Are the Saudis hurting our prospects?
As an "in the shale" landowner, I care about growing natural gas sales in hope of supporting, and possibly even raising, the price of natural gas. This can impact the size of my monthly royalty check.
Everyone already is aware the Saudis, and OPEC, are competing hard against USA shale oil producers. This has driven down the cost of gasoline, which is a sweet outcome. But there is other fallout which concerns me. Declining cost of crude is lowering the price of home heating oil.
The impact could come our way via reduced numbers of conversions. We want homeowners to convert from oil heat to natural gas heat. Those conversions are driven by the cost differential between the two fuels. Homeowners must invest money into their homes to pay for a conversion. When the cost differential between oil and natural gas is large, homeowners recoup their investment more quickly. Thanks to the Saudis the cost differential, though still in our favor, is smaller today than it was just a year ago.
The above hit home for me as I was reading this article, from Maine:
Note:
To read that article you have to answer one or two questions. It's painless. There is no need to sign in or sign up or anything stupid like that. Just click to answer their question(s) and they will instantly show you the article.
Views: 2666
Replies to This Discussion
-
Permalink Reply by cj wyalusing on
-
I think the smalll operaters drillers in the usa are all shutting or are throttling there wells down to try and raise the price at least in the marcellus area's i am talking ng. I have received notice from one of these operator's.
-
Permalink Reply by Jim Litwinowicz on
-
The Saudis are doing what Pres Zero doesn't have the balls to do......going to war with Russia, Syria, ISIS, and Iran. But this is an economic war. If they can sustain this, the Saudis will destroy their ability to wage war in Syria, Ukraine, Iraq, and support terrorism elsewhere. It will also destroy Iran's Holy Grail quest for nukes. It may even lead to an overthrow of the mad mullahs in Iran and seriously weaken Putin's hold on power. We should be thanking the Saudis, not threatening them with nukes.
-
Permalink Reply by RICHARD BASILE on
-
JL, you are on target as this is an economic war,except those in the cross/hairs are primo the US & CA --"Shale Production-"-this is the real threat to the Saudis--if the so-called over/hang is 1.5 mil bopd , that is about 2% of daily world production--101+/-mil bopd---WHY did the Saudis scuttle any production restraints ??---$ 90 oil is better than $60 oil for any producer ---look @ all the cancelled projects, 150 bil & counting---
-
Permalink Reply by Roy A. Wagner on
-
The Saudi 's have to support their huge Welfare State and I have heard this requires them to be Over $100/barrel. The Saudi's are also the ones who are financing all of the Muslim Academies and Mosques all over the USA. Their Number One Enemy, according to the Prince last year , is FRACKING in the USA. Unfortunately for them, they lack the Staying Power due to the afforementioned Welfare State, their Overseas Commitments etc. $40/barrel Oil would perhaps cause the USA developers to slow down a bit, but they know Saudi Arabia's financial position that wouldn't allow them to survive at that price, much less permitting them to drive the price down to the 1981 level of $10/barrel.
.
-
Permalink Reply by Paul Martinelli on
-
correct.....it is a game of chicken.
As soon as their cash reserves dwindle low enough, they will do what it takes to pump up the price of Oil.
In the mean time....USA should be filling up strategic oil reserves at these prices.
-
Permalink Reply by Roy A. Wagner on
-
Yes! Absolutely!
-
-
Guess, who is filling up their strategic reserves @ these prices ??--CHINA !!!--the spin -docters are extrolling the virtues of low gasoline prices--but @ what expense ??--just look @ the % disc on bonds issued by mid-tier O & G cos--credit reviews-??--$$$ have to be borrowed & it does not matter, if it is dry gas ,wet, ngls condensate--oil--the whole industry is affected !!!!
-
Permalink Reply by Martha Stevens on
-
Jim,Totally agree with you about the Saudis motives. I believe they have acted out of their own interest in world political manipulation. For Americans to think any of this recent OPEC stuff is aimed directly at America is beyond egocentric. The Saudis are not subtle when they are irritated with another country, as anyone who was alive in the 70's well remembers. Open your eyes America, they are doing us a huge favor and will probably accomplish with simple supply and demand economics what our democracy could never openly do....regime change. It would seem they have the power and the wealth to take the " long view" of the future and are most likely acting now to save their own skins,regime,way of life etc further down the road.
-
Permalink Reply by Roy A. Wagner on
-
The Saudi Prince has authored Articles in the Wall Street Journal explaining that the "Biggest Threat to the Kingdom" is Fracking. The USA has been the biggest consumer and we are going to become net Exporters. ... Their own words plus their funding of the Environmental Groups in the USA ...
