That <a href="http://quotes.ino.com/chart/?s=NYMEX_CL.G09.E&v=s&w=5&t=c&a=2>1pm plunge in the futures was a big middle finger to bottom feeders like me. I'm up 12 cents on USO at the close, but down 2 bucks after hours (stupid holiday)
We finally showed those russkies who's boss; we get the flu, they get drug resistant flesh eating TB.
Obviously this is related to credit contraction, but like Rich has written there are some energy plays out there if one wants to do the work along with any PM who starts hedging fuel.
The 1 to 1.382 extension of the A-B=C-D pattern <a href="http://img255.imageshack.us/img255/5218/usodaily081219jq4.png>confirmed last week is 24.22, for USO. A 1 to 1.618 extension is 21.45. DXO will be under $1 and de-listed by then.
Crude inventories at Cushing, Okla., the delivery point for crude futures contracts traded on the New York Mercantile Exchange, reached 28.7 million barrels in the week ended Dec. 19, the Energy Information Administration reported.
It was the highest since at least April 2004, when the government started collecting Cushing data.
Was this ever tracked before? How long can they keep this up?
Persecuted Comrade Anonymouse(Unrated)(Unrated)(Unrated)(Unrated)(Unrated)(Unrated)(Unrated)(Unrated)(Unrated) writes: \tThat 1pm plunge in the futures was a big middle finger to bottom feeders like me. I'm up 12 cents on USO at the close, but down 2 bucks after hours (stupid holiday) \t Persecuted Comrade Anonymouse | \t \t \tHomepage | \t12.24.08 - 4:22 pm | # Persecuted Comrade Anonymouse | Homepage | 12.24.08 - 4:22 pm | #
PCA, stick to SRS if you want to see big middle fingers. I can't even stick the middle finger in my Christmas stocking it's so large.
"Persecuted Comrade Anonymouse writes:
That 1pm plunge in the futures was a big middle finger to bottom feeders like me. I'm up 12 cents on USO at the close, but down 2 bucks after hours (stupid holiday)"
why don't you use a futures account?
btw.. i'm starting to really like commodities and "emerging markets" because it seems they're the only markets that are being allowed to fall to a clearing price, wherever that may be. to me, this means that when they start to recover it will be a more long term sustainable recovery.
CA, stick to SRS if you want to see big middle fingers. I can't even stick the middle finger in my Christmas stocking it's so large.
Pissed Off In California | 12.24.08 - 4:27 pm | #
I have the SRS middle finger stuck in my stocking as well. Trying to be patient and will do so for as along as I can but it's been brutal.
"So I guess I can't expect an energy welfare check from OB taxing the oil companies win fall profits. Just when I wanted a Hummer.
joe after the 12 pack | 12.24.08 - 4:34 pm | # "
Oh you're gonna get a Hummer in 2009, just not the kind you were expecting.
About 3,000 people are working on 20 projects that Hensel Phelps Construction Co. of Greeley, Colorado, is overseeing in California, including a $110 million medical facility at the San Quentin State Prison near San Rafael,
what's the dude's name, ?? is to have better health care than me.
Rich may have been on the oil direction, from looking at the old charts we are obviously below equilibrium. There should be a return to the mean with all the projects being scuppered at this price.
The fly in the ointment is that the listed firms are being elbowed out by national firms.
"I said I'd inveigh on you to make some extra-holy entreaties to the messiah when you're at his birthday party."
I'm not in any way extra holy, but I will remember Liz's Mom in my prayers. A heart-felt prayer by anyone, holy or not, is a good prayer, in my experience.
There was news several days/weeks ago that the big oil companies were taking tankers to store oil at sea. I don't know whether they thought then that the price was low and, so, ought to stockpile as much as possible.
I for one have decided not to be surprised to see gas at 99.9 cents per gallon next year. Ah, unemployment, cheap gas and a road-trip.
"And all these Gulf States need $50 per barrel just to pay for their government programs."
Oil prices didn't jump up to $50 until the hurricanes of 2004-05, and then rocketed to $147 in 2008 due to the speculative commodities bubble. Before that, $50 a barrel was considered a high price. We've only had these high oil prices for a relatively short period of time - due to temporary circumstances.
Oil prices probably never should have jumped above $50 in the first place, if it weren't for those two things.
Why on earth would the Gulf States actually plan their future based on temporary bubble prices?
