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Thread: Oil prices

  1. #1501

    Default Re: Oil prices

    Quote Originally Posted by king183 View Post
    I think you're correct in our analysis of the situation, but Mug is correct that oil prices do affect inflation. The price of oil is not counted in the "Core Inflation" measure, which is what I think you meant, but the the cost of oil affects the price of a large number of other products made using petroleum and the cost of doing business for those who must transport materials (e.g., manufacturers), which does contribute to inflation.
    It contributes but its not as simple as keep oil low to keep inflation low, but oil is one of 100s of input costs. The fed hiking rates and oil prices aren't really that directly correlated which was his point.

    Lol oil closed down 7%, market is beyond rational right now.

  2. #1502

    Default Re: Oil prices

    $1.99 gas at a couple of places in OKC. I never thought I'd see gas below two bucks again.

  3. #1503

    Default Re: Oil prices

    $1.99 at the OnCue at Hefner & May ! Like!

  4. #1504

    Default Re: Oil prices

    Quote Originally Posted by gopokes88 View Post
    Inflation doesn’t count oil so that’s not true.

    The main reasons for the drop

    is fear of a slowing global economy, and trump talking super tough about Iran and then backing down when push came to shove. When the expectation was sanctions would knock a million barrels a day off the market Saudi and Russia ramped up by a million, waivers were granted and now we’re oversupplied.

    The dollar keeps getting stronger because the fed keeps raising rates. Oil is priced in dollars. Stronger dollar keeps oil prices down.

    The general stock market weakness. Which is somewhat tied to the global economy slowing.

    US production keeps growing at an awe inspiring rate.

    Trump has very little control over oil prices, and now that the midterms are over they’ll stop answering the phone as much.
    The price of oil, and therefore, the price of gasoline and diesel is possibly the single most direct contributors to inflation because every service , raw material, basic good or finished good must be transported from one place to another. Oil is what plastics are made of and plastic is in so many goods, somehow. Our food used fertilizers and chemicals made from petroleum. Oil is not an economic measure but it is one of the most important things the Fed uses. See comments last week on the relationship

    The POTUS does not control the price of oil but he can sure talk it up or down. He did it Monday with just a Tweet.

    You other points are valid and certainly contribute to low oil prices.

  5. #1505

    Default Re: Oil prices

    Quote Originally Posted by mugofbeer View Post
    The price of oil, and therefore, the price of gasoline and diesel is possibly the single most direct contributors to inflation because every service , raw material, basic good or finished good must be transported from one place to another. Oil is what plastics are made of and plastic is in so many goods, somehow. Our food used fertilizers and chemicals made from petroleum. Oil is not an economic measure but it is one of the most important things the Fed uses. See comments last week on the relationship

    The POTUS does not control the price of oil but he can sure talk it up or down. He did it Monday with just a Tweet.

    You other points are valid and certainly contribute to low oil prices.
    Right there is raw material cost and transport cost.

    But there’s also labor, taxes, insurance, storage, credit and 99 other costs. Oil’s move doesn’t translate very much.

    The largest expense for airlines is jet A, and they are more subject to rising oil prices than almost any ther industry except O&G, and yet the price of oil doubled- air fares stayed flat. It doesn’t really have that much affect.

  6. #1506

    Default Re: Oil prices

    Quote Originally Posted by gopokes88 View Post
    Right there is raw material cost and transport cost.

    But there’s also labor, taxes, insurance, storage, credit and 99 other costs. Oil’s move doesn’t translate very much.

    The largest expense for airlines is jet A, and they are more subject to rising oil prices than almost any ther industry except O&G, and yet the price of oil doubled- air fares stayed flat. It doesn’t really have that much affect.
    They're also hedged and enjoy one of the nicer monopolies in recent memory.

  7. #1507

    Default Re: Oil prices

    Quote Originally Posted by chuck5815 View Post
    They're also hedged and enjoy one of the nicer monopolies in recent memory.
    Airlines don't hedge anymore, at least not significantly. Don't confuse making money as being a monopoly, airfares would be rising if they did. The airline industry has finally reached an equilibrium after 40+ years of straightening out from deregulation. Adjusted for inflation, air travel has never been cheaper for the consumer than it is today. The big 3 are big enough to compete with each other now, but not big enough to ever dominate the other 2 carriers. Really, the airlines are in the best position for long term survival than at any other point, a condition I personally hope will continue.

  8. #1508

    Default Re: Oil prices

    Quote Originally Posted by gopokes88 View Post
    Right there is raw material cost and transport cost.

    But there’s also labor, taxes, insurance, storage, credit and 99 other costs. Oil’s move doesn’t translate very much.

