Saudi prince: $100-a-barrel oil 'never' again

[Chef Ramsay]

Saudi billionaire businessman Prince Alwaleed bin Talal told me we will not see $100-a-barrel oil again. The plunge in oil prices has been one of the biggest stories of the year. And while cheap gasoline is good for consumers, the negative impact of a 50% decline in oil has been wide and deep, especially for major oil producers such as Saudi Arabia and Russia. Even oil-producing Texas has felt a hit. The astute investor and prince of the Saudi royal family spoke to me exclusively last week as prices spiraled below $50 a barrel. He also predicted the move would dampen what has been one of the big U.S. growth stories: the shale revolution. In fact, in the last two weeks, several major rig operators said they had received early cancellation notices for rig contracts. Companies apparently would rather pay to cancel rig agreements than keep drilling at these prices. His royal highness, who has been critical of Saudi Arabia's policies that have allowed prices to fall, called the theory of a plan to hurt Russian President Putin with cheap oil "baloney" and said the sharp sell-off has put the Saudis "in bed" with the Russians. The interview has been edited for clarity and length.

Full interview...http://www.usatoday.com/story/money/columnist/bartiromo/2015/01/11/bartiromo-saudi-prince-alwaleed-oil-100-barrel/21484911/

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[Spendulus]

Saudi billionaire businessman Prince Alwaleed bin Talal told me we will not see $100-a-barrel oil again. The plunge in oil prices has been one of the biggest stories of the year. And while cheap gasoline is good for consumers, the negative impact of a 50% decline in oil has been wide and deep, especially for major oil producers such as Saudi Arabia and Russia. Even oil-producing Texas has felt a hit. The astute investor and prince of the Saudi royal family spoke to me exclusively last week as prices spiraled below $50 a barrel. He also predicted the move would dampen what has been one of the big U.S. growth stories: the shale revolution. In fact, in the last two weeks, several major rig operators said they had received early cancellation notices for rig contracts. Companies apparently would rather pay to cancel rig agreements than keep drilling at these prices. His royal highness, who has been critical of Saudi Arabia's policies that have allowed prices to fall, called the theory of a plan to hurt Russian President Putin with cheap oil "baloney" and said the sharp sell-off has put the Saudis "in bed" with the Russians. The interview has been edited for clarity and length.

Full interview...http://www.usatoday.com/story/money/columnist/bartiromo/2015/01/11/bartiromo-saudi-prince-alwaleed-oil-100-barrel/21484911/

There is a great deal of elasticity in the renegotiation of land contracts for shale production.  The entire US industry knows this  and I believe they can respond competitively.

[newIndia]

Saudi billionaire businessman Prince Alwaleed bin Talal told me we will not see $100-a-barrel oil again. The plunge in oil prices has been one of the biggest stories of the year. And while cheap gasoline is good for consumers, the negative impact of a 50% decline in oil has been wide and deep, especially for major oil producers such as Saudi Arabia and Russia. Even oil-producing Texas has felt a hit. The astute investor and prince of the Saudi royal family spoke to me exclusively last week as prices spiraled below $50 a barrel. He also predicted the move would dampen what has been one of the big U.S. growth stories: the shale revolution. In fact, in the last two weeks, several major rig operators said they had received early cancellation notices for rig contracts. Companies apparently would rather pay to cancel rig agreements than keep drilling at these prices. His royal highness, who has been critical of Saudi Arabia's policies that have allowed prices to fall, called the theory of a plan to hurt Russian President Putin with cheap oil "baloney" and said the sharp sell-off has put the Saudis "in bed" with the Russians. The interview has been edited for clarity and length.

Full interview...http://www.usatoday.com/story/money/columnist/bartiromo/2015/01/11/bartiromo-saudi-prince-alwaleed-oil-100-barrel/21484911/

Now there are multiple entities who are shaping the market. One entity, however rich he is, can not command anymore...

[TheButterZone]

Make gas cheap enough and fewer will want to spend the extra $10-30k to get a hybrid or full-electric. We can always count on the government to tax the fuck out of gas though, and increase the taxes even higher to compensate for crude dropping.

[Spendulus]

Make gas cheap enough and fewer will want to spend the extra $10-30k to get a hybrid or full-electric.

That might well be a net positive.  Energy prices are only partly fungible.  Electric power through a coal power plant might well cost more to run a car than gasoline, if gasoline were cheap.  And from the chimeric "co2 pollution" viewport, coal has two carbon atoms for every one in gas, doesn't it?

We can always count on the government to tax the fuck out of gas though, and increase the taxes even higher to compensate for crude dropping.

Not in the USA.  Most state and federal gas taxes are fixed, like $ 0.21 per gallon.

[Agestorzrxx]

The oil price will continue to fall.

[NUFCrichard]

Saudi billionaire businessman Prince Alwaleed bin Talal told me we will not see $100-a-barrel oil again. The plunge in oil prices has been one of the biggest stories of the year. And while cheap gasoline is good for consumers, the negative impact of a 50% decline in oil has been wide and deep, especially for major oil producers such as Saudi Arabia and Russia. Even oil-producing Texas has felt a hit. The astute investor and prince of the Saudi royal family spoke to me exclusively last week as prices spiraled below $50 a barrel. He also predicted the move would dampen what has been one of the big U.S. growth stories: the shale revolution. In fact, in the last two weeks, several major rig operators said they had received early cancellation notices for rig contracts. Companies apparently would rather pay to cancel rig agreements than keep drilling at these prices. His royal highness, who has been critical of Saudi Arabia's policies that have allowed prices to fall, called the theory of a plan to hurt Russian President Putin with cheap oil "baloney" and said the sharp sell-off has put the Saudis "in bed" with the Russians. The interview has been edited for clarity and length.

