Well, support for the Russian takeover of Ukraine fell from 73% to 24%, or thereabouts.
None of these dire things need happen. All he has to do is back off Ukraine, which is an independent country and has the right to govern itself as it sees fit.
Once the sanctions are relaxed, the Russian economy rebounds and the currency goes back to normal.
In Google Translate that becomes a perfect sentence in English (and vice versa).
I would say that this tells just you the sentence isn’t remotely accurate in Russian. Knowing only how to take my leave in Russian, I can’t be certain.
I would say that this tells just you the sentence isn’t remotely accurate in Russian. Knowing only how to take my leave in Russian, I can’t be certain.
A direct translation is still quite different from a sentence an actual person would use. Perhaps in about 5-10 years we'll have online services that will imbue translations with colloquialisms and sentence structure more akin to what a human translator would add to the process.
Should the Russian system collapse, it could be very dangerous. Who knows how much a rogue organization would be willing to pay for missiles from some desperate military workers there? Anyone remember what led up to the Japanese attacking Pearl Harbor? That's right, ruinous economic sanctions enforced against Japan.
Not just selling weapons, they can use the weapons:
"Our partners need to understand that attempts to destabilize Russia using one-sided, illegitimate, restrictive measures will not stabilise [the situation in Ukraine], but only complicate dialogue.”
Putin said he hoped western leaders realised “the carelessness of attempts to blackmail Russia”, reminding them of “the threat of a fall-out between the largest nuclear powers”.
"The rapid depreciation of the Russian rouble will be a cause for panic amongst European businesses with operations in Russia. Such concern is understandable; their profits are likely to be hit by rising prices within Russia and it is becoming increasingly difficult to move money out of the country"
It makes sense for companies like Apple to stop trading because although they can just increase prices at the point of sale, the value of the currency can fall after the sale, even below the cost of building the products, which becomes a loss for Apple. Apple makes a net profit of around 25% on products so a 20% drop in currency value could really wipe out a lot of profits over a given period.
This is the same reason why Bitcoin is bad for businesses. There's nothing to keep it stable, it has been going up and down 20% week after week.
Interesting. Fracking is driving down the world's oil prices. Great for the US economy. Bad for the Russian economy, as Russia is the world's largest energy exporter. Their economy depends heavily on their natural gas, oil, and coal exports.
So the Russian government lets the ruble slide, the oil companies make windfall profits selling overseas. The Russian consumer pays way more for foreign goods and for gas, but f--k the peasants anyway, right? Russia is run by gangsters.
Later, the Russian government can adjust interest rates to make the ruble stronger. And when it rises again, the oil companies and government and Bratva mobsters can buy euros with all those strong rubles. So they can convert those euros back to tons of tiny little weak rubles when the government devalues the currency again.
OPEC's refusal to reduce output to prop up the oil price is aimed at two targets, both of which have higher extraction costs than the conventional operations mainly in the Middle East. US shale needs a price of $60-$80 per barrel to be profitable, and Siberian (Russian) production requires around $50-$60 per barrel. OPEC - led by Saudi Arabia - is trying to get the oil price temporarily below that threshold so that these operations collapse, allowing the cartel to regain its monopoly.
There is enormous external exposure to Russia. The Russian market is not terribly important, but foreign investment in Russia is to the order of hundreds of billions of dollars. As the Russian economy is heavily dependent upon exports of oil and gas, a slight reduction in the price of oil and gas will have a significantly larger impact upon Russia's balance of payments and thus the viability of the Ruble. Russian USD reserves are lower than her total USD liabilities therefore the risk of capital controls (i.e. not being able to take dollars out of the country) is high. Combined, this means that the hundreds of billions of external investment in Russia is at risk and is being sold off at fire-sale prices, further hitting the value of Russian assets, exacerbating capital flight and driving the Ruble down further.
Over the last few years, Western central banks have been increasing the money supply at unprecedented levels, pushing up asset prices and therefore pushing down yields. In order to beat even fairly modest inflation, consumers have been forced to invest in riskier asset classes and emerging markets (esp. Brazil, Russia, India, China and South Africa [the BRICS countries]) have been very popular.
