Long term OIL

[tyz]

Thanks for your opinion. That is exactly what I thought. The price will collapse again.

Do not forget the oil production decline in Libya because of increasing political instability. I guess it will be the next battle ground for ISIS.

The oil price crash is over says an article of financial post and predicts that the recovery of Alberta’s hard-hit economy begins. It is too early and I think that is more a wish than a fact.

There will not be a recovery in the crude prices anytime soon. Because there is still an oversupply of close to 2 million barrels per day, and the storage facilities are all filled up 110% of their capacity. The temporary spike was caused by the supply disruption in some of the oil producing countries (pipeline sabotage in Peru, pipeline explosion in Nigeria, and reduced output from Iraq).

[jaysabi]

<BS skipped>

So there you have it, plain-as-day proof from your own source that the conclusion you drew is incorrect.

So you make claims on me being wrong and not on the article itself, which (its author) according to your own logic should be the ultimate miscreant, since you yourself previously said that betting on oil (price) is not the same as betting on oil industry (sector). Okay then, but you still didn't draw your own conclusion ("not a bet on what oil is going to do at all", which I totally disagree with), that is, what Buffett is actually betting on as this article pretends he is, not me...

Note, I didn't shy from doing just that

I've already stated my point, sorry if you can't keep up. Buffet doesn't gamble, he invests. Read his shareholder letters over the last 30 years. He publishes them every year, and states in very clear language what his investment strategy is. I'm sure you're very sure he's gambling on oil price, but he isn't. He's a fundamentalist as an investor, which is the opposite of speculation. He buys companies that make solid, dependable money regardless of what the market as a whole is doing, and when the the market is pessimistic about a sector or industry, he can swoop in for a better price. That's what he did with CSX, Heinz, and that's what he's doing here, except he's opportunistically buying shares instead of the whole company.

[hgamezoom]

<BS skipped>

So there you have it, plain-as-day proof from your own source that the conclusion you drew is incorrect.

So you make claims on me being wrong and not on the article itself, which (its author) according to your own logic should be the ultimate miscreant, since you yourself previously said that betting on oil (price) is not the same as betting on oil industry (sector). Okay then, but you still didn't draw your own conclusion ("not a bet on what oil is going to do at all", which I totally disagree with), that is, what Buffett is actually betting on as this article pretends he is, not me...

Note, I didn't shy from doing just that

I've already stated my point, sorry if you can't keep up. Buffet doesn't gamble, he invests. Read his shareholder letters over the last 30 years. He publishes them every year, and states in very clear language what his investment strategy is. I'm sure you're very sure he's gambling on oil price, but he isn't. He's a fundamentalist as an investor, which is the opposite of speculation. He buys companies that make solid, dependable money regardless of what the market as a whole is doing, and when the the market is pessimistic about a sector or industry, he can swoop in for a better price. That's what he did with CSX, Heinz, and that's what he's doing here, except he's opportunistically buying shares instead of the whole company.

Interestng point to note there. Going to take up all of buffet's shareholder letters and see what he's had to say down the years

[jaysabi]

Buffet sold conoco, he took the refiner side because there is a strong arbitrage from cheap oil to less cheap oil products and money to be made in that production I presume.  cany as ever

According to jaysabi, this is no more than an anecdotal evidence. So, does Buffett bet on falling oil prices or on rising oil prices when he sells production stocks and buys processing stocks?

Sorry you're having so much trouble with this. I clearly stated what the anecdotal data point was:  it is presently more profitable to refine oil to gasoline than normal because gasoline prices have not fallen as much as oil. This is only a temporary circumstance, oil and gas prices normally track each other very reliably.

So unless your thesis is Buffet is making a major short term investment (something anathema to his entire investing career) to take advantage of a temporary condition, you have to conclude he's not investing in a circumstance, but a profitable company that will return value over many years, which is consistent with every investment he's made through Berkshire and consistent with the strategy he elucidates in his shareholder letters about exactly what his strategy is.

[Yogafan00000]

When you forecast out 5 years in your personal life, what kind of fuel do you see yourself putting in your vehicle?