-
Permalink Reply by Philip Brutz on
-
Saudi billionaire Prince Alwaleed bin Talal has warned that the kingdom's oil-dependent economy is increasingly vulnerable to rising U.S. energy production, breaking ranks with oil officials in Riyadh who have played down its impact.
In an open letter dated May 13 addressed to Saudi Oil Minister Ali al-Naimi and several other ministers, a link to which was published Sunday on Prince Alwaleed's Twitter account, he warned that the boom in U.S. shale oil and gas will reduce demand for crude from members of the Organization of the Petroleum Exporting Countries.
A Saudi official confirmed that ministers received the letter in May.
Not long after the prince issued his warning, a report from OPEC published Monday showed the group's oil export revenue hit a record high of $1.26 trillion in 2012. However, forecasts from the group raise questions over whether that level of earnings can be sustained amid the competition from shale oil.
Saudi Arabia, the world's biggest oil exporter, is now pumping at less than its production capacity because consumers are limiting their oil imports, Prince Alwaleed said in the letter. This means the kingdom is "facing a threat with the continuation of its near-complete reliance on oil, especially as 92% of the budget for this year depends on oil," said the prince.
Prince Alwaleed, a nephew of Saudi King Abdullah, is a major international investor, with stakes in Apple Inc., Citigroup Inc., Time Warner Inc., Twitter and News Corp, which owns Dow Jones & Co., publisher of The Wall Street Journal.
In contrast to Prince Alwaleed, Mr. Naimi, the Saudi oil minister, has so far played down the significance of rising shale-oil production, despite the fact that some OPEC members, such as Nigeria and Algeria, have seen a sharp drop in their exports to the U.S. At an OPEC meeting in late May, he said it wasn't the first time OPEC has had to compete with a surge in output from countries outside the group.
"We disagree with your Excellency on what you said, and we see that rising North American shale gas production is an inevitable threat," Prince Alwaleed's letter said, in comments directed at Mr. Naimi.
Neither Mr. Naimi nor a spokesman for the ministry could be reached to comment.
Despite posting record revenues from oil exports in 2012, OPEC data showed some members' earnings were already under pressure.
Algeria's oil-export revenue fell last year by 6% and the selling price of its flagship Saharan Blend crude was down by 1.3%, compared with the previous year. Algeria has seen its oil exports to the U.S. fall sharply and earlier this year its finance minister, Karim Djoudi, said lower oil export revenue tied to mounting shale production could force the government to cut domestic spending.
Oil revenues in Iran, whose oil exports have been sharply curtailed by Western sanctions, fell 8% to $133 billion, according to OPEC data.
OPEC data suggests other members could soon face an earnings squeeze.
The group expects demand for its crude to fall to 29.6 million barrels a day next year, 600,000 barrels a day lower than in 2012, because of rising production outside the group. The average price of the group's main crude export grades so far this year has been 4% lower than last year, OPEC data show.
The International Energy Agency expects demand for OPEC crude to decline again in 2015 to 29.2 million barrels a day, before starting to rise gradually in the following years.
Prince Alwaleed also warned in his letter that competition from shale oil means Saudi Arabia won't be able to increase its crude production capacity to 15 million barrels, adding to a rare public disagreement over whether Saudi Arabia should expand its current production capacity of 12.5 million barrels a day.
In April, Prince Turki al-Faisal, a former Saudi intelligence chief and ambassador, said the kingdom needs to increase its crude production capacity to 15 million barrels a day by 2020 in order to meet rising domestic consumption and maintain its export capacity. Mr. Naimi has ruled out increasing Saudi Arabia's capacity until at least 2030 or 2040
-
Permalink Reply by Joseph-Ohio on
-
Have the Saudis ever cared a nit about our country's (the USA's) economy being vulnerable other than exploiting it ?
Why now should we care about their economy's (or any other country's) vulnerability ?
IMHO we shouldn't.
IMHO we need to concentrate on ours.
-
Permalink Reply by Barry D on
-
Jim,
Right on the money.
The target of the Saudis actions is not the U.S. Their target is the Russian government and it's support of Iran; and by extension Syria, ISIS et al.
The Saudis fear a powerful, nuclear armed Iran as much, if not more than we do.
- ‹ Previous
- 1
- 2
- 3
- Next ›
Top Content
Latest Activity
- Top News
- Everything
pig dung replied to Theresa Kolk's discussion 'What's going on in your area?? any info???' in the group Tioga County, PApig dung replied to Theresa Kolk's discussion 'What's going on in your area?? any info???' in the group Tioga County, PA
© 2024 Created by Keith Mauck (Site Publisher).
Powered by