As the Ruble collapse has made the mainstream news, private investors are pulling out of these BRICS/emerging market funds because the holders have belatedly realised how risky they are. These funds are therefore selling assets across their entire base as investors try to get their cash out, pushing down the value of other emerging market assets hence the market in India is down when the reduction in the oil price should be pushing it up.
Finally, many banks have extended USD loans to Russia which they may be forced to write down. This is depressing the value of all bank stocks because the exposure is largely unknown. The anticipation that some banks and insurers will need to sell other assets to cover a write down of Russian assets is pricking the stock bubble that has been inflating over the last few years.
Sit back and enjoy the ride. If you have an appetite for risk, there will be some investment bargains appearing in the coming months if you look carefully...
Except the Saudis are LOWERING the price of oil in an attempt to gain back market share and to make alternative energy sources seem more expensive in comparison.
Maybe I lack understanding, but I really don't understand the drop in the markets over the last two weeks. I can understand energy stocks dropping but just about everyone else benefits from lower energy prices. Corporations' energy expenses drop, transportation/shipping costs drop and consumers are willing to spend more money because they're not spending it on gas and home heating oil. Besides, my understanding is that only 18% of U.S. oil now comes from the Middle East.
And how much does U.S. companies (Apple aside) sell to Russia?
They were talking about this on the news today and it was like, US and Canadian oil sources are in trouble if it crosses 50$/barrel, and the Saudi's could drop it down to 10$/barrel and still be making money. Iran and Russia need it in the 100's otherwise their economies are severely undermined. There's also thousands of jobs at stake if oil and gas projects (eg fracking) start being loss-leaders. How ironic, the Saudi's may solve global warmingclimate change by making all the dirtiest oil projects have to shut down.
On the other hand. The US has yet to scratch the surface of geothermal energy to replace dirty generation sources. So a faster uptake of hybrids and electric-only vehicles should be expected. If anything we'll have a short reprieve just before carbon taxes get lopped back on to make up the difference in taxes so people don't get too comfortable with lower fuel costs too long.
If the Russians can no longer afford the iPhone because of crashing oil prices, that's squarely on the Russian Government (eg Putin.) I watched a documentary the other day about a business that setup in Russia, only to realize that absolutely everyone was "a middle man" in stealing taxes from the government. He tried to make a difference, only to have his friends and coworkers murdered.
Should the Russian system collapse, it could be very dangerous. Who knows how much a rogue organization would be willing to pay for missiles from some desperate military workers there? Anyone remember what led up to the Japanese attacking Pearl Harbor? That's right, ruinous economic sanctions enforced against Japan.
Anyone remember what happened after the Pearl Harbor? I'm sure Russians do... though Russia is not quite Japan
OPEC's refusal to reduce output to prop up the oil price is aimed at two targets, both of which have higher extraction costs than the conventional operations mainly in the Middle East. US shale needs a price of $60-$80 per barrel to be profitable, and Siberian (Russian) production requires around $50-$60 per barrel. OPEC - led by Saudi Arabia - is trying to get the oil price temporarily below that threshold so that these operations collapse, allowing the cartel to regain its monopoly.
There is enormous external exposure to Russia. The Russian market is not terribly important, but foreign investment in Russia is to the order of hundreds of billions of dollars. As the Russian economy is heavily dependent upon exports of oil and gas, a slight reduction in the price of oil and gas will have a significantly larger impact upon Russia's balance of payments and thus the viability of the Ruble. Russian USD reserves are lower than her total USD liabilities therefore the risk of capital controls (i.e. not being able to take dollars out of the country) is high. Combined, this means that the hundreds of billions of external investment in Russia is at risk and is being sold off at fire-sale prices, further hitting the value of Russian assets, exacerbating capital flight and driving the Ruble down further.
