Lower Oil Prices

So that's why Senator John McKane said "Russia is a gas station masquerading as a country."

Russia is more than 1100 years old and has established a high culture. The Bolsjhoy theater is even older than the US.

Einstein made a special remark about our country:

"We jumped from barbarism to decadence, without culture".

The man had been locked up in a pit too long, I heard.

I am learning the Cyrillic alfabet already, thought first about Chinese.

A foreign language is an extra friend.

"Lower oil would hurt IS, Iran and Russia, but help the West,"

Six of OPEC member states are part of the coalition that is fighting ISIL. Even Iran! Those six are the biggest producers in OPEC. It could be planned as a means to aid the fight.

Lower oils prices are not a good sign for the economy, overall.

I've always believed that oil priced at less that $3.00 USD/barrel gives big oil ample profit while not gouging the poor slobs who drive old cars because they just can't afford anything else. Like me.

Seriously, $3.00 USD/barrel?

The current price is over $80.00 USD/barrel. It's got a looooooooong way to fall to get down to $3.00 per barrel.

Gas was what I meant.

Oils?

I was at work, and someone wanted me to do something????????????????

Well the 'break even' point of oil production from most of the new sources now is >$80 per barrel...so if the price continues to fall we will start to see shutdown of production from some sources just to keep from losing money.....I think Russia is around $70 per barrel break even....

"The IEA calculated about 2.6 million barrels of oil - among 93.2 million barrels a day produced globally - have a break even point above $80.

In its report, RBC said $80 oil would reduce drilling in U.S. shale oil plays - Bakken, Permian and Eagle Ford - as producers' high-grade their portfolios, but a prolonged slump from premium prices in recent years would be slower to impact the oilsands."

Lower oil prices would reduce the cost of food, which has skyrocketed the past few years. Reduced transportation costs of fertilizers and feeds will help farmers and ranchers, and the reduced transportation costs of produce, grains, and meat will help consumers across the globe.

Certainly in the West, lower oil prices will mean a lower price for gasoline which is still sitting at nearly twice what it was in 2008.

In general, lower oil costs puts a downward pressure on inflation. I'm ok with that.

"Moody's downgrades Russia's debt

Moody's downgraded the country's debt by one notch Friday, citing the ongoing conflict in Ukraine, capital flight and falling oil prices. The debt rating is now Baa2, just two notches above "junk" status."

"The country relies heavily on oil to bankroll its budget -- over half of the government's 2012 revenues came from oil and gas, according to the latest data from the U.S. Energy Information Administration."

http://money.cnn.com/2014/10/17/news/russia-moodys-downgrade/

Moody's is the biggest manipulating junk itself. The Saudies cannot with a too low oil price to keep up with their extended cultivated cost of living. The frackers will be out of business when this takes too long (guess this is called poking in your own eyes).

This comfort zone is even a few dollars above the break even cost of Russia, that has sold a lot of gas at good prices and has built up a "proficit" (no debt but reserves)

The newspapers are full of lies these days. Tried Zero Hedge lately?

It is about time that everyone comes to his/her sense and starts to invest in building up instead of destroying.

"S&P downgraded Friday Russia's foreign currency rating to one notch above "junk" status to 'BBB-/A-3' from 'BBB/A-2', as well as cutting local currency local-currency long-term rating to 'BBB' from 'BBB+'."

http://www.cnbc.com/id/101582313

"Russia's currency has declined another 1.1 per cent to a new record low of 38.767 against the US dollar this morning, extending its loss since the start of July to over 14 per cent as money seeps out of the country on the back of western sanctions and geopolitical tensions.

The rouble is by some distance the worst-performing major currency in the world today, this month, and over the past three months."

http://www.ft.com/fastft/206822

The credit rating agencies that grade national currencies are the same ones that rated sub prime loans as AAA a few years ago. They sidestepped all the flak that rained down on the banks and are still doing business now as incompetently as they did then. Downgrading a currency affects the value so any proficy becomes self fulfilling.The credit agencies are just in it to make a buck in the good old American way. The real idiots are the financiers and politicians who take notice of the hype.

http://www.heritage.org/research/reports/2014/09/russias-avoidable-economic-decline

I am very cautious in my comments.

Coming from a micro economy country. I have learned not to trust too much what the financial "brains" are not telling us. The 2008 crisis fell upon our head almost without any pre- warnings and what is worse the symptoms have never been dealt with, so that the bubble has been repaired with a immense bigger bubble, that is about to burst.

