The reason that crude oil price crashed

[panju1]

We should all listen to what the experts say. 


In 2008 Goldman Sachs warned of oil at $200. Now it says below $80
http://www.biznews.com/video/2014/10/28/in-2008-goldman-sachs-warned-of-oil-at-200-now-it-says-below-80/

[scarsbergholden]

simultaneously with the Japanese bringing nuclear back online

Reasonable explanation especially since Abe, who is conspicuously pro nuclear reopening, won a decisive election victory a few weeks ago. While only one (or possibly zero, I'm not sure) Japanese nuclear plant has literally reopened so far, the market may be responding to expectations they will reopen.

There was a large run up in oil prices from about 80 USD to 120 USD in 2011 after Fukushima.

A significant increase in the use of nuclear power in Japan (and more importantly elsewhere) will likely lead to long term lower oil prices. It remains that nuclear energy is much safer and much cleaner then other types of energy (including 'green' energy like solar and wind)

[picolo]

simultaneously with the Japanese bringing nuclear back online

Reasonable explanation especially since Abe, who is conspicuously pro nuclear reopening, won a decisive election victory a few weeks ago. While only one (or possibly zero, I'm not sure) Japanese nuclear plant has literally reopened so far, the market may be responding to expectations they will reopen.

There was a large run up in oil prices from about 80 USD to 120 USD in 2011 after Fukushima.

Decreasing demand and increasing supply is the reason oil crashed.

[NewLiberty]

A significant increase in the use of nuclear power in Japan (and more importantly elsewhere) will likely lead to long term lower oil prices. It remains that nuclear energy is much safer and much cleaner then other types of energy (including 'green' energy like solar and wind)

Because windmills also sometimes create superfund radioactive sites where human life is impossible for generations?
Nuclear is safer and cleaner, except when it isn't.  Fusion reactors please.  These fission fails are for the lose.

[NewLiberty]

simultaneously with the Japanese bringing nuclear back online

Reasonable explanation especially since Abe, who is conspicuously pro nuclear reopening, won a decisive election victory a few weeks ago. While only one (or possibly zero, I'm not sure) Japanese nuclear plant has literally reopened so far, the market may be responding to expectations they will reopen.

There was a large run up in oil prices from about 80 USD to 120 USD in 2011 after Fukushima.

Decreasing demand and increasing supply is the reason oil crashed.

You should understand that "demand" and "usage" are not the same thing here.  USAGE increased, DEMAND (at a given price) decreased because of expectations of increasing SUPPLY.

The suppliers then rush to get the oil sold asap so they can get ahead of a price drop, which drives it lower still.  So it over-corrects.  It happens on the rises too.

Usage is also a measure of economic activity.  Globally usage is increasing, it will likely increase more swiftly with the lower prices.

[picolo]

simultaneously with the Japanese bringing nuclear back online

Reasonable explanation especially since Abe, who is conspicuously pro nuclear reopening, won a decisive election victory a few weeks ago. While only one (or possibly zero, I'm not sure) Japanese nuclear plant has literally reopened so far, the market may be responding to expectations they will reopen.

There was a large run up in oil prices from about 80 USD to 120 USD in 2011 after Fukushima.

Decreasing demand and increasing supply is the reason oil crashed.

You should understand that "demand" and "usage" are not the same thing here.  USAGE increased, DEMAND (at a given price) decreased because of expectations of increasing SUPPLY.

The suppliers then rush to get the oil sold asap so they can get ahead of a price drop, which drives it lower still.  So it over-corrects.  It happens on the rises too.

Usage is also a measure of economic activity.  Globally usage is increasing, it will likely increase more swiftly with the lower prices.

Global usage is increasing and the price will likely go up as more inflation is created by central banks

[NewLiberty]

It will over-correct, and then come up from that, irrespective of central banking influences (which effect everything priced, and also oil).
Usage will increase due to the lower price.  Some of that will be price dependent uses (some things are economical at a lower price but not at a higher price).  Those will trail off when price climbs again.