Over the last few years, Western central banks have been increasing the money supply at unprecedented levels, pushing up asset prices and therefore pushing down yields. In order to beat even fairly modest inflation, consumers have been forced to invest in riskier asset classes and emerging markets (esp. Brazil, Russia, India, China and South Africa [the BRICS countries]) have been very popular.
As the Ruble collapse has made the mainstream news, private investors are pulling out of these BRICS/emerging market funds because the holders have belatedly realised how risky they are. These funds are therefore selling assets across their entire base as investors try to get their cash out, pushing down the value of other emerging market assets hence the market in India is down when the reduction in the oil price should be pushing it up.
Finally, many banks have extended USD loans to Russia which they may be forced to write down. This is depressing the value of all bank stocks because the exposure is largely unknown. The anticipation that some banks and insurers will need to sell other assets to cover a write down of Russian assets is pricking the stock bubble that has been inflating over the last few years.
Sit back and enjoy the ride. If you have an appetite for risk, there will be some investment bargains appearing in the coming months if you look carefully...
Quote:
Originally Posted by Misa
They were talking about this on the news today and it was like, US and Canadian oil sources are in trouble if it crosses 50$/barrel, and the Saudi's could drop it down to 10$/barrel and still be making money. Iran and Russia need it in the 100's otherwise their economies are severely undermined. There's also thousands of jobs at stake if oil and gas projects (eg fracking) start being loss-leaders. How ironic, the Saudi's may solve global warmingclimate change by making all the dirtiest oil projects have to shut down.
On the other hand. The US has yet to scratch the surface of geothermal energy to replace dirty generation sources. So a faster uptake of hybrids and electric-only vehicles should be expected. If anything we'll have a short reprieve just before carbon taxes get lopped back on to make up the difference in taxes so people don't get too comfortable with lower fuel costs too long.
If the Russians can no longer afford the iPhone because of crashing oil prices, that's squarely on the Russian Government (eg Putin.) I watched a documentary the other day about a business that setup in Russia, only to realize that absolutely everyone was "a middle man" in stealing taxes from the government. He tried to make a difference, only to have his friends and coworkers murdered.
Nope. Those profitability estimates for shale oil are out of date. A few years ago they were accurate, but all the equipment is amortized now, so the costs have dropped. The Bakken fields, for example, are profitable at $40 a barrel, and that cost will continue to decrease. The Saudi's need more than $10 a barrel to be profitable.
This will get ugly, and the best we can hope for is that OPEC is broken and ended by the time this is done.
Nope. Those profitability estimates for shale oil are out of date. A few years ago they were accurate, but all the equipment is amortized now, so the costs have dropped. The Bakken fields, for example, are profitable at $40 a barrel, and that cost will continue to decrease. The Saudi's need more than $10 a barrel to be profitable.
This will get ugly, and the best we can hope for is that OPEC is broken and ended by the time this is done.
The implosion of OPEC would be a nice side-effect. The oil market could use actual competition (for the first time in my lifetime).
They were talking about this on the news today and it was like, US and Canadian oil sources are in trouble if it crosses 50$/barrel, and the Saudi's could drop it down to 10$/barrel and still be making money.
That's not my understanding. My understanding is that the Saudi's do lose money if it drops much further, but that they can afford the losses for a time because they have very large reserves and they're willing to lose money in order to gain back market share. Technically, if they sell below cost, it's illegal, although no nation is going to stop them.
I'm most definitely not an expert on any of this, but the Saudi strategy seems to be to gain market share by stopping or reducing the available of competitive, higher priced energy sources. That might work in terms of deferring new energy exploration or new fracking projects, but I don't think they can do it for more than a year at most. Then when the price of oil heads back towards $100 a barrel again, those alternative sources will start expanding again.
Seems to me it's a win-win. Cheap Saudi oil does make us more dependent upon them, but it provides incredible economic advantages for everyone but the energy companies. Expensive Saudi oil forces us to develop our own energy sources (although some of those aren't very good for the environment). My understanding is that only 18% of our oil is imported from the Mideast in normal times. Ask the average American how much of our oil comes from the Mideast and I'd bet they'd say something like 75%. The fact is that if we could improve energy efficiency by another 20%, we probably wouldn't need any Mideast oil at all. Think how great that would be. But conservatives think energy efficiency is some kind of Communist plot.
