Oil prices plunge to $70!

[Bilal.]

Right! This is the time to stock up on oil reserves! The immediate need is to increase oil storage capacities to the max so that oil will be available at these low prices for the next 20 years!

More importantly move to cheaper alternatives such as coal and start construction of hydel projects...

 

[Bilal.]

No wonder even a Premium cruise line like Holland America is selling at 70%+ discounts:

Newsletter Deals

Go guys: Enjoy the Holiday Season by taking a great cruise!

Energy starved countries: Make hay while the sun shines!

PS. I wonder if the energy price drops are the reason for a pound of potato being only Rs. 12 in Pakistan? That becomes around 12 cents/pound!

Of course drop in oil price is the single most important reason for low inflation nowadays but the government will take credit.

 

[OrionHunter]

More importantly move to cheaper alternatives such as coal and start construction of hydel projects...

Zero point energy has been produced. But the oil cartels have nipped it in the bud. Inventors have been murdered. Imagine a world with free and unlimited energy! What would happen to the oil cartels? They'll go bust overnight and the Builderbergs would die a quick death and countries that survive on oil sales would go bankrupt. Imagine Saudi Arabia in a situation where no one wants to buy their oil. They'll go kaput!

And thus Zero point energy will continue to be out of reach due to these extremely powerful vested interests. They won't let it happen.

 

[Bilal.]

Zero point energy has been produced. But the oil cartels have nipped it in the bud. Inventors have been murdered. Imagine a world with free and unlimited energy! What would happen to the oil cartels? They'll go bust overnight and the Builderbergs would die a quick death and countries that survive on oil sales would go bankrupt. Imagine Saudi Arabia in a situation where no one wants to buy their oil. They'll go kaput!

And thus Zero point energy will continue to be out of reach due to these extremely powerful vested interests. They won't let it happen.

ZPE is not harnessible... atleast not with current tech... its like homo eractus talking about nuclear fusion. Plus, there isn't much ZPE to start with:

Vacuum catastrophe - Wikipedia, the free encyclopedia

 

[niaz]

I have made a living out of oil business for the last 45 years, but I can honestly say that $70 has been a surprise. $80 per bbl. oil was expected to be the support level primarily because Saudi Arabian Petroleum Minister had said in a press conference that world should learn to live with $80 per bbl. oil. The current drop to $70 s primarily because the OPEC countries decided not to cut their output.

Hon Bilal has correctly mentioned that it is the Arab Gulf countries such as Saudi Arabia, Abu Dhabi etc. who have been instrumental in the drop in oil prices. There are two primary reasons.

1. Shale oil & gas production has made USA independent of Mid East Oil. GCC ( Gulf Cooperation Council) countries would like to stop further exploitation of shale/tight hydrocarbon reserves by making it uneconomic.


2. GCC countries are cash rich and can easily live with low oil prices for many years. Iran’s exports are limited to less than $2-million bbl. per day due to sanctions; low prices will hurt Iran even more.

However low energy prices are good for all others including OECD (Developed nations) especially for Pakistan.

Will countries like Qatar agree to long term LNG contract at today’s low prices? Perish the thought. Any long term LNG price would be linked with Dubai crude quotations and would automatically increase should the crude price go back up.

Finally, only cartel in Oil is the OPEC. Major oil companies instead are striving to break it. Exploitation of Shale oil/gas is the direct result of this effort.

Zero point energy is the energy of vacuum which in quantum field theory is defined as ground state of the field. It is called Zero Point Energy because even at very close to the absolute Zero ( - 273 C) evidence of energy/entropy was found in the elementary particles.

While existence of Zero Energy is not controversial; it is disputed that it can be harnessed. I have come across claims that a device where power output exceeded power input has been demonstrated. I admit my inability to follow the maths involved there in. In my personal view Zero Point Energy is a pipe dream similar to ‘Cold Fusion’ claims by Stanley Pons & Martin Fleishmann of 1989. That was 25 years ago!

We would have to wait for a very long time before we could do it, if at all.

 

[Bilal.]

@niaz, Sir as you are aware Qatar brought down their offer to $14 per mmbtu. While they will not do a long term contract on current spot price, is it possible though that we might see them agree to something in the vicinity of $9-10?

 

[Viking 63]

Very good news I like to see oil price not more than 50 dollars per barrel, this will ease pressure off from the developing countries. How can now use this saving towards more projects.

 

[Bilal.]

Very good news I like to see oil price not more than 50 dollars per barrel, this will ease pressure off from the developing countries. How can now use this saving towards more projects.

Not likely, if the prices fall below $60 we are most likely to see an OPEC emergency session and cuts in production. But I don't see OPEC winning against the frackers either. In 5 years time we will be seeing a completely different energy landscape, specially, if one factors in all the alternatives and efficient technologies.

 

[Viking 63]

Not likely, if the prices fall below $60 we are most likely to see an OPEC emergency session and cuts in production. But I don't see OPEC winning against the frackers either. In 5 years time we will be seeing a completely different energy landscape, specially, because of all the alternatives and efficient technologies.

yes you are correct, but till then lets hope the prices remain low, Pakistan I think spend around 5 billion dollars on oil imports, a saving of 30-40% means a saving of 2 billion big amount!!

 

[Kaniska]

Who cares man!! Lets be selfish here, you and we should improve our economy first!! ...

Some people in Pakistan seems to be more caring to Gulf nation and their economy to go down with low oil price than their own economy..

Any way, it is due since longtime...If you follow the oil economy, US is on the verge of allowing its Oil companies to allow to export their crude oil..US has a rule where they can not export the crude oil and because of that, those companies has crude oil reserved that can sustatin 5- 7 years without importing a single barrel of oil..And if that happens, Gulf and other oil based economy will be in danger...

