Russia is collapsing

[RamzFanz]

I don't know how many of you are keeping up with world events but overnight Russia raised it's interest rates to 17% to try to stop the ruble from plummeting and it dropped even further. At a 57% drop this year compared to the dollar, a Russian's savings is now worth just 43% of what it was in January.

The Russian government is funded mostly through oil sales and they were depending on $100+ a barrel. It's at $55 and dropping.

 

[bluecoconuts]

There's a lot to say about it, but given the topic, I'm just going to say

 

[Selassie I]

Does this mean we can now get 2 for 1 on those mail order brides from over there ?

 

[RamFan503]

Are you saying that Putin is losing his shirt AGAIN?

 

[RamzFanz]

Without oil as a backbone export they have decide to focus on exporting:

Snow
Empty vodka bottles
Daughters

 

[RamFan503]

And ear hair.

 

[RamzFanz]

And ear hair.

That's a great idea!

They can use it to make underarm wigs for European women who can't grow pit hair.

 

[Athos]

Does this mean we can now get 2 for 1 on those mail order brides from over there ?

Dawg, one russian wife seems like a handful. Imagine two.

I'd give it a whirl tho. Gimme a blonde and a brunette. Maybe the darkness and light will offset each other.

 

[bluecoconuts]

Does this mean we can now get 2 for 1 on those mail order brides from over there ?

I know two guys who got mail order brides from Russia.

 

[Selassie I]

I know two guys who got mail order brides from Russia.

I also know a dude who ordered himself up something that he should have never been able to sample naturally. She disappeared once she gained her citizenship.

He swears by his experience and is planning on re-ordering. 2 for 1 would be big news for him.

 

[bluecoconuts]

I also know a dude who ordered himself up something that he should have never been able to sample naturally. She disappeared once she gained her citizenship.

He swears by his experience and is planning on re-ordering. 2 for 1 would be big news for him.

They ordered them, and for about 6 months did nothing but fight all day. Then one day out at the bar they said "how about we switch?" So they did, and they all lived happily ever after.

 

[RmsLegends]

I don't know how many of you are keeping up with world events but overnight Russia raised it's interest rates to 17% to try to stop the ruble from plummeting and it dropped even further. At a 57% drop this year compared to the dollar, a Russian's savings is now worth just 43% of what it was in January.

The Russian government is funded mostly through oil sales and they were depending on $100+ a barrel. It's at $55 and dropping.

Yea the lower price is for sure effecting them and the price of oil has been in the danger zone for some mid east kingdoms as well, but smartly they have built up large foreign exchange reserves to finance any set back. OPEC and foreign oil producing countries decided instead of cutting back on the amount of barrels produced a day even though the factors for high demand were going away (US involved conflicts in Mid East, Libya unrest, high demand from China, and etc) they decided to still produce at a current high rate. They did this knowing that the price of oil would fall and they could have a price war with the US and Canada two countries who's recent energy boom has begun the drop in energy prices.

The reason they have allowed prices to drop so low by not cutting back on production is two fold. 1 is they don't give up any market share and 2 is at these low of prices it is soon gonna be be unprofitable for US shale and Canadian tar sands oil companies to keep producing and drive them out of business.

So for now countries like Russia and OPEC nations will continue to weather the pain until they see some US and Canadian falter. Then simply begin to use and sell off the large amounts of US dollars they have bought and held in FOREX reserve removing them from the global economy and driving the value of the dollar up.

So my guess is at some point next year in this current oil war, prices will go back up either by the west producing less or after some western companies close their doors ya see the market begin to be flooded by more US dollars. So for me personally I am enjoying lower energy prices while looking at oil refining and drilling companies that are a deep discount right now and will profit heavily when oil prices go back up in the near future.

So Russia is taking it on the chin right now, but if the current war goes the way they plan less western production and competition they will be alright as long as they have no unrest during this period. I think Russia will survive as in the history of the world few nations have had to survive the harshness the Russian people have had to.