And maybe Mr. Putin will gain back a sense of reality and begin to keep his arrogant ego in check.
The big question is whether the Government should use taxpayer money to support the alternative energy suppliers in order to balance the price and to keep them from shutting down or whether they should just let market forces take hold.
With the current devaluation of the ruble and runaway inflation because of it, I suspect a lot of people are going to be looking to get out of Russia. But maybe Russia, especially Moscow, will once again become a place where tourists can afford to visit.
Well, support for the Russian takeover of Ukraine fell from 73% to 24%, or thereabouts.
None of these dire things need happen. All he has to do is back off Ukraine, which is an independent country and has the right to govern itself as it sees fit.
Once the sanctions are relaxed, the Russian economy rebounds and the currency goes back to normal.
That would just relax the sanctions. It would take a bit of time to remove them. But even then, it's the price of oil that going to be their biggest problem. Current oil prices are below their cost of production. It's expected that the low prices will remain for some time. A quick calculation shows that if the continue to product 9 million barrels a day, and sell that much, they will lose over $100 billion over the next year. Considering the size of their economy, and the fact that well over 60% of their budget comes from oil income, that's a major problem. With the ruple down so far, their external debts are high as well, though the sanctions won't have as much affect on the West, as exposure to Russia isn't that high right now, due to the sanctions.
Interesting. Fracking is driving down the world's oil prices. Great for the US economy<span style="line-height:1.4em;">. Bad </span>
for the<span style="line-height:1.4em;"> Russian economy, </span> as Russia is the world's largest energy exporter. <span style="line-height:1.4em;"> Their economy depends heavily on their natural gas, oil, and coal exports.</span>
<span style="line-height:1.4em;">So the Russian government lets the ruble slide, the oil companies make windfall profits selling overseas. The Russian consumer pays way more for foreign goods and for gas, but f--k the peasants anyway, right? Russia is run by gangsters.</span>
Later, the Russian government can adjust interest rates to make the ruble stronger. And when it rises again, the oil companies and government and Bratva mobsters can buy euros with all those strong rubles. So they can convert those euros back to tons of tiny little weak rubles when the government devalues the currency again.
Sounds like a plan to me. That's what I would do.
Cracking is on,y a part of it. More efficient myths od recovering oil are important too, in reviving older fields. But it's mostly the shale oil business in the USA right now that having the biggest effect. We're producing over 3.5 million barrels a day in shale oil.
OPEC is trying to break our shale oil production with low prices, as costs for most OPEC members are less than the costs to produce shale oil, which is high.
OPEC's refusal to reduce output to prop up the oil price is aimed at two targets, both of which have higher extraction costs than the conventional operations mainly in the Middle East. US shale needs a price of $60-$80 per barrel to be profitable, and Siberian (Russian) production requires around $50-$60 per barrel. OPEC - led by Saudi Arabia - is trying to get the oil price temporarily below that threshold so that these operations collapse, allowing the cartel to regain its monopoly.
There is enormous external exposure to Russia. The Russian market is not terribly important, but foreign investment in Russia is to the order of hundreds of billions of dollars. As the Russian economy is heavily dependent upon exports of oil and gas, a slight reduction in the price of oil and gas will have a significantly larger impact upon Russia's balance of payments and thus the viability of the Ruble. Russian USD reserves are lower than her total USD liabilities therefore the risk of capital controls (i.e. not being able to take dollars out of the country) is high. Combined, this means that the hundreds of billions of external investment in Russia is at risk and is being sold off at fire-sale prices, further hitting the value of Russian assets, exacerbating capital flight and driving the Ruble down further.
Over the last few years, Western central banks have been increasing the money supply at unprecedented levels, pushing up asset prices and therefore pushing down yields. In order to beat even fairly modest inflation, consumers have been forced to invest in riskier asset classes and emerging markets (esp. Brazil, Russia, India, China and South Africa [the BRICS countries]) have been very popular.