As for Russia, the sanctions makes them thinking more self sustainable, so they will develop the part of missing pieces in their industrial complex, doing 2 things: or self finance, which is perfectly possible because of their reserves.

The ruble going down helps their export enormously, especially direction East.

Contracts are being signed between Russia and the rest of the non Nato countries

2/3 of the world population.

This time. unlike in 1991 there is a different Russia and my 2 cents are that first the

EU will collapse. GDP as abused used now tells you nothing about a country anymore, especially in our hemisphere.

Mu guess is that the ruble will not have problems inside the country, because we are talking about a nation that has everything and has far lower production costs as the West.

The 'economic problems' that caused the collapse of the world economy in '08 were shoddy financial instruments and over extension of credit, together with over leveraged banks..those conditions have all been corrected...and there were plenty of warnings, it's just that nobody was listening or reacting....The Russian economy is on the verge of collapse for the reasons cited in the above link, and the falling oil prices....You seem to be in complete denial....Trade agreements are only good if you have something to trade....in Russia's case that is oil and gas for the most part...Weakening of the currency is only viewed as a positive if you have a strong currency to begin with, or relative to your trading partners, at some point when your currency is valued too low, it becomes negative...ie; a bad thing....because it signals runaway inflation and economic instability, this makes you a bad trading partner...

Your assertion that the Russian ecconomy is about to collapse fails to take into account just how dependent Europe is on Russian oil and gas. Germany is often quoted as an example, taking 36% of it's gas and 39% of it's oil from Russia (Old statistics, the current figures are higher but I don't know by how much) Other countries are much more dependent. Finland, Estonia, Lithuania, Macedonia & Latvia !00% of their gas, Slovakia, Belarus, Serbia Montenegro & Bulgaria over 90%, Czech Republic & Greece over 75%, Hungary, Slovenia, Austria, Turkey, Ukraine & Poland around 50%, Italy & Romania over 25% France & Switzerland over 10%. Just as the US government bailed out Fannie Mae & Freddie Mac because they could not afford to let them fail, so Europe has to keep oil & gas flowing from Russia, at least until alternative energy is available, therefore it cannot allow the Ruble to fail.

Financial Times / Oct 14 2014

"With oil prices sinking beneath $90 a barrel, the EU is increasingly confident that Moscow's treasury does not want any cut in gas sales nor risk more European customers making a generational shift away from gas to other fuels. "They realise that they would also get into trouble," says Karel De Gucht, the outgoing EU trade commissioner. "Russia also has an interest that they are seen as a reliable supplier".

But it may be too late for the Russians to stop the gradual but profound shift away from Gazprom that is under way. Mr Rombaut's plans at Agropolychim show that Moscow does not hold all the cards. Next year, he will switch from gas to biomass, running on straw and woodchips. That is highly significant for Gazprom because Agropolychim and Neochim, Bulgaria's leading fertiliser plants, jointly consume about 25 per cent of the country's gas."

The above view of the Financial Times reflects that maybe Russia is more beholding to Europe than the other way. It could be the 'bare bear wallet' that actually brings the Ukraine to some sort of normality.

The oil companies of the world have also been selling off their refineries because of the high oil input cost. The reducing price / barrel has actually improved the profitability of these refineries and the communities they support. It's a world where someone's loss is a winner for others.

Gas in Europe is gas, like LNG or otherwise fuels in gaseous phase.

$90.00 is crude, to refine into lots of chemicals, and also what is called gasoline.

While not part of the discussion, gas prices in Australia are based on Singapore prices, and Wednesday can be more than 10% cheaper than most other days in the week. Price manipulation has some strange bedfellows. As for giving the Russian admin and the money behind IS a bit of a headache, I am all for it. On an historical side, as a uni student with a flower power Mini, a dollar would buy 60 miles of weekend wickedness. Ahhhh those were the days ... and her name was ..... !

SECURITY!

Oil is taking a downfall and there are several key players in the oil business that are NOT happy about this turn of events. Oil by itself is not user-friendly as we know it. It must be refined.

Point in question; what security do these refineries have in place to safeguard against a deliberate act of sabotage?

oil prices are artificially inflated above the US break even point of $35 bbl. Many shale oil fracking operations were doing well in business at less than $80 bbl. but it's and election year and all the normal reasons for fluctuation are moot.