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The Detailed US Shale Oil Cost Curve: Where Is The Line In The Sand?
On an almost daily basis, investors are reassured that a falling oil price is "unequivocally good" for the US economy. The "It's like a tax cut for the consumer"-meme dominates financial media while the impact on the Shale (or tight) oil industry is shrugged off blindly with "well breakevens are low, right?" As Barclays shows in the chart below, the breakeven price for oil to shut-in tight-oil supply varies by region (and corporation) adding that at $80/b WTI, most producers will sweat it out. But, they warn, if prices remain at these levels through 2015, it could compromise the significant potential new volumes that are needed to offset declines from existing wells. This new, higher-breakeven volume is small in 2015, but becomes much larger in 2016 (with a 17-25% plunge in earnings which would drastically reduce capex... and thus The US Economy).
As Barclays notes,
As oil prices continue to fall, we review the likely supply response of tight oil supplies. Admittedly, cost of supply curves do not tell the whole story about where prices might bottom. At $80/b WTI, we think most producers will sweat it out and achieve their stated production objectives in 2015. But if prices remain at these levelsthrough 2015, it could compromise the significant potential new volumes that are needed to offset declines from existing wells. This new, higher-breakeven volume is small in 2015, but becomes much larger in 2016.
As we stated in the most recent Blue Drum, we expect a rebound in prices in 2H15. But, if prices do remain lower and fall to $70 for all of 2015, half of proven and probable (2P) remaining US tight oil reserves would be challenged. The near-term (6-month) effect would be marginal, but fewer new volumes would be added in 2H15 and in 2016. On a net basis, that implies a reduction to growth of about 100 kb/d for 2015 as a whole. A growth impact of 100 kb/d is a drop in the bucket in the context of total non-OPEC growth of around 1.5 mb/d. Thus, we expect downward price pressure to mount unless OPEC supplies less or demand rebounds.
At $70/bbl, 80% of the 2.8 mb/d of new tight oil volumes by 2017 (not including declines) would be produced (meaning 800 kb/d from new drilling, a reduction of 200 kb/d over the next three years), according to WoodMackenzie.
There are three reasons to be cautious with how cost curves are used.
First, WoodMac’s ‘half-cycle’ cost curve (above) represents new production only at a well, rather than at a project, level. Companies use ‘full-cycle’ economics (which include other expenses) to assess the economic viability of new drilling projects.
Second, cost curves do not address how existing production might react. For this, we turn to EIA’s Annual Energy Outlook. EIA scenarios which imply that if prices reach and stay at $70/bbl, annual growth of 630 kb/d by 2017 would be cut by 180 kb/d each year, net of declines.
Third, expected improvement in service costs will be another important determinant for the breakeven price of tight oil supplies. Oilfield services sector cost inflation has plateaued and stands to improve further in the coming years. This means that the cost curve in a year is likely to be up to $5/b lower on average. Permian D&C costs have declined from $9-10mn in 2012 to $5-7mn today.
OPEC producers have low production costs (in Saudi Arabia, even as low as $4/bbl), but will feel the heat fiscally. Still, tight oil producers are likely to be first affected in a low price environment.
Companies are likely to react very differently regarding their market capitalization, hedge ratio, and ‘oiliness’ of output. We estimate that small and mid-cap E&Ps(accounting for 880 kb/d oil and NGLs) would see earnings cut by 17% in 2015 at $80 and by 25% at $70/b, which would likely lead to a cut to capex and drilling plans in 2015. Adding production from infill drilling, drilling in new areas, and enhancing recovery rates from existing wells would add output but require different levels of capex. Wells already online would not be affected, in our view.
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Be careful whatr you wish for...
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"investors are reassured that a falling oil price is "unequivocally good" for the US economy"
I could give a shit less what it does for the US Economy as a whole. It helps average people tremendously, since they are MASSIVELY tilted towards being consumers of oil energy unless they happen to work for one of those companies or personally have a huge investment in them.
When your paycheck never goes up in nominal terms and outright declines in real terms, lower prices for oil (which has an effect on almost every product or service most people consume, not just gasoline), is a net-net positive. Period.
Price war = good.
Low demand/supply glut = bad (eventually).
it's not called "strategic" for nothing
http://en.wikipedia.org/wiki/Global_strategic_petroleum_reserves
the beauty of issuing fiat currency is that you can load up your SPR more than the other guys before playing musical-chairs with the reserves
then we'll see who has a billion gallons and who is wearing his mother's bathing suit
Everyone keeps forgetting we are at economic war with Russia, and it is completely in the CIA's destabilizing interests to get Saudi Arabia to dump oil depressing Russian Revenue.