[scarsbergholden]

A significant increase in the use of nuclear power in Japan (and more importantly elsewhere) will likely lead to long term lower oil prices. It remains that nuclear energy is much safer and much cleaner then other types of energy (including 'green' energy like solar and wind)

Because windmills also sometimes create superfund radioactive sites where human life is impossible for generations?
Nuclear is safer and cleaner, except when it isn't.  Fusion reactors please.  These fission fails are for the lose.

It is very rare that nuclear reactors meltdown. The last time this happened was in Japan in 2011 and the time before that was in the mid 1980's.

It was also estimated that there would have been few deaths of people who were living in the evacuated areas in the 2011 incident, although people who would have stayed and continued to live would have had a higher risks of certain cancers, although still overall low risk.

http://en.wikipedia.org/wiki/Fukushima_Daiichi_nuclear_disaster
http://en.wikipedia.org/wiki/Nuclear_and_radiation_accidents_and_incidents#Nuclear_meltdown

[NewLiberty]

A significant increase in the use of nuclear power in Japan (and more importantly elsewhere) will likely lead to long term lower oil prices. It remains that nuclear energy is much safer and much cleaner then other types of energy (including 'green' energy like solar and wind)

Because windmills also sometimes create superfund radioactive sites where human life is impossible for generations?
Nuclear is safer and cleaner, except when it isn't.  Fusion reactors please.  These fission fails are for the lose.

It is very rare that nuclear reactors meltdown. The last time this happened was in Japan in 2011 and the time before that was in the mid 1980's.

It was also estimated that there would have been few deaths of people who were living in the evacuated areas in the 2011 incident, although people who would have stayed and continued to live would have had a higher risks of certain cancers, although still overall low risk.

http://en.wikipedia.org/wiki/Fukushima_Daiichi_nuclear_disaster
http://en.wikipedia.org/wiki/Nuclear_and_radiation_accidents_and_incidents#Nuclear_meltdown

Yes I am aware that there are more nuclear reactors that haven't had catastrophic failures that have resulted in massive and unresolvable pollution effects that have damaged those that were completely unrelated to the reactor and derived none of its benefits while running.
So how rare are these windmill meltdowns?

You brought up the comparison, claiming the fission reactors are cleaner and safer.  Maybe you are right, but just how did you come to this assessment?

[smooth]

A significant increase in the use of nuclear power in Japan (and more importantly elsewhere) will likely lead to long term lower oil prices. It remains that nuclear energy is much safer and much cleaner then other types of energy (including 'green' energy like solar and wind)

Because windmills also sometimes create superfund radioactive sites where human life is impossible for generations?

They don't but they produce a tiny amount of usable energy, so you need a LOT of windmills, solar panels, etc., and this leads to other safety issues. More mundane industrial accidents perhaps (falls, car/truck accidents, electrocution, factory accidents, etc.), but if you are that person, you are just as injured or dead.

If you measure safety in the economically reasonable way, not as an absolute but with risks in the numerator and output in the denominator, then even nuclear fission looks pretty damn good compared to everything else (or another way to say that is that nuclear is still bad but everything else is worse to much worse).

Acknowledging that correctly estimating the tail risks in the numerator is difficult, but we do the best we can.

[NewLiberty]

A significant increase in the use of nuclear power in Japan (and more importantly elsewhere) will likely lead to long term lower oil prices. It remains that nuclear energy is much safer and much cleaner then other types of energy (including 'green' energy like solar and wind)

Because windmills also sometimes create superfund radioactive sites where human life is impossible for generations?

They don't but they produce a tiny amount of usable energy, so you need a LOT of windmills, solar panels, etc., and this leads to other safety issues. More mundane industrial accidents perhaps (falls, car/truck accidents, electrocution, factory accidents, etc.), but if you are that person, you are just as injured or dead.

If you measure safety in the economically reasonable way, not as an absolute but with risks in the numerator and output in the denominator, then even nuclear fission looks pretty damn good compared to everything else (or another way to say that is that nuclear is still bad but everything else is worse to much worse).

