we will see the RV quickly now

[randalln]

Immediate Effects: Oil Prices Plummet

The more than five percent drop seen in the Dow Jones did nothing to allay fears. On the positive side, lower crude prices will translate into cheaper gas at the pump. It will even mean cheaper airline tickets and lower rates of transport too. However, when faced with a grim economy people are likely to cut corners. It is the fear of the country's debt spiraling out of control which has brought down oil prices. Stock prices are an indication of economic confidence and with these plunging, oil has also immediately gone down nearly twenty percent.

Medium Term Outlook for Oil

By contrast, some leading financial institutions have expressed confidence in oil price stability in the medium term. They claim that oil will touch $130 in a year's time but considering the current situation it seems a risky bet. The demand for oil, which continues unabated in countries like China and other developing markets, is expected to support prices. Despite the uncertainties in the market, the price of crude oil continues to be higher than the $71.65 it touched 12 months ago. The destinies of oil and the dollar are closely intertwined with the US credit standing. So, any kind of aspersions cast on the well-being of the country's economy or its ability to cover debts can prove disastrous and bring about a domino effect.

Any major development in the US, which is the world's largest oil consumer, inevitably reflects on the oil trade. Besides the US, quite a few European nations are going through a significant financial crisis. The shrinking supply of oil is one factor influencing steep price rises. Oil is increasingly being seen as a viable investment opportunity and this is the other reason why prices fluctuate in a volatile manner. The reason for it being so lucrative is that it is a precious commodity.

To make things worse, the successive Federal Reserve stimulus plans have flooded investment banks with cash to "invest" in the economy. And to an investment banker sitting on a lot of cash, crude oil is a very attractive investment right now. Aside from the "stimulus" money, oil's rise will be amplified by retail investors (as usual late at the game) who are pulling cash out of the market en masse and investing into hard assets.

Petrodollar: The Next Shoe to Drop

Make no mistake, the credit downgrading equals a downgrade of the dollar. And this downgrade of the dollar, previously considered a refuge currency, could not come at a more inopportune time. Many oil-producing nations such as Lybia andSyria are in a state of turmoil and looking for ways to regain political stability. Other Arab nations such as Saudi Arabia, not yet affected by the "Arab Spring" are doing all they can to avert unrest that could cascade into a civil war like in Lybia. Since all these nations' budgets rely almost exclusively on oil revenue, the petrodollar does not present itself in a favorable light to these oil-rich nations. Consequently, several major oil producing nations have announced their plans to move away from the dollar and instead accept currencies such as the Euro and the Yuan. Iran, which provides 12% of China's oil opened an oil bourse on Kish Island which trades its prized high grade oil strictly in Yuan and Euros (no dollars). This is not helping the dollar's situation in any way. If major oil producing nations begin moving away from the dollar, it will not be long before others follow suit.

In the meantime, previously US-friendly governments in the Middle-East are tumbling one after the other. New flags emerge, stamped with the crescent and the moon, symbols of fundamentalist Islam. For example, Libya's new National Transitional Council, upon the overthrow of Muammar Gaddafi immediately decreed a new judicial system based on Shari law. Following the "Arab Spring", pan-Islamic governments are gradually taking over smaller oil producing nations and these "mini-Irans" will likely stop accepting dollars for their coveted oil. Newly minted governments, eager to bring stability and assess their leadership will drop the dollar because of the negative image of its tie to previous governments. Over time this will result in a lower demand for the greenback and greatly reduce its purchasing power. The price of crude oil in dollars will spiral upwards while the credit rating continues to plummet.

History indicates that very few nations, who had their credit rating downgraded from AAA, have ever been able to recover it. And those who have managed to recapture their former glory took anywhere between a decade to two decades of fiscal discipline to achieve this. But since fiscal discipline is not even on the radar screen of the US government it is safe to predict that the US credit rating is headed even lower. Today oil is traded in dollars so for every gallon of gas, say, a chinese motorist buys, he first has to change his chinese currency into US dollars then buy crude oil with these dollars. This not a very convenient arrangement to say the least for anyone but the dollar. The term "petrodollar" denotes this unique status of the US dollar: while no other currency is any longer backed by something of value like gold, the almighty dollar is the only currency backed by crude oil, "black gold". But once oil stops trading in dollars the world's need for the greenback will be strongly reduced if not eliminated. When this happens, expect the value of the dollar to decline sharply, the price of crude oil denominated in dollars to skyrocket and the US credit rating to continue its journey down the rest of the alphabet.