Or you could write that statement backwards with Russia dumping oil at the behest of Putin to hammer on western govenments.
Saudi Arabia does not want America to become energy independent so it can also leverage this by turning up the pumps to choke off the shale play.
In addition Japan if it develops it's Clathrate beds it will break energy independence and <nobody> wants an economy their size breaking free of a energy stranglehold.
http://andreswhy.blogspot.ca/2013/04/petroleum-price-and-clathrates.html
Thats assuming that the manufacturers will pass on the savings and they won't. Hell, all my suppliers have a fuel surcharge and I have yet to see this removed or modified to reflect the current price of fuel.
Do know why you would get down voted. Shipping costs are a huge drag on everything, and you are 100% correct that the 20% fuel reduction hasnt been seen in costs.
(up-arrowed)
Savings?
Volatility.
Economies of scale in reverse.
Margin compression. UP, DOWN... UP, DOWN- cycle... until it's DOWN for good (not enough support for consumption- more and more people unable to afford it and there becomes insufficient demand volume to hold up scale).
I figure it's applicable here as well (posted farther down):
Consumers missing link in full-blown recoveryhttp://www.marketwatch.com/story/consumers-missing-link-in-full-blown-re...
Excuse me now while I go bash my head against the wall...
And so is price deflation of ALL forms. Despite, of course, what our PhD Central Planner economists tell us about the hazards of deflation. When real incomes are declining, a pretty good dose of deflation sounds pretty good to me...
PS. When the shale Companies default on the Junk Bonds and go under, there will be an environmental disaster left behind. For the account of, you guessed it, the taxpayer.
In other words, so called fossil fuels just scored a first round knockout of so called green energy fuels. The market still rules, despite efforts by the wanna be despots to fix the game....
The non-existent "market" dominated by those who have the power to make "money" out of nothing, to fix all prices, including the price of money itself, is driving wilder and wilder oscillations, which are systematically knocking out everything, including itself eventually.
You don't understand what's going on. The Saudis are trying to put American oil operations out of business. What do you think will happen once their mission is accomplished? Do you think oil prices will stay low or will the House of Saud jack prices up over $100/bbl again? Their goal isn't to help you. They will wipe out hundreds of thousands of good paying jobs for Americans and make us and the world more dependent on them. The 0bola administration is playing along because they want to bankrupt Russia with low oil prices. It's a dangerous game and a lose-lose situation for America in the long term. Enjoy the "cheap" gas for now because you'll be paying $5/gal in two years.
OPEC producers have low production costs (in Saudi Arabia, even as low as $4/bbl), but will feel the heat fiscally. Still, tight oil producers are likely to be first affected in a low price environment.
My friggen cat could have written that bit of analysis! Sure and let's talk about Shale's leverage. This little play is leveraged up to it's eye balls. And many of these folks are not in profit, not if you factor their debts. They are drilling like mad to stay ahead of bankruptcy. That is why wells are spring up all over, and the best of them are drilled first, the less good as time passes. Drill baby drill, or the bankers gonna catch you.
Now Saudi and Russia and others, may have production costs, but they are not leveraged to their eye lids.
Shale would explode if market interest rates ever return. Even at near zirp, the capital investment to drill makes it imperative that they drill as many and as fast as they can.
It seems we are at Peak Shale right now. Why? The very best of the best wells are being drilled, and they are new and at peak production, interest rates are near zero, they can't go lower. So Shale is in it's golden age. It can only go down from today, UNLESS, oil prices spike again. In that case, even Shale could last for decades. It demands a high price though, to keep going.
In addition to being highly leveraged sale price is based on the quality and quantity of the produced oil and how the oil is "shipped." Producers sell at a steep discount if there are no pipelines. A significant amount of the NG and NGLs are flared, so much for gas resources.
I still do not know where the $4 production cost comes from. KSA spends a fortune drilling and flooding, are these costs excluded for propaganda?
Williston ND Basin Sweet is already below $60.
Scroll down and prices are on the right.
http://www.rmoj.com/
YES. These asinine spins that there is correlation of oil prices just from production costs. Physical demand is down. Oil cartel is breaking down with oil producing nations with different budget deficits to meet. Atop of these production disruptions, come the distribution channels now residing in a much more destabilized ME. The logistics risk weigh on prices.
