Oil Prices Going Down

chops018

http://m.rte.ie/news/business/2015/0113/672141-oil-prices/

Will they keep going down?

And what does this mean for Ireland?

I thought that it would just keep going up and up due to always being told there is a finite supply of the stuff.. or am I being ignorant?

chrysagon

Means more money in my pocket!!!

kneemos

Fracking Americans.

VinLieger

Theres on oversupply, the arabs are flooding the market to try and force the more expensive shale oil from the US out of the market when it becomes not profitable for them to sell at the current rates.
Also Russia are having a bumper production year apparently as well which is another cause of it.

2ndcoming

Can anyone explain to me why such a huge drop in the barrel price of oil is only marginally reflected at the pumps or the kerosene price?

chrysagon

TAX

Donnielighto

VinLieger wrote: »

Theres on oversupply, the arabs are flooding the market to try and force the more expensive shale oil from the US out of the market when it becomes not profitable for them to sell at the current rates.
Also Russia are having a bumper production year apparently as well which is another cause of it.

The Saudis are putting pressure on Iran and the frackers are just caught in the crossfire since they tend to be highly leveraged. They said they have the foreign cash reserves for 18 months of this. Supply will tighten up again. Great investment atm.

Donnielighto

2ndcoming wrote: »

Can anyone explain to me why such a huge drop in the barrel price of oil is only marginally reflected at the pumps or the kerosene price?

The pumps tend to have a lag with price falls or rises. Also tax on fuel means that cost isn't changing by as much.

force eleven

2ndcoming wrote: »

Can anyone explain to me why such a huge drop in the barrel price of oil is only marginally reflected at the pumps or the kerosene price?

Dollar is strong. We buy oil in dollars - strong dollar - more expensive oil.

Now, we see some benefit because the oil price is dropping faster than the dollar is strengthening, but not as much as we should. And of course the government takes 60% for themselves regardless. I think we will certainly see them increase petrol/diesel tax next budget, slipped in under a few goodies I'm sure...they are going to lose plenty of revenue with these prices.

ninebeanrows

Just returning to early 2000 levels.

If you look back at an historic chart, you can see these levels of oil prices are pretty unexceptional.

2ndcoming

Unless the tax rate has been adjusted up the cost price falling should still be reflected in the sale price though? e.g

Cost (per litre) - 80c
Tax - 30c

Sale price 1.50

Cost per litre - 50c
Tax - 30c

Sale price 1.40

Those figures are totally made up now but you know what I mean?

2ndcoming

Weathercheck wrote: »

Just returning to early 2000 levels.

If you look back at an historic chart, you can see these levels of oil prices are pretty unexceptional.

Early 2000s petrol was 85-90c a litre, it can't all be tax in the difference.

chops018

force eleven wrote: »

Dollar is strong. We buy oil in dollars - strong dollar - more expensive oil.

Now, we see some benefit because the oil price is dropping faster than the dollar is strengthening, but not as much as we should. And of course the government takes 60% for themselves regardless. I think we will certainly see them increase petrol/diesel tax next budget, slipped in under a few goodies I'm sure...they are going to lose plenty of revenue with these prices.

2ndcoming wrote: »

Unless the tax rate has been adjusted up the cost price falling should still be reflected in the sale price though? e.g

Cost (per litre) - 80c
Tax - 30c

Sale price 1.50

Cost per litre - 50c
Tax - 30c

Sale price 1.40

Those figures are totally made up now but you know what I mean?

60% Tax. Are you serious!?!? :eek:

smash

Donnielighto wrote: »

The pumps tend to have a lag with price falls or rises. Also tax on fuel means that cost isn't changing by as much.

Only when prices fall there's a lag. When they rise, the price at the pump rises.

DoYouEvenLift

I read posts on another forum about how US could be doing this along with the middle east to cause damage to the Russian economy?

gramar

Increasing oil output....weakening demand
Fracking in North America
OPEC decided to maintain output levels depsite the falling prices to try and squeeze the frackers out of business.
Some reckon this was also to put pressure on Russia which derives a huge amount of income from oil. They are now getting only about cost price for it.
The Saudi's can ride out these short term price drops, Places like Russia and Venezuela can't.

kjl

2ndcoming wrote: »

Can anyone explain to me why such a huge drop in the barrel price of oil is only marginally reflected at the pumps or the kerosene price?

Because this is how petrol stations make money.

VinLieger

2ndcoming wrote: »

Can anyone explain to me why such a huge drop in the barrel price of oil is only marginally reflected at the pumps or the kerosene price?

Because the fuel we are pumping into our cars was bought last month at different prices, theres always a lag between oil barrel prices and pump prices for this reason

ninebeanrows

Just imagine the fallout had Scotland voted for independence

chrysagon

VinLieger wrote: »

Because the fuel we are pumping into our cars was bought last month at different prices, theres always a lag between oil barrel prices and pump prices for this reason

That lag is alot shorter though when oil prices go up though..rocket/ feather affect!

CruelCoin

chops018 wrote: »

http://m.rte.ie/news/business/2015/0113/672141-oil-prices/

Will they keep going down?

And what does this mean for Ireland?

I thought that it would just keep going up and up due to always being told there is a finite supply of the stuff.. or am I being ignorant?

Demand, mostly from China has fallen this year.

Add to this the boom in US/Canadian oil production.

Alo add the unwillingness of OPEC to reduce the rate at which they produce oil.

This all leads to lower oil prices, which is exactly what OPEC wants right now, as oil produced from sands/shale is more expensive to produce than ordinary well oil.

OPEC is trying to bankrupt the sand/shale producers who are running at a loss from these low prices.

