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The American Miracle Idea Of Energy Independence Is Crumbling
Submitted by Raul Ilargi Meijer via The Automatic Earth blog,
And on the Seventh Day, God sold his shares? What do you think, is He short the market? Short oil? Oil does look up a tad, but then the dollar lost about a percent vs the euro, so that definitely feels like a headfake from where I’m sitting. The dollar lost more vs the euro than oil gained against the dollar. Gold and silver have somewhat more solid looking gains, but that’s against the same feverish buck, so what does it really mean? We’ll have to wait and see.
Now, be honest, who’s getting nervous yet? WTI oil yesterday fell 4.5% and tumbled through $63. $63, brother, you remember when it was $80 and you were thinking wow, that’s a long way down? That’s when you took that suit to the cleaners, and that feels like just yesterday, don’t it, and here we are, it’s down another 20%+. Anyone worried about their Christmas bonuses yet? New Year’s?
The central-bank-propped-up stock exchanges didn’t even like what they saw anymore either yesterday, let alone today. Greece down -13%, Shanghai -5.4%, Argentina -7.1%, Europe on average -2.5%. And that’s on a weak dollar day… Think we’ll have a lot of those days? Think God is short the greenback?
Is oil going to break the whole facade? What do YOU think? You think that maybe we’ve had enough of this charade? Is this the one God, let alone the Yellens and Draghis on this planet can’t manipulate from their comfy seats? The Fed can buy Exxon and Conoco, and Draghi can try and support Shell and BP, or maybe the Bank of England should, but oil is a global thing, it’s not like Treasuries or Greek debt that you can just buy a $1 trillion handful of every week or so.
But maybe God found a way to keep some more of the stuff in the ground. Who was it again that said nature developed man only to get rid of a carbon imbalance on the planet, to get it out of the soil and back into the atmosphere?
God’s representatives on earth anno 2014, central bankers, can’t control oil anymore than they can consumer spending. Anything else, they’re fine. But that makes them weak, it’s their Achilles heel, the things they can’t control. It didn’t used to be that way, but today central bankers are like movie stars. Exactly because they did everything they could to keep asset prices up. These days, you never leave home without one. Or as the Rolling Stones put it 40 years ago (when central banking was something entirely different from what it is now):
When your spine is cracking and your hands, they shake
Heart is bursting and you butt’s gonna break
Your woman’s cussing, you can hear her scream
You feel like murder in the first degreeAin’t nobody slowing down no way
Everybody’s stepping on theiracceleratorcrude oil tanker
Don’t matter where you are
Everybody’s gonna need aventilatorcentral banker
US Thanksgiving weekend spending was down 11%, and movie theatre box office no less than 20%. Sure online sales and Netflix went up a notch, but come on, a 16 year low Thanksgiving box office and the second installment of the Hunger Games trailing 25% behind the first, how does that spell recovery to you? Think God liked part 1 that much better?
Americans, like everybody else, are down and out. Their spines are cracking and their hands are shaking, and they don’t have a central banker on their side. Their central banker has sold all she could to the ‘other side’, and now she has no choice but to let oil prices kill millions of jobs, unless somehow an actual supply and demand market rises from its zombie state, the same market she has been very complicit in killing off.
If you don’t have real markets, and nobody knows anymore what anything’s worth, the only thing left to drive the financial world is herd mentality. Lemmings have that too. The world is going to regret letting Yellen et al destroy the market principle, and price discovery. Capitalism as a system cannot possibly work without price discovery. It leads to the few making out – literally – like bandits in the night, to the many left with nothing but debt, and to imploding societies.
Oil is the one substance that can make them implode. Because our entire societies are built on it. And from it, too. The industry that drives it, drives everything. And bringing down its revenues by 40% and falling will break that industry, and the society it designed and built. When oil was briefly at $40 in 2008, that was less of a factor, because their was some resilience still left in the whole global economic make-up. Today, it’s whole different story.
