Recorded: 2015-01-07

Show Notes: 

Thanks to John Chidgey from the Pragmatic Podcast for the shout out on twitter, http://techdistortion.com/podcasts/pragmatic

Historical demand for oil is falling, link between GDP and oil starting to fall apart

The combination of low demand and high supply leads to lower prices

The true breakeven point for oil drillers continues to drop. While this cannot be the case, media and investors benefit from the story related to the safety of oil drillers

The foreign oil drillers have lower breakeven points and therefore have the ability to beat out domestic drillers

OPEC as a cartel and the incentives related to collusion…or lack thereof

How the prisoner’s dilemma works for the non-economics nerds:

Collusion only benefits the one who deviates from the collusion.

Facebook did not participate in the salary collusion of large tech firms.

Not only does deviation from collusion give a benefit, there is no cost or punishment (when dealing with oil)

Are the low oil prices a situation that oil producers can even control or is this truly a demand driven drop due to the increase in fuel efficiency and city living?

Innovation occurs because of necessity.

Could there be a shift back to “gas guzzlers” because of the low gas prices

Side Note: CES happening this weekend (1/10/2015), inductive charging

Gasoline and oil producers have a difficult time differentiating their product due to the fact that it is a commodity.

Next level collusion? Could lower oil prices be a strategy to increase car sales therefore prolonging the demand for oil

Oil companies with their low prices now have high dividends. If these dividends are sustainable, then could this be a buying opportunity for a beat up industry?

Will the industry or the economy prevail?

Post Show:

Squirrel problems…’nuff said

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