Oil went from roughly $140 down to nearly $40 in a very short time in late '08. How long did it stay down there? Not long. Of course back then Obama wasn't yet in office.
And the Saudis went crazy forcing everyone to cut production. This time, the Saudis are the ones driving the price down. I don´t think this will last forever like some people are saying...but I do think 2015 isn´t going to get much above where it is now. Every day the Saudis seem to be saying something more powerful about lowering prices, they haven´t even hinted that they are considering cutting production.
I figured by hurricane season there would be some excuse why the cost of gasoline was going up, there always is. Right now I think it is more about propaganda to keep people in a panic mode over prices. If we didn't worry about oil we might start to worry about things that actually might be worth worrying about. In the end it all boils down to someone other then me making some money. I try not to worry about it to much, there does come a point where you have pretty much all you need so stuff like this is just more or less... business as usual. Don't think we will see the cost go up till they pull the winter grade fuel in the spring.
OPEC seems to think that it has little power at the moment to control oil prices, so I'm guessing for now that any cut would have limited impact. OPEC was always the swing producer - i.e. they made up for the slack of production from the non-OPEC countries - and they accounted for 40% of global production. We'll have to see how the oil production dynamic evolves in coming years.
The President of Venezuala is in Saudi Arabia at the moment. I am sure he is on his knees begging them to stop talking about letting oil go to $10. That is another country, besides Russia, that is getting crushed by these prices.
Nice article in USAtoday from a saudi prince saying oil will never go to $100 again. One of his main points is that OPEC is basically meaningless anymore because all of the countries cheated so badly back in the 90s when Saudi was trying to cut production. Saudi cut, and others just took market share from them. He said it would be stupid for Saudi to take a double-hit.. lower prices and lower production. His comments sounded to me like what we used to consider OPEC isn´t even a reality anymore, they are independent countries again. He also came right out and stated what I said a few days ago. This is killing the new shale industry and drilling companies are already noting cancelled orders.
I'm not sure about gas prices in the future. What I would have expected is for lower gas prices & more exports of oil & natural gas in the next coming yrs. bc it would only be natural perhaps for an oil, gas exporting nation to lean more on green energy so oil producers make more money exporting oil, gas. Not that I'm thrilled about all the green energy resources were using now.
Looking at the market, oil prices continue to slide. Goldman Sachs today slashed its short-term price forecasts for Brent oil to $42 a barrel (it's currently still above $45). OPEC has not made any indications for production cuts, meaning that oversupply is likely to continue and stocks such as UWTI and USO are likely to continue to slide until supply and demand rebalances. OPEC is set to have their next official meeting not until June to discuss output cuts.
Check out the USA interview with Saudi. It just seems to me like OPEC is window-dressing at this point. Saudi Arabia has no confidence in other members to cut oil prices even if they all say they will. For decades, the fact that OPEC tried to work together propped up oil prices, if they lose confidence in each other, than a real free market takes over, which is what I think is happening. It is going to be a race to the bottom. There is no way Venezuala is going to cut production, their economy is in shambles and their President is incapable of thinking anything past tomorrow.
If the production is cut we will be in trouble because the prices will raise a lot more than they were decreased now. It's a big chess game, no one knows what will happen next.