Full interview...http://www.usatoday.com/story/money/columnist/bartiromo/2015/01/11/bartiromo-saudi-prince-alwaleed-oil-100-barrel/21484911/

It sounds like utter rubbish to me.  What does he even mean? Never, like never? In 100 years time when I can buy a packet of chewing gum for $100 (if the USD is still around), oil will cost less than $100?
I expect $100 oil again in the next 3 years, if Russia somehow convinced the world today that it wasn't the bad guy everyone says they are, oil would rise by $30 in the next 4 weeks in my opinion.

[beetcoin]

i really doubt it. once russia collapses and capitulates, prices will go back up. shale gas is not enough of a threat to OPEC to make them increase production - it's not in their best interests to cut prices forever.

[medUSA]

The demand for oil is low due to economic slow down, supply is high because Saudi refused to cut production and the US is importing less crude. Factor in Russian politics, we have a recipe for record low oil prices!

I do not believe it will crash any lower than $40 per barrel. That is the all time low for the past 10 years! Go any lower, they will cease all drilling, cos they will be producing at a loss. Supply drops and price will pick up.

(ATL was around $40 in 2009 and ATH was $140 in 2008)

[jaysabi]

Make gas cheap enough and fewer will want to spend the extra $10-30k to get a hybrid or full-electric.

That might well be a net positive.  Energy prices are only partly fungible.  Electric power through a coal power plant might well cost more to run a car than gasoline, if gasoline were cheap.  And from the chimeric "co2 pollution" viewport, coal has two carbon atoms for every one in gas, doesn't it?

CO2 is CO2, it doesn't matter where it comes from. But I think you're wondering if running an electric car fueled by coal-generated electricity ultimately releases more carbon into the atmosphere than a car which runs on petrol. I can't find any information to reliably answer this, but I live in an area fueled by nuclear energy, so I've never had to personally give it much thought. And I'll be switching to solar as soon as one of the solar generation companies like Solar City expands to my area. (I also drive a hybrid, and it was $4,000 extra dollars compared to the non-hybrid version of my car, which is nowhere near $10-30k extra. It's also paid for itself, and although it would take longer in a time of always-low gas prices, it would still pay for it's own upgrade before I bought a new car.)

On the other point: In order for a gas car to be cheaper to fuel than an electric, gas has a long way to drop. Tesla's Model S gets 89 mpg equivalent. 1 gallon of gas is the equivalent of 33.7 KwH, which means that a Model S gets 89 miles per 33.7 KwH. At an average US electricity price of 9.84 cents per KwH, 33.7 KwH costs $3.32, which is how much it costs to move you 89 miles, for a per mile price of 3.7 cents per mile.

As of 2013, the average mpg of the American fleet was 24.6, but I'm going to assume you have a newer, fuel efficient car and say you're getting 30 mpg. At an average price of $2/gallon, 1 mile would cost 6.7 cents.

And in order for your 30 mpg vehicle to be cheaper to run per mile than the Model S, gas would have to dip below $1.11 per gallon.

(Electricity is more expensive in the northeast and California, so in California for example where electricity is 13.5 cents per KwH, gas would have to be less than $1.53 per gallon to be cheaper to run).

[zezt]

Russian will never give-in! People don't know their history very well!
The entire oil crisis is due to the inevitable crash of the United States' economy. 18 Trillion $ debt!
The leaders see the writing on the wall, so they are trying to steal the European market from Russia.
Russia has been selling oil and gas to Europe for 40 plus years!

[Rishblitz]

I like how the prince thinks the Americans wouldn't screw him over with Russia.

[zezt]

Saudi Arabia is losing billions! So what if they have 1 trillion dollars saved for a rainy day.
Nobody like to lose money. The oil price will rise again as sure as the sun!

[(Lithium)]

Why don't they cut the oil production, like they did in some war against Israel?

Even weaker industries do it when prices are falling at Bitcoin rates

[jaysabi]

Why don't they cut the oil production, like they did in some war against Israel?

Even weaker industries do it when prices are falling at Bitcoin rates

My understanding now is that they are competing with so many other producers, they don't want to give up market share. They produce just about as cheap as oil can be produced due to beneficial location of their oil fields and easy, low cost extraction, so they can weather low prices for quite awhile while the higher cost producers cannot. It sounds like they've done the calculations and have concluded that losing market share would be more expensive to them in the long run.

[freedomno1]

Never again
Never say never anyways we won't see it for a while so I guess he's right
Still it will be a while till that price per barrel reaches 100 again

[sethminer14]

Pushing down the prices to make the competition bankrupt.
That's just smart business folks

[shluher]

Yep, becouse LENR is coming. Oil price will be like $10 per barrel in a 2-3years.

[Rishblitz]

The king just died and oil prices are spiking all ready.

[Rishblitz]

Why don't they cut the oil production, like they did in some war against Israel?

Even weaker industries do it when prices are falling at Bitcoin rates

I have a great quote where the king of Saudi Arabia said to Kissinger at the time.

" We and our ancestors survived on dates and milk and we will return to them again." after Kissinger threatened to bomb the oil fields.