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United States Oil Message Board

  • sideshow32raheem sideshow32raheem Oct 15, 2008 12:30 AM Flag

    Nigeria budget now screwed due to lower oil prices

    Google any of the following news breaking in recent days:

    - Nigeria now has a budget shortfall due to falling oil prices. You think they'll cut production resulting in even less revenue? Uhh, no.

    - Iran's budget is under pressure. Some merchants went on strike in protest of new taxes to help make up the shortfall. Think Iran will cut their production? No sireee.

    - Saudi Arabia is in relatively decent shape compared to others, but they will still be scaling back their real estate development as will the UAE which is in even better shape. They may cut production but don't count on near as much of a cut as first imagined.

    - Venezuela is about to take it up the azz.

    Given the above, if you think OPEC is going to be able to control members who will be cheating to increase revenues, think again.

    Newspapers in Houston are advertising 75-80% off MSRP on Suburbans, Tahoes, Expeditions, Explorers, trucks, even smaller cars sitting on dealer lots. After this brutal beatdown, don't expect to see U.S. automakers rolling very many more off the assembly lines for years to come...IF they are able to stay in business. 2-3 years from now you're going to see many, many vehicles on the road getting 35-60 mpg. This translates to gasoline demand cut by 35-60% of what it is today. And they will be produced for a long time as it will take 15-25 years to amortize the capital needed to tool up the facilities to produce them.

    This is the permanent demand destruction people are talking about. The same thing that happened for almost 20 years beginning in 1928.

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