Go Frack yourselves

[JoeWeber 2,928]

Saudi's are up to 12.3 million barrels a day @ +/- $10 per barrel cost of production. That's above available production capacity which means they're adding in some reserves. Russia is near 11.5M bpd @ +/- $20 cop. Oil from fracking is maybe $40 per barrel cop. Call them rough numbers but even fudging in any direction makes clear the obvious market vulnerability. 

In other news, the cost of photons remains stable.

[airdvr 210]

Market driven economy.  It hurts the fracking biz here in Ohio.  Also drags down the EV market as well.

[JoeWeber 2,928]

7 minutes ago, airdvr said:

Market driven economy.  It hurts the fracking biz here in Ohio.  Also drags down the EV market as well.

Who's market? We're being whacked from the outside, that's the issue. The fracking boom did well for us but it is no solution. Costs are high and the wells are short lived. It's all hilarious and just an aspect of a market driven economy when Amazon sells for a deep discount until mom and pop are out of business and living with buddy and sis. That's capitalism at work. That's not what this is: this is just another glaring proof that reliance on hydrocarbons for energy, where bad actors can manipulate our economy, is a bad idea in today's world. 

Of course, if Brents right, and the worlds deserts green both salubriously and beneficially, we can look forward to buying our strawberry's and cantaloupes from Yemen. I'm sure they'll treat us right.

[Phil1111 1,166]

Saudi production averaged 9.8 MBPD last year and 12.5 is almost taps wide open. Unless small oil companies have very strong balance sheets and most don't. Any sustained market at these current prices will cause them to default on their loans.

Tesla, I'll refer back to the over $12 billion short sellers lost in the last year betting against it. Most of those investors threw in the towels in the last two quarters.

Russia seems to want to play hardball. "Oil prices plunged by more than 8 percent on Friday, as the market continued to digest unfavorable OPEC news, the latest of which was Russian Energy Minister Alexander Novak telling OPEC+ countries that they were free to pump oil at will after April 1, according to the Twitter feed of Javier Blas,  Chief Energy Correspondent at Bloomberg News. "

[JoeWeber 2,928]

13 minutes ago, Phil1111 said:

Saudi production averaged 9.8 MBPD last year and 12.5 is almost taps wide open. Unless small oil companies have very strong balance sheets and most don't. Any sustained market at these current prices will cause them to default on their loans.

Tesla, I'll refer back to the over $12 billion short sellers lost in the last year betting against it. Most of those investors threw in the towels in the last two quarters.

Russia seems to want to play hardball. "Oil prices plunged by more than 8 percent on Friday, as the market continued to digest unfavorable OPEC news, the latest of which was Russian Energy Minister Alexander Novak telling OPEC+ countries that they were free to pump oil at will after April 1, according to the Twitter feed of Javier Blas,  Chief Energy Correspondent at Bloomberg News. "

The Saudi are also talking even greater production/output in April. The fracking happy talk has devolved to "consolidation" when the under capitalized fold. Big oil players like OXY are also in trouble. It doesn't need to be about climate change, hydrocarbons are a bad energy bet for the future.

DUBAI/MOSCOW (Reuters) - Saudi Arabia will raise its crude supply to a record high in April, the kingdom announced on Tuesday, as it ratcheted up a standoff with Moscow over market share and appeared to reject Russian overtures for new talks.

[kallend 2,145]

Trump proposes bailing out frackers.

https://www.washingtonpost.com/business/2020/03/10/trump-oil-bailout/?fbclid=IwAR05xQsBdzmToWsRQrysAhLp8XHuOLmdSKxHT6otlsbINKE_AYz0KaZYPkI

Banks, frackers, farmers. . . .  but we can't afford healthcare for poor people.

 

[airdvr 210]

Maybe he can find them some of Obama's "shovel ready" jobs.

[normiss 887]

15 minutes ago, airdvr said:

Maybe he can find them some of Obama's "shovel ready" jobs.

Plenty of bankrupt farmers, unemployed coal workers, laid off car manufacturing workers, and fired government employees to fill those jobs I'm sure.

[brenthutch 444]

21 minutes ago, normiss said:

Plenty of bankrupt farmers, unemployed coal workers, laid off car manufacturing workers, and fired government employees to fill those jobs I'm sure.

Yep, with an unemployment rate of 3.5% and a hundred thousand more jobs created than the “experts” anticipated last month There is certainly a lot of slack in the job market.

[JoeWeber 2,928]

1 hour ago, brenthutch said:

Yep, with an unemployment rate of 3.5% and a hundred thousand more jobs created than the “experts” anticipated last month There is certainly a lot of slack in the job market.

So, are you investing in a business to enjoy that cost advantage or just making more noise? 

[billvon 3,102]

3 hours ago, airdvr said:

Maybe he can find them some of Obama's "shovel ready" jobs.

They were pretty much all taken by workers back then.  There was a highway overpass next to my office that started right after that stimulus package got passed.

[Phil1111 1,166]

19 hours ago, kallend said:

Trump proposes bailing out frackers.

https://www.washingtonpost.com/business/2020/03/10/trump-oil-bailout/?fbclid=IwAR05xQsBdzmToWsRQrysAhLp8XHuOLmdSKxHT6otlsbINKE_AYz0KaZYPkI

Banks, frackers, farmers. . . .  but we can't afford healthcare for poor people.

 

Well he could put tariffs on imported oil. The US has no real imports as production is about consumption. Given that Russia and Saudi Arabia are driving the price war. Which presumably has the effect to drive the high cost producers out of business. i.e. US frackers and shale oil producers. But that would target his two closed friends MBS and Mr. Putin. So thats out.

He could use US production to fill the US petroleum strategic reserve " The sale from the Strategic Petroleum Reserve was part of a regular drawdown schedule intended to raise $450 million for government programs in fiscal year 2020. That timing came into question after crude slumped on Monday as a price war broke out between Saudi Arabia and Russia, extending losses spurred by the spreading coronavirus." But thats been suspended.

Somehow new cash from taxpayers in an election year for special voting blocks seems right.