re: What’s bad about the price of oil dropping?

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Just getting back to the OP, wild price fluctuations in major commodities tend to disrupt a lot of things.

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They also tend to be great opportunities for intelligent investors. Intelligent. Something you need not worry about of course.

Add IDIOT to DICK. Some of he finest Americans or people period work in the industry. Made recent trip through the basin and met several. It was inspiring to say the least. They work like hell and make a solid living when times are GOOD. And your lunacy about the income of a CEO shows what a goofus you are. The number of them is so small as to be insignificant. One in a million or more! And those are the people who earn and then invest in more businesses that employ millions more.

And both pay the way for the screw-up class (you?) so they can "draw" and lay around pizzing and moaning. Or hide behind their liberal arts degree, contributing zero and driving their 8 year old Prius to a coffee shop where more semi-employed freaks gather and talk about their cats or Bernie.

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Oil conglomerates who have half a foot in solar and wind will start pushing for alternative energy (since they can't compete).

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Name these oil conglomerates. Until then this is a fantasy talking point.

For refiners it's a blow because all crude is purchased of off futures. So the millions of barrels of crude purchased and sitting in tankage was purchased at a higher rate and will be processed and sold as commercial fuels at a much lower rate than planned.

Small adjustments down can be managed as losses. Huge swings are tough. Theoretically if you manage the business right, it comes back once the market corrects and pricing goes back up.

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by Tiger Roux
All these folks still think they will still be selling the same amount of stuff and they save all this money on transportation cost.
Who are you going to sell it to and deliver it to ?
The oil business is one of the largest sectors of the economy.
If oil prices remain low for more than a few months it will have major implications for a lot of companies and their suppliers. Millions and millions of jobs lost and stock market will be in the tank.
Folks that think they live in a bubble and this is a good thing have their head in the sand.

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Your talking to a 4 decade(since late 70’s) entrepreneur bud

Historically you are dead wrong!

Private sector thrives with low oil prices, always has

All starts with lower trucking prices and flows downhill

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price of airplane tickets will go down. The price of transporting goods will go down.

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The price of fuel will go down. However the airlines and shipping companies have never lowered the price to correct for lower fuel cost. They take the profit.

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Oil prices going down is not going to effect anyone that works for or with O&G companies for at least a year.

Budgets are made annually and spending of the entire budget must be done or else they risk an automatically decreased budget the following year.

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Budgets will start to be lowered this morning and service companies will be told to lower their service cost this week or be let go. Rigs will start to be sent to the yard this week.

We started changing our plans for the year last week when oil was below 50. More change coming with this price drop.

The oil companies are not worried about haveing a problem of easing budgets when needed. If oil goes back up budgets will be raised to increase activity.

The name of the game since 2014 - 2015 price crash is cash flow. Investors are looking for companies that are cash flow positive and oil companies will adjust budgets to be cash flow positive.

I'm in the oil and gas business for the past 25 years.

Here is my take.

The demand for oil and gas isn't going away. Once this Coronavirus outbreak runs its course and the Russians/OPEC work out their crap, the markets will have a correction back upwards.

The oil bust from the past few years caused many major offshore projects to be delayed as drilling and exploration practically stopped. The bloated payrolls and headcount from 2014 in the industry isn't there anymore. Most companies are already working lean. Those offshore projects have been ramping up now big time in the past 18 months. And most have hit FID and are buying equipment to have first oil in 2021-2024.

The reason why these projects are moving forward is two fold. 1) We have to replace the oil that was being used over the past 4-5 years. 2) The oil companies have leases on offshore fields that they lose if they don't reach certain development milestones.

$30 dollar oil today doesn't mean squat to a project that won't be producing oil for another 2-4 years. They expect fluctuations in price. These fields produce for 25 years.

The fracking side is more influenced by current market trends than the mega projects because their drilling/producing timeline is much shorter and the lifecycle of the well is much shorter.

The global demand for products is still going to be there. It's not like the billions of consumers on the planet suddenly all died of Coronavirus. The ramp up to "restock" the world will be enormous once the supply chain gets back on track from the virus delays. And this means oil and gas consumption.

Whatever happens on the next few months will be temporary.

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Whatever happens on the next few months will be temporary.

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Agreed, my only concern is that the efficiency that the US shale market consumed carried over to the Saudis. The Saudis tried to frick the US shale plays over and it didn’t work. We were too efficient and the banks had so much invested they kept throwing most companies money to stay afloat.

I’m not sure what you know about 2020 and 2021 budget, but the overwhelming majority of companies are staying within cash flow. The banks aren’t doing that again.

And global demand because of China will be an issue longer than some think, IMO. Ironically what would be best is if China really got fricked. Diversifying the supply chain and making investments outside of China will pay dividends down the road.

Just depends on where you live. In south LA, oil plummeting is terrible because so much of the economy is tied to oil and gas. So when those oil companies start laying people off or shutting down completely, the effect trickles down to a lot of non-oil businesses in the area. Restaurants, retail, real estate all feel the pinch because all the oil field baw customers are out work.

If you live somewhere that doesn’t have much O&G in their local economy, low prices are great. Cheaper travel, cheaper price for goods since it costs less to transport and manufacture