The American miracle idea of energy independence is fully reliant on a shale patch that went over $100 billion deeper into debt every year for years running just to produce that not-so-miracle. Take away 40%+ of what revenue it did take in, and there is no independence left. All that’s left is fracking fluids in your drinking water, and a few trillion in debt that the Big Kahuna lenders will seek to unload upon the real economy.
Oil prices at some point will rise again, but by then, and when is anyone’s guess, the price fall we see today may have done so much damage to the very structure of our economies that far fewer people will be able to afford it.
Those box office and holiday sales numbers are only a first red flag for where we’re going. As are the snap elections in Greece (spinned by Brussels) and Japan: incumbents who feel they have an edge for now, and decide to grab the opportunity.
It’s panic and fear and most of all it’s volatility. That’s our foreland. A weaker dollar for a day, which lets oil prices breath a little, which in turn lets gold sit pretty while it lasts. Tomorrow could be very different all over again. But most of all, looking at the trend in a wider context, this means a whole lot more trouble for the 95% of people who live in the real economy. Much much more. There’s nobody left to protect them from anything at all that goes on. They’ve been sold out to the highest bidder and the lowest common denominator.
And they can pray to God, but I hear he might be shorting them too.
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Crude breaks long-term support, going to $35
http://www.goldsqueeze.com/analysis/oil-breaks-below-long-term-support-n...
Only way anyone on this planet becomes 'Energy Independent' is when they join hands & hold a séance to see what Tesla had to say about Telluric Currents.
Otherwise ~ Toss your quarter in the basket(s) every few miles & have yourself some fun on the Rockefeller Turnpike
An old oil well one mile from our place was being fracked a year ago, and for several days we had an oil sheen on the well water in our toilet.
It doesn't matter. As I said before, the typical soccer mom would rather have her children bath in SO2 then walk home from from school.
Happy motoring!
Yes, heaven forbid the children walking home be within eyesight of a non-married adult male, he might kidnap/rape on sight. Much better to have a second vehicle and keep the children indoors on the playstation when not supervised.
The oil sheen in the toilet does make a fine mirror. The little_horsemen seemed fascinated watching The Miracle of Birth every time they took a shit.
Now this was not a comment I expected to encounter today.
Whenever somebody quotes the Rolling Stones to make a point about bankers and oil companies you know its time to put that author on you ignore list.
So basically, a SWIRLIE becomes a FREE FACIAL
#Bonus!
When oil was briefly at $40 in 2008, that was less of a factor, because their was some resilience still left in the whole global economic make-up. Today, it’s whole different story.
The very fabric that holds our world together will fall apart if oil stays below $70!! Sure, oil was less than $50 up to 2004, but that shit is irrelevant now!! Sprott asshat managment needs that price above 100$ or their energy fund goes bust! God does not approve! And God shall have his vengeance on all those celebrating a below 100$ oil price!!
(Nice to see tylers daily oil-price-must-rise-or-apocalypse articles are now invoking God, has a very network feel to it all)
Wait, did you say an "old well" was being fracked - as in a well hole that had existed for some years had been returned to service via hydraulic fracturing? Is this true?
Yes. More correctly an old drilling site. I don't know if they drilled a new hole or not.
An old drilling site; but a different well bore, correct?
What you wrote before, to my knowledge, is not even possible. There's hardly any way to pressurize the bore.
I don't know the specifics. I do know they reworked it, they had all the typical fracking equipment there, and it is in production now.
what a day at the hedge....now this author is invoking god and oil? must have the wrong hedge on oil? whats next...wicca services in the oil patch....good grief....lol
Baker Hughes makes the equipment, for most if not all of the U.S. oil extractors.
The well is drilled horizontally, or at an angle, through the rock, and B-H makes the pumps which pump the oil out to the old well, then (IIRC) another pump pushes it to the surface.
We're doing B-H work right now, for this very type of work. Lots of inconel is used in the shafts.
