Thanksgiving OPEC Meeting Leaves Oil Production Unchanged — Price Plummets

While US financial markets are closed for the Thanksgiving holiday today, a closely-watched meeting of OPEC has resulted in the oil cartel taking no action in cutting oil production. According to a Reuters report, Saudi Arabia blocked calls from poorer members of OPEC who wanted cut oil production to boost prices which provide vital revenues for many oil-producing nations.

Today on the international oil markets, Brent crude fell $6 per barrel to near $71, and US WTI Crude has fallen by six percentage points below $70 per barrel.

There will be economic repercussions from oil’s sharp decline over recent months, and it looks like we could be seeing an oil price war between OPEC and North America. Many speculate that Saudi Arabia is hoping to damage the North American oil industry by letting prices fall. Much of the current oil production in the United States will become unprofitable if prices much further (expensive technology is required in shale production) and Saudi Arabian production can be profitable at much lower prices.

  • bachcole

    It only matters temporarily. It is a tempest in a short-duration teapot.

  • EEStorFanFibb

    Is Saudi Arabia trying to maintain market share at all costs because it knows oil consumption is going to fall like a rock over the coming 2 decades. They likely realize that electric motors/new batteries + solar/wind generated electrons are inherently better technology for all forms of land/sea transportation and they also expect carbon emission cuts are going to be real and dramatic.

    I think they want to be the last oil producer standing and make hay while the sun shines [reverse pun] after most other oil producers’ assets are left stranded in the ground and their balance sheets decimated.

    • bachcole

      That of course assumes that the Saudis take the LENR threat seriously. After the Gulf News story and Bill Gates famous visit in Italy, them taking LENR seriously has become a possibility for me.

      • EEStorFanFibb

        I don’t assume LENR has had any effect on their strategy as I’ve outlined it. It could be a compounding factor, but I doubt it.

      • builditnow

        Oil prices since 1946 have been mostly steady between $20 to $30 in 2013 dollars, adjusted for inflation, see red line on the link below.
        In other words, inflation has been taken into consideration to evaluate earlier prices in terms of 2013 dollars.
        There have been spikes, we are currently in a spike. Particularly in the face of LENR / Cold Fusion, potential carbon cuts, alternative energy, oil prices could return to $30 / barrel or below. The Saudis may want to keep a market share at that price. In that case, keep pumping oil and drive the price down now to stop further oil exploration.
        http://inflationdata.com/Inflation/Inflation_Rate/Historical_Oil_Prices_Chart.asp

      • Iggy Dalrymple

        Bill Gates’ visit is famous to about 2,000 inhabitants of this planet, a few of whom are movers and shakers. The eCat may affect exploration and production decisions but it’ll be one or more decades before it affects oil demand. The eCat’s 1st impact on oil use will be for propulsion of ships.

  • Is Saudi Arabia trying to maintain market share at all costs because it knows oil consumption is going to fall like a rock over the coming 2 decades. They likely realize that electric motors/new batteries + solar/wind generated electrons are inherently better technology for all forms of land/sea transportation and they also expect carbon emission cuts are going to be real and dramatic.

    I think they want to be the last oil producer standing and make hay while the sun shines [reverse pun] after most other oil producers’ assets are left stranded in the ground and their balance sheets decimated.

    • bachcole

      That of course assumes that the Saudis take the LENR threat seriously. After the Gulf News story and Bill Gates famous visit in Italy, them taking LENR seriously has become a possibility for me.

      • I don’t assume LENR has had any effect on their strategy as I’ve outlined it. It could be a compounding factor, but I doubt it.

        • kevinee

          Even if LENR never hits the market, cheap solar will. But I think this recent oil price drop is a shot across Putin’s bow.

      • builditnow

        Oil prices since 1946 have been mostly steady between $20 to $30 in 2013 dollars, adjusted for inflation, see red line on the link below.
        In other words, inflation has been taken into consideration to evaluate earlier prices in terms of 2013 dollars.
        There have been spikes, we are currently in a spike. Particularly in the face of LENR / Cold Fusion, potential carbon cuts, alternative energy, oil prices could return to $30 / barrel or below. The Saudis may want to keep a market share at that price. In that case, keep pumping oil and drive the price down now to stop further oil exploration.
        http://inflationdata.com/Inflation/Inflation_Rate/Historical_Oil_Prices_Chart.asp

      • Iggy Dalrymple

        Bill Gates’ visit is famous to about 2,000 inhabitants of this planet, a few of whom are movers and shakers. The eCat may affect exploration and production decisions but it’ll be one or more decades before it affects oil demand. The eCat’s 1st impact on oil use will be for propulsion of ships.

