Death Watch in the Oil Patch

Pumpjack

Oil pumpjacks starting to suck oil instead of money. (You and I know, of course, that grasshopper pumps are not used in fracking, but have become a universal symbol for the oil bidness in the Mainstream Media, so there you go. And here you are.).

In the same sense that brave individuals are said to “fight” stage four cancer, the American oil industry has spent a harrowing year fighting reality. Since oil prices tanked last summer, the industry has drawn down its strategic reserves of whitewash, pig lipstick, shinola and embalming fluid to keep things looking good even as they were decomposing. They did a pretty good job, but then they’ve had a lot of practice.Their theory, apparently; when you’re kicking the can down the road, a myth is as good as a mile. Consider a brief compendium of the lies, damned lies and statistics the oil guys have sold the country in the past few years. Continue reading

Fortune: “Frackers Face Mass Extinction”

It’s twilight in the fracking patch. America is slowly awakening to the dimensions of the disaster. (Photo by Daniel Foster/Flickr)

Awareness is gradually seeping into the financial press that the Great American Oil Revolution has been over for months — witness the current Fortune headline, “Frackers Could Soon Face Mass Extinction.” If the general media had any grasp of what was happening in America, or what it meant, CNN would be doing wall-to-wall coverage of the deserted man-camps in North Dakota, the unemployment lines in Texas, the equipment yards stacked with idle derricks, the spreading panic in the junk-bond, bond and stock markets. Instead we get Donald’s beautiful tax plan, Hillary’s elusive emails and Carly’s mythical video tapes.

Today is the last day of the rest of the frackers’ lives. That’s because it is the last day of the third quarter of the year, the day after which banks audit their loans, assessing anew the value of the assets held as collateral. Continue reading

Shortest Book Ever: Oil Company Ethics

An exposition of the ethical principles that guide the oil industry. The catalog of their offenses comes via 18-wheeler. (Photo by Colin Dunn/Flickr)

An exposition of the ethical principles that guide the oil industry. The catalog of their offenses comes via 18-wheeler. (Photo by Colin Dunn/Flickr)

Stress reveals character among humans, and the ongoing, slow-motion implosion of the great American shale oil revolution is throwing stark light on the nature of the humans involved in the oil industry. (I refuse, contrary to the shorthand title of this piece, to attribute human characteristics to corporations. They have none. The people who run them sometimes do.) One should not expect much of people who take as their life’s work the wresting of the planet’s last morsels of carbon from the earth so that we can burn it and destroy the ecosystem that nourishes us, but still: they live among us, they raise children, they pretend to share with us at least some fundamental values. Continue reading

It’s Official: The Shale-Oil Boom is Over

A Halliburton fracking setup in North Dakota’s Bakken play. “Whaddaya mean it’s over? We just got this thing connected!” (Wikipedia Photo)

A Halliburton fracking setup in North Dakota’s Bakken play. “Whaddaya mean it’s over? We just got this thing connected!” (Wikipedia Photo)

It comes now from the US Energy Information Agency, and is headlined by Bloomberg Business, so yes, it’s official. As Bloomberg put it, “US Shale Boom Grinds to a Halt.” Which, actually, is overstating the case by a good bit, there isn’t going to be a “halt.” Nevertheless, as sane people everywhere have been insisting for years, the shale boom is, as it always was going to be, a bust.

This — now official — assessment is in the form of a set of projections by the EIA, which, we should remember, has pretty consistently been overly optimistic in its assessment of the oil business. Remember, they were the folks who estimated that the Monterey Shale in California held 14 billion barrels of recoverable reserves — two-third of America’s total oil wealth — until they ran the numbers again and re-estimated the Monterey at 96% lower. Continue reading

Oil Money: Too Dumb to Fail

bankers

Bankers on the trading floor at CITI make a market in the latest derivatives of derivatives. (Photo by Mike Licht/NotionsCapital.com)

We interrupt the Crash of 2015 for a brief word from some people who are not participating, on the belief that the oil boat — having been hit by two icebergs, dwindling resources and plunging prices — is not sinking, it is merely bobbing in a trough between two lovely crests. We will return to the previously scheduled sinking as soon as these folks discover once again that no matter how much stupidity and cash you pump into a ship with an enormous hole in the hull, you can’t save it. Continue reading

First the Fuel Subsidies Come Off. Then the Wheels.

(Photo by okinawatakarabako.com)

“Damn! I can’t afford this! I just filled up with gas!” (Photo by okinawatakarabako.com)

A funny thing happens when countries can no longer afford massive subsidies to keep down the cost to consumers of fossil fuels: the governments stop paying, and their country stops dead, or changes governments. Cheap fuel was once a perk for anyone who happened to live in an oil-rich country. But the perk has become an entitlement, and woe betide the country who, upon discovering it is not in fact oil rich anymore, tries to balance the books by charging its people the actual cost of fuel.

