Price of Oil hits new low

[dnmun]

none of that is correct except for the close of the WTI contract.

EV sales have almost nothing to do with the price of gas. most if not all drive an EV because it is something they wanted to do to be on the cutting edge or to reduce their own impact on global warming by reducing consumption of oil.

the collapse in crude pricing is not gonna force banks into bankruptcy. there will be a number of producers who will end up on the ropes and be absorbed into larger companies and that is already happening. texas banks are more diversified now than the previous bust so they will not be ruined either.

it will rob many of the increased value of their homes as the number of oil field workers laid off climbs and the economy slows in the these major producing areas but it will not cause the stock market to crash.

one of the guys who hangs on my oil/gas board was about to sell their oil drilling/production partnership in the Bakken up until recently and the deal fell through as the price of crude in ND collapsed. now the partners worry about liquidation.

 

[USAEBIKECO]

Do some research on Oil/fracking junk bonds. You will see what I am talking about.

Ticker "JNK" holds many bonds related to oil and fracking. Look at the direction they are heading.

 

[Joseph C.]

What's the consensus in the US on the monetary value of fracking?

There are suspicions that a lot of the U.S. fracking industry has been in the red even at oil highs and the energy return on energy invested is too close to the three or four to one ratio for comfort. When you get to about 3:1 or lower pulling oil products from the ground really doesn't seem to be prudent. The thought process is that the U.S. government are subsidising the industry on the predication that oil will only rise in price in the future. Short-term that strategy makes economic sense but long-term it can't possible succeed if the ERoEI is too low.

There is also suspicion that a good few members of OPEC are taking heavy losses in the hope that they bankrupt the U.S. competition. Saudi Arabia being the only exception.

dnum, I think you are understating the risks Fracking poses. The U.S. EPA have found numerous contamination issues and the whole sector is only in its infancy - which suggests to me that the problem will only get worse. No one even knows what the companies are using for their hydraulic fluids. Therefore, it's hard to quantify the level of stupidity operating when it comes to something as vital as water in a country that has large swathes of it in drought.

Renewables will win the war over oil and gas. The transport losses on a high voltage DC line are 3.5 per cent per 1,000km. I don't know what the figures for oil and gas are but I'm better the transportation loses are at least ten times that. Oil can't win with those numbers. The ERoEI of wind is 18:1, solar is just under 2:1 but that number will only increase as 30 and 40 per cent efficient panels start hitting production near the end of this decade.

 

[Joseph C.]

My point was that when oil prices went high, the story was that we were running out of easily available oil. The low hanging fruit was all gone, and the only way for the price to go was up.

Now the price has fallen 50%. When it was $150/bbl it was pure speculation. The price swing from $150 to $57 is almost nothing to do with the scarcity of it as a resource - every day the world has less of it left and AFAIK no new sources have been found recently. Is extraction from tar sands even viable at current prices?

There is supply and demand, but changes in this is what is speculated upon. Let's be realistic if it's coming out the ground in Saudi Arabi at $5/bbl and after one boat ride it's $150, something is going on there beyond the effects of normal profit-making and taxation.

There is no way it costs the Saudis just $5 per barrel. The low estimates put their break even point between 30 and 50 dollars. The higher estimates put it at 80 and 90 dollars. You could probably cut off both extremes and go with a figure somewhere in the middle perhaps even as low as 40 dollars if you are being generous. You could speculate and say that they aren't taking a hit yet. However, all the other OPEC nations almost certainly losing money by the fistful.

OPEC is eating into their currency reserves in the hope that they will bury the competition - U.S. and Russia to a lesser extent - and get more market share. It will probably come down to whomever has the deepest pockets and is willing to suffer the financial consequences. I think one possible outcome is that some OPEC members will splinter and refuse to sell at below cost.

Whatever happens I predict that there will be an enormous surge to record high prices in the aftermath of all this.

 

[Punx0r]

Sorry, I was basing that on the 5 cents/gal in the "Gus the gas" video. I now see that video is from 2008...

I do recall hearing of $1 and $2 a barrel in the past for large reserves close to the surface, but I imagine those days are long gone.

 

[dnmun]

these imaginary risks from fracking are inventions from a movie in the US called 'Gasland'.

there has never been contamination of the water table from hydraulic fracturing of the source rock. i really do not understand why you people continue to believe the lies the russians are paying so much money to promote. why don't you research it and actually find these contamination events instead of believing the group think you feel you have to go along with because of your need to be accepted by the luddites who refuse to learn things for themselves and believe this false information.

to me it represents a low level of critical thinking when people continue to persist in the promotion of this myth. people feel the need to say the same thing as all the other people they associate with so group think is socially comforting but in most if not all cases it is wrong.

just because the producers cannot borrow money anymore and some will go bankrupt, such as Red Fork just did, that is not gonna destroy the broader equity market. the oil and gas producers are already down some as much as 90% in the last 5 months so the market was already trading at $18,000 with all the oil producers already sold off by 50% by then.