    • Anon2012_2014

      I think without LENR you are being ambitious to expect the use of batteries for all land and sea transportation. Batteries are heavy and are of low capacity. I don’t see long distance trucking, for example, every being battery powered. And I don’t see commercial aviation being powered by batteries either. It is possible that wind/solar electrons can power these items, but it would be via electric->hydrogen (i.e. electrolysis conversion); i.e. using the hydrogen as a battery. However the volume for liquid or gas hydrogen storage of energy is too large for long range trucking or for aircraft — someone would have to develop an economic hydrogen to medium length hydrocarbon process for those applications (to get the energy to fit in the tank so to speak). I don’t see this as being competitive with crude unless the hydrogen itself is literally too cheap to meter.

  • Wayne M.

    LENR is great. E-Cat is great. H-Cat is great.

    However, what all of these ‘greats’ have in common is that none of them have any influence whatsoever on world oil prices. None.

    I will never understand the sotto voce speculation on this blog about how these ‘greats’ are affecting oil, mainstream scientists, the nuclear industry, the DOE, politics, economics, etc.

    Why? Because nobody knows (or cares) about the ‘greats’ except boobs like me who read these kinds of blogs. The King of Saudi Arabia, as the article states above, is worried about the rise of the American shale gas and oil industry. Period. That is the simplest, reasonable answer. There may be others. Think Occam’s razor

    The day will come when one of Dr’s McKubre, Rossi, or Mills will deliver to the marketplace, a meaningful, over unity device for mass sales distribution. We are not there yet.

    However, when that day arrives, the ‘greats’ will be the Occam’s razor explanation. The King will irrigate his desert with SunCells and go back to being the disregarded odious dictatorship and oppressive cultural backwater that was its history.

    Regards.

    • blaze

      You don’t know that. Saudi could be offloading all their OIL because they’re aware that coming down the road are alt technologies that could make their oil worthless so they’re trying to get out while the getting is good.

      • Omega Z

        The Saudi’s only have about 20 years of Oil exports left. That may stretch to 25 years with the advent of LENR. However, At this point in time, lower oil prices equals world economic growth which could double their diversified international investments. Presently over $400 Billion. ROI could replace oil revenues.

    • Sanjeev

      I agree totally.
      USA crude oil production could surpass Saudi Arabia in 2015
      http://nextbigfuture.com/2014/11/usa-crude-oil-production-could-surpass.html

      This is the major cause of price drop. Another cause is the rising solar energy production. Its going almost exponentially, with “world’s largest solar plant” race going at full speed. The price per solar watt are dropping sharply and will drop below the conventional energy costs very soon. The best things about solar is that it can become totally distributed and so controlling it, as they control oil, is almost impossible.

      Lenr may affect the energy scene but not now, it can take 5-10 years optimistically. Its already 5 years since the invention of the ECat, we do not have even one installation yet. These things take a long time to pick up. (All personal opinions.)

    • bachcole

      I agree 99.9%. We are way too self-centered and think that everyone is just 1 minute of reading away from where we are, even though it took me 19 months of reading to believe in the E-Cat.

  • Andrew

    The price drop could be from some diplomatic pressure from several nations because lower oil prices would hurt Russia and ISIS..

    • Doug Cutler

      I think this is true but file under be careful what you wish for. OPEC is likely also seizing on the opportunity to shake out some high-cost N. American extraction at the same time.

  • Andrew

    The price drop could be from some diplomatic pressure from several nations because lower oil prices would hurt Russia and ISIS..

    • Doug Cutler

      I think this is true but file under be careful what you wish for. OPEC is likely also seizing on the opportunity to shake out some high-cost N. American extraction at the same time.

  • Anon2012_2014

    If we get a successful LENR reactor, then I expect total replacement of coal, fission nuclear, and natural gas for electric generation.

