Business Report 1/14/16: Oil production - Hawaii News Now - KGMB and KHNL

Business Report 1/14/16: Oil production

Who's NOT benefiting from oil at $30 a barrel? $30 a barrel is still way more than oil cost in some years past, but it's cheap compared to $145 a barrel, which we saw not so long ago. Overproduction ensures cheap oil for the foreseeable future. Pumping less would drive prices higher but several parties either can't afford to risk it, or don't want to.

Saudi Arabia seems to be willingly taking a financial hit in order to rub Iran's nose in it. Iran, which had been counting on a windfall when economic sanctions were lifted, has for years been trying to destabilize the Sunni monarchy of Saudi Arabia, and the Saudis seem willing to endure belt-tightening to deny Iran that windfall. 

Russia has become increasingly dependent on tax revenue from oil and gas producers. In fact, it's half of all revenue coming to the Russian government. Putin is finding that because of his Ukraine adventures, nobody anywhere seems to care whether he suffers because of cheap oil.

And then there are oil exploration interests in the U.S. Midwest, who were happy to reap windfall profits when oil was through the roof, but think the government should do something to protect them. Congress recently removed a ban on selling U.S. oil abroad. For the most part, though, since cheap oil is in all likelihood preventing a global economic slowdown, let's relish the situation as it stands.

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