With the global increases in production from America and Saudi the market is awash with crude oil which has led to the drop in price of oil. As a result of this oil companies are not as profitable as before and therefore have to cut back their drilling activity. This hits SLB because less drilling activity means less business for schlumberger and it also means that they have too many people as activity is now reduced and therefore they can't afford to pay these people if they don't have the revenues to pay them. Hence we end up with layoffs. If we see oil prices going back up then its probably true to think the reverse will happen albeit over time. Its simple really if you think about it and this is the way of the business world.
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You are very welcome anonymous. I really enjoying giving economics lessons.
I didn't realize it was so complicated but do like how you take economic problems and make them simple for us field folks to understand. I hope the oil price goes up soon.
Colleagues,
Lets continue our analysis in a spirit of mutual respect and friendly dialogue. One of the key things I learned in my master discretion is that oil prices go up and they also go down so that means we can't expect them to be up all the time. They have now gone down but given what I just said they will go up again in some unknown time in the future. We have known knowns and unknown knowns currently we are in an environment of known knowns i.e.: the know that what is known is that oil prices go up and down and when they are down the chances are they will go up again at some unknown time in the future. When this happens we will have more demand for jobs and salaries will go up again thus we enter in a new business cycle. I hope this makes it clearer.
Brian D
You complete numbskull - Saudi is not the only producer of oil...do you ever read the news? Fracking has opened up more market and your prediction of oil reserves is woefully incorrect...... https://en.wikipedia.org/wiki/Oil_reserves
There may be increased drilling activity but there is a lot of oil to get rid of and the prices paid for drilling will drop hugely. There is a lot more oil coming to market amidst a noticeable decline in demand which will be hard to recover from. Schlum will be undercut and will have to get rid of all the top heavy management and the legions of people employed to do little but ensure that their PIPs are completed.
The price of oil will skyrocket as soon as Putin and Russia rollover with what the NWO boys want them to do. Until Saudi cash reserves dry up (about 8 years in burn time), then the pain will continue.
Hi Brian,
I've got a Masters Degree too. Get fired.
Bob Dumbledit,
MSc, No-one-gives-a-fck-about-oil-anymore-engineering
Not-from-a-shtty-school-in-Texas
'I did my masters dissertion in petroleum economics'.......and you obviously got a crap score outspent too much time gazing at reruns of Scrubs.
Over the years OPEC told fibs about the reserve, mainly to keep the price of oil high which benefited their money-grabbing members whose only saleable resource was and still is, oil. Fracking has brought vast quantities of oil to the market from many more regions , which coupled with a turn down in sales of manufactured goods, has greatly reduced the oil sales market. India and South America were assumed to be the next great buyers of goods. A quick look at these countries' infrastructures would make even the densest economist realise that this will never happen in the next 50 years. There is too much oil and not enough buyers....this is before Iran et al start dumping huge quantities onto a fragile market......they really do need the foreign currency my boy.
If you work for Schlumberger I can understand why they have got it soooooo wrong.
Hi All,
I did my masters dissertion in petroleum economics and understand its a complex area but let me try and explain when oil price may go up again. The key to oil prices going up is a reduction in the available volume of oil for sale. This can take time to happen because oil companies produce more at lower prices so they can maximize their revenues. Once the excess volume is reduced prices will go up and as a direct result of that we should see an increase in drilling activity and of course with that comes an increase in the requirement for people and thus jobs are created. Its quite tricky to understand the dynamics of all of this in the global market place but the price of oil will definitely go up as soon as the excess volume goes down. I hope this helps clarify the sometimes complex relationships in the commodities markets.
Brian D
Brain, I don't understand. Can you please dumb it down?
Brian - could you perhaps give us an idea when the oil price may go up again?
ELI5, baby!!!! yea!!
Thank you Brian for taking the time to explain this.