As the Ruble collapse has made the mainstream news, private investors are pulling out of these BRICS/emerging market funds because the holders have belatedly realised how risky they are. These funds are therefore selling assets across their entire base as investors try to get their cash out, pushing down the value of other emerging market assets hence the market in India is down when the reduction in the oil price should be pushing it up.
Finally, many banks have extended USD loans to Russia which they may be forced to write down. This is depressing the value of all bank stocks because the exposure is largely unknown. The anticipation that some banks and insurers will need to sell other assets to cover a write down of Russian assets is pricking the stock bubble that has been inflating over the last few years.
Sit back and enjoy the ride. If you have an appetite for risk, there will be some investment bargains appearing in the coming months if you look carefully...
I've read that shale oil production costs in the USA are about $53 a barrel, and in some places, as low as $43 a barrel, and that these costs have been dropping. Russian oil from Western Siberia costs almost $65 a barrel to produce, due to their antiquated machinery.
Yellen has just said that USA banks have little exposure to Russian problems because of the sanctions, so it's not a big problem. A Russian collapse would affect everyone, but not nearly as much as it did in 1998. But Russia would be devastated.
Cracking is on,y a part of it. More efficient myths od recovering oil are important too, in reviving older fields. But it's mostly the shale oil business in the USA right now that having the biggest effect. We're producing over 3.5 million barrels a day in shale oil.
OPEC is trying to break our shale oil production with low prices, as costs for most OPEC members are less than the costs to produce shale oil, which is high.
Shale oil production: more expensive than traditional drilling.
Messing with Putin's economy: priceless.
Reducing dependence on Mideast oil: priceless (in lives and money).
And I think OPEC is reducing their pricing to compete against US *exports* of shale oil.
Not to make their oil cheaper for us to buy in the US.
If anything, lower OPEC prices might be hurting Russia far more than the US.
Comments
Well, support for the Russian takeover of Ukraine fell from 73% to 24%, or thereabouts.
None of these dire things need happen. All he has to do is back off Ukraine, which is an independent country and has the right to govern itself as it sees fit.
Once the sanctions are relaxed, the Russian economy rebounds and the currency goes back to normal.
I would say that this tells just you the sentence isn’t remotely accurate in Russian.
Knowing only how to take my leave in Russian, I can’t be certain.
I would say that this tells just you the sentence isn’t remotely accurate in Russian.
Knowing only how to take my leave in Russian, I can’t be certain.
A direct translation is still quite different from a sentence an actual person would use. Perhaps in about 5-10 years we'll have online services that will imbue translations with colloquialisms and sentence structure more akin to what a human translator would add to the process.
????? ???????, ??? ??????? ???? ??? ?? ????? ? ????, ??? ??? ???? ??? ???????. ?? ? ????.
Dumb and blind? Hardly. Everyone was scared shitless after nearly 30 years of rule under Stalin.
Not just selling weapons, they can use the weapons:
http://www.newsweek.com/putin-warns-careless-west-nuclear-threat-277867
"Our partners need to understand that attempts to destabilize Russia using one-sided, illegitimate, restrictive measures will not stabilise [the situation in Ukraine], but only complicate dialogue.”
Putin said he hoped western leaders realised “the carelessness of attempts to blackmail Russia”, reminding them of “the threat of a fall-out between the largest nuclear powers”.
They increased their nuclear drills this year:
http://rt.com/usa/165588-russia-nuclear-bombers-california/
http://www.defensenews.com/article/20141209/DEFREG01/312090038/NATO-Intercepts-Russian-Bombers-Over-Baltic-Sea
http://www.theguardian.com/uk-news/2014/nov/01/raf-russian-bomber-uk-airspace
http://www.nti.org/gsn/article/russian-heavy-bombers-intercepted-us-jets-near-alaska/
Foreign Exchange Trading seems to have been having an effect on Russia's currency. Russian brokers are limiting the leverage traders can use:
http://forexmagnates.com/extreme-russian-volatility-forces-brokers-limit-leverage-ruble-pairs-low-101/
"The rapid depreciation of the Russian rouble will be a cause for panic amongst European businesses with operations in Russia. Such concern is understandable; their profits are likely to be hit by rising prices within Russia and it is becoming increasingly difficult to move money out of the country"
It makes sense for companies like Apple to stop trading because although they can just increase prices at the point of sale, the value of the currency can fall after the sale, even below the cost of building the products, which becomes a loss for Apple. Apple makes a net profit of around 25% on products so a 20% drop in currency value could really wipe out a lot of profits over a given period.