When we moved into our home several neighbors warned us about a man living near us. Our young daughters were what he found attractive and he had done some inappropriate things to girls in the area. I came home one day and Mr told me he paid him a visit and told him " the way things are". I was unsure of what that meant so he explained.
When a man walks in his garden and find aphids sucking the life out of his plants, he does not call a judge and jury about the matter, he squishes those insects himself without a second thought. The man protested he was maligned by malicious rumors. Mr acknowledged that could be so, but that still didn't change the way things are.
We never in 10 years had any issue with him but we did tell our daughters to be wary of him. When my eldest was 13 and alone in the house, she heard a knock on the door. Looking out her window she could see it was him. She got a gun and barricaded herself in her room and stayed quiet. He left and I found out later he was just asking to borrow some hay.
Miffed
Statistically speaking, it is the hundreds of horny and handsome teenage boys sitting in class with your girls that is the greater risk for sexual violence. Not so much the one dirty old man down the street.
Best, really, if the girls learn to protect themselves with a knife they can have on them all of the time.
What about pepper spray? Plus ~ you can just use it to spice up your burrito if no teenage boys find you desireable.
Often times pepper spray will not do the trick.
A knife is much more reliable and effective.
Having seen several women in body bags with pepper spray as their only defense made me change my mind about its effectiveness. Perhaps in certain scenarios it's a winner, but someone who knows how to use a knife in close combat is almost always victorious. The only times I saw failure was when multiple assailants were attacking one individual.
Everyone should spend a month volunteering in the ER on graveyards in a rough area. What is effective and what is not is painfully revealed and some preconceived ideas and classroom educations on the matter are shown their true worth.
Miffed
If the price of energy independence is $100 barrel oil, I say let's bring on new technology instead and flush the entire Middle East.
What about pepper spray? Plus ~ you can just use it to spice up your burrito if no teenage boys find you desireable.
This is true. Handling male animals is a good lesson in this regard. the power of raw testosterone without the societal influences is another " the way things are" lesson. Teenage boys were demystified and not so shocking.
Funny how most of their friends were boys in high school and have remained so long after graduation. Grounded parents help children to ground themselves as you probably have experienced yourself.
Miffed
And just replace "leverage" with "oil" and you'll understand why you retarded phuck.
Drop dead asshole.
WTF? happened to the school bus? With all of this "we need to be green" stuff, I never hear them call for all of the school districts to go back to using the school bus.
WTI down $3.00 as we speak.
PEAK OIL PRICE, BEEECHES;)
Just wait until our dilapidated nuclear power plants crumble all the way and start showing up in the water supply.
5to1baby1in5
So Horseman, if you are Hegeless, what are you getting per acre to lease the mineral rights around your homestead?
And what kind of royalties did you negotiate?
By the way, Oil production doesn't require much fracking. It is primarily about horizontal drilling.
Nat gas production, other the other hand, does require a lot.
That's not far from the 2009 lows, that were actually buoyed by QE1.
we r fukd
Don't be ridiculous, all we need is cars powered by our own sense of self-satisfaction, and America will have solved the perpetual motion machine problem.
more like sense of entitlement...
If someone could figure out how to convert moronic "Thank You for your Service" comments into BTU's, we'd be home free.
AH, now as soon as someone could figure out how to tap the infinite Dunning-Kruger effect of the American public, then we'd have energy independence for real.
Nah, can't be. Porter Stansbery was all in on Shale.
Told everyone they were idiots if they didn't get on board, laughed at Chris Martensen. Comments?
Not if they can harness this. Atheists please disregard. All others, there's a reason a 2014 cube was put in the Georgia guidstones.
Remember Bono's plane making that emergency landing? Enjoy Xmas with your families & make it the sweetest. Get your spiritual house in order if you haven't done so.
https://www.youtube.com/watch?v=e5zSzZvAu8c#t=1154
Lost me at "fracking fluids in drinking water." This is vituperative invective at its worst.
