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2008-12-06 Home Front Economy

World oil prices tumble below $40 mark with no 'floor' in sight

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Posted by Fred 2008-12-06 00:00|| || Front Page|| [11123 views ] Top

#1 I won't be content until I'm bothered on the street by people collecting for famine relief in Saudia.

Posted by g(r)omgoru 2008-12-06 03:12|| 2008-12-06 03:12|| Front Page Top

#2 This really puts the oil exporters in a double-bind. If they attempt to lower production, it further reduces revenue. Countries like Iran and Russia really need the revenue. Countries like Iraq are prepared to INCREASE production to increase revenue. As Iraq increases production it will put pressure on other countries to increase their production as well because Iraq can offset any decrease they might try and keep prices low.

So basically Iran is in a position where it can ship X million barrels for $40 dollars a barrel or X-1 million for $40 a barrel. Decreasing production in that scenario only reduces revenue. We could be in a production battle soon with a flood of oil in the face of reduced demand.

That is what happens when an economy of several countries depends on one product.

Posted by crosspatch 2008-12-06 04:02|| 2008-12-06 04:02|| Front Page Top

#3 And not to mention HUGE new oil discoveries by Brazil recently.

Posted by crosspatch 2008-12-06 04:02|| 2008-12-06 04:02|| Front Page Top

#4 Man this marginal pricing thingy seems to work both ways don't it?

Posted by .5MT 2008-12-06 05:27|| www.cybernations.net]">[www.cybernations.net] 2008-12-06 05:27|| Front Page Top

#5 And the marginal cost thingy comes into play to. The Iranians may be close to the point where they lose money on every gallon they sell. But they'll make it up on volume.

Posted by Nimble Spemble 2008-12-06 07:48|| 2008-12-06 07:48|| Front Page Top

#6 Unfortunately, as the price of oil drops, so does our collective motivation to seek alternative energy sources. Personally, I'd love to see the government set a floor of $2.50 and use the difference to fund investment in alternative energy. After paying $4/gallon, $2.50 seems positively 'cheap'.

Posted by Grampaw Clomoting7313 2008-12-06 09:09|| 2008-12-06 09:09|| Front Page Top

#7 I'd rather see the govt. keep the BILLIONS of our tax dollars that they hand out to America hating assholes all over the world that chant 'Death to America' in the streets and use that money for alternative fuel development. Leave gas at $1.60 a gal and give US a goddamned break for once in my lifetime.

Posted by bigjim-ky 2008-12-06 09:13|| 2008-12-06 09:13|| Front Page Top

#8 If ALL producers successfully cut production, the rise in price will be sufficiently large to increase TOTAL revenues (because the demand for oil is highly inelastic, particularly in the short run). However, the incentive to cheat on cartel agreements is substantial.

Posted by Perfesser 2008-12-06 09:17|| 2008-12-06 09:17|| Front Page Top

#9 So, Iraq can pay back Iranian interference with their internal development by pumping as much oil as they can and get cash back in return. A twofer.

But wait, didn't we just have the 'experts' say we had met Peak Oil(tm) and that high prices were now the future? /sarcasm off

Posted by Procopius2k 2008-12-06 09:31|| 2008-12-06 09:31|| Front Page Top

#10 Ex-pert - (n.) Any guy in a reporter's Rolodex.

Posted by eLarson 2008-12-06 09:55|| 2008-12-06 09:55|| Front Page Top

#11
Fill up those choppers and UAVs now.

Posted by rhodesiafever 2008-12-06 13:22|| 2008-12-06 13:22|| Front Page Top

#12 But wait, didn't we just have the 'experts' say we had met Peak Oil(tm) and that high prices were now the future?

That was *soooo* last week!

Posted by Fester Ulaling5555 2008-12-06 14:37|| 2008-12-06 14:37|| Front Page Top

#13 The lower prices affect aviation, also. Here in Anchorage, 100LL avgas goes down to $3.64, from a high of $5.96. That is a savings of $24/hour on my bird.

Posted by Alaska Paul 2008-12-06 17:02|| 2008-12-06 17:02|| Front Page Top

#14 Good! Then you can fly me out to Galena and back for $ 10. eh?

Posted by Besoeker 2008-12-06 17:12|| 2008-12-06 17:12|| Front Page Top

#15 so what are the so-called experts now saying who earlier claimed that the $4.00/gal gas was due to dwindling supplies?

Posted by hammerhead 2008-12-06 17:22|| 2008-12-06 17:22|| Front Page Top

#16 The last commodity bubble has popped.

The government will now print to try to prevent deflation.

Posted by Bright Pebbles 2008-12-06 17:41|| 2008-12-06 17:41|| Front Page Top

#17 Stock our national reserves while it's cheap.

It won't be cheap forever, because we're not going to have oil forever.

Posted by Grolush Darling of the Hatfields3195 2008-12-06 17:42|| 2008-12-06 17:42|| Front Page Top

#18 Yep, we ran out of stone after peak stone.

Posted by Bright Pebbles 2008-12-06 18:00|| 2008-12-06 18:00|| Front Page Top

#19 Besoeker---It will cost you $120 rt in avgas. BTW they shut down the AFB this fall and turned it over to the City.

Posted by Alaska Paul 2008-12-06 19:01|| 2008-12-06 19:01|| Front Page Top

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