 

[RamzFanz]

Yea the lower price is for sure effecting them and the price of oil has been in the danger zone for some mid east kingdoms as well, but smartly they have built up large foreign exchange reserves to finance any set back. OPEC and foreign oil producing countries decided instead of cutting back on the amount of barrels produced a day even though the factors for high demand were going away (US involved conflicts in Mid East, Libya unrest, high demand from China, and etc) they decided to still produce at a current high rate. They did this knowing that the price of oil would fall and they could have a price war with the US and Canada two countries who's recent energy boom has begun the drop in energy prices.

The reason they have allowed prices to drop so low by not cutting back on production is two fold. 1 is they don't give up any market share and 2 is at these low of prices it is soon gonna be be unprofitable for US shale and Canadian tar sands oil companies to keep producing and drive them out of business.

So for now countries like Russia and OPEC nations will continue to weather the pain until they see some US and Canadian falter. Then simply begin to use and sell off the large amounts of US dollars they have bought and held in FOREX reserve removing them from the global economy and driving the value of the dollar up.

So my guess is at some point next year in this current oil war, prices will go back up either by the west producing less or after some western companies close their doors ya see the market begin to be flooded by more US dollars. So for me personally I am enjoying lower energy prices while looking at oil refining and drilling companies that are a deep discount right now and will profit heavily when oil prices go back up in the near future.

So Russia is taking it on the chin right now, but if the current war goes the way they plan less western production and competition they will be alright as long as they have no unrest during this period. I think Russia will survive as in the history of the world few nations have had to survive the harshness the Russian people have had to.

They are a resilient people but losing over half the value of your cash reserves and monthly income will have an impact on a people who have generationally started to become accustomed to modern conveniences.

With investment money stampeding out of Russia and interest rates at 17%, even those jobs are at risk. Then you have industries that are reeling from the sanctions and others that will profit from it but it's mostly a negative. The Russian GDP has dropped from 8th to 13th since the sanctions began, falling behind Canada and Australia and even with Spain. I don't see how it doesn't continue to drop unless BRICS gets involved in a big way, but that would be catching the falling knife, or the EU capitulates or compromises.

I have read that most US shale drilling can survive at $40 a barrel so, not sure how realistic it is to expect a rise in oil prices soon unless the price continues to plummet first and stays low for an extended period. Also, suspending shale oil drilling doesn't mean they won't start right back up when the prices rise. That infrastructure doesn't go away and investors will be sitting there waiting to lap up the assets at a deep discount. This may be a new paradigm for awhile.

The ruble plummet is a self-feeding system. The more value it loses, the more people who get out of the ruble, the more value it loses. Russia has made bold moves to stop the plummet with no effect.

If Russia stays in Crimea, and they will, sanctions may hold for a long long time. If they continue to make aggressive moves towards their neighbors, it could get even uglier.

I don't see Putin giving ground on anything. It's not in his nature. I see him as becoming more aggressive the more Russia is hurt. Who shows up at an economic summit with navy ships?

 

[RmsLegends]

They are a resilient people but losing over half the value of your cash reserves and monthly income will have an impact on a people who have generationally started to become accustomed to modern conveniences.

With investment money stampeding out of Russia and interest rates at 17%, even those jobs are at risk. Then you have industries that are reeling from the sanctions and others that will profit from it but it's mostly a negative. The Russian GDP has dropped from 8th to 13th since the sanctions began, falling behind Canada and Australia and even with Spain. I don't see how it doesn't continue to drop unless BRICS gets involved in a big way, but that would be catching the falling knife, or the EU capitulates or compromises.

I have read that most US shale drilling can survive at $40 a barrel so, not sure how realistic it is to expect a rise in oil prices soon unless the price continues to plummet first and stays low for an extended period. Also, suspending shale oil drilling doesn't mean they won't start right back up when the prices rise. That infrastructure doesn't go away and investors will be sitting there waiting to lap up the assets at a deep discount. This may be a new paradigm for awhile.

The ruble plummet is a self-feeding system. The more value it loses, the more people who get out of the ruble, the more value it loses. Russia has made bold moves to stop the plummet with no effect.