    The largest expense for airlines is jet A, and they are more subject to rising oil prices than almost any ther industry except O&G, and yet the price of oil doubled- air fares stayed flat. It doesn’t really have that much affect.
    Airlines do hedge against jet fuel fluctuations. SW is very adept at it while others are not so much. Delta went so far as to buy its own refinery to help control fuel prices. If oil prices rise for an extended period of time, you can be sure airlines will try to raise fares. Competition sometimes will not allow it so that steady fare in the face of higher jet fuel will come out of profits. l guaranty you, if oil prices doubled for a prolonged period, we would see higher airfares. lts happened many times.

  9. #1509

    Default Re: Oil prices

    Delta bought trainer to lower the crack spread of refined Jet A, which helps the entire industry. None of the fuel they make directly gets loaded onto a Delta plane, it is sold on the market and could end up in anyone’s fuel tanks. They are actually about to sell it because it is such a poor performer and the cost to run it is more than the realized gains in cheaper fuel. Remember the cheaper fuel they are influencing helps their competitors, too.

    Southwest has some hedges but nothing like they used to. The airlines have learned that it’s better to control capacity and adjust fares for costs, rather than to blindly chase market share and subsidize losing routes by betting on oil contracts.

    It’s just as likely to lose big on oil futures. It’s a gamble, and for a few years Southwest was losing big on their hedges while everyone else (with fewer hedges) was enjoying the post crash fuel prices.

  10. #1510

    Default Re: Oil prices

    Quote Originally Posted by catch22 View Post
    Delta bought trainer to lower the crack spread of refined Jet A, which helps the entire industry. None of the fuel they make directly gets loaded onto a Delta plane, it is sold on the market and could end up in anyone’s fuel tanks. They are actually about to sell it because it is such a poor performer and the cost to run it is more than the realized gains in cheaper fuel. Remember the cheaper fuel they are influencing helps their competitors, too.

    Southwest has some hedges but nothing like they used to. The airlines have learned that it’s better to control capacity and adjust fares for costs, rather than to blindly chase market share and subsidize losing routes by betting on oil contracts.

    It’s just as likely to lose big on oil futures. It’s a gamble, and for a few years Southwest was losing big on their hedges while everyone else (with fewer hedges) was enjoying the post crash fuel prices.
    Petroleum can essentially be a fungible product. Something produced and put in the system for others to use in New Jersey substitutes for jet fuel in Atlanta. lts one method used as a hedge. As far as other airlines, they discuss their hedging success or lack of it quarterly on airline quarterly reports and conference calls. Type Southwest Airlines oil hedging in Google and there are multiple current articles from analysts and media talking about how Southwest Airlines has staved off fare increases by successful hedges. l'm not in airlines but l do research them for client investments and the subject is always pretty prominent

  11. #1511

    Default Re: Oil prices

    There has been a very strong tie to large crude price spikes and the performance of the broader economy. Higher US crude production in recent years would help offset the severity of price spikes.
    I have concerns about NG.

    https://reason.com/archives/2011/03/...-and-the-reces
    March 8, 2011
    University of California, San Diego, economist James Hamilton noted in a recent study that 10 out of 11 post-World War II recessions [PDF] in the United States were preceded by a sharp increase in the price of crude petroleum. The only exception was the mild recession of 1960-61 for which there was no preceding rise in oil prices.
    Hamilton is not arguing that oil price shocks are the sole cause of recessions, but that they tip an already vulnerable economy into contraction. A 2010 study by economists at the St. Louis Federal Reserve Bank agrees: “For most countries, oil shocks do affect the likelihood of entering a recession.

    In particular, an average-sized shock to WTI [West Texas Intermediate crude] oil prices increases the probability of recession in the U.S. by nearly 50 percentage points after one year and nearly 90 percentage points after two years.” On the other hand, a 2005 study by the Stanford Energy Modeling Forum found that “when oil prices move gradually higher (perhaps somewhat erratically), as they have done over the last several years, they do not directly result in economic recessions, even though the economy may grow modestly slower.” Gradual price increases do not derail economic growth because consumers and entrepreneurs are able to adjust smoothly to them.

  12. #1512

    Default Re: Oil prices

    NG hits a four-year high of $4.84 per million British thermal units.

    This is good news for the state’s economy and tax base. This is also good for a number of our states corporations and thousands of royalty owners.
    NG storage levels are much tighter than in recent years.
    Usage is up. More cold WX is on the way with prognostications of a cold winter.
    The USA is exporting record amounts of NG / LNG…
    The oil price decline of several years ago that led to lower drilling rates has led to lower amounts of associated NG coming on line.

    https://www.forbes.com/sites/greatsp.../#22e88026574c

  13. #1513

    Default Re: Oil prices

    Higher gas prices are the real driver of state GPT revenues.

    We have ok to good oil fields, but the gas fields are very good. If gas went to $10/mcf and oil fell to $35 states economy would be just fine.

  14. #1514

    Default Re: Oil prices

    Price of oil dropping as fast as Dow Jones.
    https://www.google.com/url?sa=i&sour...45451454134397
    https://www.google.com/url?sa=i&sour...45451938198809

    Is America great again yet?

