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View Full Version : Falling oil Prices might mark a global recession



KingScuba
01-20-2015, 07:53 PM
Before posting in this topic, read this - http://forums.smitegame.com/showthread.php?53670-SRS-A-guide-to-this-tag-and-serious-discussion

With oil prices hitting lows we haven't seen for years (Barrels of oil have plummeted from 110 a barrel to below 50 USD a barrel), this might be the making of a global recession.

Looking back to the height of the USA's recession, oil took a dip down to the mid 30's per barrel, before finally rising back up.

On top of this, the Euro is also losing quite a bit of its power, along with a few countries threatening to stop using the Euro altogether.

Sources : http://www.valuewalk.com/2015/01/crude-oil-volatility/
http://www.valuewalk.com/2014/12/plunging-oil-prices-recession/
http://www.aljazeera.com/news/europe/2015/01/euro-plummets-as-global-oil-prices-collapse-201515223845848495.html

Thoughts?

Dmantakae
01-20-2015, 08:45 PM
Doesn't the price typically dip before and then skyrocket over summer?

KingScuba
01-20-2015, 09:04 PM
Doesn't the price typically dip before and then skyrocket over summer?

of course, but it doesn't dip by more than 10 USD. Check out the chart on the first link. Since 2009, it's stayed around the 100 dollar mark. It's dipped all the way down to 48 USD over the last month.

Aurasai
01-21-2015, 01:12 AM
The first war for shale gas already started in Ukraine, with more countries to follow.

RippleApple
01-21-2015, 02:13 AM
It was an election year and everyone knew Republicans would win. When Republicans win elections, businesses tend to feel more confident and the economy tends to improve for the common man. When Democrats win, all the right-wing fearmongering and bias tends to result in high prices for the common man.

Myrkulyte
01-21-2015, 02:25 AM
It was an election year and everyone knew Republicans would win. When Republicans win elections, businesses tend to feel more confident and the economy tends to improve for the common man. When Democrats win, all the right-wing fearmongering and bias tends to result in high prices for the common man.

Who are republicans and democrats? The left-side and right-side political partids?

RippleApple
01-21-2015, 02:29 AM
Who are republicans and democrats? The left-side and right-side political partids?

Yeah. Keep in mind that oil thing's just my personal theory though.

Think of them roughly as the whigs and tories, but not really.

Disquieted1
01-21-2015, 06:37 AM
Supply is up, demand is down. So prices go down. Why would this indicate a recession?

I'm just celebrating that gas (or petrol) is under 2 usd/gallon

Myrkulyte
01-21-2015, 06:47 AM
Supply is up, demand is down. So prices go down. Why would this indicate a recession?

I'm just celebrating that gas (or petrol) is under 2 usd/gallon

IIRC our world petrol demand is over 9000, we need petrol for nearly everything. I doubt the demand is so low

Disquieted1
01-21-2015, 06:48 AM
IIRC our world petrol demand is over 9000, we need petrol for nearly everything. I doubt the demand is so low
Is there a scale for measuring petrol demand? Is it a standard scale or a relative scale?

KingScuba
01-21-2015, 11:13 AM
As myrk said, demand for oil is still skyhigh. Everything you touch requires oil to make it in one way or another. Whether it needs the oil to operate (such as a car) or A piece of wood (Which needs a machine to mill it, and the machine needs oil to run)

Everything you eat, drink, see, or hear requires oil to run. That is the state of our world at the moment. That oil would plummet so hard is shocking to everyone.

Aurasai
01-21-2015, 12:27 PM
While technological progress demands renewable clean energy that has proven its efficiency from many many years, energy companies are turning more and more towards shale gas and fraking, which is both expensive and devastating to the enviorment.

RippleApple
01-21-2015, 01:36 PM
As myrk said, demand for oil is still skyhigh. Everything you touch requires oil to make it in one way or another. Whether it needs the oil to operate (such as a car) or A piece of wood (Which needs a machine to mill it, and the machine needs oil to run)

Everything you eat, drink, see, or hear requires oil to run. That is the state of our world at the moment. That oil would plummet so hard is shocking to everyone.

Well, electric cars are becoming more affordable and commonplace... maybe demand really has gone down.

Or maybe supply really has gone up, considering the number of permits during George Bush's second term that are finally finishing being built and resulting in an influx of oil in the marketplace.

