Trying to Kill the Oil Industry in America

Saturday, January 31, 2015

Saudi Arabia is dropping oil prices in order to put American oil producers out of business, and it is costing American jobs. None of this would matter if we had genuine fuel competition. But we do not, and the result is that the whole world is on the receiving end of Saudi Arabia's whims. They're taking us all for a ride. CNN Money's latest report on the American oil boomtowns had this to say:

Oil prices have been sinking for months. And while that's good news for most Americans, what happens to towns like Williston, N.D., that have built an entire economy around the oil industry?

The drop in crude prices, while beneficial for drivers, has already cost thousands of oil jobs. Schlumberger was among several companies to take a hit, laying off 9,000 people last week.

In North Dakota, the number of rigs drilling new oil wells dropped from 187 this time last year to 161 this week — the lowest level in five years.

"My prediction is we're down to 50 rigs by June," said Jim Arthaud, CEO of MBI Energy Services, based in nearby Belfield, N.D.

As drilling companies cut back, there will eventually be less work for companies that provide ancillary services like fracking or trucking.

"I'd say we'll lose 20,000 jobs by June," said Arthaud.


D Plat February 1, 2015 at 12:57 PM  

OPEC doesn't sell enough oil to control oil pricing. Saudi Oil Minister Ali al-Naimi to reporters: He blamed the fall in prices to half their levels of six months ago on " SPECULATORS" and what he called a lack of cooperation from non-OPEC producers.

Comment from BusinessInsider dot com By DH said: OPEC was never in control; at least for the past decade. High Frequency Trading (HFT) of commodity contracts created a HFT premium. CME Rule 575 destroyed HFT commodity trading for the purpose of price manipulation. Prices were weaker before Rule 575 was implemented mid Sept 2014 and collapsed afterward. The $40 or so difference was the HFT premium paid to financial innovators. Not to buyers. Not to sellers. Not to traditional speculators. It was the equivalent of a street tax that was just removed. Prices today reflect actual economic activity, with probably a little crash effect from buyers of contracts a few months ago who thought prices would remain high forever. They're panic sellers now.

Adam Khan February 1, 2015 at 11:49 PM  

I've read many commentators say that OPEC is no longer in control of the world's oil prices, sometimes saying this in the very same article that describes how the "overproduction" of oil by Saudi Arabia (rather than their usual response to new oil of cutting back their production to keep the price high) is what is dropping the world oil price.

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