This page has been archived and commenting is disabled.
Energy Stocks Are Crashing As WTI Plunges Under $85
Just yesterday evening, the exuberance was palpable (in stocks)... today, with WTI collapsing (under $85) to 18-month lows, Energy stocks are being monkey-hammered across the board (S&P Energy sector -4% from yesterday highs)...
As oil prices collapse...
and the curve flattens drastically...
So Energy stocks are in freefall...
But but but the Shale Revolution!!??
Quick grab the cost curve charts...
»
- 15665 reads
- Printer-friendly version
- Send to friend
- advertisements -
Gasoline will never be below $3 in the United States, ever again; no matter how much oil drops.
Regular gas is $3.02/gallon in Delaware right now at some Valero stations.
Valero in fly-over isn't known for low prices.
Paid $2.99/gal yesterday off the interstate in OK, $2.75 in OKC.
While I cheer the fall in energy prices, I dread the drop in value of my PM stacks. They will move in tandem, despite what we goldbugs desire and hope.
Financial Statistics: Liars, Acts of God, & Traitors
The feudalist system is shutting itself down, creating increasing pressure on decreasing volume, for lack of economic mobility, in a global demographic bust following a demographic boom, empire noise, as should be expected. Without children, there is no future, and the financial repression is automatic.
Now Germany, always playing last to lose, is subject to the same demographic bust, income inequality, and financial repression. Conveniently, FDR isn’t here to atone for his wife’s sins, employing Nazi Germany, and Russia doesn’t suffer the short memory characterized by America, not that it really maters beyond the empire’s arbitrary event horizons.
Labeling Snowden a traitor is just another tool in the feudalist arsenal, as is Acts of God and lying, to avoid the responsibility of stupid. It’s just easier to float downstream to the drain than swim against the current, especially for the majority, which doesn’t expect to see the drain in its lifetime, because other people are having children, until they’re not.
Feudalism seeks increasing return on decreasing risk, and someone has to pay for that, with decreasing return on increasing risk, always ending in war, and all that code is merely increasing the efficiency of the outcome. The capitalists take the return and pay the socialists to distribute the risk, paying them in derivative capital, and the entire bunch conveniently assumes that free will is a myth. The only difference in the Nazi gatekeepers was the name brand, the dress.
Everyone who makes a decision about raising children based upon empire noise loses, sooner or later. The Internet was not designed to do anything, but show you the personality event horizons within the empire, which is why the public, private and non-profit corporations liquidate themselves a little more every time they turn on a computer, with lost purchasing power and artificial security inflation in a positive feedback loop. What really changed at PIMPCO, other than Gross bailing out?
Money, all of which is arbitrary gravity, is only a consideration in the global city, where natural resources are consumed without replenishment, except by collapsing the surrounding countryside with the behavior. Top balance the system, somebody(s) has to discount that money appropriately by event horizon, to create effective economic mobility circulation.
And as you can see from the city critters moving to the countryside, trying to escape themselves, all the bank knows is real estate inflation and employing other people’s children, in a debt ponzi. They cannot feed themselves. And you know who those children are, yours.
Arbitrary behavior can only lead to capricious behavior, which can only lead to malicious behavior, left unchecked, and the law follows behavior because all feudalist systems, regardless of brand, inherently disconnect humanity from nature. Gravity has its uses, landing and take-off.
Anyone capable of normalizing the stupidity adhesive of occupations without being trapped, much easier said than done, can create economic mobility. Basically, money, debt against your children’s future to maintain the status quo of feudalism, pays people to the extent they normalize arbitrary, capricious and malicious behavior. If you want to learn what it takes to become a CEO, don’t go to the penthouse; go live with a CEO (not recommended for those with a weak stomach).
Currently, elevators, which were here long before Otis was born, have the most arbitrary technology. Planes and cars are a close second. And the proposed trains promise far worse, if they can sustain the real estate inflation associated with stealing all the property along the proposed routes to implement them. Always replace the controller, which in the case of a collapsing economy, is the upper middle class socialists implementing the dress for the capitalists.
You require a new local community education system, because the objectives and goals of your communities are not the same as those of the global cities. That city manager is paid, in line, to implement objective-based management with best-business-practices, from the global city, with arbitrary grants. You might want to change the nature of compensation, or not. There is no other exit.
At the end/beginning, you replace the gatekeepers and give the new ones a new technology to keep them busy, doing what they are bred to do, link. The last thing you want in your community is any part of the medical university complex debt explosion, unless you have a great deal of experience with economic propulsion, which is a microscopic percentage of the population, on the other side of the fulcrum.
Don’t bother knocking on my door; I’m a dishwasher for the maidservant of the Queen’s maidservant, doctoring the psychology of a herding dog kept in a box, which, sooner or later, will turn on its owner.
Idiot
Wicked prose bro. You write like a fag ( inside joke, no offense!)
I'm going to lite a dooby, and read it again.
^+1
Fat finger.
All these projections on cost of drilling are done using static numbers, but reality, sorry to say, is not static, but always changing.
If crude oil drops to $60/barrel, don't you think other prices will drop - with a certain time lag - in tandem. Lower oil > lower gas > lower food > lower wages (I know, I'm dreaming here) > lower production costs for machinery = lower costs overall.
Welcome to Deflation 101.