    Crude oil is already mostly used for transportation and plastics. I expect crude to be limited in the future even without LENR to those transportation application that need low weight, long range, or fast recharge. Nothing beats the number of megajoules that can be dumped in a gas/diesel tank via a fuel hose — all without any special handling. And nothing beats the low weight and volumetric density of gasoline piston or kerosene jet engine/fuel tank combinations.

    If a light weight high powered LENR reactor can be built for automotive/trucking applications, then crude oil will become a specialty chemical limited to aviation, lubrication and plastics.

    • Warthog

      Actually, plastics synthesis and manufacture mostly uses natural gas…..not oil.

    • Bernie Koppenhofer

      A carbon tax with the tax revenue going into electric car subsidies.

      • Omega Z

        A carbon tax equals economic decline. A carbon tax is a tax on absolutely everything including the water you drink.

        • Bernie Koppenhofer

          Why “economic decline”, taxes have been used for hundreds of years for social benefits that encourage economic growth. E.g. taxes used to build roads provide huge economic progress. Why not use a carbon tax to clean up the smog in China and our own air? If economic decline is defined as a healthier atmosphere that gives my grand kids a longer life, give me more of it.

          • Omega Z

            Bernie777
            Some taxes can be beneficial & even necessary.
            A 20 cent gas tax used to build or maintain roads is beneficial. It creates jobs that offset jobs lost elsewhere. And good roads provide for economic efficiencies which can lead to additional jobs.

            A Carbon tax is a broad based aggressive tax that makes everything cost more. food, clothes, cars, housing, Utilities, Medical, Everything & in a short period of time. Those taxes would be needed to take care of all that become jobless.

            However, due to Everything costing more, Those taxes wont be enough to take care of all that lost their jobs thus to do so would require a much lower standard of living for them. Note a large portion of those taxes are earmarked for export. Including building Coal powered plants in 3rd world countries.

            A Carbon tax in essence is a Rationing Tax. And that Rationing will be felt most by the bottom 50%. They will be the ones with thermostats set at 58′ in the cold winter or risk having no heat because they can’t afford it, While the Al Gores of the world wont suffer such inconvenience. The bottom 50% will carry the bulk of the burden.

            Be aware there are those who now see taxes as a way to control the people. They do not want you to eat meat. Tax it out of reach. The list of “do not want you to” grows. THEY know what is best for you. Learn the difference between beneficial tax & those that would enslave your grandkids or they may resent you & the world you left them.

          • Bernie Koppenhofer

            Omega Z, we use a “board based” income tax to create the CDC to help us prevent and control disease, we should do the same to keep our atmosphere breathable with a carbon tax. You use the term it is an “aggressive tax” I could make a case that all taxes are “aggressive”, and too “broad based”.

          • bachcole

            The CDC does fight germ oriented diseases. It is worst than useless when it comes to building health and fighting degenerative diseases.

  • Warthog

    Actually, plastics synthesis and manufacture mostly uses natural gas…..not oil.

  • mytakeis

    It seems oil has been overpriced, as is common with a monopolistic commodity. Could be the monopoly is crumbling with the advent of alternative energy sources coming into use. Oil as an energy product will likely no longer be profitable with the commercialization of E-cat etc.; low cost devices, initially augmented by solar/light/wind energy generation. The explanations for the fall of oil prices commented on here all seems probable and likely true. Be that as it may I believe the loss of profitability will be the real death knoll of oil/gas energy provision, as the alternatives, including E-cat come available, on sale.

    • Iggy Dalrymple

      If oil was a monopolistic commodity, its price would not be in free fall. Oil will be the last fossil fuel whose demand will be affected by the eCat. Coal, natural gas, wind, and solar will be the first to feel the heat from eCat.

      The expectation of eventual competition from eCat could be affecting exploration and new production decisions.

  • HS61AF91

    It seems oil has been overpriced, as is common with a monopolistic commodity. Could be the monopoly is crumbling with the advent of alternative energy sources coming into use. Oil as an energy product will likely no longer be profitable with the commercialization of E-cat etc.; low cost devices, initially augmented by solar/light/wind energy generation. The explanations for the fall of oil prices commented on here all seems probable and likely true. Be that as it may I believe the loss of profitability will be the real death knoll of oil/gas energy provision, as the alternatives, including E-cat come available, on sale.

