The market is broken because demand is way down, but production isn't being lowered to match. Saudi Arabia intends to keep their production high. The other producers are losing money but haven't reduced output, because changing output levels is more expensive than taking the loss.
I love the different names for various types of oil: sweet, sour, light, etc. As if it was edible.<p>Description of the names:<p><a href="https://en.m.wikipedia.org/wiki/Sweet_crude_oil" rel="nofollow">https://en.m.wikipedia.org/wiki/Sweet_crude_oil</a><p><a href="https://www.thebalance.com/the-basics-of-crude-oil-classification-1182570" rel="nofollow">https://www.thebalance.com/the-basics-of-crude-oil-classific...</a>
I'm a truck driver, been in the LA area a few days. It's surprising how large the area looks without oppressive smog and haze, and how sharp and detailed the hills and mountains have become.<p>For what that's worth.
It's easy to say "we live in a Just-In-Time Economy", but it's things like this that really demonstrate the implications.<p>The supply chain is set up to flow, so when demand drops or spikes up you get a flood or a shortage.<p>If there's a flood, some companies will go out of business, leaving the survivors with a bigger slice of the pie.<p>If there's a shortage, companies will respond, and some will over-react and build over-capacity and then fail when the shortage evens out, leaving the survivors with a bigger slice of the pie. I think this may happen with ventilator companies. After this event, there may be an over-supply of ventilators, leading to failure of some companies or lines of business.
Demand for oil drops, prices fall, stocks pile up, production scales down. There is nothing broken here. This is exactly how a market-based economy works.
There are approximately 7500 crude tankers on planet earth.<p>I bought and sold tanker stocks based on the following:<p>IMO 2020 regulatory retrofits.<p>Coronavirus<p>Saudi Russian Oil Price War<p>Shipyard Shutdowns<p>My next bet is going to be based on the drawdown in US Oil operations. I'm gambling on $FCG based on the notion that the price of natural gas will go up a bit because the associated gas from oil wells is no longer in play.<p>Right now, the volatility is a gambler's paradise.
The upside is - damange to the environment aside - oil is a universal currency. Lowing the cost of energy is like printing money and mailing everyone a cheque; without the inflation. (It's also why oil is has been used as an economic weapon). Lowing the cost of energy impacts everyone. It's like being The Fed and lowing interest rates, but better since Joe & Jane Q Public benefit every time they pull up to the pump.<p>This is the same reason the Obama administration did little to discourage fracking from hockey stick'ing. Given the state of the economy was one of the few tools they had to goose the economy. Essentially, like it or not, selling out Mother Nature for the economy.<p><a href="https://www.forbes.com/sites/rrapier/2016/01/15/president-obamas-petroleum-legacy/#4cfd5637c10f" rel="nofollow">https://www.forbes.com/sites/rrapier/2016/01/15/president-ob...</a>
Serious question: how do I invest in some of those $10 barrels of oil? It seems like a contract to deliver oil at $10 in 2021 is likely to be worth more than by next year.
Markets are broken when oil usage develops towards sustainable levels?<p>We have to drastically cut down oil use, let's not pretend that the pre-corona oil consumption was tolerable, much less desireable.<p>Now would be a good opportunity make internaltional agreements to cap oil consumption and extraction to its current level in shutdown, and when the shutdown starts to get rolled back, the shock will be smaller as rising demand and price mechanisms reconcile how the remaining lower oil supply gets used.
Despite Canada's dollar doing terribly, gas stations are selling it for $0.64/Litre where I live.<p>I haven't seen it this low in maybe 20 years.
The oil isn't just magically coming from some unstoppable font.<p>They're going to have to bite the bullet and shut some wells. They say as much at the bottom of the article. It's not like we haven't had oil downturns before...
I find it odd that the article does not mention the oil price war between Saudi Arabia and Russia.<p><a href="https://www.reuters.com/article/us-opec-oil-policies-idUSKBN20W21S" rel="nofollow">https://www.reuters.com/article/us-opec-oil-policies-idUSKBN...</a>
The idea of supertankers storing 100 million barrels of oil at sea is an environmental catastrophe waiting to happen, especially if the boat is old, as is sometimes the case.
<a href="https://www.reuters.com/article/us-asia-oil-storage/in-latest-sign-of-crude-glut-aging-supertankers-used-to-store-unsold-oil-idUSKBN19709N" rel="nofollow">https://www.reuters.com/article/us-asia-oil-storage/in-lates...</a>
I know this is the wrong attitude but with no ties to the oil industry that I am aware of I personally am enjoying watching the market crash and my cost of gas go way down. However my understanding of the economy is poor. Does this negatively effect the average joe or mainly oil producers?
Saudi Arabia, our ally, is working hard to completely destroy the U.S. Shale Oil industry, as well as the Russian Oil industry, and every other oil producing country in the world.<p>The cost to produce oil in Saudi Arabia is about $6 a barrel and they are taking this opportunity to undermine everything. Only Iraq is close in cost to produce oil as the Saudi's, and the U.S. has worked to make sure that Iraq is not a threat to the Saudi's.
So, I have not yet seen any informed analysis of how this is impacting the solar panel and wind turbine industries. I assume it would be bad, but I don't know how bad. If anyone has knowledge of that, feel free to chime in.
It's not crude "nobody needs". It's just storage being too expensive to expand infinitely. If it weren't, it'd be a great opportunity to stock up, because the need will be there for decades.
Saudis want to put Putin out of the oil biz.<p>As such, gasoline in some parts of the US is currently going for $0.99/gal (0.24€/L, 0.21£/L or 20 Rs/L).<p>And it's sort of funny/sad that what is called "blacktop" can be had for less than free. Transportation and steamroller not included.