 

[Bilal.]

yes you are correct, but till then lets hope the prices remain low, Pakistan I think spend around 5 billion dollars on oil imports, a saving of 30-40% means a saving of 2 billion big amount!!

I think last year we imported $15 billion in POL category... So the savings would be more if the prices stay low. Thats why I am hoping for current account surplus for a couple of years (hopefully more).

 

[Bilal.]

Some people in Pakistan seems to be more caring to Gulf nation and their economy to go down with low oil price than their own economy..
.

Who? Care to show? Or you have some kind of itch in the wrong place?

 

[Hyperion]

It will hit USD60 soon enough and eventually balance between USD65 - USD70, and will stay in that range for some time.

I have made a living out of oil business for the last 45 years, but I can honestly say that $70 has been a surprise. $80 per bbl. oil was expected to be the support level primarily because Saudi Arabian Petroleum Minister had said in a press conference that world should learn to live with $80 per bbl. oil. The current drop to $70 s primarily because the OPEC countries decided not to cut their output.

Hon Bilal has correctly mentioned that it is the Arab Gulf countries such as Saudi Arabia, Abu Dhabi etc. who have been instrumental in the drop in oil prices. There are two primary reasons.

1. Shale oil & gas production has made USA independent of Mid East Oil. GCC ( Gulf Cooperation Council) countries would like to stop further exploitation of shale/tight hydrocarbon reserves by making it uneconomic.


2. GCC countries are cash rich and can easily live with low oil prices for many years. Iran’s exports are limited to less than $2-million bbl. per day due to sanctions; low prices will hurt Iran even more.

However low energy prices are good for all others including OECD (Developed nations) especially for Pakistan.

Will countries like Qatar agree to long term LNG contract at today’s low prices? Perish the thought. Any long term LNG price would be linked with Dubai crude quotations and would automatically increase should the crude price go back up.

Finally, only cartel in Oil is the OPEC. Major oil companies instead are striving to break it. Exploitation of Shale oil/gas is the direct result of this effort.

Zero point energy is the energy of vacuum which in quantum field theory is defined as ground state of the field. It is called Zero Point Energy because even at very close to the absolute Zero ( - 273 C) evidence of energy/entropy was found in the elementary particles.

While existence of Zero Energy is not controversial; it is disputed that it can be harnessed. I have come across claims that a device where power output exceeded power input has been demonstrated. I admit my inability to follow the maths involved there in. In my personal view Zero Point Energy is a pipe dream similar to ‘Cold Fusion’ claims by Stanley Pons & Martin Fleishmann of 1989. That was 25 years ago!

We would have to wait for a very long time before we could do it, if at all.

 

[niaz]

@niaz, Sir as you are aware Qatar brought down their offer to $14 per mmbtu. While they will not do a long term contract on current spot price, is it possible though that we might see them agree to something in the vicinity of $9-10?

Qatar offered at $14 per mm Btu but do we know that it was fixed for more than a year? Qatar could possibly agree to $9-10 per mm Btu but it wont be fixed for more than 12 months.

Petroleum producing countries are not stupid. You have seen that prices dropped by $30 per bbl. in a couple of months. It is possible that price could go back up again in 6 months’ time. What do you think media / opposition would do to a Pak Oil Minister, if he had signed a contract at $14 fixed for 3 years and LNG international price drops to $7 per mm btu? On the other hand Qatari Oil Minister who signs fixed price for 3 years at $10 and international prices jump to $20 per mm Btu would be fired at the very least.

Basic principle of any long term contract involves protection of both the buyer and the seller. All term contracts I have come across have some sort of price re-opener clause in addition to re-negotiation every 12 months. Understand KPC – PSO term gas oil contract negotiates prices every 6 months.

In the term contracts that I have personally written for my clients, price is not only linked to the market crude price, a contingency clause which allows both the parties to re-negotiate prices if the market conditions become extraordinarily skewed. This allows re-opening price when price of a certain product such as gasoline, Naphtha or LNG either drops too much or rises abnormally without corresponding escalation/de-escalation of crude prices.

 

[Bilal.]

Qatar offered at $14 per mm Btu but do we know that it was fixed for more than a year? Qatar could possibly agree to $9-10 per mm Btu but it wont be fixed for more than 12 months.

Petroleum producing countries are not stupid. You have seen that prices dropped by $30 per bbl. in a couple of months. It is possible that price could go back up again in 6 months’ time. What do you think media / opposition would do to a Pak Oil Minister, if he had signed a contract at $14 fixed for 3 years and LNG international price drops to $7 per mm btu? On the other hand Qatari Oil Minister who signs fixed price for 3 years at $10 and international prices jump to $20 per mm Btu would be fired at the very least.

Basic principle of any long term contract involves protection of both the buyer and the seller. All term contracts I have come across have some sort of price re-opener clause in addition to re-negotiation every 12 months. Understand KPC – PSO term gas oil contract negotiates prices every 6 months.

In the term contracts that I have personally written for my clients, price is not only linked to the market crude price, a contingency clause which allows both the parties to re-negotiate prices if the market conditions become extraordinarily skewed. This allows re-opening price when price of a certain product such as gasoline, Naphtha or LNG either drops too much or rises abnormally without corresponding escalation/de-escalation of crude prices.

Sir, if I am not mistaking, the contract being negotiated is for 10 years period (but I am not sure about the volume per year though). Plus, in the news I read there was a mention of USAID consultants who are of the opinion that the spot price is projected to fall to ~$7 or so and stay there for 7-8 years.