I still don't understand this all because I can see how Russia hurts, the UAE hurts, the KSA hurts, Iran collapses.
but the US can and has switched between innie and outie before. Yeah we pause domestic production, but its a jolt of energy into consumer spending, shipping, travel, airlines, etc, isn't it?

That was the case the last time Russia and the KSA locked claws and plummeted as the Saudis wanted to outcompete the bakken formation. And they did, and we did just fine, and Russia suffered but got through it. We had that big stint where people pretended the Russian economy was smaller than Italy's because they only looked at GDP instead of GDP-PPP, but look where Russia is today.

Russia diversified a lot since then because they saw how vulnerable they were. Problem with the price war is while these two massive players exchange blows our companies are also going to suffer considering they don't want to be selling oil for so cheap. I mean many US companies need 30+ for break even. There's a fuck ton of US oil companies, refineries, downstream, upstream, etc. that will get pummeled because the price isn't economical. What happens to the 10+million jobs in the US that are dependent on some segment of oil production? Many of these guys are already leveraged, yeah the Exxon's and Chevrons will be okay long term but some of those smaller companies could be in deep trouble if this persists.

And then think about the tangent service economies built around some of these oil hubs. What happens to aggregate spending in places like Houston?

This post was edited by ofthevoid on Mar 9 2020 11:06am

I think they'll get shat on. Especially in the Bakken formation. But is that a net positive or negative for the country as a whole? What about all the positive effects of a dramatic drop in gas prices?
The last time it happened, oil jobs were essentially placed on hiatus. Workers were laid off en masse and told they might be wanted back in a few years. But it didn't blow up our economy

If it was just Iran, Venezuela, Russia, the UAE & KSA taking the hit, it would be one thing. But with China and SEA simultaneously dealing with a big Coronavirus outbreak, its another. That's a lot of the US's global competition getting shanked when our economic engine is already booming and 'should' be able to shrug this off.

If Russia throws support to the Houthi I’m with Russia all the way.

I'm curious which enemies of America you don't automatically side with
There's still ~100 members alive of Kach and Kahane Chai, I'm guessing you'd hate them

Hard to say if it's net positive or net negative but imo leaning towards more negative since our oil industry is much larger than it was so it's probably a bigger chunk of our gdp. Certainly if you are a consumer or use oil/gas as an input for you then you should be glad while the oil producers are going to get raped. I think a lot of this ties into the hysteria with the corona. I mean in what logical universe does oil dropping by 20% overnight lead to airlines dropping by 7%?

I think medium term when the corona stuff subsides we can stomach lower prices temporarily. Demand should come back online and we'll be fine.

I think what's happening now is a prime example of the negative impact of media when their revenue model is to get as many eyeballs. Their sky is falling wall to wall coverage of the corona virus is causing much of the panic which just keeps feeding on itself.

This post was edited by ofthevoid on Mar 9 2020 11:40am

The Houthi represented a window of opportunity for the United States to stabilize the region in 2015. Many U.S. intelligence experts said we should work with them at the time. And now we see the fallout. The United States can no longer walk that path, but Russia can. That makes Russia the potential hero of this story.

Your question is comparable to a "why do you hate the United States – Saddam is a brutal dictator and should be removed!" circa 2003.

And we both know how that ended.

This post was edited by inkanddagger on Mar 9 2020 12:40pm

You have to have huge balls to invest in airlines right now. They're pretty shit even at the best of times.

Huge fixed costs, huge running costs, extremely sensitive to demand, high proportion of margin dervied from first class and business class which is intrinsically linked to aggregate economic performance, sensitivity to government regulations (particularly with regard to climate change policies), cash-strapped (more often than not), etc etc.

Now they've got to rely on cash reserves to last them possibly 6 months + for this coronavirus to abate.

Oil prices are literally the only thing going for them.

And at this point, valuation.

They're cheap because they have huge fixed costs, are heavily geared, and are experiencing a significant drop off in demand. Lots of smaller airliners will go bust so their valuations means little - whereas the bigger ones are in so much debt and make such little profit they don't give any value back to shareholders IMO.

This post was edited by dro94 on Mar 9 2020 03:48pm