If Russia stays in Crimea, and they will, sanctions may hold for a long long time. If they continue to make aggressive moves towards their neighbors, it could get even uglier.

I don't see Putin giving ground on anything. It's not in his nature. I see him as becoming more aggressive the more Russia is hurt. Who shows up at an economic summit with navy ships?

Depends on the individual companies. Shale did not become a viable factor until high demand and high cost made it viable. So many of our companies had to take on debt to start the process so some still are not profitable. So it depends on what price some can stay afloat while others have to fold. So will weed out the weaker and leave only the stronger, but for the sake of your argument we will say they can still all stay in the game at $40.00, OPEC can still be profitable at $20.00 a barrel.

An whether some of our companies could start back up would depend upon their debt and their ability to get new loans based on their oil reserves. Then ya couple in by law we can't export oil. Luckily we can export refined products, but oil no. So one thing if we are gonna have a fair fight in this Congress needs to lift our ban on exportation of oil.

The ruble will be saved by us at some point as soon someone will figure out how they can tie some in-flush of dollars to nuclear proliferation in Iran. So whether the Russians do are we do look for talks some time next year tied to Russia putting some pressure on Iran we can't and look for their reward being us stabilizing the ruble.

 

[RamzFanz]

Depends on the individual companies. Shale did not become a viable factor until high demand and high cost made it viable. So many of our companies had to take on debt to start the process so some still are not profitable. So it depends on what price some can stay afloat while others have to fold. So will weed out the weaker and leave only the stronger, but for the sake of your argument we will say they can still all stay in the game at $40.00, OPEC can still be profitable at $20.00 a barrel.

An whether some of our companies could start back up would depend upon their debt and their ability to get new loans based on their oil reserves. Then ya couple in by law we can't export oil. Luckily we can export refined products, but oil no. So one thing if we are gonna have a fair fight in this Congress needs to lift our ban on exportation of oil.

The ruble will be saved by us at some point as soon someone will figure out how they can tie some in-flush of dollars to nuclear proliferation in Iran. So whether the Russians do are we do look for talks some time next year tied to Russia putting some pressure on Iran we can't and look for their reward being us stabilizing the ruble.

Yep. Some of the shale oil companies are heavily leveraged. That doesn't mean they fold though. They may restructure their loans or go into bankruptcy to reorganise debt. The ones who do fold don't just pick up their rigs and leases and leave, they are there for speculators to snap up at a discount and restart after oil goes up.

In the end, Oil either stays low decimating the Russian economy or goes back up allowing shale to make a profit. Russia was betting on $100+ for their budget and that may be years away if at all. Not to mention the effect on the Russian GDP which is heavily tied to oil.

Yes, they need to lift the oil ban. It's outlived its usefulness.

Ruble stabilization for help with Iran? That's interesting. The US usually gets screwed in those deals though as neither Russia or Iran can be expected to be honest. Still, it may take a new president as Obama has drawn a line in the sand with Crimea and the EU had to be strong armed to go along with the sanctions. The EU wouldn't like it at all I wouldn't think.

 

[LesBaker]

Let's hope there is a coup and Putin get put on a stick.

 

[RmsLegends]

Yep. Some of the shale oil companies are heavily leveraged. That doesn't mean they fold though. They may restructure their loans or go into bankruptcy to reorganise debt. The ones who do fold don't just pick up their rigs and leases and leave, they are there for speculators to snap up at a discount and restart after oil goes up.

In the end, Oil either stays low decimating the Russian economy or goes back up allowing shale to make a profit. Russia was betting on $100+ for their budget and that may be years away if at all. Not to mention the effect on the Russian GDP which is heavily tied to oil.

Yes, they need to lift the oil ban. It's outlived its usefulness.

Ruble stabilization for help with Iran? That's interesting. The US usually gets screwed in those deals though as neither Russia or Iran can be expected to be honest. Still, it may take a new president as Obama has drawn a line in the sand with Crimea and the EU had to be strong armed to go along with the sanctions. The EU wouldn't like it at all I wouldn't think.