Not to be a Scrooge but the next next bubble is showing itself. Jewels and jewelry. Diamonds are near multi-decade averages before inflation. Extraction and manufacturing and distribution have dropped markups. Bye bye asset valuations.
I'm just curious, but has anyone entertained the idea of outsourcing the entire U.S. prison system to China? Or at the very least California's. California's corrections system alone cost the state nearly 9 billion dollars last year. That is 9 billion dollars all to keep criminals locked up, talk about a waste. I'm pretty sure China can do it for less than one Billion, and better yet lower the rates of recidivism among prisoners. The 8 billion saved could be put to much better use or simply returned to the taxpayer. Though of course the prison guard unions are likely to resist any such moves.
re: Cushing
Something that might limit speculation in oil would be to limit the number of outstanding contracts to the amount of oil that Cushing has capacity for. Even with that limit there would be speculators to take the other side of hedger's contracts, but there wouldn't be the -- common -- situation where there are more outstanding contracts than Cushing's capacity.
I know that many speculators close their contracts before the delivery date.
"I can haz bailouts? writes:
I'm just curious, but has anyone entertained the idea of outsourcing the entire U.S. prison system to China? Or at the very least California's. California's corrections system alone cost the state nearly 9 billion dollars last year. That is 9 billion dollars all to keep criminals locked up, talk about a waste. I'm pretty sure China can do it for less than one Billion, and better yet lower the rates of recidivism among prisoners. The 8 billion saved could be put to much better use or simply returned to the taxpayer. Though of course the prison guard unions are likely to resist any such moves."
If this happens I'd recommend going long bullet manufacturers and shorting health-care companies.
I hear they only allow 1 bullet per prisoner, but still they'll make that up on volume.
Plus organ donations will sky-rocket cutting into the cost of health-care.
"crispy&cole writes:
monta's ankle - nice timing on the release...Christmas eve to make an exception to the banking rules...discusting!
crispy&cole | Homepage | 12.24.08 - 5:03 pm | # "
Exactly how the Federal Reserve was created in the first place. Read up on the history of how/when the Congressional vote was performed. Nothing new here unfortunately.
reptillian writes:
"I'm just curious, but has anyone entertained the idea of outsourcing the entire U.S. prison system to China?"
That might reduce the cost of spare body parts.
reptillian | 12.24.08 - 5:01 pm | #
What will reduce the cost of body parts is cloning on an epic scale. I mean that everyone gets themselves cloned. Getting your spare body parts from your clone also has the advantage that no immune suppression drugs are required when you have your clone's liver transplanted into you.
monta's ankle: The Fed is using emergency powers to grant GMACs request because of the unusual and exigent circumstances affecting the financial markets,
HG(Unrated) writes: Oil prices didn't jump up to $50 until the hurricanes of 2004-05, and then rocketed to $147 in 2008 due to the speculative commodities bubble.
Factors exogenous to the US domestic market have an effect on price setting. I hear there are people in India and shit these days.
2005 -- the effects of the mortgage ATM are really kicking in and the trans-Pacific capital-for-goods pump is thrumming along.
Now it is apparently gone into the magical world of freefall economics.
I suggest sending out a scouting party to find out where emerging market demand went.
IMO, this is a really ominous signal WRT second order consequences. I expected oil to have a punishment price around $65/bbl.
There are some sights to be seen these days in China, I reckon.
[Bair has called for the federal government to direct $24 billion from the $700 billion financial bailout to give lenders a financial incentives to modify more loans and help more borrowers keep their homes. Doing so could prevent 1.5 million foreclosures, the FDIC says]
This pisses me off totally. All the benefits Greenspan claimed the whole way up the bubble was that risk is spread around the globe. But now that risk turns into losses the US Taxpayer needs to pick up the tab.
" Pissed off in California writes:
What the h*ll is wrong with CR companion? I've thrown in the towel with it. Everytime I try to use it the delays are making it unusable.
Pissed off in California | 12.24.08 - 4:30 pm | # "
All the benefits Greenspan claimed the whole way up the bubble was that risk is spread around the globe. But now that risk turns into losses the US Taxpayer needs to pick up the tab.
~~~~
As it always will be until we get a Public Central Banking system based on a public utility model.
" I can haz bailouts? writes:
I'm just curious, but has anyone entertained the idea of outsourcing the entire U.S. prison system to China? O....... Though of course the prison guard unions are likely to resist any such moves.
