What causes the extreme drop in oil and gas prices? And who wants to crush russias only income?

[C130]

russia is cheaper

yes it is.

 

[C130]

blabla russian is always cheaper to produce than america. You need 90$ a barrel according to your own propaganda media

conventional oil will always cheaper to produce, but the price is falling to produce unconventional oil as well as time goes by new technology and experience.

 

[senheiser]

conventional oil will always cheaper to produce, but the price is falling to produce unconventional oil as well as time goes by new technology and experience.

so are russias reserves as technology advances. You always except that everything turns out in your favor while the other will be behind. Russia pretty much hacked all your oil companys and got the technology as well as from investment in russian projects.

 

[C130]

so are russias reserves as technology advances. You always except that everything turns out in your favor while the other will be behind. Russia pretty much hacked all your oil companys and got the technology as well as from investment in russian projects.

 

[senheiser]

@MarkusS

View attachment 89ff532445ba700238b818f028a20948.png View attachment 89ff532445ba700238b818f028a20948.png
saudi arabia is one step away f

 

[nvKyleBrown]

And you assume that Russia will sit there and take no necessary actions.

4/5 years is plenty of time for Russia to cut public spending to take into account lower oil price and also take necessary measures to stimulate the non oil/gas sectors of their economy. Oil prices are only down 20% not completely collapsed.

They certainly can cut public spending. I think I've suggested that they will be forced to cut. What mix of benefits and military spending they cut will be interesting.

A 20% cut would be nothing to sneeze at, but it will actually be a bit more than that. Oil production cost, while not the majority of costs, is more than zero - so the drop in oil prices amounts to more than a 20% hit to profit. I don't know the exact numbers, but consider:

if it costs you $20/barrel to produce the oil (marginal production cost) and you sell for $100, you make $80 per barrel. A cut to only $80/barrel means you now make $60 per barrel. That's a 25% cut in usable revenue, not a 20% cut. Further, on the spending side, there are some things you just can't cut, so to some degree your hands are tied. The most discretionary is military spending, in western countries. Social programs are usually too painful to cut significantly. It will be interesting to see how Russia handles this challenge.

Imagine Bangladesh cutting the budget by 20%. Imagine any country doing that - its non trivial.

 

[nvKyleBrown]

so are russias reserves as technology advances. You always except that everything turns out in your favor while the other will be behind. Russia pretty much hacked all your oil companys and got the technology as well as from investment in russian projects.

Yeah, that's why arctic drilling stopped when Exxon left. Russia is just operating stealth drilling rigs that no one can detect. /s

 

[UKBengali]

They certainly can cut public spending. I think I've suggested that they will be forced to cut. What mix of benefits and military spending they cut will be interesting.

A 20% cut would be nothing to sneeze at, but it will actually be a bit more than that. Oil production cost, while not the majority of costs, is more than zero - so the drop in oil prices amounts to more than a 20% hit to profit. I don't know the exact numbers, but consider:

if it costs you $20/barrel to produce the oil (marginal production cost) and you sell for $100, you make $80 per barrel. A cut to only $80/barrel means you now make $60 per barrel. That's a 25% cut in usable revenue, not a 20% cut. Further, on the spending side, there are some things you just can't cut, so to some degree your hands are tied. The most discretionary is military spending, in western countries. Social programs are usually too painful to cut significantly. It will be interesting to see how Russia handles this challenge.

Imagine Bangladesh cutting the budget by 20%. Imagine any country doing that - its non trivial.

You make some good points but we need to remember that oil and gas account for 80 and not 100 per cent of the Russian budget. Around 20 per cent of the Russian budget comes from other sources.

Fall in oil prices will be painful for Russia but not a catastrophe. This could be the impetus to build a different economy based less on the energy sector so Russia could easily come out stronger on the end.

 

[zzzz]

They certainly can cut public spending. I think I've suggested that they will be forced to cut. What mix of benefits and military spending they cut will be interesting.

A 20% cut would be nothing to sneeze at, but it will actually be a bit more than that. Oil production cost, while not the majority of costs, is more than zero - so the drop in oil prices amounts to more than a 20% hit to profit. I don't know the exact numbers, but consider:

if it costs you $20/barrel to produce the oil (marginal production cost) and you sell for $100, you make $80 per barrel. A cut to only $80/barrel means you now make $60 per barrel. That's a 25% cut in usable revenue, not a 20% cut. Further, on the spending side, there are some things you just can't cut, so to some degree your hands are tied. The most discretionary is military spending, in western countries. Social programs are usually too painful to cut significantly. It will be interesting to see how Russia handles this challenge.

Imagine Bangladesh cutting the budget by 20%. Imagine any country doing that - its non trivial.

If you are so interested total spendings in proposed 2015 budget will increase by 10,5% from previous year.

 

[Ammyy]

Around 4.75 lira (2.1 dollar) but lira dropped alot against dollar the last year, its still around 50 cent more expensive than Europe in avarage.

Seems like Turkey isnt the most expensive anymore this year (4th place).

Gasoline prices around the world, 27-Oct-2014 | GlobalPetrolPrices.com


View attachment 139120

View attachment 139121

Is this difference for gas prices real?

We people get fucked by these oil producing nations.

 

[Tsilihin]

This can be good move,countries will buy cheap oil from Saudis and they will get weapons to be ready to kill each other.
This is good and for Russians, with little effort they can buy one oil tanker for one rocket.....

 

[Schutz]

It might be a good thing for Russia if they can work this situation out right, cut military spending as they really overspend for what they have, the only threat that Russia will ever have for a long time is going to be domestic/neighbouring terrorists so if they cut the military budget and put more effort into other sectors they might benefit, cant be relying on oil and military spending in a changing world otherwise they will be back to where they were 10 years ago before the oil price drove upwards.

 

[nvKyleBrown]

If you are so interested total spendings in proposed 2015 budget will increase by 10,5% from previous year.

@UKBengali Well, you and I think they could deal with it, but this attitude will be a problem. lol russian math.

 

[nvKyleBrown]

But the oil price is not going to be low for 3-4 years.

That would be too much good luck for countries like us that import over half of our oil.

Plus, the BRICS bank was set up for just an eventuality like this, and allows the combined initial capital to be moved from country to country in case of need.

I agree, I think the price will rebound eventually, but it will be hard times for oil exporters until then. I also think the rebound will not get oil back to it's previous price levels, given the work in alternative energies, increasing efficiencies (particularly in the developing world) and new sources (fracking, in particular).

 

[temp1994]

@UKBengali Well, you and I think they could deal with it, but this attitude will be a problem. lol russian math.

I think it would be more of your and whole of the world's problem rather than Russian.

Many expert believe that Saudis are trying to bankrupt Shale drilling companies of US so as to kill the challenger to their monopoly before it becomes too strong.

This was predicted decades ago. Whenever an alternate Energy source try to eat into Big oils market share, Oil prices would crash in order to bankrupt that source ( pioneering technologies are costly ).