This is the same reason why Bitcoin is bad for businesses. There's nothing to keep it stable, it has been going up and down 20% week after week.
Interesting. Fracking is driving down the world's oil prices. Great for the US economy. Bad for the Russian economy, as Russia is the world's largest energy exporter. Their economy depends heavily on their natural gas, oil, and coal exports.
So the Russian government lets the ruble slide, the oil companies make windfall profits selling overseas. The Russian consumer pays way more for foreign goods and for gas, but f--k the peasants anyway, right? Russia is run by gangsters.
Later, the Russian government can adjust interest rates to make the ruble stronger. And when it rises again, the oil companies and government and Bratva mobsters can buy euros with all those strong rubles. So they can convert those euros back to tons of tiny little weak rubles when the government devalues the currency again.
Sounds like a plan to me. That's what I would do.
There is enormous external exposure to Russia. The Russian market is not terribly important, but foreign investment in Russia is to the order of hundreds of billions of dollars. As the Russian economy is heavily dependent upon exports of oil and gas, a slight reduction in the price of oil and gas will have a significantly larger impact upon Russia's balance of payments and thus the viability of the Ruble. Russian USD reserves are lower than her total USD liabilities therefore the risk of capital controls (i.e. not being able to take dollars out of the country) is high. Combined, this means that the hundreds of billions of external investment in Russia is at risk and is being sold off at fire-sale prices, further hitting the value of Russian assets, exacerbating capital flight and driving the Ruble down further.
Over the last few years, Western central banks have been increasing the money supply at unprecedented levels, pushing up asset prices and therefore pushing down yields. In order to beat even fairly modest inflation, consumers have been forced to invest in riskier asset classes and emerging markets (esp. Brazil, Russia, India, China and South Africa [the BRICS countries]) have been very popular.
As the Ruble collapse has made the mainstream news, private investors are pulling out of these BRICS/emerging market funds because the holders have belatedly realised how risky they are. These funds are therefore selling assets across their entire base as investors try to get their cash out, pushing down the value of other emerging market assets hence the market in India is down when the reduction in the oil price should be pushing it up.
Finally, many banks have extended USD loans to Russia which they may be forced to write down. This is depressing the value of all bank stocks because the exposure is largely unknown. The anticipation that some banks and insurers will need to sell other assets to cover a write down of Russian assets is pricking the stock bubble that has been inflating over the last few years.
Sit back and enjoy the ride. If you have an appetite for risk, there will be some investment bargains appearing in the coming months if you look carefully...
They were talking about this on the news today and it was like, US and Canadian oil sources are in trouble if it crosses 50$/barrel, and the Saudi's could drop it down to 10$/barrel and still be making money. Iran and Russia need it in the 100's otherwise their economies are severely undermined. There's also thousands of jobs at stake if oil and gas projects (eg fracking) start being loss-leaders. How ironic, the Saudi's may solve
global warmingclimate change by making all the dirtiest oil projects have to shut down.On the other hand. The US has yet to scratch the surface of geothermal energy to replace dirty generation sources. So a faster uptake of hybrids and electric-only vehicles should be expected. If anything we'll have a short reprieve just before carbon taxes get lopped back on to make up the difference in taxes so people don't get too comfortable with lower fuel costs too long.
If the Russians can no longer afford the iPhone because of crashing oil prices, that's squarely on the Russian Government (eg Putin.) I watched a documentary the other day about a business that setup in Russia, only to realize that absolutely everyone was "a middle man" in stealing taxes from the government. He tried to make a difference, only to have his friends and coworkers murdered.
