Price of oil and aviation

[loopa]

With the price of oil steadily dropping is it fair to start expecting pilot / fa layoffs?

What are your thoughts?

[nightbird]

Why would you expect layoffs when the airlines are more profitable with a lower gas price? I'm I missing something?

[ditar]

I think this possibility applies mainly in Alberta, where a large portion of the flying is for the oil industry. It's certainly a concern.

[loopa]

I should have been more clear. I was more curious about oil charter work and moving workers?

[Johnny#5]

Oil will be back up by mid-summer...plus US congress will push through pipeline projects in new year.

[flyinthebug]

Oil will be back up by mid-summer...plus US congress will push through pipeline projects in new year.

+1

Oil will be back up to 80$-90$ a barrel in 3-4 months or so...so I don't think it will have any affect on crew moves...and as Johnny#5 said, Keystone will get approved in Jan when the Republicans take over the house and senate. The worst case scenario would be when Obama leaves office in 2017 and the new President signs it in. (God help us if that President is another Clinton!) ANYONE but Hillary!!!

[MikeInAB]

"(God help us if that President is another Clinton!) ANYONE but Hillary!!! "

Amen, brother!

[dave_091]

Oil will be back up by mid-summer...plus US congress will push through pipeline projects in new year.

+1

Oil will be back up to 80$-90$ a barrel in 3-4 months or so...so I don't think it will have any affect on crew moves...and as Johnny#5 said, Keystone will get approved in Jan when the Republicans take over the house and senate. The worst case scenario would be when Obama leaves office in 2017 and the new President signs it in. (God help us if that President is another Clinton!) ANYONE but Hillary!!!

-1

The only way oil prices will go up that high in the next 3-6 months is if demand shoots through the roof. There is simply too much oil out there right now. Until Saudi Arabia decides to cut back on production prices will remain low.

I fail to see how the both of you two think oil prices will go back up in the near term. However, if you care to explain the reasoning behind your statements, I am all ears.

[JasonE]

I could do with some cheaper avgas the next 6 months. I've got lots of flying to do to complete my PPL....(own plane)

[flyinthebug]

-1

The only way oil prices will go up that high in the next 3-6 months is if demand shoots through the roof. There is simply too much oil out there right now. Until Saudi Arabia decides to cut back on production prices will remain low.

I fail to see how the both of you two think oil prices will go back up in the near term. However, if you care to explain the reasoning behind your statements, I am all ears.

Its really quite simple...if oil prices remain low and the market is saturated with too much supply and not enough demand...it will force oil producing nations to cut supply. If you believe that the USA and Canada don't have any "pull" within OPEC, you are sadly mistaken. The USA dictates to the Saudis...hell they even flew out 35 members of Bin Ladens family 3 days after 9/11 to protect them. If oil drops below 45$ a barrel... I guarantee that OPEC as well as Canada, and the other major oil producing nations will slash production. Do you think the Saudis are enjoying getting half or less a barrel than they were 6 months ago? The Saudis cant afford it to stay this low for too much longer...and unless you have been living under a rock, we all know that Canada`s economy is taking a HUGE hit because of this...so the political pressure from the States and Canada will force OPEC to cut production. The cost of oil is threatening our balanced budget for 2015...an ELECTION year for Harper...so you can count on the political pressure to mount the longer this goes on. I give it 6 months or less before were back to 80-90$ a barrel. The world economy cannot withstand these low oil prices for much longer, so enjoy the break while we have it.

I wish you were right, but lets revisit this thread in 4-6 months and see which one of us was right.

My 2 cents (1 cent by todays oil prices).

Fly safe
FTB

[Diadem]

One of the most salient points I've seen made is that OPEC is letting the drop happen on behalf of the US to hurt Russia. The Americans weren't too pleased that the Europeans didn't impose very damaging sanctions on the Russians, so this is their way of hurting the Russian economy, which is so dependent on oil. Gulf states extract their oil so easily that they can make a profit down to around $20 per barrel, so they've still got good margins at $50; with a bit of pressure from the US and a reminder of all the help they've been given over the last 70 years, Saudi Arabia and the other ME countries are letting prices drop to accommodate. It hurts North American oil companies, but Obama probably isn't all that concerned about that, and I doubt complaints from Harper will change his mind. It's certainly an effective strategy, and it's already put Russia into a recession. If that's the case, then the pressure from the US would be to keep prices low, not to raise them, so I wouldn't put any money on OPEC suddenly doing a 180 and pushing prices back up.

[dhc#]

So have the scheduled charter and charter company's in AB and SK started to feel the fall out of the low oil prices, its no secret that the major drilling company's have drastically cut back their capital budgets for 2015 and beyond.

[flyinthebug]

One of the most salient points I've seen made is that OPEC is letting the drop happen on behalf of the US to hurt Russia. The Americans weren't too pleased that the Europeans didn't impose very damaging sanctions on the Russians, so this is their way of hurting the Russian economy, which is so dependent on oil. Gulf states extract their oil so easily that they can make a profit down to around $20 per barrel, so they've still got good margins at $50; with a bit of pressure from the US and a reminder of all the help they've been given over the last 70 years, Saudi Arabia and the other ME countries are letting prices drop to accommodate. It hurts North American oil companies, but Obama probably isn't all that concerned about that, and I doubt complaints from Harper will change his mind. It's certainly an effective strategy, and it's already put Russia into a recession. If that's the case, then the pressure from the US would be to keep prices low, not to raise them, so I wouldn't put any money on OPEC suddenly doing a 180 and pushing prices back up.