Is it still gasoline/diesel?  Or is it something else?

[botany]

When you forecast out 5 years in your personal life, what kind of fuel do you see yourself putting in your vehicle?
Is it still gasoline/diesel?  Or is it something else?

With such low oil prices, it is unlikely that other energy sources will receive sufficient funds for development.
If oil prices increase again, people will start looking at alternate sources of energy.

[ASHLIUSZ]

consumers are benefiting from lower oil and gas prices, oil producing companies and countries are being challenged by lower revenues..

[sishendaoye]

consumers are benefiting from lower oil and gas prices, oil producing companies and countries are being challenged by lower revenues..

Well it seems everybody body is benefiting now.
Airliners make more profit, we consumers pay less for oil/gas at a gas station etc. If we/you are smart you start also buying/investing some oil obligations. This way you benefit double of it.

[lixer]

Besides, the article headline is Warren Buffett's $1 billion bet on oil (i.e. price of oil going up or down), surely not Warren Buffett's $1 billion bet on oil industry (i.e. success or failure of the oil industry) as you pretend it to look. These are not the same, are they?

So who is actually drawing wrong conclusion and inspiring deliberate confusion?

As you say it is a bit complicated but I can say that if price of oil decreases from a value i.e cost of extraction then we have a bankrupted industry and if it rises from a value then rivals of oil can overcome and I think both of oil and oil industry have the same fate.

Now over the past few days the price of oil has increased to a small extent. If this increase continues surely industry will boom high and the east Asian countries will be the most beneficiaries.

But before achieving a high price for oil, I think the Arab countries will not have remain their oil wells with an oil as they have increased their output too much. They have to keep a limit on their outputs for the sake of future.

[jaysabi]

When you forecast out 5 years in your personal life, what kind of fuel do you see yourself putting in your vehicle?
Is it still gasoline/diesel?  Or is it something else?

With such low oil prices, it is unlikely that other energy sources will receive sufficient funds for development.
If oil prices increase again, people will start looking at alternate sources of energy.

But this is incredibly shortsighted. Already there is progress in alternative energy for transportation. Natural gas is used as an alternative in the heavy duty trucking industry, and in fleet operations (companies and cities that run buses or waste removal services are the largest users of natural gas for trucking and buses), and then there is Tesla and the innovations they are making and forcing other automobile manufacturers to also compete in electric vehicles. Oil is still cheap and easy, and we've built 100 years of infrastructure that runs on oil for transportation. You can't just flip a switch and and switch fuels, but progress is being made. All that said, oil will be the dominant transportation fuel for the next 30 years, but we've all known for a very long time that oil is finite and another plan would be needed.

[bryant.coleman]

Do not forget the oil production decline in Libya because of increasing political instability. I guess it will be the next battle ground for ISIS.

Yeah.. I missed Libya in my post. Right now, most of the oil fields there are controlled by either the government or by the non-ISIS rebels. However, recently the Islamic State has succeeded in capturing a few of the oil fields (Dhahra, Bahi, Mabruk.etc), and some of the major oil terminals and ports (especially those in Ras Lanuf, Es Sidra and Zueitina) are very vulnerable to attacks by the ISIS barbarians.

[coinplus]

Besides, the article headline is Warren Buffett's $1 billion bet on oil (i.e. price of oil going up or down), surely not Warren Buffett's $1 billion bet on oil industry (i.e. success or failure of the oil industry) as you pretend it to look. These are not the same, are they?

So who is actually drawing wrong conclusion and inspiring deliberate confusion?

As you say it is a bit complicated but I can say that if price of oil decreases from a value i.e cost of extraction then we have a bankrupted industry and if it rises from a value then rivals of oil can overcome and I think both of oil and oil industry have the same fate.

Now over the past few days the price of oil has increased to a small extent. If this increase continues surely industry will boom high and the east Asian countries will be the most beneficiaries.

Yeah, with such a low price they are earning nothing with their oil, and if the price increased they will be more wealthy than any other industry, But everyone want a low price, for their machinery to run.

