A hydraulic fracturing drilling rig creating a new well on the Niobara shale formation, one of the most intensively fracked areas in the United States.
One way to better comprehend the current state of the oil business, and gas prices, is to look more closely at the situation of an Uber driver. (Our example is imaginary, and the numbers are made up, but I think realistic.)
As he begins his employment, our Uber driver is quite pleased with the job. At the end of most days he has a nice wad of cash (or its equivalent) in his pocket and feels optimistic about his prospects. But he is entirely on his own, and must pay for his own gas, oil, maintenance, tires, insurance (including, not incidentally, health insurance), etcetera. Still, by working long hours and being thrifty, he keeps his head above water.
At the end of his first year, his profit-and-loss statement (P&L) is in positive territory, but not by much. When all his expenses are accounted for he has “made” — and this depends entirely on how he categorizes his expenses — perhaps $15,000 after taxes. Not great, but equivalent to a lot of low-end jobs, and he has his independence. So he resolves to work even longer hours next year, and do better.
But the next year he has a short illness, and despite working longer hours ends up with basically the same financial results. Ditto, the year after that. And then he runs into the bitter truth about being an Uber driver.
He has to replace his car. The average cost of a new car today is $40,000, an amount that will almost completely obliterate three years of earnings. Sure, he can finance it, but the reality is that with the wear and tear an Uber car gets he will probably have to replace it in three years. To pay off the loan in three years will require payments that will devour his retained income.
So he’s learned a nasty lesson, but here’s the lesson the observer of Uber (and fracker) economics must learn: the expense of buying a new car every three years will never appear on his profit and loss statement (just the interest paid on the loan). So after six years he may well be able to show six annual P&Ls that show substantial profits every year, and yet be dead broke.
Now let’s meet our Fracker. The bitter truth about fracking oil wells is that they play out after an average of three years, whereas legacy oil wells last for 20 years or more. They are hideously expensive to build and operate — each one requires millions of gallons of water, thousands of tons of sand and a witch’s brew of toxic chemicals — but if the price of oil is reasonably high each well can make money every year.
But because of the cost of replacing the wells, and the need to do so every three years, virtually nobody engaged in the fracking industry since it began its current “boom” about 20 years ago has made any money, despite displaying impressive P&Ls. Indeed, most fracking players have gone deeply in debt.
And that, dear friends, is why we are seeing reports about unprecedented “profits” in the oil patch, coupled with rising gas prices, which many take as proof that the oil companies are gouging us. A corollary belief is that all they have to do to end the current gas price crunch is to “ramp up production.”
The unfortunate reality is that the frackers are facing forced liquidation, even as the price they can get for their product is soaring. They are dead frackers walking.
The entities providing the finance do not care because they expect another bailout. The government does not care about the bailout because they do not (yet) care about the inflation caused.
And 98% of the people are too stupid to understand any of it.
So now the USA is extending a filthy hand to Iran (that recently bombed US facilities in Iraq) and Venezuela.
Agree most hardly with the words “yet, “98%,” and “a filthy hand” and the context in which they were used, but the words “bombed US facilities” I found a bit troubling.
It was by all appearences a precision conventional ballistic missile strike, intended to hit near the unfinished US Consulate, but not in it, and in the least populated area available.
12 Fateh-110 missiles were used, known warhead weights – 450kg to 650kg, with a Circular Error Probality of 30 meters.
Only minor injuries and minimul damage reported. By all measures, in my opinion, an example of what might be considered, a perfecly legible smoke signal on the plains, circa 1688, or 1835, only put up in the year 2022, for any interested parties.
Apologies, but words like bombed, bombarded, bombardment, shelled, shelling, indiscriminately raining shells, etc … are not helping my fellow citizens come to grips with the realities of the 21st century, and that means they are getting left far behind.
I mean, the other night I was watching in abject f*cking horror, as Anderson Cooper and Ret. Four Star General David Petraeus were discussing the best way to take out a Russian tank using a Molotov Cocktail. Anderson believed throwing the flaming bottle at the turret would be the best way to go about things, but Gen. Petraeaus insisted the better method would be to manuever around the tank to the back, where it is most vulnerable.
The entire world -exluding Nato countries of course- is laughing at us.
“The entire world -exluding (sic) Nato countries of course- is laughing at us.”
Us? I’m Scottish.
Thanks for pointing out which words you “most hardly” agreed with, I guess the opposite would be “least easily”.
I am going to have to pick out your use of the word “back” as absolutely abhorrent, “rear” would have been far more accurate, with an error probability close to zero.
Sincere apologies for the word “us,” and even greater ones for the word “hardly,” which is missing an i between the d and l, which means my sentiments in the matter could easily be misinterpreted, and probably should be.
Whether Molotive Cocktail attacks on tanks are best carried out by maneuvering to the “rear” of the tank, instead of to the “back” I couldn’t say, having never been involved in one, but former Full General of the US Army Patraeus did make one thing clear to Cocktail enthusiast Anderson, that stealth of movement would be paramount as one approached the tank, if one wished to make multiple such attacks during the upcoming battle for Kyiv.