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2008-10-25 Home Front Economy

Oil prices tumble to $61 despite major slash in Opec output

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Posted by Fred 2008-10-25 00:00|| || Front Page|| [1 views ] Top

#1 if Chavez needs $97 bbl and Iran needs $91..
There will be cheating

Posted by 3dc 2008-10-25 03:45|| 2008-10-25 03:45|| Front Page Top

#2 Question is, will they really cut production? The pressure to cheat is enormous ...

SOme of the countries don't have the ability to cheat, because although they might have more oil than Saudi Arabia their lifting and infrastructure costs are higher and they've been letting their infrastructure rot.

Posted by Thing From Snowy Mountain 2008-10-25 09:49|| 2008-10-25 09:49|| Front Page Top

#3 Makes me all sad.

Posted by g(r)omgoru 2008-10-25 10:05|| 2008-10-25 10:05|| Front Page Top

#4 Quagmire!

Posted by anonymous5089 2008-10-25 10:06|| 2008-10-25 10:06|| Front Page Top

#5 if Chavez needs $97 bbl and Iran needs $91..

IIUC, putin needs $95. Tough luck, vlad.

Posted by anonymous5089 2008-10-25 10:06|| 2008-10-25 10:06|| Front Page Top

#6
Venezuelan and Iranian production have fallen to the point where they can no longer produce up their quotas. That's why they're always in the forefront of calls for cuts.

Posted by DoDo 2008-10-25 10:36|| 2008-10-25 10:36|| Front Page Top

#7 Ok, So how is it that the price of oil has dropped below the cost to produce it? Simple economics would force producers to slow and stop production until prices level off to a margin with profit, no matter how much we hate the Arabs. Threatening to cut producetion is media hype and actual cutting production is pure economics. It costs Saudi $72 a barrel to produce oil, or so we are told. Why would they even concider producing millions of barrels of oil at a $10 a barrel loss?

The oil market was driven up by the same jerks that screwed the housing market up, Wall Street. Now it is resetting, like the housing market. The worlds oil market will settle, some countries will suffer and not be able to produce, I only hope that is Iran and the Russians. I would expect them to settle around the Saudi price margin, they seem to set the market.

Posted by 49 Pan">49 Pan 2008-10-25 13:13|| 2008-10-25 13:13|| Front Page Top

#8 It does not cost the Saudis anything close to $72 to produce a barrel of oil - unless you include the cost of supporting the Royal Family.

It DOES cost $72 per barrel to produce the incremental barrel in the US and other super-mature producing areas (includes the cost of finding and developing as well as actually producing.) Small remaining pockets, ultra-deep water, oil shale & tar sands, enhanced recovery are quite expensive. Many such projects also have long lead times between big spending and start of production - the risk of change in prices during that multi-year period means succesful projects need high profit margins to compensate for the ones where the money was invested 'betting on' $140 oil but when the oil was finally produced it only could sell for $65. (Look at the 1982-98 period for examples.)

Posted by Glenmore">Glenmore 2008-10-25 13:26|| 2008-10-25 13:26|| Front Page Top

#9 There is a difference between cost to produce and cost to find and drill. Once oil has been found and the pumping rigs established the marginal costs are below $70. That oil will be pumped.

What is more than $70 is the cost of exploring for, finding and then establishing the production platforms. What comes to a halt at prices under $70 is exploration and drilling for new fields. What also stops is attempts to convert tar sands, shale and coal to oil.

Posted by DoDo 2008-10-25 13:35|| 2008-10-25 13:35|| Front Page Top

#10 [philip has been pooplisted.]

Posted by philip 2008-10-25 15:11|| 2008-10-25 15:11|| Front Page Top

#11 Spam spam spam spam Spametty Spam, O Wonderful Spam!

Posted by Thing From Snowy Mountain 2008-10-25 15:19|| 2008-10-25 15:19|| Front Page Top

#12 Where's the tariff to support a $60 floor in the USA? Are we going to whipsaw our producers and investors again?

Hello, Congress? More expensive - less use. Isn't that what you Dems want?

Posted by KBK 2008-10-25 15:28|| 2008-10-25 15:28|| Front Page Top

#13 Thanks! Always up for a little education.

Posted by 49 Pan">49 Pan 2008-10-25 20:09|| 2008-10-25 20:09|| Front Page Top

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