How is the Price of Oil going to Affect you?
 

OPEC decides to keep its production ceiling unchanged despite crude glut, price plunge | CTV News

With oil going down below $70 a barrel things might start changing faster than you think. What I don't get is how the price at the pumps remains virtually unchanged?

Working full time with the Oil and Gas industry I am cautiously watching this playout. I know many of you probably also rely on the industry to support yourselves. Not to mention the tax income that our governments squander away year after year.

Didn't I read somewhere where although good at the pump, it's actually bad for increase in exploration and new production?

i have been following oil since the summer and it has been tanking drastically since september. aprox 30% loss in value.

for implications of this? well from my understanding the cdn oilsands are profitable around 75-85/barrel. the 75 mark is probably for the larger / efficient firms. immediate effect may not have much implications but look to the bottom lines. if prices stay this low for a substantial amount of times (several quarters) it will cause the profits to be eroded which may ultimately cause the lesser firms to close up shop.

whats the implications for us in canada? well there are many on both ends... lower oil prices = cheaper energy = more manufactures but low oil = tar sands no money = lots of rippling throughout the economy.

in alberta where people started getting smug about being the 'have' province (not too long ago they were have-nots) subsidizing other provinces this could take a drastic turn for the worst. so what happens when lay-offs happen due to production cuts? those LOC's , mortgages, car loans, and debt start to look a lot more daunting without that fat income. something to the magnitutde of avg cdn has 160% debt to income.

good luck though... even if oil goes bust doesn't mean the entire economy would go bust. i can't say the same for the tar sands in particular because they are a 1 trick pony. this sort of reinforces the term 'diversity' and 'dont keep all your eggs in one basket' type mantra.

I remember the bumper stickers in Alberta in the 80's...

"Please Lord, give us another oil boom. I promise not to piss it away like the last one!"

The sad truth is, so many young men work in the oil patch assuming that the money will never run out. They spend everything they make plus more. Buy a $80,000 truck, $500,000 house then run up all their credit cards because, "Hey, what the heck! I make $150,000 a year! I'm rich!".

All it takes is two to four weeks of no income for them to be financially ruined. So little common sense these days. No one puts money away for the rainy days. No one wants to live within their means. They want everything now and can't wait to save up and pay cash for their toys and vacations etc. It's a cultural phenomenom that seems to have corrupted the young people of today.

Yeah I agree with all you guys. With a very expensive purchase coming up for us here shortly I hope things stay status quo or close to. Its all about keeping overhead and debt low to help ride out the bumps.

Mark I know of many rig guys who have a hard enough time saving for a planned breakup season let alone for a layoff.

Im glad the Z is paid off let me tell you that. haha.

That's why the banks now make you qualify for a 5% mortgage rate even if the rate is less than 3%.... All it takes is a minor fluctuation in Prime to make people unable to pay their mortgages.

Too many people living wayyyy beyond their means.

PS: Congrats on paying off the Z Mitch!

Great for me and glad I don't have to take out a loan to fill my cars up. The reason I stop driving my SRT8 and bought a SmartCar so the hell with oil company's and there executives!!!

more like consumerism which is being compounded by external factors. look at the media pushing 'house ownership'.

i agree housing is important but it's not an ends to your means. no one wants to save and i read in one of those little tid-bids in the elevator tv that canadians spend the same amount planning as they do researching vacations each week... 2 hours. which tells me that 'canadians' on average look for instant gratification...

i guess i'm skewing the lot as i spend average of no vacation planning and 4-5 hours looking at my investments or planning out my next strategy

let me clarify this for you as you seem to misunderstand how rates work.

variable rates are based on the prime + x

fixed are based on 5 year GOC bonds (sorry edit had it reversed)

any rate change will not affect anyone locked in during their fixed period however upon renewal thats where disaster strikes. As for the variables if prime/overnight rate does go up they will immediately be impacted.


banks are getting you to qualify for a 5% rate because they know the chances of rates going up in 2015 are more probable than staying the same or going down.

but i agree... living outside your means = set up for disaster!

(I do work at headoffice for a big red bank in the securities industry)

No issue understanding how rates work. I assumed a variable mortgage as locked in rates are not the best value these days. I have had mortgages for over 30 years and paid most of them off before selling and moving on... :tup:

To get back on topic. It was pure speculation with no regulation that drove up the price of oil. I by no means have any empathy at all with the lower price of fuel as in all reality should be at the 2 dollar mark. With economic turmoil and everything else with raised prices such as food and other commodities it will make subtle differences now at an economic point. Also, we the people know it's just a matter of time before the next best excuse is made to raise fuel prices again.

My next vehicle will either be an EV or hybrid. I do not believe in getting an ICE powered car anymore. The technology's there and the world is changing. I don't know enough about hydrogen powered technology, but I heard it's potentially dangerous because it's flammable.

I dunno, I think ill always be a gas smelling horsepower kinda guy. Something about the whine of an electric engine just doesn't do it for me.