Heavily leveraged? US shale oil industry lost 32 billion dollars in 2012, in 2013 lost 9 billion dollars and now prices are at their lowest in 5 years. So will be interesting to see how the industry does for 2014. Since or shale oil industry has yet to be cash flow positive we have had to borrow to offset and fund any new growth plans. So the fall in prices means lending is harder to find and since shale is capitol intensive and has yet to be cash flow positive with 2014's numbers not being out yet. So anyway for our industry to survive we need prices to go back up since our shale wells have a shorter production life than a conventional well. Which means we need to drill new wells, new wells take more capitol. Lending cost are up what like 2 or 3% now.

Higher lending cost is not advantageous to a capitol intensive business like our shale industry. So I speculate we will slow down on our production as someone has to for our shale industry to survive. It might be a concise decision by our industry to do so or one forced by dried up lending and the shorter production life of our wells compared to conventional wells and less or no new capitol for new wells. So anyway I opined in my first post I see us cutting production or some of our shale companies going under and production is cut by loss of them. So I see oil prices going up, which ya said ya don't see realistic.

Your other argument is shale companies can turn a profit on oil at $40.00 a barrel. Which I said ok for sake of argument we will say $40.00 a barrel, which means once again a cut in production of shale oil. As companies will just continue to drill the known wells and fields and not drill new wells as it is capitol intensive to do so. An lower prices means they will work to grow their cash flow and profit on current rather than taking on new explorations. Which in shale new explorations are needed since shale oil wells production life is shorter than conventional.

Also ya already have some companies shutting down production since prices dropped. Baker Hughes has stopped 20 drilling sites now. While we nationally still have 111 more drilling sites than we did last year. We are already shutting down some drilling sites. So like I said western oil production is gonna have to end up going down as we need oil prices higher to survive than OPEC does.

Getting back to your $40.00 a barrel that depends upon the individual site here is a blurb I read about a few of the sites and prices they needed.

Earlier last week, Greg Haas, director of integrated oil and gas research at Stratas Advisors, said the Bakken in North Dakota, Eagle Ford in South Texas and Niobrara centered in northeast Colorado, on average, remain economic with crude prices as low as $50 per barrel. Permian drilling in West Texas, on average, remains profitable at $40 while the Utica in the Northeast U.S. can be drilled for as low as $20 per barrel, he said.

http://www.mrt.com/business/article_086d3048-57ed-11e4-ad7e-778c0e2cb49a.html

 

[RamFan503]

Hell - if oil prices continue to drop, it would be smart if possible for the US companies to stop producing and let the OPEC countries and Russia continue to pump out this cheap oil. Not sure if the US companies can afford to hold off but the price of oil is sure to go back up at some point here and simply breaking even on pumping it out of the ground is not something our production should hope to continue with. We are still dealing with a finite resource in high demand. There is a lot of profiteering going on right now in the industry - just not by the ones pulling it out of the ground.

Hopefully the low oil prices will harm Russia's economy enough to oust Putin and reinstall a more benevolent leadership.

 

[RamzFanz]

Hopefully the low oil prices will harm Russia's economy enough to oust Putin and reinstall a more benevolent leadership.

I agree. That would be the best outcome. They are so dependent on oil, it's that or they do something stupid.

 

[RmsLegends]

Hell - if oil prices continue to drop, it would be smart if possible for the US companies to stop producing and let the OPEC countries and Russia continue to pump out this cheap oil. Not sure if the US companies can afford to hold off but the price of oil is sure to go back up at some point here and simply breaking even on pumping it out of the ground is not something our production should hope to continue with. We are still dealing with a finite resource in high demand. There is a lot of profiteering going on right now in the industry - just not by the ones pulling it out of the ground.

Hopefully the low oil prices will harm Russia's economy enough to oust Putin and reinstall a more benevolent leadership.

Benevolent leadership in Russia bro heck Putin could be that compared to what their historical past has been.........LOL