This Could Explain One Of The Biggest Mysteries Of Cheap Oil

The price of oil has crashed over the last year and a half. In the middle of 2014, a barrel of crude cost over $100. Now it's worth just over $30.

Normally, such a collapse would lead OPEC to pump less oil. The idea is that less oil on the market helps keep prices up. But despite a historic fall in oil prices, the Saudi Arabian-led international oil cartel hasn't budged: The biggest step it has taken so far is offer to freeze production at its current record levels. Production cuts are not on the table.

Why the Wild Descent of Oil Is Cause for Concern

The signs of oil's madcap price collapse are everywhere.

Global markets now behave like digital roller-coasters from China to Europe.

Schlumberger, the largest oil field service firm, cut 10,000 jobs in 2016 and another 20,000 jobs last year. The champion of hydraulic fracturing posted a loss of $1 billion, too.

Take 2 Minutes To Learn Why Obama's $10 Fee On Oil Is So Important

A forthcoming White House proposal to put a $10 per barrel fee on oil essentially amounts to a partial tax on carbon.

Over the next decade, that fee, to be paid by oil companies, would fund $300 billion of investments in mass transit, high-speed rail, self-driving vehicles and other forms of transportation that reduce dependence carbon, according to Politico.

It's long overdue.

Oil Price Not Done Crashing, Saudi Arabia Could Be Broke In Five Years: Reports

• Saudi Arabia projected to run massive deficits
• Storage getting close to capacity, Goldman Sachs warns
• Canadian oil producers, Alberta budget in the red

The bad news keeps piling on for the oil industry and the countries that rely on it.

Despite oil prices having already fallen 60 per cent from their highs last year, investment bank Goldman Sachs says they could suffer another major decline as storage space for refined fuel gets closer to full capacity.

How Tories Dumped Your Interests at the Pump

Oil prices have plunged by 50 per cent since last year, but you would never know that looking at what people are paying at the pump. What gives?

Don't ask the Conservatives. They halted the department in charge of telling us how much their Big Oil backers are profiting from those market-defying high prices.

The Real Story Behind the Oil Price Collapse

Many reasons have been provided for the dramatic plunge in the price of oil to about $60 per barrel (nearly half of what it was a year ago): slowing demand due to global economic stagnation; overproduction at shale fields in the United States; the decision of the Saudis and other Middle Eastern OPEC producers to maintain output at current levels (presumably to punish higher-cost producers in the U.S. and elsewhere); and the increased value of the dollar relative to other currencies. There is, however, one reason that’s not being discussed, and yet it could be the most important of all: the complete collapse of Big Oil’s production-maximizing business model.

The Oil Price Collapse Is Not Just Another Bust Cycle

Oil is the most valuable commodity in world trade, so any significant change in its price—whether upward or downward—has far-reaching economic consequences. Because oil also plays a pivotal role in world politics, such shifts can have equally momentous implications for international relations. It is hardly surprising, then, that the recent plunge in prices has generated headlines around the world. Many giant energy firms have announced massive cutbacks in employment and investment, and major producing countries like Russia and Venezuela have been forced to scale back government expenditures. While some analysts speculate that prices have now reached bottom and will soon begin climbing again, there are good reasons to believe that this descent is not just another cyclical event but rather the product of something far more profound and durable.

Sinking Oil Prices Could Push Ottawa into Deficit: Report

A report from Canada's Parliamentary Budget Officer says the country's fiscal situation can stabilize in the face of plunging oil prices if the government uses up its $3-billion contingency fund, sells assets or "tweaks" other expenditures.

If it manages those feats, it can get away with little more than a $400-million deficit in the next budget.

But that's only if oil prices stay at $48 per barrel, or if they rise. The budget watchdog did not examine the worst-case scenario of oil prices dropping further.

Oil plummets after Saudis say $20 crude is possible

Brent crude crashed below the $60 per barrel level again on Monday after Saudi Arabia’s oil minister said his country would not intervene to revive prices.

Ali al-Naimi – who oversees the world’s largest exporter of crude – said in an interview that even if the price of oil fell to $20 per barrel the kingdom would do nothing to arrest the decline.

"Whether it goes down to $20, $40, $50, $60, it is irrelevant," he said in an interview with Middle East Economic Survey (Mees).

Saudi Oil Chief: No Conspiracy Behind Oil Prices

ABU DHABI, United Arab Emirates (AP) — Saudi Arabia's oil chief on Sunday dismissed allegations that his kingdom conspired to bring down oil prices in order to harm other countries and told a summit of Arab energy leaders that he was confident the market would stabilize.

The kingdom, which is dependent on oil revenues, is able to weather lower oil prices due to large reserves built up over the years. Non-OPEC member Russia and other nations like Iraq, Iran and Venezuela need prices substantially above present levels to meet budget goals and want to drive prices up.

