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Wednesday, December 3, 2014

oil down


OIL DOWN

A few short weeks ago when a minion asked me about the falling price of oil, I was quick to dismiss it as a normal back and forth of petroleum pricing which is normal.  As long as it stayed, roughly, in the $80 to $100 range it didn’t have too much effect overall on the market.  Right now it is at $73 ( I use Brent, not Texas, price as a better barometer of global supply and demand- less US bank manipulation through derivatives for one thing ) which may or may not be a world changing event.  It can always just be a one off event that corrects itself shortly.  Having said that, I’ve never seen the price of gasoline in Elko go below $3 in six and a half years until the other day ( so much for the annual complaint that the evil oil companies screw us on the holiday commute ).  So, that alone is enough to put index finger to keyboard.  Why-again, assuming this is longish term rather than an aberration- is oil down this low?  The blogoshere is of course full of conjecture.  One is that the last time oil fell $40 we had the 2008 economic event.  Another is that the evil Saudi’s are trying to kill our fracking industry.  I don’t buy into either one.  Just because a huge fall in oil price happened the last time doesn’t mean an economic collapse is in store for us ( I mean, it is, but not JUST because the price of oil dropped ).  The explanation is that oil prices falling mean a huge drop in activity, hence less energy needed.  Hence a new Economic Depression.

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This presupposes that we actually had any economic activity for the last five years and that there is an elevated level we have dropped from.  If you buy into the Helicopter Ben theory of economics since 2008, it has all been central bank manipulation and credit creation.  There is no economy outside that.  We are merely coasting along on the vestiges of the PetroDollar and the dubious net negative frack oil production.  All things considered, given the few choices available, creating worthless dollars to get frack oil isn’t all that bad of a deal.  You know the US economy is doomed, so creating more Monopoly money doesn’t matter, but a bit of extra energy for a short time does help keep the can being kicked down the road.  Which brings us to the Saudi’s.  Really?  The Saudi’s want to kill our fracking industry?  How would they benefit?  By destroying our economy so we couldn’t either buy their oil OR send our military to protect them ( one could make the case ISIS is our creation, sent to put the fear of God into the Saudi’s to keep them from giving up our military protection )?  Remember, fracking oil is TERRIBLE as far as net energy but so was coal liquidation for the Nazi’s.  It might have been a net energy loss but it kept the Soviets out of Berlin a little longer after Romanian oil fields were lost.  Same with fracking.  More tomorrow.

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12 comments:

  1. Predicting a correlation between commodity value X and collapse date Y is all good and well as a casual hobby, but there is certainly no shortage of lost souls who seem to spend less time hardening up and more time attempting to play the pre-facto historian.

    I sure hope their anxious market speculations and subtle adjustments to their armageddon clock aren't dragging too much attention away from doing the things they'll actually need to survive the coming crapstorm.

    I only speak as someone who used to sacrifice hours a day reading links from SHTFplan and Survivalblog to wake up one day with the realization that my real world survivability was advancing at a snails pace.

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    Replies
    1. I think its a form of "mind mechanic". The right answer is fixing something, as it were. Luckily, I get paid to it. Don't try that at home, kids.

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  2. I think the Saudis are actually trying to bankrupt the Russians and our fracking industry is collateral damage.

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    1. Certainly, bankrupting both superpowers might increase the Saudi's survivability. A way to get out from under the commodity curse. Not implausible, the question is just if its possible.

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    2. The Saudi's want a gas pipeline through Syria to supply Europe. This would be in competition with Russia who supplies Europe. And the reason why Russia backs Syria.

      This is all 'shot across the bow' stuff by the movers and shakers of the world.

      Us little folk just need to make sure we can take care of our own needs and stay out of their way.

      Idaho Homesteader

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    3. I know attempting to pretend to understand how the powers behind thrones think is a waste of time and mental masturbation. But, I need to fill up blog space, it's kind of fun even when you know jigsaw pieces are missing, and we are all just entertaining ourselves until the end.

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  3. I think you're wrong on this one, Lord Bison. It really is all about the Saudi's influencing the OPEC vote to keep production high (which will temporarily lower prices) so as to kick the Frackers in the balls by having to shut-down temporarily, and then spend big bucks to 'start-up' once prices warrant.

    I've seen figures that say Frack Oil needs close to $100/barrel to be profitable. BTW, Canadian tar-sands oil only needs $70/barrel to keep in the black.

    Anyways, there's far more to all of this than The Powers That Be will ever let us peasants in on. We are cannon fodder, and nothing more.

    I'm sorry about your recent spousal (#4?) problems. If you move to Minnesota I will guarantee you a hook-up with my step-sister. She has, thus far in life (she is 45 yrs/old), decided that having black men that literally beat her black-n-blue is the way to live. She has long been ready for a 'real' man, but is clueless as to how to find him because of her upbringing. Actually, she is so desperate that she would probably move to you. Beware though, she is a life-long welfare queen. (two grown 20+ year old daughters (gorgeous) who never got a red-cent from their 'father') If you have even one-half of one-percent interest in knowing more, I will e-mail you. She just wants somebody that won't beat her. And just so you know: I'm a long-time reader, and a huge fan. She is a girl that you would be compatible with. Shit-in-a-bucket and all! She is quite naive, but a survivor.

    Your new blog is getting close to overdue for an over-the-top anti-Obama rant. Just saying...

    Nobody can quite say it like you do, Lord Bison.

    Peace, Love, and Ammunition.

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    1. Actually, I AM very interested. E-mail is jimd303@reagan.com Thanks.

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  4. isis IS our creation, AND the saudis fund/run it. their real goal is iran/syria. the sunnis want rid of the shiites once and for all. by over producing they undercut iran/syria oil profits and i'm sure helping obammy look good plays into it as well. neither thought isis would go rogue as it has. once you release the kraken, its hard to control.the rooskies however will not suffer long before they smack the saudis or us upside the head. our missiles are depleted, our nukes are outdated and in disrepair with no supervision. our navy has been gutted and our army has been run to death. the air force put all it's eggs in the stealth basket that only works against a low tech enemy. our credit is over extended and we have zero gold to buy materiel for fighting. we're hosed. i wish i'd paid more attention in russian class back in college. dobra deh tavarish

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    1. It's their own fault for making the alphabet too weird and backwards. Yet, no worries. Russia doesn't want a global empire, just border security. Their initial drive east was offensive only to defeat the mongol types and the Cold War offensive was defensive in nature trying to defend against the US.

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    2. i didn't say they want us. i said they will smack us, as in punish us for mucking about in their affairs.

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  5. Bah, Russia will not attack mainland USA (Alaska? maybe) Russia is interested in their immediate region only. Their USSR days of tromping around the globe taught them how easy it was to overextend. Their days during their nadir being attacked by terrorists in their schools taught them that ignoring their neighbors is bad policy also. Russia is shooting at being a serious regional power, and on par with the USA in Europe and the middle east.
    China has ambitions on Africa and possibly the globe.

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I must moderate-trust me. You don't want to see what happens otherwise. Sometimes it takes awhile to respond as I only check two or three times a day. No N-Bombs, nothing to get me libeled. Otherwise, have at it. If you criticize me, make sure to praise my hair first.