doing this, but then again, I've never seen one part of a given industry trying to destroy other parts like OPEC is doing either...

 

[Vern_in_IL]

Originally Posted By: javacontour
Let OPEC keep pumping. We'll keep our oil in the ground and buy all that others are willing to export cheaply.

Once they run out, or don't have enough to influence the market, they become practically irrelevant in the market.


As relevant as Brent crude and the North Sea....

 

[HTSS_TR]

Originally Posted By: grampi
Your example about keeping prices high is a form of controlling prices just as is flooding the market with supply...and no, I can't give an example of another industry doing this, but then again, I've never seen one part of a given industry trying to destroy other parts like OPEC is doing either...

This is clearly the oil industry doesn't control supply !

I tell you one example of controlling supply: De Beer is in total control of diamond industry, they bought almost all raw diamonds from all over the world and supply it just enough to satisfy demand, the price of diamond never drop more than 5-10% the last 50+ years.

This is what controlling supply is about.

 

[grampi]

Originally Posted By: HTSS_TR
Originally Posted By: grampi
Your example about keeping prices high is a form of controlling prices just as is flooding the market with supply...and no, I can't give an example of another industry doing this, but then again, I've never seen one part of a given industry trying to destroy other parts like OPEC is doing either...

This is clearly the oil industry doesn't control supply !

I tell you one example of controlling supply: De Beer is in total control of diamond industry, they bought almost all raw diamonds from all over the world and supply it just enough to satisfy demand, the price of diamond never drop more than 5-10% the last 50+ years.

This is what controlling supply is about.


If they can't control supply, then why is the market flooded right now?

 

[lubricatosaurus]

Originally Posted By: grampi
If they can't control supply, then why is the market flooded right now?


I'd like to hear comments on what rebound effect might occur in about a year or so.
As in, cheap oil has a lot of wells shut down now, companies go under, and then the surviving wells (Saudi oil is very cheap to pull out of the ground) are the only game left on the planet later.

 

[Garak]

Originally Posted By: grampi
If they can't control supply, then why is the market flooded right now?

There always is limited control over supply. We can't say there is zero control, or the players have complete control. To pick on OPEC, they don't have enough power to starve us from oil, as it were. They can definitely cause price problems. However, even if they shut the taps off completely, we still have oil. And, they never will shut the taps off completely, because they need money to live, too. Similarly, they don't have infinite production.

 

[javacontour]

But demand is soft as well.

Everyone was/is geared up for a major Chinese expansion.

China's economy has hiccuped. I don't think world demand is as strong as anticipated.

Finally, is Iranian oil on the market yet? Another supplier entering or has entered the game on the legitimate, not the black market side.

They will be moving more now that they don't have to sneak it out of the terminal.

 

[Alfred_B]

The flooding of the market is geo-political.

 

[Al]

Originally Posted By: Alfred_B
The flooding of the market is geo-political.

What exactly do you mean???

 

[javacontour]

I have a SWAG for this.

When we do it, it's good. When other producers do it, it's Geo-Political.

'Merica!

Originally Posted By: Al
Originally Posted By: Alfred_B
The flooding of the market is geo-political.

What exactly do you mean???

 

[Shannow]

Originally Posted By: javacontour
I have a SWAG for this.

When we do it, it's good. When other producers do it, it's Geo-Political.


LOL, probably close to the mark.

It's what happens when new technologies start to become viable in response to high prices, be these technologies renewable or the current unconventional.

Prices up, they become viable, and start to compete, crash prices, and flush the new competition out of the market for a decade or more.

 

[Tempest]

Originally Posted By: Shannow

Prices up, they become viable, and start to compete, crash prices, and flush the new competition out of the market for a decade or more.


It's amazing how capitalist governments become when their own cash cow is on the line...

 

[hatt]

Originally Posted By: javacontour
Let OPEC keep pumping. We'll keep our oil in the ground and buy all that others are willing to export cheaply.

Once they run out, or don't have enough to influence the market, they become practically irrelevant in the market.

Originally Posted By: hatt
The Saudi's are making sure to nix any further US production expansion and contract the current production.

No one is running out of oil. Despite all the "peak oil" hysteria, If you look at production data it's going up. We're better off pumping oil while we can make money off of it instead of handing money and jobs to other countries. I don't see oil being a dominant energy source in 50 years.