Dropping Oil Prices

[NSXType-R]

Not sure if this belongs in another thread, but yeah, if mods move it, so be it.

Yeah, so oil prices are dropping so fast it's making many companys' and countries' heads spin. So I just wondered, obviously, they're going to cut production to make oil prices rise once the economy recovers. But how does this affect Dubai?

And why should oil executives be worried, after all, they've had year after year of record profits. What goes up must come down. Seriously, it's not like oil prices wouldn't have dropped sooner or later. It's just that no one foresaw it dropping so quickly.

And how does this affect airline tickets and all? I don't fly all that often, so are they still overcharging for luggage and all that bullshit? There's no excuse for overcharging anymore, since they can't say that oil prices are expensive anymore.

Comments, questions, etc. all welcome, just no flaming.

[Rockefella]

Not sure if this belongs in another thread, but yeah, if mods move it, so be it.

Fine here I think.

Yeah, so oil prices are dropping so fast it's making many companys' and countries' heads spin. So I just wondered, obviously, they're going to cut production to make oil prices rise once the economy recovers. But how does this affect Dubai?

I would think it's not helping the outlook of Dubai, but in the long run I can't see it making much difference as Dubai will be held as a tourist stronghold rather than an oil mecca.

And why should oil executives be worried, after all, they've had year after year of record profits. What goes up must come down. Seriously, it's not like oil prices wouldn't have dropped sooner or later. It's just that no one foresaw it dropping so quickly.

From what I've noticed their stock hasn't dropped very much; however, from what I can recall their profit margins are considerably lower when gas prices are at these kind of levels versus those observed just months ago.

And how does this affect airline tickets and all? I don't fly all that often, so are they still overcharging for luggage and all that bullshit? There's no excuse for overcharging anymore, since they can't say that oil prices are expensive anymore.

Should go down a bit. Maybe 5% or so.

Comments, questions, etc. all welcome, just no flaming.

this

[Ferrer]

I don't think oil executives should be especially worried (or producer contries, for now at least).

Yes oil prices now are very low, but I'd say that they are artifically low now just as some months ago they were artificially high.

Once the economic situation has more or less stabilised oil prices will go up again, just as it should with a non renewable product which has a growing demand.

[henk4]

Dubai never had much oil in the first place, Abu Dhabi has about 90% of the oil reserves of the United Arab Emirates.

[NSXType-R]

Fine here I think.



I would think it's not helping the outlook of Dubai, but in the long run I can't see it making much difference as Dubai will be held as a tourist stronghold rather than an oil mecca.



From what I've noticed their stock hasn't dropped very much; however, from what I can recall their profit margins are considerably lower when gas prices are at these kind of levels versus those observed just months ago.



Should go down a bit. Maybe 5% or so.



this

Well the thing is, in July, nearly every country (oil producing or not) based their budgets on at least $100 a barrel oil. And now obviously, it's way below that. For some countries, I guess it helps, but it certainly doesn't help the oil producing ones.

I don't think oil executives should be especially worried (or producer contries, for now at least).

Yes oil prices now are very low, but I'd say that they are artifically low now just as some months ago they were artificially high.

Once the economic situation has more or less stabilised oil prices will go up again, just as it should with a non renewable product which has a growing demand.

I like it cheap. Feels like a time machine.

Dubai never had much oil in the first place, Abu Dhabi has about 90% of the oil reserves of the United Arab Emirates.

Didn't know that.

I think it's a bit unethical for the oil companies to hold customers by the throat, and now it's nice for a change that nearly everyone's hurting in this economy. At least it's a bit more fair.

Has oil prices ever risen and dropped this quickly ever before, by the way?

[Ferrer]

Has oil prices ever risen and dropped this quickly ever before, by the way?

This may be helpful.

[syko]

Doesn't Dubai get more money from shipping rather than crude oil?

[blingbling]

Dubai never had much oil in the first place, Abu Dhabi has about 90% of the oil reserves of the United Arab Emirates.

put it up for AD woo woot!

[henk4]

Doesn't Dubai get more money from shipping rather than crude oil?

shopping or shipping? if the latter, shipping what?

[cmcpokey]

shopping or shipping? if the latter, shipping what?

they have one of the largest port facilities in the world. pretty much all shipping that goes into or out of the gulf goes through Jebel Ali. That is their primary income source, with tourism coming in second.

[Kitdy]

I was reading an article in the economist saying that all is not well in the UAE and the boom is dying and I think there is potential for a lot of lost money because of overspending on development and government debt.

Here's an oil chart from 2007 that also extends further back than Ferrer's - it's from Wiki.

I can't link it as it is an .svg.

[wwgkd]

I was reading an article in the economist saying that all is not well in the UAE and the boom is dying and I think there is potential for a lot of lost money because of overspending on development and government debt.

Here's an oil chart from 2007 that also extends further back than Ferrer's - it's from Wiki.

I can't link it as it is an .svg.

I sympathize with them, but 15 gallons for less than $25 is freaking sweet.

[csl177]

I read that piece in the Economist as well... UAE belt tightening will continue as in the rest of the world. Read this week's articles on India and China's vulnerabilities. Sobering stuff.

Oil prices had been rising (artificially) because of speculators, which ended as credit streams dried up with the banking collapse world wide. They deserve most of the blame and took major hits as margins were called, so there's some justice. Outlawing the practice would be a good idea, let's see how world markets decide to regulate certain practices once the wounds have been cauterized.
Merrill's analysts project oil at $24-26 by mid Jan '09, but as capitol loosens through the second quarter and OPEC slows production, it will go back up. Expect a rise to an artificially supported $85 by mid 2009, which the producing nations will try to sustain... particularly as currency rates shift under the weight of all the bad debt floating around. Projections through 2011 are steady rises on demand in China and India (in spite of pending financial stress) so $140+ is merely 12 to 18 months away. Enjoy the "relatively" low cost of gasoline while you can.

I'm not in the business. I've been married to an extremely successful Merrill Lynch PCG FA foreign trade specialist for 28 years, though. Ya learn a few things.

[Kitdy]

It's hard for me to sympathise for a group of people that treat their immigrant workers so poorly, have such a large amount of money, and in many ways are the architects of their own potential future money problems. Choking on their own greed?

[wwgkd]

It's hard for me to sympathise for a group of people that treat their immigrant workers so poorly, have such a large amount of money, and in many ways are the architects of their own potential future money problems. Choking on their own greed?

Well, I was thinking that, but empty sympathies work almost as well. Besides, that description works for a lot of people right now.