[Kevin77]

I also think the price of oil will rise toward the $50 level soon, but I don't think that the $100 level is likely to observe in a medium term.

I strongly agree with you about this arising although previously I did not think like this!

But I think it is not a possibility in the coming future. Maybe in the year of 2020 it may occur and the price height up to about $80 and $100, but currently in this time it is not possible.

[Decoded]

I also think the price of oil will rise toward the $50 level soon, but I don't think that the $100 level is likely to observe in a medium term.

I strongly agree with you about this arising although previously I did not think like this!

But I think it is not a possibility in the coming future. Maybe in the year of 2020 it may occur and the price height up to about $80 and $100, but currently in this time it is not possible.

With all the electric cars becoming cheaper and more widely available, I think they'll cause the price to fall. I wouldn't recommend investing long term.

[sana54210]

Besides, the article headline is Warren Buffett's $1 billion bet on oil (i.e. price of oil going up or down), surely not Warren Buffett's $1 billion bet on oil industry (i.e. success or failure of the oil industry) as you pretend it to look. These are not the same, are they?

So who is actually drawing wrong conclusion and inspiring deliberate confusion?

As you say it is a bit complicated but I can say that if price of oil decreases from a value i.e cost of extraction then we have a bankrupted industry and if it rises from a value then rivals of oil can overcome and I think both of oil and oil industry have the same fate.

Yeah you are right, but one of the fact is that the Saudi Arabia and Iran, in order to destroy each others industry, increased their output too much and kept the price at historical low value.

[deisik]

Besides, the article headline is Warren Buffett's $1 billion bet on oil (i.e. price of oil going up or down), surely not Warren Buffett's $1 billion bet on oil industry (i.e. success or failure of the oil industry) as you pretend it to look. These are not the same, are they?

So who is actually drawing wrong conclusion and inspiring deliberate confusion?

As you say it is a bit complicated but I can say that if price of oil decreases from a value i.e cost of extraction then we have a bankrupted industry and if it rises from a value then rivals of oil can overcome and I think both of oil and oil industry have the same fate.

Yeah you are right, but one of the fact is that the Saudi Arabia and Iran, in order to destroy each others industry, increased their output too much and kept the price at historical low value.

When the price of oil was at its lowest in January there was no Iranian oil on the market, save only for the oil they sold to China and bootlegged to Russia. But the amount of this oil was far below what they had been selling before the sanctions...

What you mean was actually market expectations and fears stirred up by pernicious and malevolent HFT algos (or just the algos, lol)

[n0ne]

When you forecast out 5 years in your personal life, what kind of fuel do you see yourself putting in your vehicle?
Is it still gasoline/diesel?  Or is it something else?

With such low oil prices, it is unlikely that other energy sources will receive sufficient funds for development.
If oil prices increase again, people will start looking at alternate sources of energy.

Now itself alternate energy sources were produced. But this won't long last. At any moment the oil usage won't get cut by the alternate energy generators.

[tyz]

Oil Prices Fall Fast On Huge Inventory Build

We are reaching new historic high inventory oil peak levels.

http://oilprice.com/Energy/Energy-General/Oil-Prices-Fall-Fast-On-Huge-Inventory-Build.html

[botany]

When you forecast out 5 years in your personal life, what kind of fuel do you see yourself putting in your vehicle?
Is it still gasoline/diesel?  Or is it something else?

With such low oil prices, it is unlikely that other energy sources will receive sufficient funds for development.
If oil prices increase again, people will start looking at alternate sources of energy.

Now itself alternate energy sources were produced. But this won't long last. At any moment the oil usage won't get cut by the alternate energy generators.

Alternate energy sources are present, but they need scale before they become financially available. Right now, they get some support from various governments in the form of tax breaks and subsidies. As long as there is cheap oil available, people will see no reason to switch to alternate technologies.

[KennyR]

Oil crisis is expected to continue till the end of this year. Long term oil price fall has made most oil dependents under recession. Only growth is expected on oil price peak.