credit: David Fitzsimmons, Arizona Star
Wackydoodle sez: Still need that big pipe, boys!
Yes, it is beginning to creep-out
US Person too. The next thing will be the return of hot pants, or may NOT.
Analysts say that a world downturn in economic activity (deflation) is responsible for the slide in oil prices while others say price manipulation to punish Russia is the real reason behind the cheap oil. What is clear is that the Saudis are in no mood to prop up the price that is now below $50/barrel at the expense of market share. The Saudis blame 'high cost' producers--shale oil producers--for the glut of oil. The current price is near the break-even of around $60 for shale producers in the US
[chart below]. It still is above the level that makes Alberta bitumen mining profitable ($53) because those costs of production are mostly sunk upfront.
The current price rout is the second biggest on record; the price of a barrel of crude fell to $32 during the Financial Panic of 2008. Bank of America analysts say it could hit $35/barrel for WTI and $40/barrel for Brent. The oil market is in "contango", trader jargon for when a commodity market's current price is lower than futures.
The Keystone pipeline project has become
a political wedge issue in the current oil market. Since the tar sands business could go on without it (it is only one of
several proposed new pipelines or expansions to carry Alberta dilbit) and even expand somewhat, It's construction would be a symbolic victory over Obamanation, tree-huggers, one-worlders and other assorted anti-capitalists so dispised by the extreme right.