we should see movement now that the window has open

Remember the US and a few other countries buy oil from iraq at around $40+bl

It is time This is what they were waiting for

[xyzzy]

Remember the US and a few other countries buy oil from iraq at around $40+bl

Can you provide an authoritative source for this? and by "the US" do you mean the US Treasury or US based oil companies? (I see no evidence that the US Treasure buys oil directly from crude producers at all, let alone at a huge discount).

[ngodstust2]

Randalin --- About time you spoke up.....!!!

[ThePeoplesChamp]

Thank you for the post randalln. I sure hope we are on the fast track now.

[MrDinarman]

The window is so old and beat up it just won't close and never will.... maybe we are mistaking a shattered window with an open window... JMO

Edited September 23, 2011 by MrDinarman

[zbubbaz]

conversely when the world's economies cannot afford oil and the demand drops we may see another "glut" .

[Shick]

THE TIME IS RIGHT FOR ALL OF US TO PROSPER, WE SHOULD BE THANKFUL AT BEST.

[TonyDownTheShore]

I'm ready, lets do it.

Thanks for the post

[randalln]

Can you provide an authoritative source for this? and by "the US" do you mean the US Treasury or US based oil companies? (I see no evidence that the US Treasure buys oil directly from crude producers at all, let alone at a huge discount).

Why would the UST be buying oil ? LOL

[zigmeister]

Why would the UST be buying oil ? LOL

For their cars?

[randalln]

The United States (US) oil supply is a frequent topic of discussion within the US, because of increasing concerns about dependence on oil as a source of fuel. According to the US Department of Energy, 40% of America's energy needs are met through petroleum products. Many citizens are worried about the impacts of oil on the environment, and would like to see the country moving towards more sustainable sources of oil. In addition, there is a great deal of controversy over the sources for American oil, and the political maneuvering which is necessary in order to meet American demands for oil.

Approximately 40% of America's oil comes from domestic oil fields in states like Texas, Alaska, and California. Some of this oil is actually sold to other countries, such as Japan. The other 60% of the US oil supply is from foreign sources. Contrary to popular belief, however, the US has very diverse oil interests all over the world, and receives oil and petroleum products from almost every continent on Earth. This diversity within the US oil supply allows allows for the manufacture of a wide range of petroleum products, using crude oil of various chemical makeups.

Canada, Saudi Arabia, Colombia, Nigeria, Angola, and Iraq all contribute sizable amounts to the US oil supply. America also imports oil from Kuwait, Norway, the United Kingdom, Venezuela, Equatorial Guinea, and Algeria. Numerous other countries ship refined oil products to the United States to supplement the output of American refineries. The diversity of the US oil supply makes it difficult to cut off the country's supply of oil altogether, although wrinkles in the supply chain could be problematic.

Much of the US oil supply comes from member nations of the Organization of the Petroleum Exporting Countries (OPEC). OPEC member nations are supposed to work together to ensure stable oil prices while safeguarding oil reserves and ensuring that countries around the world have access to oil when they need it. The US oil supply is not, however, restricted to OPEC sources, and the country regularly imports oil from countries which are not member nations, such as Canada, at varying prices.

While the sources for American oil are myriad, many of the countries which contribute the bulk of the US oil supply are economically and politically unstable. This has led to concerns about the security of the US oil supply, since a major political disturbance could be devastating. For this reason, the US also maintains an oil reserve for emergency situations, and is devoting funding to the development of energy alternatives.

[N2DEEP]

I hope you are right!!!!!!!!!!!!!!!

[gsxr600]

The window is so old and beat up it just won't close and never will.... maybe we are mistaking a shattered window with an open window... JMO

You might be right. I think the window has been stuck open for several years atleast.

[randalln]

April 29, 2003

• How much oil does Iraq have?
• How much oil did Iraq produce before the 2003 conflict?
• What held Iraq back from producing more oil?
• Where in Iraq is the oil located?
• Where did Iraq sell its oil before the 2003 war?
• Did the United States buy Iraqi oil?
• Could Iraq have hurt the United States by withholding oil sales?
• What role did oil play in the Iraq showdown?