Falling Oil Prices Could Rock Canada's Politics: Expert

What do the plummeting oil prices tell us not only about our near term economic future in Canada, but the political fragility of the world's petro states?

If Canada fully joins the petro state club, as our prime minister and his party desire, is oil's volatility just the cost of doing business, or a threat to our nation's well-being?

The ideal person to ask is Terry Lynn Karl, one of North America's foremost experts on the politics of oil. The Tyee recently caught up with Karl, who teaches at Stanford University and lives in San Francisco.

Prentice Government takes Alberta from boom to bust in one weekend, breaking all records

Guess what, we're broke again out here in The Richest Place on Earth! ™

Yesterday, citing the spectacular recent drop in oil prices, Alberta Premier Jim Prentice pulled his Grim Reaper's hood over his head, took up his scythe and headed out to, in the words of his government's press release, "take action to control spending."

Target No. 1 of his newly formed seven-minister "Budget 2015 committee," according to the press release: "Public sector compensation."

Falling oil price puts Ottawa’s surplus at risk

Finance Minister Joe Oliver is acknowledging the dramatic drop in oil prices will take a further bite out of government revenues, making Ottawa’s previously declared surplus less certain.

The government already shaved billions off of its revenue forecasts when it released a fiscal update on Nov. 12, when the price of North American crude was around $81 (U.S.). That price closed Monday below $56.

What happens when oil prices go down instead of up

Luck plays a part in any political career. Napoleon famously asked of a general recommended to him for his military prowess: "so he is good -- but is he lucky?"

A barrel of oil that was selling in the US$110 range last summer, now sells for less than US$70. That was not the future Stephen Harper and his ruling Conservatives expected when the party leader touted Canada as an energy superpower, based on massive petroleum reserves -- the world's third largest after Saudi Arabia and Venezuela -- locked away in the bitumen sands of Alberta.

Canadian Banks' Revenue Threatened By Falling Oil Prices

TORONTO - Oil prices that reached a five-year low on Friday are starting to take a bite out of profits at TD Bank (TSX:TD) and raising concerns for the rest of the country's top lenders.

Canada's biggest banks earn up to 20 per cent of their revenues through providing investment and corporate banking services, with oil and gas companies an important part of that client base.

As oil prices plunge, wide-ranging effects for consumers and the global economy

Tumbling oil prices are draining hundreds of billions of dollars from the coffers of oil-rich exporters and oil companies and injecting a much-needed boost for ailing economies in Europe and Japan — and for American consumers at the start of the peak shopping season.

The result could be one of the biggest transfers of wealth in history, potentially reshaping everything from talks over Iran’s nuclear program to the Federal Reserve’s policies to further rejuvenate the U.S. economy.

Joe Oliver: We're Prepared For Low Oil Prices; No New Moves On Housing

TORONTO - Finance Minister Joe Oliver says the federal government has already considered the dramatic slide in oil prices in its fiscal forecasts.

"When we took into account the oil price decline which had already occurred, we made the assumption that the prices would stay at the low level for the entire period," Oliver told a media conference on Thursday.

Alberta Budget 2014: Falling Oil Prices Take Bite From Surplus

EDMONTON - Alberta is slashing its oil forecasts for this budget year as the world price remains mired in a trough around $75 a barrel, Finance Minister Robin Campbell announced Wednesday.

Campbell said while the operating budget for the current fiscal year remains in the black, he and Premier Jim Prentice are promising "tough decisions" so that Alberta is no longer captive to the whims of the international marketplace.

"We have to get to a position where we're not listening to OPEC to decide on how many schools we're going to build," Campbell told reporters as he delivered the second-quarter budget update.

How Will Falling Oil Prices Affect Alberta?

A slump in Alberta's crude oil prices means the province's economy is slowing down, and many want to know what the future holds.

Todd Hirsch, chief economist at ATB Financial, told Bloomberg News that in 2015 Alberta will see the slowest economic growth it's faced in five years, and that the province's economy is forecast to grow about half a percentage point less than in 2014.

Cameron warns Putin as Russian president lashes sanctions

Vladimir Putin has admitted for the first time that he is prepared for his country to face a “catastrophic” slump in oil prices, as David Cameron said Europe would have no choice but to step up sanctions if the Russian president did not abide by previous agreements to respect Ukraine’s independence.

Putin was speaking before a bilateral meeting with Cameron on the margins of the G20 summit in Brisbane. The meeting is likely to be a bruising affair, especially after the British prime minister likened Russia to Nazi Germany, saying Europe had learned lessons from history about how a big country could bully others. Sideline talks between EU leaders and Barack Obama over the Ukraine crisis have also been scheduled.