Nigeria is Africa’s largest oil exporter, and third largest economy, yet it has desperate needs for investment in roads, power generation and water systems. The two principal reasons these needs have been unmet are generations of rampant government corruption, and the roughly $8 billion a year in fuel subsidies. In March, a new government won election on promises to stop the corruption and the subsidies. Continue reading

GOP and Coal Launch War on America

This is how the Republican Coal War will look, fought not with artillery but smokestacks. It’s a war no one can win. (Photo by alohaspirit/iStock)

This is how the Republican Coal War will look, fought not with artillery but smokestacks. It’s a war no one can win. (Photo by alohaspirit/iStock)

To celebrate their coming to power in the United States Senate, Republicans this week launched their answer to the imaginary “War on Coal” by declaring war on clean air, and thus on all of us. Newly elected West Virginia Senator Shelley Moore Capito introduced a bill that would make it impossible for the Environmental Protection Agency to regulate emissions from coal-burning power plants. Climate-change-denier-in-chief James Inhofe, celebrated for bringing a snowball onto the floor of the Senate in February to prove that global warming is a hoax, cheered Capito on from his throne at the Senate Environment and Public Works Committee. Continue reading

Oil: A Fit of Peak

“Rex [Tillerson, CEO of Exxon Mobil] knows his company is in liquidation and he’s terrified his stockholders are going to find out.” — Arthur Berman. Is this what Rex sees when he dreams?

Arthur Berman is perhaps the most credible debunkers of oil hype on the planet because he is a highly qualified petroleum geologist and a longtime, top-tier employee of the oil industry. In a presentation early this year, he made an offhand remark in answer to a question about Exxon Mobil CEO Rex Tillerson. “Oh,” Berman responded, “Rex knows his company is in liquidation and he’s terrified his stockholders are going to find out.” I don’t know if anyone else heard a thunderclap at that moment. The discussion moved quickly onward, but I sat stunned (as I listened to the tape). It seemed to me I had just heard spoken aloud the essential truth of our industrial age: it’s in liquidation, and the people in charge are terrified we are going to find out.

Liquidation, also known as a going-out-of-business sale, is a stunning word to use about the oil industry, unless you think about it for a minute. Continue reading

The Crash of 2015: Vultures vs. Jackals

So. How have you frackers been feeling, lately? Just checking. (Photo by docentjoyce/Flickr)

So. How have you frackers been feeling, lately? Just checking. (Photo by docentjoyce/Flickr)

The crash of 2015 has been paused temporarily by a curious circumstance: a brawl among the financial scavengers who by now should have carted away the body parts of the great American fracking boom. Against all logic, financial vultures are fighting with financial jackals for possession of the corpse, and while doing so are pumping transfusions into it even though decomposition is already well under way. Here’s what’s happening:

The Vultures believe the decline of American oil fracking is only temporary, a product of the sudden decline in oil prices that struck last fall, and that with the inevitable return to $100-a-barrel oil, the frackers will return to profitability. Continue reading

Forbes: “Shale Oil Boom Goes Bust”

This happy fracker -- a Halliburton employee at a site in North Dakota’s Bakken play -- obviously hasn’t got the memo yet. It’s over. (Wikipedia photo)

This happy fracker — a Halliburton employee at a site in North Dakota’s Bakken play — obviously hasn’t got the memo yet. It’s over. (Wikipedia photo)

Yes, Forbes, the magazine of the Masters of the Universe has uncharacteristically published some discouraging words about the only good news the American economy has had to celebrate in many decades.

Oil output from the most productive U.S. shale fields is expected to drop off next month by 57 million [sic — they mean thousand] barrels of crude daily from April to May, the U.S. Energy Information Administration said Monday. That would represent the first monthly decline in more than four years, according to Reuters.

And then there’s Bloomberg Business, a more objective reporter of what’s going on in American industry, with the headline: “Shale Oil Boom could End in May After Price Collapse.”

Output from the prolific tight-rock formations such as North Dakota’s Bakken shale will decline 57,000 barrels a day in May, the Energy Information Administration said Monday. It’s the first time the agency has forecast a drop in output since it began issuing a monthly drilling productivity report in 2013.

Yet even after admitting that it’s over in the shale patch, the Pollyannas insist that it’s only for a while, until reduced supply brings prices back up and everybody starts doing exactly what they were doing before. How shall we put this? Continue reading