Should the Russian system collapse, it could be very dangerous. Who knows how much a rogue organization would be willing to pay for missiles from some desperate military workers there? Anyone remember what led up to the Japanese attacking Pearl Harbor? That's right, ruinous economic sanctions enforced against Japan.
Anyone remember what happened after the Pearl Harbor? I'm sure Russians do... though Russia is not quite Japan
OPEC's refusal to reduce output to prop up the oil price is aimed at two targets, both of which have higher extraction costs than the conventional operations mainly in the Middle East. US shale needs a price of $60-$80 per barrel to be profitable, and Siberian (Russian) production requires around $50-$60 per barrel. OPEC - led by Saudi Arabia - is trying to get the oil price temporarily below that threshold so that these operations collapse, allowing the cartel to regain its monopoly.
There is enormous external exposure to Russia. The Russian market is not terribly important, but foreign investment in Russia is to the order of hundreds of billions of dollars. As the Russian economy is heavily dependent upon exports of oil and gas, a slight reduction in the price of oil and gas will have a significantly larger impact upon Russia's balance of payments and thus the viability of the Ruble. Russian USD reserves are lower than her total USD liabilities therefore the risk of capital controls (i.e. not being able to take dollars out of the country) is high. Combined, this means that the hundreds of billions of external investment in Russia is at risk and is being sold off at fire-sale prices, further hitting the value of Russian assets, exacerbating capital flight and driving the Ruble down further.
Over the last few years, Western central banks have been increasing the money supply at unprecedented levels, pushing up asset prices and therefore pushing down yields. In order to beat even fairly modest inflation, consumers have been forced to invest in riskier asset classes and emerging markets (esp. Brazil, Russia, India, China and South Africa [the BRICS countries]) have been very popular.
As the Ruble collapse has made the mainstream news, private investors are pulling out of these BRICS/emerging market funds because the holders have belatedly realised how risky they are. These funds are therefore selling assets across their entire base as investors try to get their cash out, pushing down the value of other emerging market assets hence the market in India is down when the reduction in the oil price should be pushing it up.
Finally, many banks have extended USD loans to Russia which they may be forced to write down. This is depressing the value of all bank stocks because the exposure is largely unknown. The anticipation that some banks and insurers will need to sell other assets to cover a write down of Russian assets is pricking the stock bubble that has been inflating over the last few years.
Sit back and enjoy the ride. If you have an appetite for risk, there will be some investment bargains appearing in the coming months if you look carefully...
They were talking about this on the news today and it was like, US and Canadian oil sources are in trouble if it crosses 50$/barrel, and the Saudi's could drop it down to 10$/barrel and still be making money. Iran and Russia need it in the 100's otherwise their economies are severely undermined. There's also thousands of jobs at stake if oil and gas projects (eg fracking) start being loss-leaders. How ironic, the Saudi's may solve global warmingclimate change by making all the dirtiest oil projects have to shut down.
On the other hand. The US has yet to scratch the surface of geothermal energy to replace dirty generation sources. So a faster uptake of hybrids and electric-only vehicles should be expected. If anything we'll have a short reprieve just before carbon taxes get lopped back on to make up the difference in taxes so people don't get too comfortable with lower fuel costs too long.
If the Russians can no longer afford the iPhone because of crashing oil prices, that's squarely on the Russian Government (eg Putin.) I watched a documentary the other day about a business that setup in Russia, only to realize that absolutely everyone was "a middle man" in stealing taxes from the government. He tried to make a difference, only to have his friends and coworkers murdered.
Nope. Those profitability estimates for shale oil are out of date. A few years ago they were accurate, but all the equipment is amortized now, so the costs have dropped. The Bakken fields, for example, are profitable at $40 a barrel, and that cost will continue to decrease. The Saudi's need more than $10 a barrel to be profitable.
This will get ugly, and the best we can hope for is that OPEC is broken and ended by the time this is done.
The implosion of OPEC would be a nice side-effect. The oil market could use actual competition (for the first time in my lifetime).
