ok.. that's about it...
Stumbled upon something interesting today,
That was in 2007, in today's oil producing countries have been trying to tap on high oil prices which once peaked at close to $147/barrel and with an ever increasing pressure from western capitalism for OPEC to increase output, oil producing countries made huge capital investments on infrastructure, oil wells, offshore oil rigs, invested in offshore oil exploration, just look at the books of keppel offshore and Ezra to get an idea of the situation.
Faced with the downward spiral of oil prices, those whose orders have not been fulfilled have the luxury of canceling it, however, those who have already made the move, they have to continue producing, as you can from the chart above, those were the breakeven points per barrel of oil, in 2007, however, in 2008, more advanced access points have been built to access inaccessible oil, the necessary infrastructure much more costly and the capital investment beyond imagination.
This easily brings up the breakeven point by 30-40%.
OPEC has been calling for a cut in ouput by 2million barrels per day to stave off the decrease in oil price, but apparently, not everyone is adhering to the mandate passed down, the bottomline is that, everyone has their bottomline to watch out for, under-utilizing their current capacity can make a huge hole in their current account, especially after spending so much on the newly installed facilities.
It seems that oil prices might not hold $70 after all, this christmas is going to be a chilly one, everyone please pray for the economy, however, the good news is that oil is probably going to fuel the raging bear of deflation and bring down prices everywhere just as it brought it up....... I just hope that as the ham in the middle of the supply chain, we will be able to hold our ground against the big bear... i don't wanna get eaten up.... *prays
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