Crude Oil prices in turn affect shale oil profitability within a closed demand./supply model. Such a model does not exist with its financialization i.e. financiers revving up hypes with snake oils. (Financial markets already contain these 2nd to 3rd degree derivatives).
Any novice trader can tell you that they do not trade based on the metrics of physical demand/suppy/production. The pricing of the papers connected to both crude and shale are also dependent on liquidity of these papers. Price discovery of the oil market is not much different as it moves in tangents out of physical demand/supply/production.
Traders will fly such analysis/noise to wastebins.
Yeah, Jack Burton, I thought the following two articles on the topic were better, since they could not have been written merely by "your friggen cat." Hah!
Oil Price Slide – No Good Way Out
The collapse of oil prices and energy security in EuropeMy opinion is that we are in a relatively S-L-O-W motion train wreck, which, for most of us, is still in flight, before hitting the walls. It was such a vast globalized system of making "money" out of nothing to "pay" for strip-mining the planet's natural resources! Our own life times were too brief to be able to perceive the overall trajectory. Everyone within those systems became more personally successful by attempting to maximize their participation in an overall criminally insane system, where they naturally felt that they were sane by adapting as best they personally could to succeed within those existing systems.
I always liked this Huxley quote:
"They are normal not in what may be called the absolute sense of the word; they are normal only in relation to a profoundly abnormal society. Their perfect adjustment to that abnormal society is a measure of their mental sickness."
Similarly from Jeddi Krishnamurti:
"It's no measure of health to be well adjusted to a profoundly sick society."
A civilization whose entire political economy is based on enforced frauds, and which therefore does its best to deliberately ignore everything else regarding its environmental ecology, is a "profoundly sick society" to the degree that its "mental sickness" is psychotic criminal insanity. That the vast majority of people continue to be utterly ignorant, and want to stay that way, regarding practically everything regarding the real world they live in, because that "real" world was always dominated, throughout their lives, by the biggest bullies' bullshit, operating systems of enforced frauds, was reviewed in the first part of the following video, (but then its subsequent analysis of those patterns collapses back to superficial solutions, that are nicer than none at all, but not by much.)
http://www.youtube.com/watch?v=aNWuqHA13uQ
The Money Fix - A Monetary Reform Documentary
That documentary attempts to compare natural ecologies to the human systems, but does so in old-fashioned ways. By and large, most people like "mom and apple pie" versions of ecology, not "red in tooth and claw" versions of ecology. Human ecology has been way more in the nature of "red in tooth and claw," since the War Kings made societies which ended up being dominated by the Fraud Kings.
The basic problem is that everything our civilization did was based on making "money" out of nothing as debts to "pay" for that, while the thing that was done most of all was to turn natural resources, especially oil, into garbage and pollution as fast as possible. Of course, that could not go on forever, and was always a S-L-O-W motion train wreck from its beginning. However, we are finally just reaching some clearer tipping points in those processes.
Being on a debt slavery treadmill, burning all the world's fossil fuels as fast as possible, is reaching the point where the debts created doing that are at their turning point from the long ride UP, to the probably quicker ride DOWN. Although I believe that there are theoretically an abundance of possible creative alternatives which could be integrated, HOWEVER, the actual systems of debt slavery, generating numbers which have become debt insanities, are now the millstones dragging us to drown, strangling our potential creativity to cope to death, instead of being able to more effectively respond.
Paradoxically, what the better analyses of these problems vis-a-vis the price of oil, and the production/consumption of oil, tend to attempt to demonstrate are the ways that the financial consequences of the system of making "money" out of nothing to have "paid" for everything, like burning all the oil that we could, as fast as possible, first and foremost shows its physical limits in the form of the psychotic breakdowns of the financing of those systems:
"Drill baby drill, or the bankers gonna catch you."
That saying applies ubiquitously to everything else, although the current leading edge of that is in the oil industry. Since the foundation of our civilization was the ability to become socially successful through systems whereby legalized lies were backed up with legalized violence, with the financial system being the first and foremost expression of that social situation, we were never able to be any more rational about anything. We have squandered all the oil that we could, in criminally insane ways, with terrible long-term consequences.
However, since it was never possible to stop civilization from being controlled by the best organized gangs of criminals, the biggest gangsters, the international banksters, while everyone else was forced to adapt to live inside of those systems, in order to enjoy any personal success within that sort of civilization, we have collectively been behaving in ways which were more and more criminally insane, while being unable to prevent that, since the same methods of organized crime that controlled everything continued to do so ...
