What’s Next for Oil: Whiplash

roller coaster

This is the closest we could come to a chart showing what is next for ojl and gas prices, and how it’s going to feel. (Photo by Patrick McGarvey)

A savvy investor once told me that if you read something in the news, it is no longer true, if it ever was. I keep this in mind as I read over and over that the world is awash in 3 billion barrels of surplus oil. This glut — always and everywhere specified as 3 billion barrels — is present, the conventional wisdom (oxymoron alert) goes, because the crafty Saudis refused to cut production when the price of oil tanked (metaphor alert). They did this, it is said, to run the pesky American oil frackers out of business before they took over the world. This reminds me of the engraved plaque found in many Irish bars: “The Lord invented whiskey to keep the Irish from ruling the world.” An endearing sentiment, but probably not true. Continue reading

Billions of Barrels of US Oil Set to Disappear. Poof.

oil fire

An oil refinery in Puerto Rico burns in 2009. That’s one way to make a bunch of oil disappear, but accountants can do it faster. And they’re going to. (Wikipedia Photo)

In a few weeks, several billion barrels of American oil will vanish in an instant. (I am not making this stuff up: the headline is right there on Bloomberg Business, hardly a chicken-little medium.) This is — shortly to be was — the oil that just a few months ago (Remember? When we were young, and happy?) was to return us to energy independence, to make us the number one oil producer in the world, to bring the happy days here again for good.

Okay, there were weasel words salted into those assurances all along, words that we didn’t realize were there until too late. The new American oil revolution was going to put us on the road back in the general direction of North American energy independence (as long as you counted Mexican and Canadian oil, too); and we would be the number one oil producer if you included in your definition of “oil” such things as biofuels, refinery gains from heat expansion, spillage and, if necessary, drippings from leaky transmissions in shopping mall parking lots. Continue reading

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

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

The Glad News Bears

The Glad News Bears are cute and entertaining, but should not be mistaken for financial advisers or life coaches. (Painting by Frederick Stuart Church [Public domain], via Wikimedia Commons)

The Glad News Bears are cute and entertaining, but should not be mistaken for financial advisers or life coaches. (Painting by Frederick Stuart Church [Public domain], via Wikimedia Commons)

This week, the U.S. Energy Information Agency forecast that oil production in the country’s two largest fracking patches — Bakken in North Dakota and Eagle Ford in Texas — will actually decline this month. To those who have been watching the agony of the oil patch with clear eyes, this had all the shock value of a soaked weather forecaster, standing in a downpour, predicting rain. But it had no effect at all on the Glad News Bears, the relentless chanters of “Don’t Worry, Be Happy,” and “Ain’t Gonna Rain No More, No More.” Continue reading

The Crash of 2015: The End of the Beginning

Coming soon to an economy near you: a two-train wreck.

Coming soon to an economy near you: a two-train wreck.

The setup continues of the double train wreck that will decimate the U.S. economy this year; the switches have been thrown to prevent either train from leaving the track, and the engines are accelerating. It doesn’t take much perspective, now, to see both trains, closing fast.

[Note: The Crash of 2015 is not expected to be the collapse of the global industrial economy, which will take a little longer.  Just another lurch downward of the shattered Titanic, further unsettling those passengers who do not believe in icebergs.] Continue reading

Holding Accountants Accountable

If I had known that was the name of my accountant's firm, I don't think I would have turned over my life's savings....  (Photo by Indi Samarajia/Flickr)

If I had known that was the name of my accountant’s firm, I don’t think I would have turned over my life’s savings…. (Photo by Indi Samarajia/Flickr)

It’s on account of accountants that we can’t count anymore, and someone should hold them accountable. We call them bean counters not to disparage them — honestly, I mean no disrespect — but to remind us and them of their purpose: to tell us how many beans are in the jar. When instead they tell us how many beans were in the jar last year; or how many beans would be in the jar if we had only put more in; or exactly how many beans are in a jar we don’t have and can’t get, they are not just failing to do their job, they are doing a great deal of harm to the people and companies and system they serve. Continue reading

The Crash of 2015, Day 49: Hell to Pay

You have this perfectly good structure, and then you kick out a few of the supporting pillars, and the next thin you know the SEC is on the phone.

What do you mean, Uncle Clarence didn’t believe they were going to do it, and stayed in his room?

I know, it’s old news. If I stop by on Monday and tell Oscar Oblivious that his house appears to be on fire, he is of course concerned. But when I stop by on Wednesday to say it’s still burning, has consumed most of the structure, and collapse appears to be imminent, he demands to know why I am bothering him with old news. The Crash of 2015, the burn and crash of the economies of much of the world into — at least — serious recession for a very long time, is well under way. It is of course no news at all for the mainstream media, transfixed as they are with simpler stories of happier, imaginary times. But for you who come here from time to time, it’s old news. How is it then that you are still in the burning house? Continue reading

The Crash of 2015: Day 29 [UPDATE Day 30]

You have this perfectly good structure, and then you kick out a few of the supporting pillars, and the next thin you know the SEC is on the phone.

Maybe we could still live in the top floor? If we could just slow it down a little?

A couple of things to keep firmly in mind as we watch the Crash of 2015 unfold, pretty much on the schedule I’ve been writing about here for six months. First, the drop in oil prices is not the cause of this disaster, merely an accelerant. The fracking industry is succumbing to its inherent high expense, toxicity, rapid depletion rates and over-reliance on junk financing. Similarly, the stock market crash we expect to follow the fracking collapse would have come anyway because of its inherent instability, and indeed may yet occur before the chain reaction in the fracking fields has run its course. And finally, what is happening to fracking is also happening to the legacy oil business, only slower. Continue reading

The “Worst News of 2015” Just Got Worse

Just a garden-variety protest in some Middle Eastern county, you say, nothing to be afraid of here? Wait till you find out where these people are. (BBC Photo by Safa Al-Ahmad)

Just a garden-variety protest in some Middle Eastern county, you say, nothing to be afraid of here? Wait till you find out where these people are. (BBC Photo by Safa Al-Ahmad)

The news photo I labeled the scariest of 2014, back in August, and the news story I called the worst of 2015 a few weeks ago, just got scarier, and worse. The photo was of demonstrators who have managed to keep an insurgency alive in the Eastern Province of Saudi Arabia for three years despite everything a boundlessly wealthy state can do to snuff it out. Bad for us, because the Eastern Province is where the Saudi oil is. The worst news of the year for us was that the Saudi king was in hospital with a terminal illness. Now the king is dead, and the difficulties faced by his successor just became worse by at least an order of magnitude. Continue reading