 

[friendly1uk]

87-octane gasoline at $2.23/gal where Interstate 70 crosses state highway 77 in N.E. Kansas, central USA.

About 25% of what I pay.

I'm glad fracking will go away for a bit. The cost is just too great. Subsided land and buildings is one thing. Weakening your land till you start getting quakes is just ridiculous. It shouldn't be done at any cost.

 

[dnmun]

87-octane gasoline at $2.23/gal where Interstate 70 crosses state highway 77 in N.E. Kansas, central USA.

I'm glad fracking will go away for a bit. The cost is just too great. Subsided land and buildings is one thing. Weakening your land till you start getting quakes is just ridiculous. It shouldn't be done at any cost.

more stupid stupid lies. none of this is real. all totally manufactured.

 

[gogo]

I'm glad fracking will go away for a bit. The cost is just too great. Subsided land and buildings is one thing. Weakening your land till you start getting quakes is just ridiculous. It shouldn't be done at any cost.

Ya, we don't want to diminish the magnitude of the next big event!
http://en.wikipedia.org/wiki/New_Madrid_Seismic_Zone

 

[Punx0r]

I'm happy to ignore anything said by *either* side in the fracking debate unless accompanied by credible, peer-reviewed sources.

 

[dnmun]

there is no either side. the claims that hydraulic fracturing has led to contamination of the water table is totally fictitious. there has never been a single event where frac fluids have penetrated the encapsulating layers of rock and entered the water table.

it is all made up for the movie "Gasland" and none of the people who repeat this fable have any exposure to drilling procedures or how oil and gas is produced.

i do have that exposure and studied for over a year at CSM to learn petroleum geology and drilling techniques so i stand down to nobody in my knowledge of oilfield procedures and drilling techniques.

these people just make it up and then all of their similar minded friends chime in an echo of ignorance. they have to or they will not be socially accepted in their peer groups of similarly uneducated ignoranti.

 

[Hillhater]

there is no either side. the claims that hydraulic fracturing has led to contamination of the water table is totally fictitious. there has never been a single event where frac fluids have penetrated the encapsulating layers of rock and entered the water table.
.

Maybe none that you are prepared to accept, but it has occurred several times in Australia, to the point where Frac' exploration has been banned in many areas.
And yes, there is conclusive scientific evidence verified by Government authorities.

 

[Joseph C.]

Sorry, I was basing that on the 5 cents/gal in the "Gus the gas" video. I now see that video is from 2008...

I do recall hearing of $1 and $2 a barrel in the past for large reserves close to the surface, but I imagine those days are long gone.

The best breakdown I got was from an article in The Journal (thejournal.ie) a week or two ago which for whatever reason I can't find now. The breakdown for Ireland was petrol stations made 4 to 5 cents per litre, distributors made eight cent and that actual cost of petrol was about 50 cent. About 80 cent per litre was tax.

Petrol is current priced at €1.399 in Ireland. I'd imagine the UK breakdown is somewhat similar though the tax policy might be different. Here it is charged per litre not as a percentage of cost. Seeing as petrol prices are bought on futures when the price was high I don't see the prices being that much higher when the article was published.

I don't know how much petrol prices can fall. Maybe 20 cent in Ireland.

 

[chvidgov.bc.ca]

I think we can safely say that at the very least fracking puts more carbon into the atmosphere. That alone, as a dedicated anti-carbon ebike hobbyist and appropriate technology crusader, is sufficient to suggest to me that it is probably a bad thing in the long run. Assuming we are fully off oil is less than 20 years, given tech change - amazing batteries, tabletop fusion, 40% efficient solar arrays, superinsulators - whatever - I see this change happening. Investing in oil is stupid, whether fracking or whatever other nightmare of the oil age is out there. So I'm pretty happy that 500 billion in malinvestment just went "poof", if the Saudis "have their way" with the U.S. oil industry. Nothing like an old-fashioned gas war. I'm sure the FED will cough up another 500 billion for the next bubble. This is going to be getting interesting.

 

[Punx0r]

there is no either side. the claims that hydraulic fracturing has led to contamination of the water table is totally fictitious. there has never been a single event where frac fluids have penetrated the encapsulating layers of rock and entered the water table.

Speculation.

i do have that exposure and studied for over a year at CSM to learn petroleum geology and drilling techniques so i stand down to nobody in my knowledge of oilfield procedures and drilling techniques.

