This is a game of chicken with Saudi Arabia on one side and American frackers on the other.
Meanwhile, Venezuela is eating shit with 200% inflation and defaulting on their loans and Russia is just plain pissed.
I have seen opposite opinions from industry analysts. One saying oil will go back up to $80-$100 a barrel and another saying it is going to stay where it is at for the year.
It will be interesting. I prefer to see guys busy on the oilfield, just better for our economy.
I agree with the guys saying it'll last another year, minimum... maybe longer. This based on reading the Saudi statements on the matter and various analyses in the Economist, Bloomberg, etc... just an amateur assessment obviously since I'm not in the business but it's a fascinating story.
Sucks that an industry here is hurting, but given that our consumption and production are in the same neighborhood as each other, the decline in oil industry profits is offset almost equally by lower expenses by everyone and his brother that buys gas. Economically it's kind of a wash. But... given that much of the oil industry profits wind up in the hands of the super rich (think Exxon, Shell, etc) whereas the unspent money on cheaper gas winds up staying in the hands of the working class and middle class for the most part, this is actually a shot in the arm for the economy overall. This is money that turns around and gets spent some other way, not getting sent to some offshore Cayman Islands account to be invested in Chinese or Brazilian developments, and not spent on lavish vacations in Monaco or on a super yacht built in South Korea and staffed with a Philippine crew then sailed around in the South Pacific. Instead, this money stays in the US.
Also, Russia's troubles have caused them to reconsider their adventure in the Ukraine and playing hostage with heating oil being shipped to Europe for winter warmth, and may well have contributed to their sudden withdrawal from Syria yesterday. Remember, the collapsing oil prices of the late 80's combined with their massive adventure in Afghanistan triggered the disintegration of the entire Soviet Union which was much larger than merely Russia. Militaries cost a lot of money.
Venezuela's troubles are likewise good for us diplomatically, likely to make them friendlier and more cooperative in contrast to Hugo Chavez's misguided policies.
Same for Iran. They went into that big nuclear restriction agreement with us (and many other nations) with the expectation that they could suddenly start making gobs of cash again by rejoining the world's largest oil exporters, but then the price crashes and now they're suffering hugely. Less money and arms to send to Hezbollah, Assad, various other assholes... and a better chance of the gov't coming under internal pressure and even falling.
Diplomatically, the crashed oil price is a godsend. We live in interesting times.