You raise some valid points and yes the USA is telling OPEC to keep the pressure on Russia forsure...but I think you underestimate the power that Canada wields in the oil producing world. If necessary, we will go to the USA for help and i`m certain they will accommodate us. Sanctions are meant to hurt Russia not Canada. One call from Harper to Obama will change the current course. How long do you think the USA will allow its best friend, largest trading partner, and neighbour to suffer? All in the name of hurting Putin? As I said, time will tell.

[complexintentions]

If necessary, we will go to the USA for help and i`m certain they will accommodate us.

You mean, like they did with Keystone XL?

One call from Harper to Obama will change the current course.

You must be joking. Obama doesn't even LIKE Harper, let alone jump when Canada's Dear Leader asks. I think you vastly overestimate Canada's place on the world stage. The US may be our friends, but they are loyal to only one thing: the US. If it is their mission to use low oil prices to hurt the Russians, they won't give a rat's ass what Canada wants. Thus was it ever so.

I don't see prices rising in the near-term (six months). It isn't just about oversupply, it's also about slackening demand. In case you hadn't noticed, much of the world is either in recession or on the brink. Even China is slowing.

[flyinthebug]

If necessary, we will go to the USA for help and i`m certain they will accommodate us.

You mean, like they did with Keystone XL?

One call from Harper to Obama will change the current course.

You must be joking. Obama doesn't even LIKE Harper, let alone jump when Canada's Dear Leader asks. I think you vastly overestimate Canada's place on the world stage. The US may be our friends, but they are loyal to only one thing: the US. If it is their mission to use low oil prices to hurt the Russians, they won't give a rat's ass what Canada wants. Thus was it ever so.

I don't see prices rising in the near-term (six months). It isn't just about oversupply, it's also about slackening demand. In case you hadn't noticed, much of the world is either in recession or on the brink. Even China is slowing.

Keystone is not in the best interests of the USA as Obama has been trying to sell to the Yanks for the past couple years. If that's the case, why did the house approve it twice now? Why has EVERY announced (and not formally announced) presidential candidates have ALL stated their first order of business would be to approve Keystone? Obama controls the senate so there was no chance of it passing there...but come January when the Republicans take over the house and senate, it WILL make it to Obama`s desk. If he vetos it, then we simply wait until hes out and the new President is in.

Obama says what`s good for Canadian oil companies is not "necessarily" good for the USA...but at the end of the day do you really think Obama is going to risk the 1.7 billion we do in trade daily with the USA? Just to appease the environmentalists in the states? Politics is not a popularity contest when it comes to leaders...and it doesn't matter what Obama thinks of Harper or Visa Versa. Do you remember how Trudeau and Reagan didn't get along? But when it came to world issues, they backed each other despite their intense dislike for one another. As you suggest I over estimate the power we have, I think you under estimate the power we have when it comes to this issue. Just because our military isn't exactly "powerful" our resources are very powerful. Oil is not a want it is a need to ALL countries so sales will continue to grow and demand will continue to grow with the explosion in world population. I also agree the world economy is on the brink of a recession, but do you not understand what caused that in the first place? How about $140 a barrel oil for countless months? Bad loans, sub prime market all contributed to the collapse in 2008. That's why I suggest it will settle in around the 80-90$ mark and likely stay there for some time to come...in order to allow the world economy to bounce back. I think this runs far deeper than any of us here understand, but suffice it to say that the world economy cannot withstand $50 a barrel oil anymore than we can withstand $145-150 a barrel. I understand the process for taking oil from the earth in the ME is a much simpler method than we have at the tar sands...but the Saudis like HUGE profits just like all big oil companies. Yes they are trying to hurt Putin and obviously the dramatic fall of the Ruble in the past 4 weeks has proven that sanctions are working and therefore it wont have to last much longer. We shall see.

FTB

[7ECA]

The Saudi's have a currency reserve of over $700 Billion dollars. They can hold out for a few years, if they really want to.

The fact of the matter is, it benefits the Saudi's to hurt Russian oil production (competition sucks), and they also like taking a chunk out of the Canadian tar sands and US shale gas/oil and fracking projects (all of which need a high $/barrel price to be economically feasible).

Now, will this "gas war" last for years, I doubt it, because most other OPEC nations can't handle the strain, and do not have the currency reserves to hang on, but I have a feeling it will last into the Spring, just to show the world that the Saudi's can and do run the show.

http://www.bbc.com/news/business-29643612

[180]

To answer your question in one word, no.

The vast majority of oil sand workers get driven into camps. It's only the top 10-20%, give or take, who fly in and out of camps. The executives, managers, higher ups and contractors whose day rates are too steep to sit them on a bus for 12 hours one way into work, and the really remote locations that don't have the option of a road. While there have been some lay offs recently, like with any industry, it is the least crucial workers who get let go first, the guys and gals on the buses so to speak, and my guess is it would take a major long term down turn before we see a hit as far as the flying goes.

[X-Savior]

Canadian North has stopped some of their routes from what I hear going East-West with the low oil prices hurting bottom line of their clients.

[Johnny#5]

http://business.financialpost.com/2014/ ... =a980-212b

She thinks the low oil price is already oversold, and a 25% correction is due by late new year.

But who knows, could be earlier with high summer demands...

[180]

I should have been more clear. I was more curious about oil charter work and moving workers?

Canadian North doesn't really do oil sand charter work, which I believe was the jist of this thread...