    • Iggy Dalrymple

      If oil was a monopolistic commodity, its price would not be in free fall. Oil will be the last fossil fuel whose demand will be affected by the eCat. Coal, natural gas, wind, and solar will be the first to feel the heat from eCat.

      The expectation of eventual competition from eCat could be affecting exploration and new production decisions.

      • bachcole

        I agree. But let’s just say that the oil industry was not entirely fluid, given that OPEC controlled 1/2 of the market. But now it is entirely fluid because Saudi Arabia did not hold to OPEC’s purpose and let the market rule. How long that lasts can only be guessed at.

  • Andreas Moraitis

    This article in the German magazine Wirtschaftswoche

    http://www.wiwo.de/technologie/forschung/trendwende-im-energiemarkt-oelverbrauch-koennte-um-2030-weltweit-sinken/10306684-3.html

    provides a diagram that shows the worldwide daily oil consumption in several branches:

    Branch-million barrel-%

    Petrochemistry 9 9.6
    Other industries 14 14.9

    Households 9 9.6
    Electricity generation 9 9.6

    Trains 2 2.1
    Ships 4 4.3
    Other traffic 5 5.3
    Air traffic 5 5.3
    Trucks 14 14.9
    Cars 23 24.5

    Industrial heat generation, which will be the first ‘target’ of the E-Cat, would mainly fall into the category “other industries”. Of the remaining branches, some might become affected sooner, some much later. Maybe even petrochemistry is not completely ‘immune’ against LENR, since cheaper energy could make alternative production methods, especially the synthesis of organic compounds from CO2 and hydrogen, economically attractive.

  • Bernie777

    This Forbes reporter has LENR on the tip of his tongue but just can’t say it for fear of losing his job (;

    http://www.forbes.com/sites/markrogowsky/2014/11/28/2014-the-beginning-of-the-end-of-the-carbon-energy-era/?partner=yahootix

  • Bernie Koppenhofer

    This Forbes reporter has LENR on the tip of his tongue but just can’t say it for fear of losing his job (;

    http://www.forbes.com/sites/markrogowsky/2014/11/28/2014-the-beginning-of-the-end-of-the-carbon-energy-era/?partner=yahootix

    • bachcole

      Why not leave a snide remark about no mention of LENR and Mark Gibbs getting fired over doing that at Forbes? I will be doing that once I register.

      • Bernie Koppenhofer

        Good idea, go for it.

  • Sanjeev

    I agree totally.
    USA crude oil production could surpass Saudi Arabia in 2015
    http://nextbigfuture.com/2014/11/usa-crude-oil-production-could-surpass.html

    This is the major cause of price drop. Another cause is the rising solar energy production. Its going almost exponentially, with “world’s largest solar plant” race going at full speed. The price per solar watt are dropping sharply and will drop below the conventional energy costs very soon. The best things about solar is that it can become totally distributed and so controlling it, as they control oil, is almost impossible.

    Lenr may affect the energy scene but not now, it can take 5-10 years optimistically. Its already 5 years since the invention of the ECat, we do not have even one installation yet. These things take a long time to pick up. (All personal opinions.)

  • Bernie777

    A carbon tax with the tax revenue going into electric car subsidies.

    • Omega Z

      A carbon tax equals economic decline. A carbon tax is a tax on absolutely everything including the water you drink.

      • Bernie777

        Why “economic decline”, taxes have been used for hundreds of years for social benefits that encourage economic growth. E.g. taxes used to build roads provide huge economic progress. Why not use a carbon tax to clean up the smog in China and our own air? If economic decline is defined as a healthier atmosphere that gives my grand kids a longer life, give me more of it.

        • Omega Z

          Bernie777
          Some taxes can be beneficial & even necessary.
          A 20 cent gas tax used to build or maintain roads is beneficial. It creates jobs that offset jobs lost elsewhere. And good roads provide for economic efficiencies which can lead to additional jobs.

          A Carbon tax is a broad based aggressive tax that makes everything cost more. food, clothes, cars, housing, Utilities, Medical, Everything & in a short period of time. Those taxes would be needed to take care of all that become jobless.

          However, due to Everything costing more, Those taxes wont be enough to take care of all that lost their jobs thus to do so would require a much lower standard of living for them. Note a large portion of those taxes are earmarked for export. Including building Coal powered plants in 3rd world countries.