Grimfortress
01-22-2015, 12:42 PM
Much of the oil price bounce is likely due to dropping of speculation on commodity futures, and intentional actions by major oil producing nations and companies. For many years the oil market has been one uniform international market with no regional competition, all solded as commodity futures. That tends to kill out competition. I doubt we will see a global recession, we'll just see lots of negative economic pain for some entities and positive gain by others.

LegioXI
01-27-2015, 11:43 PM
It was an election year and everyone knew Republicans would win. When Republicans win elections, businesses tend to feel more confident and the economy tends to improve for the common man. When Democrats win, all the right-wing fearmongering and bias tends to result in high prices for the common man.

That is a VERY shortsighted view of oil, remember that USA is not the only oil consumer on the planet.

USA fucked over Saudi Arabia with fracking for shale oil and supply jumped a lot, driven by the determination to cut demands for oil out of the tar sands from Canada. Fracking turned out to be VERY profitable and the supply was abundant, but it cut a significant part of OPEC, particularly Saudi's market share on oil sales. So when the prices started to slide last autumn with no sign of stopping, Saudi and OPEC decided to keep production unchanged and strangle US shale oil industry. Canada, Venezuela, Iran and Russia are collateral victims in this entire story.

Aurasai
01-28-2015, 02:43 AM
Canada, Venezuela, Iran and Russia are collateral victims in this entire story.

Would say Ukraine most of all.

RippleApple
01-28-2015, 12:11 PM
That is a VERY shortsighted view of oil, remember that USA is not the only oil consumer on the planet.

USA fucked over Saudi Arabia with fracking for shale oil and supply jumped a lot, driven by the determination to cut demands for oil out of the tar sands from Canada. Fracking turned out to be VERY profitable and the supply was abundant, but it cut a significant part of OPEC, particularly Saudi's market share on oil sales. So when the prices started to slide last autumn with no sign of stopping, Saudi and OPEC decided to keep production unchanged and strangle US shale oil industry. Canada, Venezuela, Iran and Russia are collateral victims in this entire story.

No, but there's a reason why the USA's oil has been cheaper than European oil for a very long time at the consumer level. Our politics highly impact the prices of oil because the dollar was the standard currency for a very long time. There might be other reasons, but this probably compounded that fact.

LegioXI
01-31-2015, 06:17 AM
No, but there's a reason why the USA's oil has been cheaper than European oil for a very long time at the consumer level. Our politics highly impact the prices of oil because the dollar was the standard currency for a very long time. There might be other reasons, but this probably compounded that fact.

Petrol in US is way cheaper because 1. they have a strong national production (shale gas, Texas, Alaska) while their tax on fuel is minimal, while in Europe we got Norway and UK extracting oil, while we buy natural gas from Russia in the winter, not to mention that the taxes on fuel in Europe are astronomically high. Even if oil has falles below $45/bbl as it is now, fuel in Europe hasn't gotten cheaper because in a lot of countries excises are fixed, not based on a % off the gross price of fuel. For example, where I used to live taxes were 78 eurocents per liter of fuel, meaning gasoline and diesel, and as a result fuel price dropped from 1.4 euros/liter in summer last year to 1.15 euros/liter, compared to US where not only they buy in gallons not in liters, right now the average price per gallon ($2.2/gal) translates into 0.52 euros/liter.

Loulina
02-01-2015, 06:40 AM
if demand isnt changing than supply is in excess. Which means those who are major producers of oil still think it is wrothy enough to sell that oil even with the %40 decreased price..if you didnt think that you would cut the supply (leave the oil underground for further sale) and prices would balance themselves.then it means there are high rates of interest (might be in any currency) somewhere for that money earned through the selling of that oil or oil producers are investing that money in some place else which is profitable enough to cover that %40 decreased sale price.(i am estimating it might be weapon industry at the moment. it an additional and profitable area during times of war)
If there are no extra investments by oil producers from my point of view interest rates of any state bonds or stocks shouldnt be that high to cover that much of decrease, somebody somewhere is overexaggrating their value currently. it probably wont end well.

AllknowingWolf
05-12-2015, 01:36 AM
This is old. But supply and demand for oil, is clearly a load of bollocks. The prices plummeted recently...and isn't the whole point of them going up for all these year is because no one was letting us drill...well, no one is letting us drill still and it only would make sense for prices to continue to rise as supplies become scarce. Its like diamonds, they cost a fortune but they are worthless and actually very easy to find.

Low prices leading to a recession is ridiculous...and is clearly a media scare tactic.