
Why Oil Is Finally Declining - gasull
http://wallstreetexaminer.com/2014/12/why-the-price-of-oil-is-finally-declining-and-why-it-will-lead-to-disaster/
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silver1
Dont know much about geo-politics but someone is playing a huge dirty game
.... could be OPEC or USA ... it deals with many issues at hand:

1\. Strangling Russian economy

2\. Straightening out Iran

3\. Disrupt Shale Oil production rise

4\. Create financial gap between cheap oil and other renewable alternatives
....etc...etc...etc...

It will be very interesting to see what happens in the countries where shale
oil production is on rise .... somehow tax payers are going to pay because
many shale oil companies may go bankrupt ... that means either you pay higher
prices at gas pump & stores (b'cause oil is expensive) or pay for shale oil
companies that cant sustain their economies.

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pseudometa
It isn't so much as they are now playing a dirty game, it is more that OPEC
has been playing a dirty game for a long time. Now its members are no longer
in lockstep and it is causing a huge correction.

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BenoitEssiambre
This is wrong. There is no evidence "malinvestment" exists at economy scale in
any significant way.

Money is a government made artificial store of value made to make transactions
and contracts easier. It has no intrinsic value in itself and it should not
artificially keep value at a rate that makes it desirable enough so that it
displaces private stores of value, such as private bonds, stocks, commodities,
or even buying now what you will need later.

It is a sad state that a lot of countries currently let the risk adjusted
value of their money have better returns than private market stores of value
thus making people invest in fiat instead of in the real economy. This causes
unemployment and low productivity.

When people, businesses and banks invest in government sponsored fiat instead
of the real economy because fiat has a better return, it is a subsidy to
economic idleness that jams the private markets. In Europe they desperately
need inflation to overshoot a bit to unjam their markets.

Otherwise all this idle money that accumulates without sufficient production
capacity to back it up will create problems in the future. Idle money that
starts chasing few goods is a risk of spikes in inflation, that or painful
corrective high interest rates. In general a little overshoot of inflation
early in a recession prevents more inflation later by making money less
desirable compared to private investments and preventing it from accumulating
idly too much.

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api
This should illustrate why getting "off oil" should be such a priority. That
doesn't mean totally phasing it out, which would probably take centuries, but
it does mean getting to the point where oil is no longer the rate limiting
reagent in the economy.

Right now our hopes, dreams, futures, and lives are pinned to the oil price
graph. If it doesn't scare you, you haven't thought about it very much.

~~~
krschultz
Unfortunately falling oil prices puts a lot of pressure on alternative energy
sources. We were _just_ getting to the point where the unsubsidized price of
wind & solar was within spitting distance of oil.

Though replacing coal with natural gas is a net win for the environment, and
that might accelerate with natural gas prices dropping through the floor.

~~~
saryant
Natural gas prices in the US should stabilize as the American producers begin
exporting to the world market.

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joosters
_The central banks have been frustrated in their insane and misguided aim to
increase inflation because QE and ZIRP actually foster the opposite of what
central bankers expect. Central bankers and economists think that to get
inflation they only need to print more money, not recognizing that the
inflation that does result from money printing, asset inflation, leads
eventually to consumer goods deflation._

Central bankers are wrong! Economists are wrong! This one blogger knows the
truth!

Seriously, it makes me lose all faith in a writer if they so openly and freely
trash-talk so many other people.

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ck2
Oil is declining because the Saudis are dumping it.

Their oil is cheap to produce because it is near the surface and plentiful and
"good quality".

They probably figured they better halt development in other parts of the world
by making it unprofitable for others to produce.

The question is how long they will keep it up.

Just imagine how much every extra penny on the cost of oil/gas squeezes out of
the economy every day.

[http://i.imgur.com/hi9pTsQ.png](http://i.imgur.com/hi9pTsQ.png)

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pseudometa
Planet Money on NPR has a great story on this.
[http://www.npr.org/blogs/money/2014/11/05/361424491/episode-...](http://www.npr.org/blogs/money/2014/11/05/361424491/episode-580-the-
other-side-of-the-pump)

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gesman
Last but not least tumbling oil prices is a convenient way to hurt russia.

Add this to "why" list.

