Price of oil has collapsed; how will this impact the economy?

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TechGuy365
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Re: Price of oil has collapsed; how will this impact the economy?

Post by TechGuy365 »

NYTimes has a good pieces on why this is happened:

“Prices went negative — meaning that anyone trying to sell a barrel would have to pay a buyer $30 — in part because of the way oil is traded. Futures contracts that require buyers to take possession of oil in May are expiring on Tuesday, and nobody wanted the oil because there was no place to store it. Contracts for June delivery were still trading for about $22 a barrel, down 16 percent for the day.”

https://www.nytimes.com/2020/04/20/busi ... rices.html
sasquatch12
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Re: Price of oil has collapsed; how will this impact the economy?

Post by sasquatch12 »

Looking up a few things. America’s oil and natural gas industry supports 10.3 million jobs in the United States and nearly 8 percent of our nation’s Gross Domestic Product. In Saudi Arabia he oil and gas sector accounts for about 50 per cent of gross domestic product, and about 70 per cent of export earnings. In Russia oil and gas are responsible for more than 60% of Russia's exports and provide more than 30% of the country's GDP.

So low prices hurt them far more than in the US, not that losing a big chunk of the 10.3 million jobs would not be painful here. Having worked in oil and gas in the past and talking to those still in it, they believe the low prices are temporary and should get back into the $30's at least by the end of the year. I hope it does.
KSActuary
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Re: Price of oil has collapsed; how will this impact the economy?

Post by KSActuary »

fatcoffeedrinker wrote: Mon Apr 20, 2020 7:04 pm
KSActuary wrote: Mon Apr 20, 2020 5:00 pm Maybe but the new EVs are more exciting than a Tesla so actual consumer demand may pick up more than you think. National grid and energy policy need a re-work. Too bad we just spent it on a virus.
Nothing is more exciting then a Tesla. :mrgreen:
The offerings from Porsche and Audi are pretty interesting and I prefer a ICE-powered car anyway for fun.
Xrayman69
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Re: Price of oil has collapsed; how will this impact the economy?

Post by Xrayman69 »

sasquatch12 wrote: Mon Apr 20, 2020 9:17 pm Looking up a few things. America’s oil and natural gas industry supports 10.3 million jobs in the United States and nearly 8 percent of our nation’s Gross Domestic Product. In Saudi Arabia he oil and gas sector accounts for about 50 per cent of gross domestic product, and about 70 per cent of export earnings. In Russia oil and gas are responsible for more than 60% of Russia's exports and provide more than 30% of the country's GDP.

So low prices hurt them far more than in the US, not that losing a big chunk of the 10.3 million jobs would not be painful here. Having worked in oil and gas in the past and talking to those still in it, they believe the low prices are temporary and should get back into the $30's at least by the end of the year. I hope it does.
Unfortunately, Saudi Arabia and Russia oil companies are state supported or backed and thus can backstop. They both have little risk of political upheaval as the leaders are unlikely to be removed from the seat of power by hook or crook. Im a little suspicious of the convenient oil “war” that the Russians and Saudi’s ostensibly declared that in a matter of a few weeks have made the American oil producers business’ non viable because they are constrained by the rules of capitalism and the rule of law. Short term pain for the Russians and saudis who have openly stated disdain for the North American competition.

So albeit the low oil prices hurt Russia and Saudi Arabia in the short term, I fear that it will not be a mortal injury.
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SimpleGift
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Re: Price of oil has collapsed; how will this impact the economy?

Post by SimpleGift »

sasquatch12 wrote: Mon Apr 20, 2020 9:17 pm Having worked in oil and gas in the past and talking to those still in it, they believe the low prices are temporary and should get back into the $30's at least by the end of the year. I hope it does.
This is in line with the U.S. Energy Department's recent forecasts in their April 2020 report, which are projecting the sharp reductions in global crude oil prices occurring during March-April will persist through the second quarter of 2020, before demand and prices begin gradually increasing through the end of the year (chart below).
This of course assumes the world economy gets back on its feet in 2020, without a fall recurrence of coronavirus outbreaks.
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whodidntante
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Re: Price of oil has collapsed; how will this impact the economy?

Post by whodidntante »

fatcoffeedrinker wrote: Mon Apr 20, 2020 7:04 pm
KSActuary wrote: Mon Apr 20, 2020 5:00 pm Maybe but the new EVs are more exciting than a Tesla so actual consumer demand may pick up more than you think. National grid and energy policy need a re-work. Too bad we just spent it on a virus.
Nothing is more exciting then a Tesla. :mrgreen:
Oh, I don't know about that. Shorting their stock can be pretty exciting. :happy
rascott
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Re: Price of oil has collapsed; how will this impact the economy?

Post by rascott »

While today was a real market oddity.... that's basically all it was. Nothing has fundamentally changed with the price of global oil.
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Rainier
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Re: Price of oil has collapsed; how will this impact the economy?

Post by Rainier »

Ged wrote: Mon Apr 20, 2020 6:19 pm
Rainier wrote: Mon Apr 20, 2020 12:25 pm
DonIce wrote: Mon Apr 20, 2020 12:24 pm Dang, touched a low of $2.99.

I kind of want to take physical delivery of 1000 barrels for $3k haha.
Got a swimming pool?

BTW, CME just confirmed that oil futures can go negative.
Got a refinery? Crude oil is not going to be of much use to you.
Coffee filters? I don't know anything about refining but I think crude is pretty close to home heating oil. Store it in your pool and use it to heat your house for the next 10 years. (Not a recommendation).
Random Poster
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Re: Price of oil has collapsed; how will this impact the economy?

Post by Random Poster »

Rainier wrote: Tue Apr 21, 2020 5:44 am
Coffee filters? I don't know anything about refining but I think crude is pretty close to home heating oil. Store it in your pool and use it to heat your house for the next 10 years. (Not a recommendation).
Not a chemical engineer, but I've heard that, depending on the oil grade, what would likely happen is that, over time, the lighter fractions of oil would evaporate and you'd essentially be left with a heavy sludge in the pool.

Throw a few animals in the pool (kidding...) and you'd end up with the La Brea Tar Pits in a few decades.
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