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

The Crash of 2015: Day 21 [Update: Day 22]

Hold on a second, we’ve changed our minds. Can you just hold it right there, please? We’ve decided we like it the way it is…..

The economy of the United States and the world is on fire, and with the flames and smoke visible in any direction one cared to look, the President of the United States declared last night that the worst is over, “the shadow of crisis has passed,” and happy days are here again. In reality (a state that presidents and candidates for president never seem to visit) 2015 is shaping up to be one of the worst any of us have ever seen.

It’s a potent mix of flammable situations, from an unhinged stock market to a drought-ravaged West to the fiscal convulsions of China, Russia and Europe. But for us in America, the collapse of the bogus New American Oil Revolution is the fire that’s burning hottest and spreading fastest. This is how it’s likely to go: Continue reading

The Crash of 2015: Day 9

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]

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

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

2014: The Last Good Year

For what we are about to lose, Dear Lord, we thank You. (Photo by Terren in Virginia/Flickr)

For what we are about to lose, Dear Lord, we thank You. (Photo by Terren in Virginia/Flickr)

Thanksgiving is coming, and Christmas and Kwanzaa and Hanukkah and New Year’s, and we should make the best of them. These are the good old days, and we should celebrate them well, because we are probably not going to see their like again. Gas is cheaper than it was, and we should go to see the relatives this year, because next year will be different. Food is a little more expensive than it was, yet we should eat hearty nevertheless, because next year will be different. We still have plenty of water (if we don’t live in California, or Brazil, or North Africa, or any of a multitude of other places being seared by implacable drought) but, because of changing climate and advancing pollution, next year could be different. The lights are still on, but the aging grid is creaking and groaning with the effort of meeting our burgeoning demand, and next year could well be different. Eat, drink, and be merry, for tomorrow we diet. Continue reading

Epidemic: Countries Falling Ill from Oil Anemia

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

Bulls Running: Frackers Getting Trampled

It's bulls v. bears on Wall Street, and the collateral damage is substantial.

It’s bulls v. bears on Wall Street, and the collateral damage is substantial.

Overtaken by arithmetic and logic, the Wall Street bulls are trying to find a place to hide their money, and while they don’t agree on where to put it, they are beginning to agree that it definitely should not be in the fracking patch. The stock of fracking operators has been in bear country for weeks now as the strain of trying to pretend everything is all right gets worse by the hour.

A Ponzi scheme requires the operator to get new suckers in the door fast enough to use their money to pay off the old suckers, so they don’t blow the whistle on the  con. Continue reading

Math Unmasks Oil and Gas Boom as Bubble

a natural gas well using hydraulic fracturing

In the midst of a natural gas “boom,” fracking rigs like this are fast becoming an endangered species. The reason? Mathematics.

There are three kinds of people in this world: the kind who understand mathematics, and the kind who don’t (Irony alert). You can find the latter buying lottery tickets, leaning over casino tables and conducting news conferences about the new American oil boom.  It has become conventional wisdom (oxymoron alert), an assertion not even worthy of discussion by Serious People, that the United States is, as an NPR program host said offhandedly the other day,  “on its way to energy independence.” Here’s what mathematics has to say about this titanic (metaphor alert) scam. Continue reading