Quote:
Originally Posted by OracleOfCalgary
By Christmas you will start to hear stories of layoffs in the O&G industry and in housing. Starting next week, it will be impossible to sell a house in this city. Full housing sector collapse next spring when the spring market fails to materialize. So predicts the Oracle.
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OK, that's a little too drama queen, but it wont help the economy, that's for sure.
Some points that nobody seems to understand or recognize.
Throwing out WTI as a benchmark for the price of oil is naive and / or disingenious. a growing portion of production and a vast majority of the growth is in heavy oil, which is discounted about 31 - 27 USD below WTI right now, further the decay in CAD has reduced netbacks to the proportion that the CAD has appreciated. ie if CAD is up 20% vs USD, producer n/b has gone down by the same proportion.
So people talk about $85 WTI, which is an alltime high, but it is $55 USD which is about $53. And that is against costs of all kinds that are at all time highs.
Further this heavy requires diluent, and dilent is trading many dollars over TI, depending on the density of the produced oil this can reduce the $53 n/b to something in the high 30's or low 40's.
Some large scale heavy oil production facilities are simply treading water and will now lose money, there will not be much incentive to develop unconventional if they have to pay a large % of revenue pre payout.
Many people who don't understand the oil industry but have a strong opinion are some of the most damaging humans in the province, and country. If you don't really understand how the industry works take some of the energy you have towards building your opinion and redirect it to learning for awhile.