Go ahead and down-arrow if you like, but deflation has to happen to clear all the mal-investments, trigger margin calls, bankruptcies, all that good stuff.
Or, would you rather pay $4.50 for a dozen eggs or 0.89¢?
I'll take deflation for $400, Alex, er, make that $250.
If I am a producer and the price of crude factors into my costs, I'm going to keep prices static ("we held prices stead for XX time!") and pocket the extra margin ("record profits beating analyst expectations! -or- "Yeah, Bob, the Company's been doing well. I could finally afford to buy that new boat.")
Example: Coffee. Drops from $3.00lb to $1.00lb over 3 years. What do we get? $1 any-size coffees. Price springs back up to $2.50 in 6 months and what do we hear? "Oh, we have to raise our prices 7%. The cost is going up."
The retail market aside, with the other manufacturing and industrial processes that have multiple cost imputs related to the price of crude, there are enough little hands to buffer the price decline and keep a slice for themselves.
Hey Putin! We will break you! Everyone is on our side now! Okay, not really. But I'm going to pretend that's the case anyway.
Just how poorly do you think a commodities based economy like Russia is faring? The Ruble has all but collapsed. OPEC isn't cheering.
Oil correction, constantly revised downward economic estimates, bad luck (mild weather) ng storage injections...who's surprised?
Rossi's e-CAT / LENR testing result released yeterday. BIG OIL affected
http://www.e-catworld.com/2014/10/08/e-cat-report-released/
http://www.sifferkoll.se/sifferkoll/wp-content/uploads/2014/10/LuganoRep...
Tylers, a great topic for you to cover would be what is the break even per barrel price of oil in the fracking eagleford shale play? I heard somewhere it is so leveraged that anything under $80/bbl and it is no longer profitable...
The process of extracting energy from shale in a form that can be made into oil requires heating the shale in a pressure vessel called a 'retort' - usually an geological chamber.
The process of creating a retort, pressurizing it, and feeding energy into it for heat costs extra money. The conventional wisdom is that those extra processes and expenses raise the production cost to about $80/bl. Below $80/bl it stops being profitable, presuming other expenses remain flat.
I do remember reading , that for the longest time, the Saudis cost to extract a bbl was 10cents.
I'm sure that has ticked up a bit. And they need revenues to placate all the Royal hangers on.
I wonder if they are still demanding a piece of the bill be paid with gold?
This has nothing to do with the shale revolution.
Oil is crashing because the world's biggest energy producer, all types combined, has butt-fucked their own currency out of economic ignorance. As their currency crashes the things they sell - OIL AMONG THEM - get cheaper.
Shortly, this is caused by capital fleeing the Ruble due to fears of confiscation, and causing the Ruble to fall.
It is that simple.
Someone apparently thinks the observation that devaluing the currency used by the world's biggest energy producer makes that energy cheaper to foreigners is a political statement.
It's not.
It's a fact.
Ruble is falling. This makes everything Russia exports cheaper. That is going to have an effect on the price of the commodities they dominate.
FWIW,
If crude drops much more Shale Oil will have to start offlining capacity.
Also, if Europe and the US economies go into the toilet in the next couple of months - which it looks like they will - then oil demand is going to drop, causing the prices to drop further, causing wailing and knashing of teeth in Russia, and opening a black hole in the balance sheet of the companies that have heavily invested in Shale.
From now until then policy makers will strut and preen and talk about imposing 'consequences' on Russia through sanctions. Meanwhile in Russia, Putin will say that sanctions are ineffective, and that he will take from the private western company of his choice to reimburse his cronies for any of their losses (and then some).
But once the proverbial flood arrives, they will trade places. Western politicians will bemoan the ineffective sanctions that allowed those evil Russians to kill the 'Shale Revolution'. And in Putin's Russia, the dropping Ruble will suddenly turn into an evil American plot to take over the world.
I can't believe anyone listens to these asshats.
Fool me once, 'Shame on you!' Fool me twice, SHAME ON ME!
We've got a regular three ring circus. What do we watch? It's all so much fun.
Peanuts or popcorn? Barnum would love this!
Send in the Clowns!
Eeeee...Bol...laaaaaa
If currency is losing purchasing power, you need more of it to buy the same barrel of oil, not less.
It is the sellers' currency that is dropping.
Today a barrel of Russian Oil costs about 3,500 roubles.
In dollars that is $88
In Silver that is 5 ounces.
Then the Ruble devalues relative to everything 50%. That means a Ruble is HALF as valuable as before.
But where 3,500 Rbl used to = $88 or = 5 oz Ar NOW it takes 7,000 Rbl to = $88 or 5 oz Ar... or 1 Bl Oil.
So, Mr Oilman, Russia in this case, still needs to buy things to keep his business running. If he sells for 3,500 Rbl, then he can't buy enough stuff - because the Ruble is less valuable. And the market now is much more expansive relative to Rubles. So, he raises prices. If he raises them all the way to parity - 7,000 Rbl, then he doesn't get enough volume of sale to buy all the stuff he needs. So he lowers his prices.
Then Oil sells internationally for, maybe, $75/bbl = 5,000 Rbl = 3.75 Oz Ar
Get it?
When the seller's currency devalues, everything he sells gets cheaper to foreigners.
Thanks 1971.
collapsing energy means collapsing economy
Where's the 200 dollar oil? This is making my Canadian money worthless.