Oil Slick Stuff

Sort by newest Sort by date
It's all part of a bigger plan to keep prices high, I think.:nuts:

Big Oil: We told you so

With prices sharply lower from the summer's highs, Big Oil's decision to hold off on new production now seems rather wise.

By Steve Hargreaves, CNNMoney.com staff writer
Last Updated: November 18, 2008: 7:23 AM ET

NEW YORK (CNNMoney.com) -- It would be tempting to say they told us so.
Back when oil prices were going nowhere but up, public officials, consumer rights groups and newspaper editorials chastised the major oil companies for not investing enough in new production. Big Oil, they argued, was simply lavishing shareholders with massive stock buybacks and dividends at the expense of the motoring public.
"The results illustrate an industry with plenty of resources to produce more oil in the U.S., but slow to spend the money to develop them," Judy Dugan, research director at Consumer Watchdog, wrote in a statement last August, just after Chevron posted a quarterly profit of $6 billion.
"In a normal market, with prices for a product rising like they have for oil, manufacturers in competitive markets would be spending like crazy to make more of it," Dugan continued. "Yet oil companies are able to sit back and make more money by selling less."
The oil companies, in turn, argued that commodity prices are cyclical and would fall soon enough. In addition to a lack of access to resources and skyrocketing production costs, the companies said planning projects that can take a decade to build and cost billions of dollars meant they needed to take a long-term view. In short, they just didn't believe the high prices were here to stay.
With oil prices now barely a third of that they were just 4 months ago, it seems they were right.
"They have been very good stewards of their investors' money," said Rayola Dougher, senior economic adviser for the American Petroleum Institute. "The majors are well positioned to move forward with investments over the next year."
Dougher was careful to stress it's the major oil companies that are in good shape.
Many of the independents embarked on aggressive exploration and production programs over the last few years, at a steep price. Rates to charter drill rigs have risen to more than $800,000 a day from as much as $400,000 a few years back. Leases that once went for $200 an acre have been known to fetch upwards of $20,000.
The market has punished these companies. Shares of Anadarko (APC, Fortune 500) are down over 30% over the last three months. Occidental (OXY, Fortune 500) is off 35% and Hess (HES, Fortune 500), a darling of 2007, has sunk 40%.
Other smaller oil producers are in even worse shape.
"Some of the smaller independents are having a hard time and are delaying or canceling projects" said Dougher.
The major oil companies were much more cautious during the price runup, and returned much more to their investors in the form of dividends and share buybacks.
For the five big international oil companies - ExxonMobil (XOM, Fortune 500), Royal Dutch Shell (RDSA) BP (BP), Chevron (CVX, Fortune 500), and ConocoPhillips (COP, Fortune 500) - spending on share buybacks increased sixfold, to nearly $60 billion a year in 2006 from under $10 billion a year in 2003, according to a study done this summer by Amy Myers Jaffe, a fellow in energy studies at the James A. Baker III Institute for Public Policy.
Spending on developing existing oil fields, however, rose at a less torrid pace - to $50 billion from about $35 billion, while spending on finding new oil fields increased to $10 billion from about $6 billion.
But lumping all the major oil companies isn't fair.
Paul Sanky, an oil company analyst at Deutsche Bank, said the major oil companies behaved very differently over the last few years.
He said ConocoPhillips and BP made several acquisitions at the height of the market. ExxonMobil, on the other hand, generally held back.
With prices now falling, Exxon now "looks like a hero on the way down," said Sankey.
Investors have taken note. BP shares are down 25% over the last three months, while ConocoPhillips is off 40%. Exxon, meanwhile, has lost just under 5%.
"Exxon got criticized for underinvesting over the last four years," said Fadel Gheit, a senior energy analyst at Oppenheimer. "It's not that they were stupid, it's just that they thought it was too expensive. Now Exxon is going to laugh all the way to the bank."
Gheit said oil companies made investment decisions with a target price in mind of about $30 a barrel back in 2005 or 2006.
Over that last year or so, he believes the target price has risen to about $40 or $45, although he still thinks Exxon has set the lowest number.
Exxon may laugh all the way to the bank during this downturn, but when the world pulls out of this economic slump, will the proper investments have been made to make sure prices don't run up like they did earlier this year?
Dugan, from Consumer Watchdog, doesn't think so.
"There's a sense that they think the prices are now too low to invest," she said "They are whipsawing it both ways." http://money.cnn.com/2008/11/14/news/economy/oil_production/index.htm?postversion=2008111807
 
Man, I am heartsick for poor Dubai::laugh:

Dubai Vulnerable to Lower Oil Prices, Citigroup Says

By Camilla Hall
Nov. 18 (Bloomberg) -- Dubai, the second largest of the seven sheikhdoms in the United Arab Emirates, is the most vulnerable place in the Gulf to lower oil prices as real estate prices and debt refinancing pose ``real risks,'' Citigroup Inc. said.
The emirate ``has been booming on the oil surpluses'' from neighboring Gulf states and Russia, Citigroup's Mushtaq Khan said in the report today. ``Dubai's two specific concerns are its real estate sector and how it will refinance the debt it has built up in recent years.''
Dubai has borrowed to fund real estate projects including Burj Dubai, the world's tallest tower, and to buy stakes in Deutsche Bank AG, European Aeronautic Defence and Space Co. and Standard Chartered Plc, as it seeks to diversify its economy.
Outstanding mortgage loans in the UAE almost doubled in the year through June as property prices soared to a record. Mortgage loans leaped 92 percent to 87.6 billion dirhams ($23.8 billion), compared with annual growth of 55 percent in March, the central bank said yesterday.
HSBC Holdings Plc indicated in a report last week that house prices in Dubai and Abu Dhabi have begun to fall. The U.A.E. central bank has held discussions with the finance ministry on measures to support real estate lending.
``We see a much needed correction in the property market,'' Khan said. ``Global conditions are likely to slow Dubai's economic growth, but not knock it out.''
Dubai controls its economy through state-owned companies that dominate each major industry. Dubai Holding LLC, which groups assets belonging to Dubai Ruler Sheikh Mohammed bin Rashid al- Maktoum, owns hotel chain Jumeirah Group and Dubai International Capital, which unsuccessfully bid for Liverpool Football Club earlier this year.
Gulf states will be able to maintain fiscal spending at current levels as oil remains above the break-even point for most governments, Fitch Ratings said in a report on Nov. 11. New York- traded crude has more than halved to about $55 a barrel since reaching a record $147.27 on July 11.
``If oil prices averaged $50 per barrel, only Kuwait would be able to show an external surplus in 2009,'' Khan said.
http://www.bloomberg.com/apps/news?pid=20601072&sid=aYcJwiNQ9vPY&refer=energy
 
Yeah, breaks my heart too...What will they do if they can't build another Snow ski-scape in the middle of the desert?:laugh:
 
Can I be first to Bitch Slap this fool?!!!!:nuts:

Time to raise the gas tax

To avoid another big spike in gas prices, raise the gas tax and let market forces go to work.

By Allan Sloan, senior editor at large
Last Updated: November 18, 2008: 8:30 AM ET

(Fortune) -- The big game in Washington these days consists of running around dealing with the problems of the Detroit Three automakers, formerly the Big Three.

But all the to-ing and fro-ing about how (or whether) to keep General Motors (GM, Fortune 500), Ford (F, Fortune 500) and Chrysler out of bankruptcy is ignoring the elephant in the room - lower gasoline prices. As you doubtless know, they've fallen about 50% from the record levels they reached in July, making them one of the few bright spots in our economic picture.
So let me fulfill my traditional role of skunk in the garden party, and suggest that these lower gas prices aren't an unalloyed good thing. Let me also suggest that we jack them up, sharply, by adopting a big honking tax on gasoline.
This idea has been around for years, and has gotten no traction. But it's an idea whose time has come, given the stomach-churning ups and downs of gas prices, the visible folly of leaving our fate to oil-exporting countries and the speculators who helped drive prices irrationally high and may now be driving them irrationally low, and the fact that we'll soon have a president who proposed targeted tax increases during the campaign and still got elected.
Yes, a big gas tax would cause economic hardship, especially to people who are barely making ends meet. But we could refund the money to those needy people through the income tax. We could also refund the gas tax to those of us who aren't particularly needy, or else use it for energy research-and-development or public works or - dare I say it - for deficit reduction.[more]
http://money.cnn.com/2008/11/17/news/economy/sloan_gastax.fortune/index.htm?postversion=2008111808
 
Windfall Profits Tax on Big Oil...NOW. Before the price goes back above the Royalty Relief threshhold. And it will. They're cutting back production and aren't in any hurry to bring the rest of the Gulf of Mexico back online with prices this low. Gears are in motion to get the price back up.

Peg the windfall profits tax to the royalty relief threshold. Incentive to drill and keep costs down.
 
luv2read said:
Windfall Profits Tax on Big Oil...NOW. Before the price goes back above the Royalty Relief threshhold. And it will. They're cutting back production and aren't in any hurry to bring the rest of the Gulf of Mexico back online with prices this low. Gears are in motion to get the price back up.

Peg the windfall profits tax to the royalty relief threshold. Incentive to drill and keep costs down.
Click to expand...
That's a different story than a tax at the pump!! Might work?:D
 
We will see the $40s soon!!:D

Oil continuing toward $50

Crude prices are down 60% in four months on global demand fears, but bottom may be nearing.