Russian Brides cheaper?!?
I think they said it was ‘effectively’ dissolved already.
I wonder what will happen if it falls below $50 per barrel.
They were talking about this on the news today and it was like, US and Canadian oil sources are in trouble if it crosses 50$/barrel, and the Saudi's could drop it down to 10$/barrel and still be making money.
That's not my understanding. My understanding is that the Saudi's do lose money if it drops much further, but that they can afford the losses for a time because they have very large reserves and they're willing to lose money in order to gain back market share. Technically, if they sell below cost, it's illegal, although no nation is going to stop them.
I'm most definitely not an expert on any of this, but the Saudi strategy seems to be to gain market share by stopping or reducing the available of competitive, higher priced energy sources. That might work in terms of deferring new energy exploration or new fracking projects, but I don't think they can do it for more than a year at most. Then when the price of oil heads back towards $100 a barrel again, those alternative sources will start expanding again.
Seems to me it's a win-win. Cheap Saudi oil does make us more dependent upon them, but it provides incredible economic advantages for everyone but the energy companies. Expensive Saudi oil forces us to develop our own energy sources (although some of those aren't very good for the environment). My understanding is that only 18% of our oil is imported from the Mideast in normal times. Ask the average American how much of our oil comes from the Mideast and I'd bet they'd say something like 75%. The fact is that if we could improve energy efficiency by another 20%, we probably wouldn't need any Mideast oil at all. Think how great that would be. But conservatives think energy efficiency is some kind of Communist plot.
And maybe Mr. Putin will gain back a sense of reality and begin to keep his arrogant ego in check.
The big question is whether the Government should use taxpayer money to support the alternative energy suppliers in order to balance the price and to keep them from shutting down or whether they should just let market forces take hold.
Russian Brides cheaper?!?
With the current devaluation of the ruble and runaway inflation because of it, I suspect a lot of people are going to be looking to get out of Russia. But maybe Russia, especially Moscow, will once again become a place where tourists can afford to visit.
That would just relax the sanctions. It would take a bit of time to remove them. But even then, it's the price of oil that going to be their biggest problem. Current oil prices are below their cost of production. It's expected that the low prices will remain for some time. A quick calculation shows that if the continue to product 9 million barrels a day, and sell that much, they will lose over $100 billion over the next year. Considering the size of their economy, and the fact that well over 60% of their budget comes from oil income, that's a major problem. With the ruple down so far, their external debts are high as well, though the sanctions won't have as much affect on the West, as exposure to Russia isn't that high right now, due to the sanctions.
Cracking is on,y a part of it. More efficient myths od recovering oil are important too, in reviving older fields. But it's mostly the shale oil business in the USA right now that having the biggest effect. We're producing over 3.5 million barrels a day in shale oil.
OPEC is trying to break our shale oil production with low prices, as costs for most OPEC members are less than the costs to produce shale oil, which is high.
I've read that shale oil production costs in the USA are about $53 a barrel, and in some places, as low as $43 a barrel, and that these costs have been dropping. Russian oil from Western Siberia costs almost $65 a barrel to produce, due to their antiquated machinery.
Yellen has just said that USA banks have little exposure to Russian problems because of the sanctions, so it's not a big problem. A Russian collapse would affect everyone, but not nearly as much as it did in 1998. But Russia would be devastated.
Cracking is on,y a part of it. More efficient myths od recovering oil are important too, in reviving older fields. But it's mostly the shale oil business in the USA right now that having the biggest effect. We're producing over 3.5 million barrels a day in shale oil.
OPEC is trying to break our shale oil production with low prices, as costs for most OPEC members are less than the costs to produce shale oil, which is high.
Shale oil production: more expensive than traditional drilling.
Messing with Putin's economy: priceless.
Reducing dependence on Mideast oil: priceless (in lives and money).
And I think OPEC is reducing their pricing to compete against US *exports* of shale oil.
Not to make their oil cheaper for us to buy in the US.
If anything, lower OPEC prices might be hurting Russia far more than the US.