Tag Archives: oil prices

The Crash of 2015: Day 9

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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.

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

With oil prices at about half what they were six months ago, the most vulnerable players in the oil business, the frackers who brought about the new American Oil Revolution, are imploding. If you think that’s just their end of the boat sinking, no worries here, think again. They are, or were, the last best hope of continuing the oil bonanza, and they’re done. As soon as that fact is so obvious that even Faux News has to admit it (this may take a few months), it will dawn on us all that the very same thing is happening to the deep water drillers, the Arctic drillers and the tar sands wringers.

It would have happened at any oil price. The slump has merely brought it on sooner, and will force us to face — this year! — the reality that we will never again have quite enough cheap oil. That’s the meaning of the Crash of 2015. Now, about the schedule: Here’s what’s happened, what’s happening and what’s about to happen. Continue reading →

Attention in the Crowded Theater: Fire!

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Firefighters try to snuff an oil well fire in Iraq in 2003. What is happening to the oil business today, especially in the United States, is akin to a thousand such fires. (Wikipedia Photo)

The flames of the next financial crash are leaping up everywhere you look (if you look without wearing the rose-colored glasses): in the Bakken fracking fields of North Dakota, the Eagle Ford in Texas, the tar sands of Alberta, the deep waters of the Gulf of Mexico. They are lighting up the night sky in all directions, and in the daytime the smoke is sickening the light and smelling up the air in the skyscraper offices of the Masters of the Universe where they shuffle decks of junk bonds, subprime loans and derivatives. Along with the smoke, you can smell the fear. This is going to be bad. Continue reading →

The Oil Crash is Under Way [UPDATED 12/13]

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When big trees come down, they start slow and end with a crunch. (Photo by geograph.org.uk)

When big trees come down, they start slow and end with a crunch. (Photo by geograph.org.uk)

When you are felling a really big tree, the first signs that it is coming down are subtle; a crack here and there, a twitching of the crown. By the time these clues register on you, the tree is on its way down. The cracks and twitches from the U.S. oil industry are coming almost hourly now, and although it is a really big tree, and won’t actually hit the ground until next year, its fate is pretty well sealed. Here are this week’s signs and portents: Continue reading →

International Energy Agency Says: Brace for Impact

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What America will look like of the frackers have their way -- and what Huntington Beach, California looked like in 1926. But according to the IEA’s World Energy Outlook, we shouldn’t be too concerned about what the frackers are going to be able to do. (Photo courtesy Orange County Archives)

What America will look like of the frackers have their way — and what Huntington Beach, California looked like in 1926. But according to the IEA’s World Energy Outlook, we shouldn’t be too concerned about what the frackers are going to be able to do. (Photo courtesy Orange County Archives)

The customarily cheery International Energy Agency (IEA), created to advise the member nations of the Organization for Economic Co-operation and Development (OECD), has taken a more somber tone in its latest annual World Energy Outlook released today. The agency dismisses the wildly hyped shale-oil and -gas “boom” in the United States as a band-aid on a malignant tumor, a temporary mask distracting the world from the pervasive illness afflicting its oil supply. Continue reading →

Epidemic: Countries Falling Ill from Oil Anemia

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Oil: we can afford to buy it now, but they really can't afford to sell it to us.

Oil: we can afford to buy it now, but they really can’t afford to sell it to us.

An epidemic of oil anemia is spreading around the world with the speed of an airborne virus, leaving scores of countries gasping for breath as their financial arteries shrivel for lack of cash. The price of oil has dropped to about $80 a barrel from $100 just a few weeks ago. And just as oil burning countries begin to shrivel when they have to pay more than $100, oil producing countries start to suffocate on anything less. The sickest examples: Continue reading →

Letting Go of the Tar (Sands) Baby

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A tar sands mine and plant near Fort McMurray, Alberta, Canada. The recipe is simple: scrape the skin off the earth, boil what you find, wash the residue, dilute it with explosive fluids and send it 3,000 miles to where someone can make an inferior product with it. For some reason, the business model isn’t working. (Wikipedia Photo)

A tar sands mine and plant near Fort McMurray, Alberta, Canada. The recipe is simple: scrape the skin off the earth, boil what you find, wash the residue, dilute it with explosive fluids and send it 3,000 miles to where someone can make an inferior product with it. For some reason, the business model isn’t working. (Wikipedia Photo)

Just as is the case in the American tight (shale) oil plays, things in the Canadian tar sands are breaking down fast, and for the same reason: wringing the last few barrels of oil out of the earth is proving to be far more expensive than hoped. Two weeks ago the Norwegian energy giant Statoil postponed for at least three years building a new tar sands project designed to pump 40,000 barrels a day; earlier this year Total SA of France, the fifth-largest oil company in the world, suspended operations at its $10 billion oil sands mine while it tries to figure out a way to make a profit; and Shell announced in February indefinite suspension of work on a prospective 200,000-barrel-a-day mine. (The same Shell that has been quietly folding its 13-billion-dollar hand in the US shale-oil bonanza and tiptoeing from the building? Yes, the very same.) Continue reading →

WikiPeak Oil: Now Do You Believe It?

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"Got oil?" "Not so much any more. You?"

M. King Hubbert started predicting the inevitable arrival of peak oil in 1950. In the ensuing 60 years, a steadily growing band of geologists, other scientists, and people who grasp the essentials of arithmetic have been warning strenously that peak oil is both inevitable and imminent. If they are right, its arrival will have consequences for the world that will rank somewhere between catastrophic and apocalyptic; yet, in the developed countries (and by developed, we mean oil-dependent) virtually no one in a position to do anything about it mentions the prospect, let alone taking it seriously. Now, powerful confirmation of peak oil has turned up in WikiLeaks. It’s where we learned, for example, that Prince Charles is not as well respected as Queen Elizabeth. So now do you believe? Continue reading →