Agreed. It's more leftist pop-psychology drivel than fact.
Raul must think he has hit the big time now that he gets posted on ZH. He spit this one out so fast he didn't proof read it. If you have a good article the spelling and grammer should also be good.
Please say your misspelling of "grammar" was intentional.
If so, funny.
No, that would be, maybe, gramrrr.
Like saying Grrrls when you mean Dykes.
Loved him in Cheers. Frasier - not so much
Thank Google I know that there's a period in "et al."
proofread ... one word, not two. Two mistakes in one and a half lines. To quote shark hunter Quint (from Jaws): "That's not too good, is it Chief."
As long as it prevents cavities I don't give a shit.
planetary downsizing
The low price is to punish Russia....YOU WILL NOT GET OFF OF THE DOLLAR!
ask Qaddafi and Saddam...oh, nevermind...
That was exactly my take as well. But now they're starting to look like a one-legged man in a butt-kicking contest. Whatever group of nitwits came up with this brilliant "strategy" must actually believe the fracking fairy tale. No doubt the same cadre of clowns who want to sell fracked gas to Europe like, this winter.
You can tell the posters that have invested in fracking. You would be surprised how hard brokers pushed fracking investment. Millions of retail folks invested heavily. A portion of the 100 billion a year came from small guys thinking big. Their obvious anger at anything critical of fracking just screams. "I am long fracking!" For a number of years, it was smart for the little guy to get a piece of the miracle and be patriotic too, that is what the brokers used to sell them. Hell, just bad mouth fracking in the slightest way and they will "reply" in double quick time. Might even call you a Liberal. I love when they call me Liberal. It is too funny. Shows their limited grasp of capitalism and free markets.
We bamboozled some folks......
Recent ZH article showed shale break-even prices. The lowest of those was around the $75-$80 range. Watcha gonna do gub, subsidize?
I'm thinking "Energy Backed Securities," with triple A ratings will fix everything.
After all, look at the wonders it's worked for autos and housing.
I am very much against tariffs. But in this case I say put a tariff on oil imports putting a floor price at $75/barrel. Don't allow dumping to drive our oil producers out of business. The "greens" (socialists/capitalism haters) can go ride their "green" powered magic carpets to and from work - when they have jobs.
The oil isn't going anywhere. Who gives a fuck about the producers?
Wouldn't putting a floor on oil be manipulation?
The communist/socialist/progressive motto.. Not higher or lower than thisssssssssssssssssssss price..
Good thing we don't wipe our asses with oil!
pods
It's in the constitution, it's protectionist, for shame I pay my taxes and get something for them and I paid $435,000 last year on wait for it.............OIL LEASE BONUS MONEY
Political pragmatism is but an exercise in incoherence.
One cannot do go via evil means, regardless of intent or "necessity."
FTA: "all you're left with is fracking fluids in your drinking water."
REALLY?! EVERYWHERE?!
And yet the EPA couldn't shut down fracking?!
I stopped reading right there.
"Unload on the real economy."
...and what real economy what that be? Simple question.
Our dumb-ass, bought-off Congress can't take anymore because there's nothing left to take. Even the Chinese and Russians know that. They patiently waited while the West slowly killed the Golden Goose called Capitalism.
I don't know Raul. I believe the FED can control the price of crude. The FED has goblin shops across the globe. I am confident the price of oil is falling due to the US flexing its last bit of power against Russia who is standing up to the bully. But it is backfiring on the FED and they know it. Now is it by design or mistake?
In a system where everything is supposed to be controlled the signs of slippage are very worrying. The coming collapse much talked of here on ZH will be far more frighting due to the meddling of the Central Bankers. So on the upside these same Cental Bankers will be the first thrown to the wolves.
Turning and turning in the widening gyre
The falcon cannot hear the falconer;
Things fall apart; the centre cannot hold;
Mere anarchy is loosed upon the world,
The blood-dimmed tide is loosed, and everywhere
The ceremony of innocence is drowned;
The best lack all conviction, while the worst
Are full of passionate intensity.