None of the rational evidence nor logical arguments regarding going deeper and deeper into debts, in order to pay for strip-mining the planet's natural resources, were ever able to do anything to stop the established systems of enforced frauds from financing our own mad self-destruction. Meanwhile, for most of us, including me, there are NO obvious consequences, so far, from being inside of our S-L-O-W motion train wreck ...
AFTER ALL, we run into the diminishing returns from strip-mining the planet quite gradually, from the perspective of most individuals ... Very few people will even dimly perceive the basic connections between financial systems of enforced frauds, and the limits to natural resources, manifesting their inter-related problems. Furthermore, better understanding those problems will not make much practical difference anyway, since the vast majority of people will continue to be quite deliberately ignorant of those basic relationships, while the ruling classes, and their mass media, will continue to work hard to try to keep things like that, even as the S-L-O-W motion train wreck ride gets rougher and rougher, faster and faster ...
Saudis aren't sitting pretty by any stretch of the imagination. They have other "production" costs, such as revenues propping up most of their social programs.
People also ought to keep in mind that as things march forward more and more energy will stay in its home land (for use by locals): we're nearing peak exports.
Growth down. Margins down. Down, down, down we go...
The breakeven price is not set in stone however, it keeps going down as technology and expertise improve. 20 years ago no shale was economic even at $90 oil.
Oh, look! Another Cassandra!
One "word" for you: CAPEX
Next...
It’s not complicated. Just forget about the supply and demand balance.
There is a shrinking input of economically extractable oil. The global economy can temporally function in an unsustainable mode by cannibalizing its less essential parts:
“It’s clear that other parts of the economy are being sacrificed to pay for ‘hundred dollar oil’, or vain attempts at inferior substitution; similar to an addict selling things or not paying bills to support his addiction.
Some of these things are considered discretionary by those who do the sacrificing; not so discretionary for those who make their livings in those sectors, or planned to retire on the surplus they thought they had produced.
It seems these ‘surpluses’ are being targeted to provide the illusion that we, collectively, haven’t overshot our resource base. Prices creeping up relative to incomes, pension funds disappearing, increasing costs of necessary services; how much of this is due to our perceived need to support the increasing costs of our oil addiction? I, for one, can’t call this ‘resilience’. It’s triage.” – By symmetrybreaker, at OFW.
http://ourfiniteworld.com/2014/10/22/eight-pieces-of-our-oil-price-predicament/#comment-46033
"...
It’s not complicated. Just forget about the supply and demand balance.
There is a shrinking input of economically extractable oil. The global economy can temporally function in an unsustainable mode by cannibalizing its less essential parts:
...."
Experience of the last few decades show just the opposite: there is an increase in economically extractable oil.
Possible I don't understand your logic. But the amouunt of hydrocarbons even in easily reached (onshore, shallow) rock is effectively infinite - there is enough to fuel many genertions into the future. I don't think those arguing from the sustainability position who know about geology argue with that. (Any more than they would about other hydrocarbons in the ground, coal, methane hydrates, etc.)
The issue is extraction and that depends on many things: geology, technology of identification, technology of extraction, finance, competition, markets, regulation, etc.
"economically extractable" is a moving target, right?
Fucking idiot!
Back in 1920 they were saying the world would run out of oil in 20 years. Almost 100 years later we hear the same thing. The Brazilians and Russians have found massive new oil fields. There's more oil in Canada and Venezuela than there is in Saudi Arabia. The only question is the cost and technology needed to get the oil out of the ground. Oil will become more expense as it requires more capital to extract it, but we will not run out anytime soon. Can anyone give us a viable alternative to fossil fuels right now? As much as everyone hates and bitches and moans about oil, we would not have a civilized society without it.
Run the US oil producers out of business and then buy up their wells for pennies on the dollar and then ramp the price of oil. Done deal courtesy of Loyd Blankfein.
Goldman Sack'em
q99x2
Good Point! You can count on that happening.
Is there anyone, here, wondering how?
Well, wonder No-More!
Private-money (fractional lending) and interest (usury) on the power of private sector that can be turned into debt (serfdom), inflation, hyperinflation, deflation and, depression throughout society.