Acknowledging that correctly estimating the tail risks in the numerator is difficult, but we do the best we can.

I remain skeptical, or else they would be insurable.
As it stands, only nation-states can build them.  Industry at best can do management contracts, with government backing (insured by all taxpayers).

Cleaner than coal on a per joule basis? Granted.  Cleaner than windmills?  I doubt this.  Even if you are considering the dead birds.

[picolo]

A significant increase in the use of nuclear power in Japan (and more importantly elsewhere) will likely lead to long term lower oil prices. It remains that nuclear energy is much safer and much cleaner then other types of energy (including 'green' energy like solar and wind)

Because windmills also sometimes create superfund radioactive sites where human life is impossible for generations?

They don't but they produce a tiny amount of usable energy, so you need a LOT of windmills, solar panels, etc., and this leads to other safety issues. More mundane industrial accidents perhaps (falls, car/truck accidents, electrocution, factory accidents, etc.), but if you are that person, you are just as injured or dead.

If you measure safety in the economically reasonable way, not as an absolute but with risks in the numerator and output in the denominator, then even nuclear fission looks pretty damn good compared to everything else (or another way to say that is that nuclear is still bad but everything else is worse to much worse).

Acknowledging that correctly estimating the tail risks in the numerator is difficult, but we do the best we can.

I remain skeptical, or else they would be insurable.
As it stands, only nation-states can build them.  Industry at best can do management contracts, with government backing (insured by all taxpayers).

Cleaner than coal on a per joule basis? Granted.  Cleaner than windmills?  I doubt this.  Even if you are considering the dead birds.

Radioactivity seems very safe and clean if set up properly when windmills use a lot of resource and are not too efficient.

[smooth]

A significant increase in the use of nuclear power in Japan (and more importantly elsewhere) will likely lead to long term lower oil prices. It remains that nuclear energy is much safer and much cleaner then other types of energy (including 'green' energy like solar and wind)

Because windmills also sometimes create superfund radioactive sites where human life is impossible for generations?

They don't but they produce a tiny amount of usable energy, so you need a LOT of windmills, solar panels, etc., and this leads to other safety issues. More mundane industrial accidents perhaps (falls, car/truck accidents, electrocution, factory accidents, etc.), but if you are that person, you are just as injured or dead.

If you measure safety in the economically reasonable way, not as an absolute but with risks in the numerator and output in the denominator, then even nuclear fission looks pretty damn good compared to everything else (or another way to say that is that nuclear is still bad but everything else is worse to much worse).

Acknowledging that correctly estimating the tail risks in the numerator is difficult, but we do the best we can.

I remain skeptical, or else they would be insurable.
As it stands, only nation-states can build them.  Industry at best can do management contracts, with government backing (insured by all taxpayers).

Cleaner than coal on a per joule basis? Granted.  Cleaner than windmills?  I doubt this.  Even if you are considering the dead birds.

I didn't say cleaner than windmills, though that might also be true for the same reasons (I haven't seen the numbers), I said safer.

Here's one fairly recent ranking.

http://www.forbes.com/sites/jamesconca/2012/06/10/energys-deathprint-a-price-always-paid/

mortality rate

Wind: 150
Nuclear: 90

Wind is actually in second place and fairly close, so its entirely possible this ordering is wrong (likewise with solar). But what is more important is the comparison of nuclear to the scale baseload sources that realistically substitute for it (not just coal). Those differences are orders of magnitude.

[NewLiberty]

A significant increase in the use of nuclear power in Japan (and more importantly elsewhere) will likely lead to long term lower oil prices. It remains that nuclear energy is much safer and much cleaner then other types of energy (including 'green' energy like solar and wind)

Because windmills also sometimes create superfund radioactive sites where human life is impossible for generations?

They don't but they produce a tiny amount of usable energy, so you need a LOT of windmills, solar panels, etc., and this leads to other safety issues. More mundane industrial accidents perhaps (falls, car/truck accidents, electrocution, factory accidents, etc.), but if you are that person, you are just as injured or dead.