Oil prices will stay in and around $70-80 per barrel on average in 2015, but after that? Anybody's guess.

ninebeanrows

CruelCoin wrote: »

Demand, mostly from China has fallen this year.

Add to this the boom in US/Canadian oil production.

Alo add the unwillingness of OPEC to reduce the rate at which they produce oil.

This all leads to lower oil prices, which is exactly what OPEC wants right now, as oil produced from sands/shale is more expensive to produce than ordinary well oil.

OPEC is trying to bankrupt the sand/shale producers who are running at a loss from these low prices.

Oil prices will stay in and around $70-80 per barrel on average in 2015, but after that? Anybody's guess.

Oil is at 45$ right now?

Hermy

Someone on the radio the other day said the falling oil price is bad for the economy.
Now given that so much commerce relies on oil how could this be a bad thing?

gramar

Hermy wrote: »

Someone on the radio the other day said the falling oil price is bad for the economy.
Now given that so much commerce relies on oil how could this be a bad thing?

It might be bad for Russia and other oil producers who depend on it as a huge proportion of their national budget but countries that have to spend less on it should become more competitive and money that would otherwise be spent in oil can be spent/invested on other goods and services so quite the opposite I would have thought.

Hermy

gramar wrote: »

...countries that have to spend less on it should become more competitive and money that would otherwise be spent in oil can be spent/invested on other goods and services so quite the opposite I would have thought.

I would have thought that too but the guy on the radio (sorry I can't remember what programme) seemed quite certain that it would have a negative impact because falling prices mean people put off spending in the hope that prices will continue to fall further. That might be the case for some items but fuel is not something you can do without if you rely on your car for day to day stuff.
I can only presume he was a spokesperson for the oil industry in Ireland.

CruelCoin

Weathercheck wrote: »

Oil is at 45$ right now?

You saw how fast it dropped to get to that point?

Some of that drop is due to speculation and will likely see a rebound, but not back to where it was origionally.

I'm giving prices that "industry experts" are coming out with.

gramar

Hermy wrote: »

I would have thought that too but the guy on the radio (sorry I can't remember what programme) seemed quite certain that it would have a negative impact because falling prices mean people put off spending in the hope that prices will continue to fall further. That might be the case for some items but fuel is not something you can do without if you rely on your car for day to day stuff.
I can only presume he was a spokesperson for the oil industry in Ireland.

Seeing that oil is a lot cheaper now I think people would be inclined to drive more than wait for it to fall further or leave the heating on that bit longer!

I read that in the US it might lead to more people looking to buy bigger models of cars as they are now cheaper to run that before when oil was higher.

Baggy Trousers

DoYouEvenLift wrote: »

I read posts on another forum about how US could be doing this along with the middle east to cause damage to the Russian economy?

I would not be one bit surprised. Iraq is at peak production.

CruelCoin

gramar wrote: »

It might be bad for Russia and other oil producers who depend on it as a huge proportion of their national budget but countries that have to spend less on it should become more competitive and money that would otherwise be spent in oil can be spent/invested on other goods and services so quite the opposite I would have thought.

Russia for example needs oil to be at $100 per barrel to balance the national books.

Libya needs it to be north of $150!

Kuwait, UAE, etc are a more realistic and can balance the books at much lower prices.

stevedublin

Hermy wrote: »

Someone on the radio the other day said the falling oil price is bad for the economy.
Now given that so much commerce relies on oil how could this be a bad thing?

I think a lot of oil consuming countries, have lent lots of money to oil producing countries that are now in trouble.
The risk of default of oil producing economies has a knock-on effect on all countries.

bear1

Tbf we are seeing the difference at the pumps.
Summer last year was what 1.50 average? I've heard of people getting diesel in Dungarvan for 1.14.
Petrol stations don't make a hell of a lot on the price of a litre as the government takes most of the costs in tax.
The costs of the fuel will only ever reach a certain point here as both the government and petrol station will want a profit.
If the prices do keep failling then the Government will have to lower the tax.
I'd say it could be around March that we see the 1e per litre price cropping up.

Tony EH

2ndcoming wrote: »

Can anyone explain to me why such a huge drop in the barrel price of oil is only marginally reflected at the pumps or the kerosene price?

Your government.

swimming in a sea

maybe some one can correct me if I'm wrong but I think since 2008 the tax on a litre of petrol\diesel increased by 15cent, so oil will have to drop a good bit more to get to fuel 2008 prices.

Magico Gonzalez

Oil is bought and paid for long in advance of it arriving into your car, it's not like every time you squeeze the pump handle you're buying brent crude off the fcking commodities market. The petrol you're buying today was bought a considerable amount of time in the past at a different price.

NotCominBack

What's a fracker?

Magico Gonzalez

NotCominBack wrote: »

What's a fracker?

a fcking cracker.

NotCominBack

swimming in a sea wrote: »

maybe some one can correct me if I'm wrong but I think since 2008 the tax on a litre of petrol\diesel increased by 15cent, so oil will have to drop a good bit more to get to fuel 2008 prices.

Very true, the rate oil prices increased in the last few years was exceptional, the drop is expected at a similar rate... Arabs squeezing Arabs, Arabs squeezing US, US squeezing Russia - codswallop

Podge_irl

Magico Gonzalez wrote: »

Oil is bought and paid for long in advance of it arriving into your car, it's not like every time you squeeze the pump handle you're buying brent crude off the fcking commodities market. The petrol you're buying today was bought a considerable amount of time in the past at a different price.

It depends on your definition of long in advance, but I certainly wouldn't call it that. The petrol/diesel you are pumping probably priced as Crude within the previous month.