  15. #1515

    Default Re: Oil prices

    Took 10 years, but we are walking upon that can that we kicked down the road in 2008. Trump was stupid to take ownership of this "strong" economy. Fed has to raise rates in order to pretend their in control.

  16. #1516

    Default Re: Oil prices

    ETF - GASL is disappearing. Might consider getting back in after awhile...

  17. #1517

    Default Re: Oil prices

    Quote Originally Posted by Jersey Boss View Post
    Price of oil dropping as fast as Dow Jones.
    https://www.google.com/url?sa=i&sour...45451454134397
    https://www.google.com/url?sa=i&sour...45451938198809

    Is America great again yet?
    That's so weird, I would have thought you liked low oil prices.

  18. Default Re: Oil prices

    Quote Originally Posted by chuck5815 View Post
    That's so weird, I would have thought you liked low oil prices.
    As a consumer, low oil prices are great because prices at the pump are cheaper. But prolonged low oil prices will wreak havoc on our state and city if we're not careful.

  19. #1519

    Default Re: Oil prices

    Quote Originally Posted by baralheia View Post
    As a consumer, low oil prices are great because prices at the pump are cheaper. But prolonged low oil prices will wreak havoc on our state and city if we're not careful.
    This would seem to be reason number 1,000 as to why Oklahoma may want to welcome other industries into the state. The issue is that Oklahoma does not care about education, infrastructure, and other core values that big companies look for when considering if they want to bring jobs to the state. As soon as the powers that be realize this the better off this state will be. Until then I don't feel a bit sorry for anyone that puts all their eggs in one basket.

  20. #1520

    Default Re: Oil prices

    Quote Originally Posted by cbing04 View Post
    This would seem to be reason number 1,000 as to why Oklahoma may want to welcome other industries into the state. The issue is that Oklahoma does not care about education, infrastructure, and other core values that big companies look for when considering if they want to bring jobs to the state. As soon as the powers that be realize this the better off this state will be. Until then I don't feel a bit sorry for anyone that puts all their eggs in one basket.
    You do realize that the economy of OK (at least OKC, in particular) is less dependent on O&G than it has been in a very, very long time, right?

  21. #1521

    Default Re: Oil prices

    Quote Originally Posted by jonny d View Post
    You do realize that the economy of OK (at least OKC, in particular) is less dependent on O&G than it has been in a very, very long time, right?
    While the economy of Oklahoma is not as dependent on oil n gas, it is still disproportionately so. Even more disproportionate is the political influence and power wielded in state government by this industry. With the state barring cities from any revenue source other than sales taxes, municipalities and their schools are at the mercy of state funding.

  22. #1522
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    Default Re: Oil prices

    Quote Originally Posted by cbing04 View Post
    This would seem to be reason number 1,000 as to why Oklahoma may want to welcome other industries into the state. The issue is that Oklahoma does not care about education, infrastructure, and other core values that big companies look for when considering if they want to bring jobs to the state. As soon as the powers that be realize this the better off this state will be. Until then I don't feel a bit sorry for anyone that puts all their eggs in one basket.
    It's very difficult to compete against Texas as well as Colorado. The solution is from within. It would help if Oklahomans could innovate more new ideas for business and industry. I seldom see them trying to do that on Shark Tank. Having a state that more highly values education would assist in that.

  23. Default Re: Oil prices

    Big news out last Friday in case anyone missed it: Chevron agrees to acquire Anadarko Petroleum (who purchased Kerr-McGee back in 2006) for $33 Billion. Apparently Oxy also made a similar offer to APC so it should be interesting to see if this leads to any more large scale M&A activity.

    https://www.google.com/amp/s/www.cnb...tock-deal.html

  24. #1524

    Default Re: Oil prices

    Quote Originally Posted by PhiAlpha View Post
    Big news out last Friday in case anyone missed it: Chevron agrees to acquire Anadarko Petroleum (who purchased Kerr-McGee back in 2006) for $33 Billion. Apparently Oxy also made a similar offer to APC so it should be interesting to see if this leads to any more large scale M&A activity.

    https://www.google.com/amp/s/www.cnb...tock-deal.html
    The combined company will continue to be headquartered in San Ramon. I imagine Houston will remain a large office but I wonder how many executive level employees make the move to California, and how many positions in Houston and Denver (the other large Anadarko office) get eliminated by redundancy?

  25. Default Re: Oil prices

    Quote Originally Posted by BG918 View Post
    The combined company will continue to be headquartered in San Ramon. I imagine Houston will remain a large office but I wonder how many executive level employees make the move to California, and how many positions in Houston and Denver (the other large Anadarko office) get eliminated by redundancy?
    I wonder what they’ll do with the Rockies assets in general. It would seem that they bought Anadarko primarily for their Permian and offshore assets. At least right now, their huge Rockies leasehold and checkerboard mineral position from the old Union Pacific, Central Pacific and Kansas Pacific Land grants appear to be the outlier.

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