That's what Saudis play is...drive down the price by flooding the market. Bring the Russians back to the table to discuss a production cut....or kill the u.s shale industry in the process. After u.s death, increase prices and have greater market share.
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If I were Trump, I'd "bailout/stimulate" shale producers.
- Thread starter IAS_LLC
- Start date
That's what Saudis play is...drive down the price by flooding the market. Bring the Russians back to the table to discuss a production cut....or kill the u.s shale industry in the process. After u.s death, increase prices and have greater market share.
Besides bailing out the stakeholders in Shale companies, what will government help accomplish?
Help industry weather the storm.
BTW, I'm against all bailouts. The lack of creative destruction is the main reason economic growth has been so anemic during the last decade.
I am too, for the most part. I posted this purely for discussion. Just a random thought I had..but I dont think it's impossible.
WH said they're announcing stimulus tommorow
The Saudis actually wanted to keep a lid on production, my understanding was that the Russians blew the deal up. The only rational thing for the Saudis to do at that point, given they have the lowest cost production and are in a better position to weather it out, is to max output and hurt the rest of the players enough that they come back to the table.That's what Saudis play is...drive down the price by flooding the market. Bring the Russians back to the table to discuss a production cut....or kill the u.s shale industry in the process. After u.s death, increase prices and have greater market share.
On the plus side we all benefit from lower energy costs which positively benefit almost every sector of our economy except the oil industry. So it's a plus factor in minimizing the impact of the Trump recession. Kind of ironic really that it's responsible in part for driving down the price of stocks in companies that actually benefit from low oil prices.
The industry wouldn't be in so much trouble if they weren't so levered. And they wouldn't be so levered if the Fed and Treasury department wouldn't enable bad actors to take on exorbitant risk.
But whats done is done. Who has the appetite to let them fail?
The Saudis actually wanted to keep a lid on production, my understanding was that the Russians blew the deal up. The only rational thing for the Saudis to do at that point, given they have the lowest cost production and are in a better position to weather it out, is to max output and hurt the rest of the players enough that they come back to the table.
On the plus side we all benefit from lower energy costs which positively benefit almost every sector of our economy except the oil industry. So it's a plus factor in minimizing the impact of the Trump recession. Kind of ironic really that it's responsible in part for driving down the price of stocks in companies that actually benefit from low oil prices.
Yes agreed. I think Russia baited saudi to make this move though. Not an original idea by me.
The only rational thing for the Saudis to do at that point, given they have the lowest cost production and are in a better position to weather it out, is to max output and hurt the rest of the players enough that they come back to the table.
Besides production costs, Doesn't Saudi's govt have a budget /social programs that are dependent on oil prices that are MUCH higher? Maybe that was one of the other opec memebers