Not even someone who studied the subject for, perhaps, two years? Or is one year sufficient to reach the pinnacle of human wisdom and knowledge?

 

[dnmun]

no, i meant i am educated in the procedures used in the oil well drilling business and follow the industry closely so i would know if there had ever been an occurrence of this presumed contamination of the water table. followed it since my retirement in 1991 and hydraulic fracturing techniques used today with horizontal drilling were not developed until recently. fracturing of vertical well bores goes back to the early 40s.

there has not been any australian report of this either or i would have known about it and if it had truly occurred you would have the reference for it.

 

[TheBeastie]

there is no either side. the claims that hydraulic fracturing has led to contamination of the water table is totally fictitious. there has never been a single event where frac fluids have penetrated the encapsulating layers of rock and entered the water table.
.

Maybe none that you are prepared to accept, but it has occurred several times in Australia, to the point where Frac' exploration has been banned in many areas.
And yes, there is conclusive scientific evidence verified by Government authorities.

I watched a documentary on the evils of fracking etc the other week. The thing I thought is that for my country farming area of my relatives they *all* live on tank water from roofs. I never seen personally/directly drinking water from underground for humans at all.
The thing I thought at least for humans that are drinking underground water is why can't they just get a rain water tank like most people in country Australia.
Underwater drinking water sounds like a unrealistic thing to have in this day and age with so many people.. The city of London in the 18th century used to drink from underground water until they all started dying from cholera due to their own feces getting mixed with their ground drinking water.

Personally I guess I am not fussed by what is and isn't the truth, but I think it is nice for people to hold their ground in terms of clean underground water.. NPI

 

[Joseph C.]

The city of London in the 18th century used to drink from underground water until they all started dying from cholera due to their own feces getting mixed with their ground drinking water.

Personally I guess I am not fussed by what is and isn't the truth, but I think it is nice for people to hold their ground in terms of clean underground water.. NPI

I don't know what you are talking about but nearly all of London's water comes from aquifers either directly or indirectly. Water treatment is the reason people do not get cholera. It has largely nothing to do with water sources.

Rainwater harvesting has the same problems. There is nothing to stop birds from shitting on the roof and getting people sick. Once again it is the treatment that the water undergoes that makes it safe to consume.

 

[TheBeastie]

I don't know what you are talking about but nearly all of London's water comes from aquifers either directly or indirectly. Water treatment is the reason people do not get cholera. It has largely nothing to do with water sources.

Rainwater harvesting has the same problems. There is nothing to stop birds from shitting on the roof and getting people sick. Once again it is the treatment that the water undergoes that makes it safe to consume.

Really? wow, didnt know that. I knew they fixed the cholera problem by building dedicated sewers in London as I watched the documentry of Joseph Bazalgette which was a really fantastic story. http://en.wikipedia.org/wiki/Joseph_Bazalgette
But I still assumed overtime they would of built dedicated pipes to a fresh water dam for main water, just shows you can't assume anything.

 

[Punx0r]

Yes, the problem was poor sewerage contaminating small local wells.

It's all still rainwater, though, its just stored temporarily underground Unlike the ancient "fossil" water found in some parts of the world including Australia.

 

[dnmun]

just printed $55.18

 

[TheBeastie]

Russia s Ruble currency is collapsing due to the low price of oil and sanctions against Putin.
http://www.bloomberg.com/news/2014-12-15/russia-increases-key-interest-rate-to-17-to-stem-ruble-decline.html

In a surprise announcement just before 1 a.m. in Moscow, the Russian central bank said it would raise its key interest rate to 17 percent from 10.5 percent, effective today. The move was the largest single increase since 1998, when Russian rates soared past 100 percent and the government defaulted on debt.

“This move symbolizes the surrender of economic growth for the sake of preserving the financial system,” said Ian Hague, founding partner at New York-based Firebird Management LLC, which oversees about $1.1 billion, including Russian stocks. “It’s the right move to make, and it wasn’t easy to make it.”

 

[dnmun]

$53.60 print already overnight.

 

[Punx0r]

Where will it stop???

 

[dnmun]

there was an early print down to $53.60 and then following novak's comment there was a move all the way up to $57.15 and it has now backed off to the high $55.xx level.

i watched one stock make a new low at 6.04 and then had a 12% move up to 6.85 in an hour or two. almost all have had big 5-7% moves up from big lows early. this may be the trading volume turn needed and it appears to be a real bottom based on the news from novak that russian production will fall 'naturally' from lack of investment.

rumor is that gazprom is gonna lay off about 25% of their staff. largest employer in russia with about 546,000 workers.

ruble hit new low of 80 ruble/dollar before FX stopped trading in the dollar/ruble contract.

putin has threatened war if they are cut off from SWIFT. made comments about putting nukes in crimea.