How much oil does Iraq have?

Iraq has 112.5 billion barrels of proven oil reserves, or about 10 percent of the world's known remaining oil--making it a distant second to Saudi Arabia, which possesses some 300 billion barrels, or one-quarter of the world's known reserves.

How much oil did Iraq produce before the 2003 conflict?

Its output varied, but in 2002 Iraq averaged about 1.5 million barrels per day--far less than the 3.5 million barrels a day it was producing before its August 1990 invasion of Kuwait.

What held Iraq back from producing more oil?

Economic sanctions imposed on Iraq in 1990 by the U.N. Security Council to pressure it to, first, withdraw from Kuwait and, later, give up its suspected arsenal of unconventional weapons. The sanctions banned oil exports, purchases of oil equipment purchases, and other trade or investment in the state-run industry. Production plummeted as a result. In 1996, Iraq revved up production when it agreed to participate in the U.N.-sanctioned "oil for food" program, which let Iraq sell limited quantities of oil and buy humanitarian goods with the proceeds through deals subject to approval by the United Nations. Later U.N. resolutions lifted restrictions on how much oil Iraq could export through oil-for-food and permitted the purchase of spare parts to repair production facilities. Even so, Iraq's oil system is in disrepair, and some energy experts estimate that raising production to its estimated capacity of 2.8 million barrels a day will take at least two years and cost $50 billion.

Where in Iraq is the oil located?

Iraq has two main oil fields: Kirkuk, in the Kurdish-dominated north, and Rumaila, in the Shiite Arab south. Prospecting for new oil has not been possible since the 1991 Gulf War, but oil experts say these two areas probably have other deposits that remain undiscovered.

Where did Iraq sell its oil before the 2003 war?

Domestic consumption amounted to about 300,000 barrels per day. About 1.1 million barrels per day were sold through the oil-for-food program. The rest--about 400,000 barrels, according to industry estimates--was smuggled out through Jordan, Syria, Iran, and Turkey in violation of U.N. sanctions. Until September 2002, the Iraqi government tacked an illegal surcharge onto the smuggled oil.

Did the United States buy Iraqi oil?

Yes. The United States was Iraq's biggest customer, through the oil-for-food program.

Could Iraq have hurt the United States by withholding oil sales?

Not unless other countries had gone along. In April 2002, for instance, Saddam Hussein announced that Iraq would cut off its oil-for-food exports for 30 days to protest Israel's incursion into the West Bank. But the effect on oil prices was negligible, because Russia and other exporters with excess production capacity sold America the oil it would otherwise have bought from Iraq.

What role did oil play in the Iraq showdown?

Though not a central motivating factor for the U.S.-led assault- the threat of terrorism and weapons of mass destruction took priority in the Bush administration's case for war— experts say oil played a significant role in the decision to confront Iraq. The United States has a long-standing interest in the free flow of oil from the Persian Gulf, which has been threatened repeatedly by Saddam, most dramatically in his 1990-91 occupation of oil-rich Kuwait. The United States is the world's largest consumer of oil, and past disruptions of the global oil supply have hurt the American economy. Much of the world's oil lies beneath Iraq and its Gulf neighbors, such as Saudi Arabia and Kuwait. Some experts argue that, if Iraq had built a nuclear weapon, it would have been much harder to deter Saddam from trying to control the Gulf region and, with it, the world oil market.

Why is Iraq such a prize? Not only does it have the potential to become the world's largest producer, but no other country can do it as cheaply. That's because, for geological reasons, Iraq boasts the world's most prolific wells. In 1979, the year before Iraq's oil fields were devastated by the first of three wars, its wells produced an average of 13,700 bbl. each per day. By contrast, each Saudi well averaged 10,200 bbl. U.S. wells, which are gradually drying up, averaged just 17 bbl. It would take more than 800 U.S. wells to pump as much oil as a typical Iraqi well. Consequently, production costs in Iraq are much lower. The average cost of bringing a barrel of oil out of the ground in the U.S. is about $10. In Saudi Arabia, it's about $2.50. And in Iraq, it's less than $1, according to Fadhil Chalabi, executive director of the Center for Global Energy Studies in London and former Under Secretary of Oil in Iraq. What's more, most of Iraq's known oil deposits are waiting to be developed. That's why everyone has cast a covetous eye on the country. And why each one of the world's major powers and international groups has an agenda for Iraqi oil. Among them:

