Originally Posted by rufus
Dennis, it is the uncertainty that concerns me. I remember in the 1950's seeing gas for 19 cents a gallon. I don't think we will ever see that, but the price of the product at the pump will probably come down. That may be good news form some, but it sure seems to have produced a rash of bankruptcies in the oil industry.
And now, Iran is ready to start dumping on the market. Read this article and think about it. http://www.bloomberg.com/news/articles/2015-11-22/venezuela-sees-crude-in-mid-20s-if-opec-doesn-t-take-action
The Dutch company, Shell, has withdrawn from drilling in the Arctic. They don't see enough return possible to justify the project. We may see the same in some of the shale projects.
I'm always amazed the general public's lack of understanding of the oil industry. Other than corporate profits, nothing changes. The Chinese produce the oil and it is sold to a gatherer operating in the region (Conoco Phillips, ExxonMobil, Sunoco, Chevron to name a few of the larger). The Chinese still pay the same royalty to the mineral owner, the County still receives it's severance tax, the IRS will still take it's pound of flesh, the employees of the previous companies will still receive their salaries, and if the Chinese decide to expand production by drilling more wells or working over existing wells, it will still be local companies doing the work. No oil is taken out of the country and sold back in and the price of the oil is set on by a global market, not local. I too would much rather see a US company purchase these properties, but the sky is definitely not falling.
Just like ANY industry, when prices go down investment goes down in that industry. This is nothing new, it's the way the markets have ALWAYS worked.
Do you have any idea of what percentage of the U.S. oil industry this deal amounts to ? It's like one flea on a pack of dogs.