
Russia says Saudis proposing global oil production cut - edtrudeau
http://www.reuters.com/article/us-russia-oil-cuts-proposals-idUSKCN0V61WS
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chollida1
Just to be clear here, Saudi Arabia has already come out and said they would
be open to discussing a cut but they were very clear that they, themselves
haven't proposed any form of cut by OPEC members. I think the article makes
this clear but the headline is misleading.

The biggest issue for many of the first world oil produces and services is
that they levered up on debt in the past 6 years when money was cheap and now
alot of loans are coming due in the next 18 months.

Larry Fink, of BlackRock fame, has come out and said as many as 400 energy
companies may not survive due to their debt loads and the current value of
WTI. [1]

The junk bond market is about to become overcrowded.

As for the OPEC members, they are in a tough deflationary spiral where the
lower price of oil means they need to produce more barrels to meet their
governmental budget demands, which pushes down the price of oil, which leads
to them needing to produce more barrels of oil, and so on and so on.....

[1]
[http://www.bloomberg.com/news/articles/2016-01-27/blackrock-...](http://www.bloomberg.com/news/articles/2016-01-27/blackrock-
s-fink-says-400-energy-firms-may-not-survive-cheap-oil)

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Avernar
Funny thing is I read this about the Saudis and OPEC last night:
[https://np.reddit.com/r/worldnews/comments/4203ko/oil_price_...](https://np.reddit.com/r/worldnews/comments/4203ko/oil_price_fall_to_10_a_barrel_not_impossible/cz74dxp?context=3)

Basically he says that the Saudis don't trust OPEC, are pro production cuts
but won't cut their own production because they got burned in the past.

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luma
Title should read "Russia hopes Saudis will propose global oil production
cut". With Iran coming back into the world market, Saudi Arabia has an
interest in keeping prices low to prevent Iran from pulling in billions in oil
revenue. Further, there's a hard limit on how high prices can climb now that
natural gas wells in North America (and elsewhere) are ready to resume
production as soon as the price warrants it.

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ck2
It's crazy how the world is held hostage economically if they aren't paying
enough for oil.

"Squeeze consumers or the world gets it!"

Still, I'd like to see taxes go up on gas in the USA with a specifically
funded program based on the excess. Something like holding gas at $2/gallon -
if it goes up, then the extra tax ends.

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refurb
_Something like holding gas at $2 /gallon - if it goes up, then the extra tax
ends._

It's an interesting idea, but I think it would cause havoc with gov't budgets.
Could you imagine if oil prices went up and suddenly that $0.50/gal tax
disappeared overnight?

It seems like gov'ts in oil producing countries have a hard enough time
budgeting based on the oil royalties they receive. I know Alberta, Canada has
gotten hammered again and again when they assumed royalty revenue would stay
high and it dropped like a rock.

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ck2
I don't mean the funds should be used for a continuous project that needs
continuous funds, like how lottery/cigarette taxes are used to replace other
taxes.

I mean it should fund something not being funded right now because the money
simply doesn't exist and the tax law should be ONLY for that project and not
fungible.

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refurb
That would be a fantastic idea in general (tax money funds a specific
project), but you'd still have the problem of the unpredictability of the tax
revenue.

It would be great to fund a new program using a gas tax like the one you
suggested, but could you imagine the blow-back if oil prices went back up and
suddenly closed the new program down?