Most nations are client states of the international banking cartel. We long ago lost the free market envisioned by Adam Smith in the “Wealth of Nations.” Such a world would require sovereign currencies, i.e. currencies that are well-regulated rather than floating, and an asset rather than an interest-bearing debt. Only then could there be a “wealth of nations. But now we have nothing but the “debt of nations.” The exponential math of debt by definition meant that countries would only lose their wealth over time and become increasingly indebted to the global central banking network.
http://www.economonitor.com/lrwray/2011/08/24/zimbabwe-weimer-republic-how-modern-money-theory-replies-to-hyperinflation-hyperventilators-part-1/
https://realcurrencies.wordpress.com/2014/08/27/the-plane-truth-usury-and-the-rise-of-the-bankster-dictatorship/#comment-27303
And the oil would be sold to?
There is no doubt that things are concentrating, as TPTB require ever-increasingly more control as things get all wobbly (and then ultimately collapse right from under them).
Us, the slaves
Looks like some of the analysts are starting to be a, we bit intellectually honest.
Arabian Spring in Saudi Arabia funded by NED soon?
Can find no sand, man
frackers pump it in the hole
no sand no line man!
http://www.bloomberg.com/news/print/2014-11-05/spending-on-wastewater-treatment-for-fracking-may-triple-by-2020.html
Interesting, so they think that they'll take out before they put it in the pipeling for the People to use?
Tell that to the folks whose water burns at the tap.
Shale oil is still gonna be there in the ground until pricing turns around. A Hurt Locker short term, but it's a strategic reservoir for the peak oil guys.
people still think the people in charge care about whats good for america.
small, and mid-cap co.'s are not getting money at 0% interest, their borrowing from the same people plotting to destroy them, and human nature says they'll frack, until their fu----.
ask the coal people what it's like to be on the wrong side of the global nazi envirormantalist, with your fracking.
the BIS is not going to allow americans energy, or financial freedom.
"their borrowing from the same people plotting to destroy them"
It was always going to come down to this. Only issue was When. The time-frame has been sped up greatly thanks to the combination of "democracy" (concentrating POWER- lobbying) with "capitalism" (concentrating wealth/capital [bankers?]).
All the "models" that people attempt to cling to are based on the premise of perpetual, which is absolutely impossible on a finite planet (of course, one can remove the word "finite" as the very word "planet" refers to an quantifiable thing). Failure to question the premise will only lead to false applications...
If you didn't already know this: humans are quite skilled in deception.
I could be wrong, but, bluntly, what are the chances that in a very competitive atmosphere, with a lot of small producers, that any financial analyst can truly get accurate enough numbers to know whether $60, $70, $75 or $80 will "break" the producers?
If it's highly competitive then "producers" (actually, they extract and refine- the REAL "producing" happened a LONG time ago)) will only be more deceptive, as that's how survival dictates it.
And when we consider that the producers themselves rely on the use of the very thing they are "producing" it should be clear that in order to keep it running they HAVE to have volume. All us lowly "consumers" help prop up the volume part of the equation (in order to support TPTB), we're like junk mail to the USPS. As we drop out of our consumptive levels (due to stagnating and declining wages and lost jobs) the volume side of "economies of scale" pushes the "producers" in to a de-leveraging of same- "economies of scale"- it is, as I coined years ago, "economies of scale in reverse."*
* In essence, margin compression. Most people, however, cannot understand this. Instead, I turn around the all-to-familiar "economies of scale" (which are always assumed to be "positive," though the term is really neutral), a reversing of the benefits of gains/leveraging of increased production scale.
So how many of these OPEC countries have already run the credit card on higher prices with the intention of maintaining some order amongst their restless savages?
Can we get the line in the sand for that one?
It is amusing to watch the Ehrlichians concern trolling the tight oil and gas industry.
https://gailtheactuary.files.wordpress.com/2014/07/canada-crude-oil-prod...
?
Do you guys remember ... just a few short years ago, WTI hitting the $140 range, and it was not uncommon for 'folks' to 'borrow' gasoline from their neighbors by taking a screwdriver and a hammer and punching holes in their gas tank? Those were good times indeed. Everyone sharing like that.....
Now that gas prices have dropped, nobody shares anymore. Sigh.
There's no "joy" in "joy riding" when your ride has been repossessed (due to the "recovered" economy).
People saving up their ONE gallon for self-immolation to celebrate the recovered economy? Consumer confidence!
You do know that the production in the Bakken is up by 100,000 bpd, doncha?
It is currently at 1.16 million bpd, up over 100,000 bpd from August production stats.