          A Carbon tax in essence is a Rationing Tax. And that Rationing will be felt most by the bottom 50%. They will be the ones with thermostats set at 58′ in the cold winter or risk having no heat because they can’t afford it, While the Al Gores of the world wont suffer such inconvenience. The bottom 50% will carry the bulk of the burden.

          Be aware there are those who now see taxes as a way to control the people. They do not want you to eat meat. Tax it out of reach. The list of “do not want you to” grows. THEY know what is best for you. Learn the difference between beneficial tax & those that would enslave your grandkids or they may resent you & the world you left them.

          • Bernie777

            Omega Z, we use a “board based” income tax to create the CDC to help us prevent and control disease, we should do the same to keep our atmosphere breathable with a carbon tax. You use the term it is an “aggressive tax” I could make a case that all taxes are “aggressive”, and too “broad based”.

  • New Huffington Post article on LENR –

    http://www.huffingtonpost.com/david-h-bailey/low-energy-nuclear-reacti_b_6189772.html

    Also, a new peer reviewed scientific paper has found strong evidence that the Sun has controlled Earth temperatures over the last 11,000 years, not atmospheric CO2 levels.

    http://hockeyschtick.blogspot.com/2014/11/new-paper-finds-strong-evidence-sun-has.html

    • GreenWin

      As LENR gains acceptance, we see new evidence of non-anthropomorphic climate cycles. AGW & IPCC, like hot fusion’s time, has passed.

  • New Huffington Post article on LENR –

    http://www.huffingtonpost.com/david-h-bailey/low-energy-nuclear-reacti_b_6189772.html

    Also, a new peer reviewed scientific paper has found strong evidence that the Sun has controlled Earth temperatures over the last 11,000 years, not atmospheric CO2 levels.

    http://hockeyschtick.blogspot.com/2014/11/new-paper-finds-strong-evidence-sun-has.html

    • GreenWin

      As LENR gains acceptance, we see new evidence of non-anthropomorphic climate cycles. AGW & IPCC, like hot fusion’s time, has passed.

      • bachcole

        Unfortunately, far too many people, particularly journalists, don’t realize this yet for both subjects.

  • Omega Z

    The Saudi’s only have about 20 years of Oil exports left. That may stretch to 25 years with the advent of LENR. However, At this point in time, lower oil prices equals world economic growth which could double their diversified international investments. Presently over $400 Billion. ROI could replace oil revenues.

  • GreenWin

    CNBC predicted $60.00/bbl a month ago. OPEC “pumping” provides plausible deniability for the role LENR is playing in oil prices. DDD. 🙂

  • Bernie Koppenhofer

    The oil price drop is giving us a good indication of what will happen when LENR starts affecting the energy market, there is going to be a lot of disruption, deflation, fun at the gas pump.

    • bachcole

      I am already having fun at the gas pump. I just paid for gas at $2.47 per gallon.

  • bachcole

    I pumped gas this morning at $2.399 per gallon. I believe that that comes to $0.659725 per liter. This is an unprecedental fall in the price of gasoline at the pump. I predicted to my son yesterday that the price would drop below $2.00. We are again watching history, probably even without the influence of LENR.

  • EEStorFanFibb

    let me give you the title so you can more easily decide if you want to click on the link.

    Oil Investors May Be Running Off a Cliff They Can’t See – Businessweek

    http://www.businessweek.com/news/2014-12-02/oil-investors-may-be-running-off-a-cliff-they-can-t-see#p3

  • let me give you the title so you can more easily decide if you want to click on the link.

    Oil Investors May Be Running Off a Cliff They Can’t See – Businessweek

    http://www.businessweek.com/news/2014-12-02/oil-investors-may-be-running-off-a-cliff-they-can-t-see#p3

  • EEStorFanFibb

    An important article in Nature.

    “The United States is banking on decades of abundant natural gas to power its economic resurgence. That may be wishful thinking.”

    http://www.nature.com/news/natural-gas-the-fracking-fallacy-1.16430

  • An important article in Nature.

    “The United States is banking on decades of abundant natural gas to power its economic resurgence. That may be wishful thinking.”

    http://www.nature.com/news/natural-gas-the-fracking-fallacy-1.16430