Posted by: seanmalstrom | December 13, 2014

Email: How about the low oil prices?

Specially about this article: http://www.economist.com/news/finance-and-economics/21635505-will-falling-oil-prices-curb-americas-shale-boom-bind?

Any thoughts? Do you think OPEP can keep prices too low for enough time to take away shale oil?
Or is this a movement just to crash Russia?
Hope your position is safe!
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Oil and Gas always has a boom and bust cycle. The big problem for many companies is all the debt they have in trying to make their ‘riches’. They will be sunk.
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Remember that whenever someone thinks “this will always make money!” is the time to run away as that market is about to tank. Consider the Dot Com crash. Or the housing crash. “Everything goes up, up, up!” No, it doesn’t.
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Oil prices will go up again just as they will go down again. It was only a few years ago that oil was at $140 a barrel. Of course, that coincided with the 2008 crisis. The drop in oil price may likely coincide with a 2015 financial crisis.
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The shale revolution really isn’t about the oil. This is just what the media has focused on. The big thing about the shale revolution is the natural gas. The United States has, based on current consumption rates of known amounts, 700 years before it runs out of natural gas. This is why there is so much talk about exporting natural gas. Before the shale revolution, natural gas and oil prices followed one another. When one went up, the other went down. Natural gas prices plummeted and became so cheap, producers didn’t want to bother getting it. Oil may be catching up with that.
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It is not just Oil Industry. It is Oil And Gas Industry. “What do you use the gas for, Malstrom?” Why for all sorts of chemicals.
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What I do is not aligned with the Oil and Gas industry. It is where I live (Houston) that aligns me with Oil and Gas. What I do has me aligned with Automation. I could easily work at nuclear power plants or food processing.
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The problem is that oil is not, and never has been, a scarce resource. The drop in price should show even the most stubborn scarce-resource believer that oil is infinite and in massive supply. Oil does not come from the ground. Oil comes from the Human mind. Just like all resources are not the bountiful gift of Earth but are products of the Human mind. Iron ore is just a rock until Man gave it purpose.
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Oil prices are down because there is too much oil. Just like today, the idea of expensive natural gas only belongs to the past, the idea of oil being expensive may only belong in the past. Future generations may wonder why people thought oil would remain expensive and cannot imagine what the fuss was all about.
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What is this? Does the reader doubt me? Oh, reader! Know that the reason why Columbus sailed in 1492 was because spices were expensive and funded the trip. Spices, the stuff you take for granted on your food, were very expensive. Just imagining that type of world is impossible for us.

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