OIL is being destroyed by deflation as will everything else... it's just a matter of a little more time.
http://www.globaldeflationnews.com/oil-light-sweet-crudeelliott-wave-upd...
Reverting to mean. Read Grantham.
The friggin box office is not a good gauge of anything. People don't go to the movies as much because the at home options have gone exponential.
And the movies have gotten exponentially stupid. Why anyone would waste the time, let alone the money to watch this shit is beyond me.
Last movie I went to see in the theaters was only to experience a 3D movie. I wanted to kill myself within the first 20 minutes.
So how green will we close today?
Did you say green shoots?
Speaking of b-cups..
Yeah, no shit. "If we didn't have a bull market how else could we all be whining like a bitch here?"
I say again...the Fed bailed out LEVERAGE not gold...let alone "the goo."
Everything else is just total bullshit. You think a nigger is gonna tell Wall Street to drop dead? Bwhahahahahahaha. But hey just get some Jewish whore to blame the CIA and "it's all good." Even the moronic right is horrified!
Now keep reading from the script you pedantic PHUCKS. Somewhere ou there is a kool-aid drinker just like you but with mo money!
20 minutes left to place your Buy order. BTFD in oils.
When did the idea of US energy independence NOT scare TPTB shitless?
Next (banker trick), all-out-war.
A top British diplomat said of his experience prior to WW 1: 'Every time we appeared on the verge of achieving a peaceful outcome it seemed as if some mysterious unseen force kept pushing us towards war'.
That would be Churchills owners.
The Saudis might have done us a huge left handed favor. It just may be time to clean up our act. In all truthfulness I find myself at times "Rootin fer Putin!"
LOL, this article sponsored by the Russian Oil and Gas Assn.
Prices will continue to fall until news comes out that someone, American, Arab, Russian, is cutting production. I think we will start to hear that within three months from American producers. My personal forecast is that $50 is the floor. After the news starts to trickle out from Americans, I think OPEC will follow with production cuts within four weeks. Then, within two months prices will be back to $80. So, down to $50 by, say, February, then back to $80 by June.
Thing is, very few (if any?) have the cash flow necessary to survive a production cut. Saudi's could liquidate some Treasurys perhaps, but I doubt the House of Saud would survive the attempt without Yellen's blessing.
Given the wholly political nature of this situation, I find it amusing that you'd believe you can predict price swings into next Summer.
Oil prices at some point will rise again, but by then, and when is anyone’s guess, the price fall we see today may have done so much damage to the very structure of our economies that far fewer people will be able to afford it.
Great article. Maybe it isn't "peak oil" that pulls the plug, but "not so peak" oil prices that do it. Its still oil, the foundation
of everything you do, even brush your teeth with, yes even the plastic cap on that toothpaste bottle.
With the banks underwater breathing through a straw above the surface try to keep the air coming, then throw
this on top of it. Is it time for the party to start yet?
EDIT:
Oil prices at some point will rise again,
Is it game over before that happens? Meaing the down state now finishes it all off, and there is no going back?
And there was I worried for years about Peak Oil. Anybody seen that lately?
The shale oil 'bashers' cannot have it both ways. It is a fact that new permits are down and I bet well starts are down too -- but if you don't turn in a permit and you don't drill, then guess what -- you have no debt from that. So all your debt must be tied to the drilling of existing wells -- and guess what -- existing wells are basically 'free cash flow' at this point, as they have no drilling or exploration costs.
There is a 'pinch' going on, but that would be in the easily layed off drilling crews. But they will collect unemployment through the winter (beats working in North Dakota in January!) and can start right back up when Goldman decides that oil should be $85 again next spring.
