Hello all,
I was trying to glean some wisdom about medium and long term oil prices to help in decision making for some leases. With my limited knowledge of the industry, I had been assuming that long term global industrialization as in China, India, etc would drive up demand and so prices.
Then I came across this article-an op-ed piece which claims US oil production has surpassed the Gulf States and others to such an extent that prices will continue to fall.
I would appreciate input from others who might have some knowledge and understanding to take a look at this article-not getting distracted by the political aspects since it is an op-ed -but to see what you think again about long term prices and demand for oil globally. Is this correct that US production has eclipsed the Gulf States? Here is the link. Take care, thanks and God bless!
http://www.ynetnews.com/articles/0,7340,L-4611200,00.html
Here is a contrary point of view that sees global oil prices rising with a rising middle class in other parts of the world. Althought they acknowlege that no one can predict global trends that affect price. While I am not familiar with the reliability of this source, my limited knowledge tends to agree with their general assessment.
Here is the link. Anybody else have some thoughts or nuggets of knowledge? Input much appreciated. Thanks, Van M
http://thesovereigninvestor.com/diversified-investments/cannot-predict-future-oil-and-gas-prices/
Well, there is a lot of truth in the first article. Thankfully, the oil and gas industry has developed deep drilling, fracturing and the shale deposits. The world is no longer held hostage to the middle east. But therein lies a problem. Those countries have evolved into welfare states dependent upon a one product economy. When times were good, they failed to diversify their economies.
People have gotten used to a higher standard of living. It is hard to return to the camel and burro after one has owned a Mercedes Benz or a Rolls Royce. Rather than produce engineers, doctors, entrepreneurs and people used to working for a living, they all seem to have advanced degrees in religion and philosophy. They can tell you all about the Koran and hadiths, but they cannot change a tire.
When the countries of the mid east no longer can provide the welfare programs and make work sinecures that they currently do, the people will rebel. Then there is ISIS.
Iran and Saudi Arabia may go to war. We may see Sunni and Shite killing each other. That will affect the price of petroleum products, but not to the extent it would have without the development of the shale deposits around the world.
Hang on to your oil stocks. Wait and see what happens the day after the Iranis set off their nuclear bomb.
The Irani Oil Minister Bijan Zanganeh has said the OPEC members will be cutting production. I suspect what he meant was "you guys are going to cut your production." Iran will not cut their production, especially if they go to war in Syria, Lebanon and Israel. They will need the revenue.
Iran is always making ugly statements and threats about Israel. They may really mean it at this time.
Another armed confrontation in the middle east will surely increase the price of oil and gas; but it is a horrible way for it to happen. This will not be a small war.
Thanks for your thoughts Robert. I appreciate your input.
To be honest, I believe we are entering a time and season in history in which even the experts and pundits increasingly won't be able predict or control the uncertainty and turbulence coming upon the earth-I suspect only the Good Lord will know. :)
I haven't heard the latest on Iran's threats to Israel-but I suspect the pride and arrogance of Iranian leaders will be their downfall. At least the leaders-from I have heard from people from Iran-most people there don't like their tyrannical leaders. But if they do attempt to strike Israel-and I think Israel is doing all it can including computer viruses, etc- to avoid war and attacks,-but if Iran's leaders do strike, I don't doubt that they will have a very rude awakening that they will regret-if they survive.
But yes, from my very limited knowledge of the oil industry, I would likewise tend to think prices would rise for a variety of reasons. Hopefully like you say not due to war which could affect much more than oil prices.
Thanks, blessings!
Robert V. Gill said:
The Irani Oil Minister Bijan Zanganeh has said the OPEC members will be cutting production. I suspect what he meant was "you guys are going to cut your production." Iran will not cut their production, especially if they go to war in Syria, Lebanon and Israel. They will need the revenue.
Iran is always making ugly statements and threats about Israel. They may really mean it at this time.
Another armed confrontation in the middle east will surely increase the price of oil and gas; but it is a horrible way for it to happen. This will not be a small war.