If you measure safety in the economically reasonable way, not as an absolute but with risks in the numerator and output in the denominator, then even nuclear fission looks pretty damn good compared to everything else (or another way to say that is that nuclear is still bad but everything else is worse to much worse).

Acknowledging that correctly estimating the tail risks in the numerator is difficult, but we do the best we can.

I remain skeptical, or else they would be insurable.
As it stands, only nation-states can build them.  Industry at best can do management contracts, with government backing (insured by all taxpayers).

Cleaner than coal on a per joule basis? Granted.  Cleaner than windmills?  I doubt this.  Even if you are considering the dead birds.

I didn't say cleaner than windmills, though that might also be true for the same reasons (I haven't seen the numbers), I said safer.

Here's one fairly recent ranking.

http://www.forbes.com/sites/jamesconca/2012/06/10/energys-deathprint-a-price-always-paid/

mortality rate

Wind: 150
Nuclear: 90

Wind is actually in second place and fairly close, so its entirely possible this ordering is wrong (likewise with solar). But what is more important is the comparison of nuclear to the scale baseload sources that realistically substitute for it (not just coal). Those differences are orders of magnitude.

Thanks for the link.
scarsbergholden's claim was cleaner and safer.
I suspect when you count the folks "relocated" from the areas, and later effects, the numbers might be different.
Worse for coal though.  Lung cancer is the highest rising mortality in China.  We'd have to use the female rate and discount the males there though because >50% are smokers and <2% of women.

[peonminer]

Someone's cold heart... somewhere.... melted a tiny bit for this deflation to occur.

[jaysabi]

Someone's cold heart... somewhere.... melted a tiny bit for this deflation to occur.

Your personal message has malformed binary. You have five digits at the end that don't create anything. Are they extra, or did you run out of space?

[cameronpalte]

The actual reason why oil prices came down was because of a sharp increase in production by the United States and the North Sea operators which resulted in an oversupply for the market decreasing the price - it's all supply and demand.

OPEC does like the lower prices for now however, (which is why it hasn't cut production yet), because many of the new projects in the US and the North Sea are unprofitable at below $65/barrel so OPEC is hoping that the lower oil price will help drive these projects out of business (a basic monopoly tactic here), which will allow OPEC to control most of the world's oil supply once again.

[Window2Wall]

The actual reason why oil prices came down was because of a sharp increase in production by the United States and the North Sea operators which resulted in an oversupply for the market decreasing the price - it's all supply and demand.

OPEC does like the lower prices for now however, (which is why it hasn't cut production yet), because many of the new projects in the US and the North Sea are unprofitable at below $65/barrel so OPEC is hoping that the lower oil price will help drive these projects out of business (a basic monopoly tactic here), which will allow OPEC to control most of the world's oil supply once again.

The high oil prices that we have seen much of the last decade have already caused too much investment into these kinds of projects for them to be completely abandoned. Even if the projects were to be temporarily shut down they could easily resume drilling for oil with much less effort then it cost to build the projects

[grendel25]

I saw a few folks mention alternative energy sources in the discussion but I think this is really a stronger and valid point that deserves more elaboration.  "The reason that crude oil price crashed" is obviously the result of OPEC reactions to excess supply, demand and resultant lowered price.  However, I really 'wish' that it were for better reasons such as greater availability of renewable energy.

When home solar panels are made for the lay person to install at a low enough price and at high enough efficiency to work even during low light periods then there could be even more electric vehicles and even less demand on fossil fuels.

[botany]

I saw a few folks mention alternative energy sources in the discussion but I think this is really a stronger and valid point that deserves more elaboration.  "The reason that crude oil price crashed" is obviously the result of OPEC reactions to excess supply, demand and resultant lowered price.  However, I really 'wish' that it were for better reasons such as greater availability of renewable energy.

When home solar panels are made for the lay person to install at a low enough price and at high enough efficiency to work even during low light periods then there could be even more electric vehicles and even less demand on fossil fuels.

Lower crude prices are probably bad for renewable sources of energy.
Now they will be seen as uncompetitive and the required investments in renewable technology won't be made.