And yes, there is less income right now for the oil companies on a per-well basis, so that hurts a bit too. But don't bet that they are not making up for it by using Wall Street's own tricks of pre-selling, futures, guaranteed delivery contracts, etc. It may hurt for a few months, but it won't be fatal unless it lasts well into next summer. And you can bet that Goldman and JPM are already figuring that a $25 price increase on a $60 barrel of oil in the summer of 2015 will mean a nice end of year bonus in December 2015!
Does pointing out the fact that existing wells suffer a punishing depletion rate in the order of 30% - which your analysis neglects to consider - make me a "shale oil 'basher'"?
The use of terms such as 'basher' is just argumentum ad hominem, which is invariably a tell-tale sign of a fundamentally flawed argument.
We busted into a deep oil vein at the Macondo Rift in the Gulf of Mexico.
Right now, the oil is being used to change the gulf stream current that feeds Europe with warm, moist air.
Eventually we'll descend a big sippy straw and reap the benefits of an abiogenesis wonderland.
Breathless writing is always a sign of bullshit.
The real story is global GDP and massive monetization, not this crap about the supposed myth of increased production, which is a fact. If global GDP wasn't going to hell, people would be using a lot of oil. Period. Population growth ain't slowing down.
Lessee, the Progressives want the last heavy US industry to go down, just like tobacco, so this is great news for them! Perhaps they will enjoy the Obama legacy even more when Texas, Okla, La, Alaska and other producing states stop pulling their weight and we can see how that government spending on potholes works.
PERSPECTIVE:
10 or even 5 years ago I would not call $60 or $80/bbl oil "Cheap".
Most of the time the Shale companies were getting those loans oil was closer to what it is now than to what it was this summer.
END OF THE DREAM?
My visit to the store says that most other prices have not gone down, but gone up. Poor sales numbers confirm that diagnosis.
Oil is down because of a trade war, not a general price decline.
If you believe that bankers need inflation to survive then you believe oil will go up, and that oil-driven debtors will tomorrow find yesterday's loans easy to replay.
As a geopolitical matter, I do not believe that a couple-month supply surge from OPEC will shake out the US's pockets.
And I don't think that DC will hesitate to help US oil - 5% of the US economy - if it hurts Russian Oil (50% of the Russian economy).
Think about that for a moment.
The Saudi's and Russians with the majority of their economy in oil BLEED when prices are down...litterally. These are state-owned oil companies. And the state uses those funds in public compliance buying entitlement schemes.
Whether they choose to add the costs of the oil-funded entitlements to their price per barrel is irrelevant. When oil is down, their societies bleed big percentages of income.
The US oil industry isn't such a big part of the US economy.
During this price war everyone will bleed red ink somewhere.
Who can bleed the most before capitulation?
I think Russia has the psychology to suffer. But I think SA is politically unstable. Saudis are paid not to work. And SA stirs up reasons for its jihadists to leave.
Who do you think will accept the most bleeding?
Average Russians as entitlements are cut or the currency busts?
Saudi's who are bred on entitlements, and paid to take their ISIS over the border?
Or US oil, a small but significant portion of the US economy, who has not even called in political help yet?
I think the conclusion is far from foregone.
from the oil economy, the help we would want is a $25/bbl tariff on OPEC oil. This would stabilize the US oil market and let OPEC know they can't push US shale players around. However, since we really don't get anything for the taxes we pay, nothing like that will happen.
Obama punishing Russia with low prices but also shale producers.
i wondered why there wasn't the strong aggresive political movements against fracking.
the BIS was going to let the frackers, russia, iran, and several other countries lever up on exploration, and drilling, in their oil game, because they knew they were going to pull the rug out.
one good thing, all americans know what oil, and gas prices should be from here on.
haven't heard a word on how this affects the corn prices. and subsities for farmers, and multi national grain processors, and their ethenal.
Boycott wheels
TYLER
Great stuff as usual. I especially liked the modified lyrics.
So how are the Koch Brothers dealing with this mess? Inquiring minds want to know.
Thanks
Yet, we still see Fracking Banner Ads here...