When the Bakken was not on the radar in 2004,5, the production was 130,000 bpd. It is now nine times what it once was.
An extra 365 million barrels added to the domestic production each year keeps imports away.
The Saudis need to find new buyers, it won't sell here when there are 365 million barrels available right here. They've got an extra 365 million barrels not sold in the US market. They lost market share.
They have to lower the price to find buyers.
It's a double-edged sword.
Bakken is developed because of high oil prices, the price is forced lower because of the Bakken, oil is flowing over the cup and running over.
Cursed by success.
What you describe: the lag times between development, supply, and market price is what helps gives rise to commodity cycles.
The U.S. alone uses 9.5 MILLION barrels per DAY. World use is 25 BILLION barrels per day. If you think the U.S. is all that matters guess again.
Check your numbers, Landrew ... you are approaching Iscuvara(sp?) levels of inaccuracy.
(Hope things are going well with your brother).
I noticed on the chart that there wasn't a single reserve listed as profitable under $50 a barrel. I find that very hard to believe. The price distortion caused by mass leveraged speculation in the oil market have made it impossible to determine a real market based price. Oil trades on emotion more than any fundamental, essentially becoming a momentum play.
Oil producers were talking about the immense possibilities ten years ago when oil hit $40 a barrel, saying it would be massively profitable to drill anywhere in the world. Those same producers also said $50 per barrel oil would cripple the global economy. They were right. However what they didn't realize was oil prices were being controlled by the same people who bid up corporations with no business model and no profit to multi-billion dollar valuations.
In no time oil blew past $50, $70, $90 on its way to $140. The governments of oil producing nations became drunk on the influx of revenue and readjusted their budgets based on the windfall, not because of real demand but pure Wall Street greed. Oil producers then used the massive profits along with nearly free debt to massively consolidate the industry removing competition and pressure for lower prices. The meme was always increased demand from emerging markets. While there was increased demand it didn't explain the run from $20 to $140. The fact that the entire price run corresponded with increased speculation by investment banks once they were allowed to take over the market proves the move was not demand based.
In 2003 I was told by my friend who was an Exxon engineer that they could build a profitable drilling platform on the ocean floor if oil was $40 a barrel. If the calculations existed then I don't see the basics for that changing over the past decade. Of course now the claim will be oil under $70 is no longer profitable. Of course producers will stay with the claim of a much higher price. If people started paying $100 for something that used to sell for $20, you wouldn't want to sell it for $20 ever again.
THe best thing that could happen is for oil to fall below $30 a barrel even if it sets off a massive financial catastrophe. It needs to happen and then we need to put the repealed regulations back in place. Perhaps we can rebuild the economy on sound money principles, although that is probably a pipe dream.
concur with every single word, comma or period of your post
"Oil trades on emotion more than any fundamental, essentially becoming a momentum play."
What doesn't?
Given that it's ALL layered on the TOTALLY IMPOSSIBLE premise of perpetual growth on a finite planet, well, this is all just nit-picking isn't it?
Somewhere amongst the trees is the forest...
+100 adr
Since this XOI.X index cycle model has been doing pretty well on timing turning points for the index, I would expect a lot of the leveraged shale oil/gas plays to have a rought time through the third quarter of 2015.
Nothing fancy needed to describe how this will all go.
Consumers missing link in full-blown recoveryhttp://www.marketwatch.com/story/consumers-missing-link-in-full-blown-re...
What do you mean we cannot ramp up growth without increasing consumption? Fucking consumers, if they'd only get off their fat asses and consume MOAR credit then they could turn themselves around!
Worry about Japan
Everyone else is .
http://andreswhy.blogspot.com/2013/04/petroleum-price-and-clathrates.html
http://andreswhy.blogspot.com/2014/11/laundry-economics.html
Takes energy to make energy. Running an integrated oil company means oil is just the base commodity where as the value added is in the refining and transportation. The collapse of metals prices and natural gas (feedstock) is what matters most since its very expensive to refine oil into gasoline. Or was I should say. Once the gasoline is in gas station tank its game over. The price is effectively zero until sold.
I say again...avoid the debt markets save treasuries and the dollar. We're producing stupendous amounts of base metals in the USA because we burn coal to generate electricity. There is no such thing as "pure coal.". Take a look at the " waste product" (nickel for example) and then take a look at the natural gas price which can burn that coal and generate huge amounts of electricity too.
Obviously the market disagrees with those who say collapsing oil prices is bad.