Hey Oilfield Guys!!

[Hardware]

Oil is always volatile when it's used a political tool. It's why OPEC is not willing to cut production at this point. They're using it as a way to punish Iran and Russia.

Oil was volitale because it was being used as political tool to punish other OPEC nations not conforming to the Saudis lead!!!!!

"The glut began in the early 1980's as a result of the slowed economic activity in industrial countrries(due to the crises of the 1970s, especially in 1973 and 1979) and energy conservation spurred by high fuel prices." This is from the additional quote you posted.
The crises they're speaking about is the oil embargo and the inflated prices created by the embargo. The glut was from othe OPEC nations not falling in line and reducing output the same as the Saudis. This caused the Saudis to increase production to full capacity which dropped the price to a low of 7.00 dollars per barrel. They wanted to punish the non conformers.

Texas would have been fine with 27.00 dollar barrel oil but Saudis wanted to teach the non conformers a lesson.

[deer farmer]

I agree what your saying about the 80's S&L and the 2008 mortgage crisis but completely disagree when it comes to oil during these times. Please see quote below pertaining to the oil crisis of the 80's

"OPEC's membership began to have divided opinions over what actions to take. In September 1985, Saudi Arabia became fed up with de facto propping up prices by lowering its own production in the face of high output from elsewhere in OPEC.[16] In 1985, daily output was around 3.5 million bpd down from around 10 million in 1981.[17] During this period, OPEC members were supposed to meet production quotas in order to maintain price stability, however, many countries inflated their reserves to achieve higher quotas, cheated, or outright refused to accord with the quotas.[18] In 1985, the Saudis were fed up with this behavior and decided to punish the undisciplined OPEC countries.[19] They abandoned their role as swing producer and began producing at full capacity, which created a "huge surplus that angered many of their colleagues in OPEC".[20] High-cost oil production facilities became less or even not profitable. Oil prices as a result fell to as low as $7 per barrel"

This is what brought Texas to it's knees in the 80's and is what I have been referring about in all previous post!! It had nothing to do with the S&L crisis which is totally another subject and discussion.

A small decrease in oil prices can be beneficial but when the bottom falls out it isn't good for anyone.

This Is Correct. All of my post has been about a bust !! I'm not talking slow down in my responses here. Only us older oilfield guys were there and not many of us made it through those times. Few of us were able to stay in the industry. Slow downs are nothing compared to a bust as was seen in the 80's. And as I said I hope I never see it again but this time I think the Saudies are trying to save their market share and I suspect they may flood the market again. Or maybe someone wants to shut out the Russians production. Not sure

[Hardware]

I think it has to do with the Russians and Iranians this time. People are sick of the arrogant policies of Putin and the Saudis don't want Iran to get nuclear capabilities in the Middle East.

[BrianL]

I think it has to do with the Russians and Iranians this time. People are sick of the arrogant policies of Putin and the Saudis don't want Iran to get nuclear capabilities in the Middle East.

I agree.

If you look at it from the Saudi side, at oil above $70, shale is in play, other energy sources like continue to grow, Russia and Iraq continues to be a thorn in their side, and they will continue to loose market share. My guess is they will try to keep it at $55-65.

[ladrones]

A little over 63 today.

[txjustin]

Have a friend at MI Swaco (SLB) that is a well/production tester and he said they laid off several yesterday.

[Maddox]

Rumor has it BP will start having lay-offs today.

[txjustin]

Rumor has it BP will start having lay-offs today.

They're restructuring so you can bet your arse there will be layoffs.

http://news.yahoo.com/bp-spend-1-billion-restructuring-090404478--finance.html;_ylt=A0LEV1RbVYhUVZUAT4BXNyoA;_ylu=X3oDMTEzazhsdmdsBHNlYwNzcgRwb3MDMgRjb2xvA2JmMQR2dGlkA1ZJUDUxMl8x

[rtp]

They're restructuring so you can bet your arse there will be layoffs.


http://news.yahoo.com/bp-spend-1-bil...lkA1ZJUDUxMl8x

Yep, I know one of the Honchos there. Right now just looking to trim fat and cut some dead wood.

[kyle1974]

during a boom, there are always people working that never should have been hired in the first place. the first lay off is usually pretty easy to deal with... it's that 2nd, 3rd, 4th, 5th that get tough....

[oktx]

BP's layoffs are mainly due to a little settlement they owe.

[Brooks]

BP's layoffs are mainly due to a little settlement they owe.

haha… yeah little

[manwitaplan]

Bank Of America's Energy Expert - Prediction

http://www.telegraph.co.uk/finance/oilprices/11283875/Bank-of-America-sees-50-oil-as-Opec-dies.html

Bank of America said the current slump will choke off shale projects in Argentina and Mexico, and will force retrenchment in Canadian oil sands and some of Russia’s remote fields. The major oil companies will have to cut back on projects with a break-even cost below $80 for Brent crude.

It will take six months or so to whittle away the 1m barrels a day of excess oil on the market – with US crude falling to $50 - given that supply and demand are both “inelastic” in the short-run. That will create the beginnings of the next shortage. “We expect a pretty sharp rebound to the high $80s or even $90 in the second half of next year,” said Sabine Schels, the bank’s energy expert.

Mrs Schels said the global market for (LNG) will “change drastically” in 2015, going into a “bear market” lasting years as a surge of supply from Australia compounds the global effects of the US gas saga.
If the forecast is correct, the LNG flood could have powerful political effects, giving Europe a source of mass supply that can undercut pipeline gas from Russia. The EU already has enough LNG terminals to cover most of its gas needs. It has not been able to use this asset as a geostrategic bargaining chip with the Kremlin because LGN itself has been in scarce supply, mostly diverted to Japan and Korea. Much of Europe may not need Russian gas at all within a couple of years.
Bank of America said the oil price crash is worth $1 trillion of stimulus for the global economy, equal to a $730bn “tax cut” in 2015. Yet the effects are complex, with winners and losers. The benefits diminish the further it falls. Academic studies suggest that oil crashes can ultimately turn negative if they trigger systemic financial crises in commodity states.

[JeffJ]

during a boom, there are always people working that never should have been hired in the first place. the first lay off is usually pretty easy to deal with... it's that 2nd, 3rd, 4th, 5th that get tough....

You are so right. The first, maybe second were demand driven hires. Those layoffs are simply trimming the fat. That holds true across most sectors too.

[mtmoore361]

ITs official!!!!!!! A month ago took my release of my land to my lawyer. My wife got a call this morning that the lease is canceled till further notice! I just hope employees in the oil field don't start losing job the Texas Economy is going to take a big hit!! I work for a natural gas company and we started watching spending two months ago!