Quote:
Originally Posted by justsomeguy
Reality is Canada is a price taker in the oil world, which means in a downturn you can't cut production in hopes of raising the price so your only option is to run hard and get your cost per barrel lower by spreading your fixed costs out over as many barrels as possible, all while hammering your variable costs and few actual costs you have control over (this is key to understanding why some companies seem obsessed over "little costs" like travel, company trucks and coffee, in some budgets thats all you have besides wages....it's hard to justify laying folks off when you're still driving around in company trucks, providing free meals and sending folks off to "conferences" in warm climates in the middle of winter).
The Saudi's plan is to bankrupt the high cost producers, then let the price float up to just below the point where those industries would consider jumping back into the game. That puts them in the sweet spot of controlling most of the market, keeping their competition out of the game, giving them political clout with the US since they can always threaten to turn off the taps if Obama get's too friendly with Iran) and keeping oil from going so high that everyone jumps back in or alternatives become economically competative......it's so ingenious and devious it sounds more like a Hollywood plot than reality.
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This is the most rational, and logical analysis I have seen of the oil situation to date.
My two cents:I think a war will be started involving a big oil producer. Likely involving Saudi Arabia. They are not the puppets they used to be, and I don't think that sits well with people