China pegs oil price to $40 a barrel

[Down Under]

Re: China pegs oil price to $40 a barrel and pockets the rest.

It can go anywhere from here. In the short run.

It cannot stay at these current levels in the longer run. [...]

Many of the companies holding the premier assets in their operating jurisdictions have been bid down to absurd levels. I noted one today on the "Flood of New Oil" thread. I still think oil is not investable - unless you can store physical in sufficient quantities perhaps. However, companies like Suncor with long life reserves in the ground in secure jurisdictions might today make the investable hurdle for anyone with a 3 to 5 year horizon.

Thanks kindly for taking the time to reply. It is much appreciated. I especially like Suncor, since the AUD-CAD is bouncing around parity.

[touchring]

Re: China pegs oil price to $40 a barrel and pockets the rest.

I suspect that the oil price at this point is determined more by politics than market forces, until demand catches up with supply, as you previously mentioned.

It can go anywhere from here. In the short run.

It cannot stay at these current levels in the longer run. The cost of replacing depleted reserves in the quantities needed to meet global demand is higher than the current price. We are now doing serious damage to the global petroleum industry's ability to function, especially the permanent loss of very skilled technical people.

Many of the companies holding the premier assets in their operating jurisdictions have been bid down to absurd levels. I noted one today on the "Flood of New Oil" thread. I still think oil is not investable - unless you can store physical in sufficient quantities perhaps. However, companies like Suncor with long life reserves in the ground in secure jurisdictions might today make the investable hurdle for anyone with a 3 to 5 year horizon.

[Thailandnotes]

Re: China pegs oil price to $40 a barrel and pockets the rest.

Because even though one sector of the economy is "protected", other sectors are put at a competitive disadvantage. That is what is going to happen in China.

I have often wondered how this works. Thailand has a sliding tax on gas at the pump. When the price of a barrel falls dramatically, the government raises the tax. Consumers don’t see a big windfall. Today gasoline was 23 baht per liter which is about $2.50 per gallon, way above what drivers are paying in the states. Google says this translates to 75 dollars a barrel. When oil swings radically the other way, the Thai government subsidizes the price. As you can imagine the “Oil Fund” is often a political issue as it runs up big surpluses and then is broke or in debt.

At the same time, most years Thailand is one of the top 10 car manufacturers, so how do other segments of an economy stay competitive?