CHINA

Like Russia, China signed contracts with Saddam's government to produce oil, in China's case 90,000 bbl. a day. But unlike Russia, China needs all that oil, and much more, for its own growth. For many years, it was believed that China would be self-sufficient in oil. But that doesn't seem likely. China is already importing 2 million bbl. daily and is on its way to becoming the second largest importer after the U.S. China needs a new major producer to emerge.

Edited September 23, 2011 by randalln

[design interrupted]

Randalln,

If your 120 days is up Oct 1st, you may be on to something

DI

[randalln]

Now that the war is over and the U.S. occupies Iraq, the country's role as swing producer presents a different set of problems. If Iraq limits its production to 2.5 million to 3.5 million bbl. a day, it will fail to generate enough revenue to rebuild its infrastructure, pay off at least a portion of the $400 billion it owes in debt and war reparations, modernize existing oil fields, open new ones and raise the living standards of its people. In fact, a State Department-sponsored advisory group of Iraqi exiles has concluded that the country needs to double its output by the end of the decade to "invigorate Iraq's economy and lift the Iraqi people out of a future of impoverishment." If Iraq does so, some experts believe, growing demand for oil around the world would eat up that new supply as quickly as it came to market, thus keeping prices stable. But in another scenario, oil prices could be pushed sharply downward, creating instability elsewhere, especially in Saudi Arabia. Which the U.S. will do almost anything to prevent—maybe.

But would the U.S. actually throttle a country's production to keep the peace? In Iraq, restricted production is an old story. It has often happen

this is from aug 09'

Randalln,

If your 120 days is up Oct 1st, you may be on to something

DI

Hey at least let me look like i did some research DI

Dont tell the people i have a inside track

it has been 8 years now Im ready

ZIPPER is the word

The RockStar

Edited September 23, 2011 by randalln

[xyzzy]

Can you provide an authoritative source for this? and by "the US" do you mean the US Treasury or US based oil companies? (I see no evidence that the US Treasure buys oil directly from crude producers at all, let alone at a huge discount).

Why would the UST be buying oil ? LOL

So the answer is you can not support you claims. Ok.

[design interrupted]

I'm ready too, Rock Star!!!

Are you sure it's not button fly?

[randalln]

So the answer is you can not support you claims. Ok.

I will answer your Q ? when you show me where I say that the UST is buying oil

If you will read the posts instead of glancing at them you will see that it only requires $10 in the us,$2.50 in Saudi ,and $1 in iraq to get it out of the ground SOOOOOOOOOOOOOO

if your the one that gets it out of the ground why would you pay somebody $80 a barrel when it costs one

And you can get a good look at a steak by sticking your head in a bulls ass But i take the butchers word for it.................CF 96'

I'm ready too, Rock Star!!!

Are you sure it's not button fly?

Positive zipper

Edited September 23, 2011 by randalln

[myst]

randallin. way to go!!! Great to see you out here with a post!!

A quite awesome one,I might add.............

thank you ,myst

[randalln]

So the answer is you can not support you claims. Ok.

and yes I am the authority on this subject I have been working in Iraq and Kuwait since 02' Started on the Rio project for Halliburton not KBR

[design interrupted]

I take it you're reworking your rate before the twenty days are up, or do you mean tequilla then zipper?

You know what tequila can do to ya?

[randalln]

I take it your reworking your rate before the twenty days is up, or do you mean tequilla then zipper?

You know what tequila can do to ya?

Only when your buying HMMMM!!

And yes she is in the process now .But that only affects the return side

Edited September 23, 2011 by randalln

[design interrupted]

Only when your buying HMMMM!!

You should pop into Cisole's 3000th thread. Read the first three or four pages so you get the gist, then pop to the last page and join in the fun. It's slowing down now and could use some tequila!

[Barriegirl]

Only when your buying HMMMM!!

It's getting hot in here ....