November 19, 2008: 6:40 AM ET

VIENNA, Austria (AP) -- Oil prices slipped further Wednesday, dipping below $54 on fears of global economic weakness that have sent crude down more than 60% in four months.
But analysts suggested that prices might be bottoming out as they moved closer to the psychologically significant $50 mark.
Light, sweet crude for December delivery was down 60 cents at $53.79 a barrel by noon in Europe. The contract Tuesday fell 56 cents to settle at $54.39, the lowest since January 2007.
"Market sentiment is still bearish, but not as bearish as a [more]
http://money.cnn.com/2008/11/19/markets/oil.ap/index.htm?postversion=2008111906
 
nnuut said:
Oil prices ($53.97, -0.8%) reverse into the red after both crude oil and gasoline inventories rose by a larger than expected amount.
http://finance.yahoo.com/marketupdate/overview?u
Click to expand...

This is what I call, good old American paybacks. Even if the lowering demand
isn't solely based on US usage. It feels good to see them squirm, lower
production, then quirm again. All because of a falling rock called demand.
 
squalebear said:
This is what I call, good old American paybacks. Even if the lowering demand
isn't solely based on US usage. It feels good to see them squirm, lower
production, then quirm again. All because of a falling rock called demand.
Click to expand...
Actually I think that a slow down in speculation is adding to the party. That was the main reason for the extreme rise in the price of gas ond oil anyway.:cool: There is plenty of oil, even with China drinking it up in massave gulps!!:worried:
 
Gas falls to half of record high

Prices at the pump in national survey continue to decline as 21 states' averages fall below $2 a gallon.

By Julianne Pepitone, CNNMoney.com contributing writer
November 19, 2008: 10:13 AM ET

gas_pump_3.ce.03.jpg

Gas gets cheaper by the day


NEW YORK (CNNMoney.com) -- Gasoline prices dropped to below half of the record high Wednesday, declining for the 63rd straight day in a national survey.
The national average fell 2.1 cents to $2.047 per gallon of regular gasoline, according to the daily survey conducted for the American Automobile Association, a motorist group.
The price of gas is less than half the record high of $4.114 per gallon reached in mid-July. Prices were down more than $1.04 per gallon from a year ago and 87.6 cents from a month ago.
Prices at the pump have slipped below an average of $2 a gallon in 21 states. It was cheapest in Missouri, at an average of $1.754, according to AAA.[more]
http://money.cnn.com/2008/11/19/news/economy/gas_prices/index.htm?postversion=2008111910
 
Oil falls toward $50

Fears of global recession and weakening demand drive crude prices down.



See all CNNMoney.com RSS FEEDS (close)

November 20, 2008: 6:49 AM ET

Trader: $45 oil ahead


VIENNA, Austria (AP) -- Oil prices fell below $53 to almost a two-year low Thursday as investors, worried by plummeting stock markets, priced in lower crude demand as the global economic downturn shapes up to be the worst in decades.
Light, sweet crude for December delivery was down $1.23 to $52.39 a barrel in electronic trading on the New York Mercantile Exchange by midday in Europe. The contract fell 77 cents Wednesday to settle at $53.62, the lowest since January 2007.
In London, December Brent crude fell $1.02 to $50.70 on the ICE Futures exchange.
"People are saying this slowdown could be the worst since the Great Depression," said Toby Hassall, an analyst with investment firm Commodity Warrants Australia in Sydney. "There's definitely fear out there that it's going to be pretty severe."
Concerns that Congress may not approve a $25 billion rescue package for ailing U.S. carmakers General Motors Corp (GM, Fortune 500)., Ford Motor Co (F, Fortune 500)., and Chrysler LLC helped drag the Dow Jones industrial average down 5.1 percent Wednesday to its lowest level since March 2003.
"The downturn in equities is driving an overall lack of confidence," said Olivier Jakob of Petromatrix in Switzerland.[more]
http://money.cnn.com/2008/11/20/markets/oil.ap/index.htm?postversion=2008112006
 
Hey Norm,

Quick question, Do you know what the break even point on drilling versus selling a barrel of oil. That is, when does oil reach a price that it is just not even worth pumping it out of the ground?:blink:
 
Frixxxx said:
Hey Norm,

Quick question, Do you know what the break even point on drilling versus selling a barrel of oil. That is, when does oil reach a price that it is just not even worth pumping it out of the ground?:blink:
Click to expand...
Haven't seen any numbers on that. If there is anything from the Oil companies it's probably inflated. I'll search around and see what I can find, I do know Oil has been lots cheaper than it's is now and they still made a killing, although some areas they are drilling now require drilling much deeper than before using newer equipment and techniclogies. Norman:D
 
Here's some info from 2007, but what you want:

Oil Price Predictions and Break-Even Prices

by: Richard Shaw December 25, 2007 | about stocks:

Richard Shaw

Department of Energy “Annual Energy Outlook, 2008″ predicts that oil prices will decline to $58 by 2106, measured in constant 2006 dollars, in their most likely scenario. They predict real prices will rise from 2016 through 2030 to $72 in constant 2006 dollars.
Today’s West Texas Intermediate crude prices are about $93.
The Dept. of Energy is therefore predicting an approximate 38% decline in oil prices over the next 8 years.
Their short term prediction for 2007 back in 2006 was for crude to be around $57 — way off the mark.
An interesting perspective is the $30 break-even price for Saudi Arabia, as reported by the National Bank of Kuwait in mid-2006. The table below shows the break-even oil price for the Gulf Cooperation Council countries, showing an overall break-even price of $38.
gcc_oil_breakeven.jpg


Canada’s oil sands are the second largest oil reserves in the world. The largest oil sands syncrude producer is Canadian Oil Sands Trust (COSWF.PK) which reports a current break-even cost of about $33 per barrel.
The table below shows the oil reserves of key countries. Note that the Canadian reserves are overwhelmingly oil sands.
keycountryoilreserves.jpg


Oil sands have not come into full productive capacity, but their cost is significant. Canadian Oil Sands Trust is a large, if not the largest, player in the oil sands / syncrude market. While their break-even costs are about $33, Kurt Wulf of McDep Associates recently reported that PetroCanada’s (PCZ) new oil sands project will have a break-even cost over $50 per barrel up from $25 per barrel five years earlier.[More] http://seekingalpha.com/article/58322-oil-price-predictions-and-break-even-prices

Here's one that's more current:
Falling crude prices could slow deep-water drilling

By BRETT CLANTON HOUSTON CHRONICLE

Nov. 11, 2008, 11:27PM

So far unscathed by plummeting oil prices, costly deep-water drilling projects in the Gulf of Mexico could soon become less attractive if crude prices continue falling, as they did again Tuesday.

Oil prices closed below $60 a barrel, a level widely considered to be near the break-even point for multibillion-dollar deep-water projects that have been a key driver of Houston’s energy economy in recent years.
If prices go lower still, oil companies could be forced to re-evaluate and possibly postpone deep-water projects, just as they have already done with less-costly land and shallow-water drilling plans, analysts said.
“At $50, they probably start canceling projects or slowing projects up,” said Eric Smith, associate director of the Tulane Energy Institute in New Orleans.
Such a move should not affect projects under way or in the late stages of planning, given the large investments already made, but could affect projects further out.
Yet any pullback would likely be temporary and followed by a rebound based on the same factors that created the most recent boom in offshore drilling: rising global energy demands and pressure to find new sources of oil to feed them.
“The world still runs on oil and gas,” David Williams, chief executive of Noble Corp., an offshore drilling contractor in Sugar Land, said in a recent conference call with analysts. “The meltdown in the financial sector and loss of confidence in the equity markets have not changed this fundamental fact.”
Generally, deep-water oil and gas projects have been viewed as more insulated from commodity price swings than other kinds of exploration. The huge investments required assume operators are committed for many years, and the companies involved are oil majors, national oil companies and large independent producers that have strong enough balance sheets to ride out down cycles.
But the downturn in oil prices has been more dramatic than many had predicted and could make producers reconsider those developments.
“If we continue to see a decline, we’ll start to see more curbing of capital outlays and capital programs,” said Gary Adams, vice chairman of Deloitte’s oil and gas practice in Houston. “I think that is about a year to two-year time frame. Any projects that could start up between now and then could be delayed.”
“I would guess a range of $40 to $50 is where you start to see some eyebrows raised.”
With oil prices down, Brazil’s state-owned oil company, Petrobras, could postpone investments in the Gulf of Mexico to focus on prospects in areas where returns are more certain, Petrobras CEO Jose Sergio Gabrielli said in an interview with the Chronicle last month.
Some offshore blocks leased by Petrobras in the Gulf showed less potential than originally thought, he said.
But most oil and gas companies and offshore drillers have tried to reassure investors that the fundamentals of deep-water drilling remain solid despite current challenges.
“I think most deep-water projects are economic at $60 oil, and we see no change in interest of our customers regarding additional deep-water capacity or renewal of existing deep-water capacity,” Robert Long, CEO and chairman of Transocean, the world’s largest offshore drilling contractor, said during a conference call last week to discuss the company’s third-quarter financial results.
Executives with Anadarko Petroleum Corp. in The Woodlands suggested last month that some of its deep-water projects could still work with oil prices as low as $30 a barrel.
On Tuesday, light, sweet crude for December delivery fell $3.08 to settle at $59.33 a barrel on the New York Mercantile Exchange, the lowest closing price since March 2007.
But past break-even points used to justify deep-water projects are changing.[more]
http://www.chron.com/disp/story.mpl/headline/biz/6107661.html
 
You must log in or register to reply here.
Back
Top