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Kelt · 12-17-2014, 07:21 PM

This article in the Economist "Cheaper Oil: Winners And Losers" is a pretty good look at the global nature of this round of shifting oil prices and addresses some of the region specific outcomes of the current situation. Bear in mind it is about seven weeks old, but the underpinnings are still accurate. And there are charts!

Here is a short excerpt on the effects in America and some of the extraction methods:

"The impact on America will be mixed because the country is simultaneously the world’s largest consumer, importer and producer of oil. On balance cheaper oil will help, but not as much as it used to. Analysts at Goldman Sachs reckon that cheaper oil and lower interest rates should add about 0.1 percentage points to growth in 2015. But that will be more than offset by a stronger dollar, slower global growth and weaker stockmarkets.

Extracting oil from shale is expensive. So when the oil price drops, America is one of the places most likely to pull back (Arctic and Canadian tar-sands producers are even more vulnerable). According to Michael Cohen of Barclays, a bank, a $20 drop in the world oil price reduces American producers’ earnings before interest by 20%, and only four-fifths of shale reserves are economic to extract using current technology with Brent around $85. How quickly production will fall as a result, though, is unclear, since producers’ costs vary and some have locked in prices via hedging. The impact will also vary by region. “If I’m in California, it’s pretty clear-cut that this is a good-news story,” says Michael Levi of the Council on Foreign Relations, a think-tank. “If I were in North Dakota [the biggest shale-oil state], I would be a lot more nervous.”

America is a net importer, so lower prices mean Americans get to keep more of their money and spend it at home. But the stimulative impact is less than it used to be, since imports are becoming less important, and oil is shrinking as a share of the economy."

There's also the fact that the Russian economy is basically folding in on itself due their (Putin's) reliance on the earlier high price profits to escape the effects of sanctions. Here's an article from Al Jazeera: Russian rouble in 'catastrophic decline'

Oh yeah, right now I've got $2.29 gal.

12-17-2014, 07:21 PM	#72
Kelt Senior Member How Do You Identify?: Beach Butch Join Date: Oct 2010 Location: SoCal Posts: 2,751 My Photo Gallery Thanks: 19,765 Thanked 15,379 Times in 2,541 Posts Rep Power: 21474852	This article in the Economist "Cheaper Oil: Winners And Losers" is a pretty good look at the global nature of this round of shifting oil prices and addresses some of the region specific outcomes of the current situation. Bear in mind it is about seven weeks old, but the underpinnings are still accurate. And there are charts! Here is a short excerpt on the effects in America and some of the extraction methods: "The impact on America will be mixed because the country is simultaneously the world’s largest consumer, importer and producer of oil. On balance cheaper oil will help, but not as much as it used to. Analysts at Goldman Sachs reckon that cheaper oil and lower interest rates should add about 0.1 percentage points to growth in 2015. But that will be more than offset by a stronger dollar, slower global growth and weaker stockmarkets. Extracting oil from shale is expensive. So when the oil price drops, America is one of the places most likely to pull back (Arctic and Canadian tar-sands producers are even more vulnerable). According to Michael Cohen of Barclays, a bank, a $20 drop in the world oil price reduces American producers’ earnings before interest by 20%, and only four-fifths of shale reserves are economic to extract using current technology with Brent around $85. How quickly production will fall as a result, though, is unclear, since producers’ costs vary and some have locked in prices via hedging. The impact will also vary by region. “If I’m in California, it’s pretty clear-cut that this is a good-news story,” says Michael Levi of the Council on Foreign Relations, a think-tank. “If I were in North Dakota [the biggest shale-oil state], I would be a lot more nervous.” America is a net importer, so lower prices mean Americans get to keep more of their money and spend it at home. But the stimulative impact is less than it used to be, since imports are becoming less important, and oil is shrinking as a share of the economy." There's also the fact that the Russian economy is basically folding in on itself due their (Putin's) reliance on the earlier high price profits to escape the effects of sanctions. Here's an article from Al Jazeera: Russian rouble in 'catastrophic decline' Oh yeah, right now I've got $2.29 gal.