I can haz bailouts? | 12.24.08 - 4:56 pm | # "
SCOTUS might have something to say about cruel and unusual punishment. We don't use our prisons as organ banks.
Many happy returns Seb - must go check the prime rib cooking in the oven now - later the extended family, excess calories and a cigar with a scotch that is legal to vote...
Wouldn't multiple devaluations in a short timespan qualify to be referred to as hyperinflation? or at least the beginnings of hyperinflation? Regrettably, it would appear that the 21st century analogue of Weimar Germany is going to be Putin's Russia. And they already have the xenophobia and the secret police and the elected dictator want-to-be in place. All thats needed is a Duma resolution declaring Putin "dictator for life". On the other hand, Russia's military is a threat to no one with the exception of their Strategic Rocket Forces.
From Lama's article about Russian economist predicting break-up of U.S.:
He even suggested that "we could claim Alaska - it was only granted on lease, after all."
On the fate of the U.S. dollar, he said: "In 2006 a secret agreement was reached between Canada, Mexico and the U.S. on a common Amero currency as a new monetary unit. This could signal preparations to replace the dollar. The one-hundred dollar bills that have flooded the world could be simply frozen. Under the pretext, let's say, that terrorists are forging them and they need to be checked."
Trying to keep Alaska out of Russian hands will keep Sarah Palin busy for a while.
If the borrowers need a break why not simply legislate a national cramdown of 20% off everyone's mortgage, transferring wealth to J6P.
Well, last I checked, the people can't afford their congressmen.
Besides, what kind of message would that send the average American? Go ahead and be irresponsible and the government will bail you out? Can you imagine what would happen to our society if the rules were optional for everybody?
I'm just curious, but has anyone entertained the idea of outsourcing the entire U.S. prison system to China?
Not a bad idea- the numbers would work.
A better strategy would be to outsource Foreign Policy to France-- they seem to be many times better at it than the current regime.
In "The myth of the Oil Crisis" (2008), Robin Mills an economist and geologist, points out that (Production) "(c)osts in Saudi Arabia also remain low by world standards and estimates vary from,$1.2 to $5.1/bbl.(page 118)
"Clearly production costs in the Persian Gulf don't average $50/bbl.
Secondary and tertiary costs depend on the field size and structure.
He also points out that data on proven reserves varies widely. Total OPEC recovery estimates vary from 895 billion (from Campbell) to 2140 billion (from USGS).
Ca. prisoners to China...Nah, Why not send them below the mason dixon line, new prisons have sprang up all over the south, taking prisoners from as far away as Hawaii.
Russia's military is a threat to no one with the exception of their Strategic Rocket Forces.
What they lack in technology they make up for in sheer numbers and heart. Let's hope there's been enough of a democratic shift in the Russian populace to prevent Putin from manifesting his full potential.
Federal Reserve lets GMAC tap bailout fund
WASHINGTON The Federal Reserve has granted a request by the financing arm of General Motors to tap the government's $700 billion rescue fund, bolstering GM's ability to survive.
The Fed announced Wednesday that it had approved GMAC Financial Services' request to become a bank holding company. That designation makes GMAC eligible to receive a portion of the bailout fund and get emergency loans directly from the Fed.
Peak Oil = a 50-year+ theory with based on sound geology, EROEI, world oilfield discovery rates, and world known proven reserves.
Summer 2008 oil prices = leveraged speculation + panicked $$ fleeing from the housing & stock markets.
To conflate the two would be an insult to M. King Hubbert, Matthew Simmons, Kenneth S. Deffeyes, and dozens of other scientists that have spent their lives painstakingly accumulating data, researching and assembling the big energy picture of what may lie in store for us.
The latest collapse in commodities speculation and the global recession/depression has thankfully given us a brief reprieve in oil prices. I hope we use it wisely to seek out new and better sources of energy that we can produce domestically (though our track record to date is not very good).
We need Russia and they need us ... This rehashing of the Cold War is and will be a strategic blunder the size of Iraq if relations keep worsening.
Europe needs Russian resources to function. We need Europe in good shape. We need Russian cooperation around the world. Russia needs economic stability. Good relations will provide that ...
Do we rearm along with Russia as the Chinese build their domestic industrial production?
Another Cold War is a "fools' errand" that we surely can not afford with the domestic and foreign challenges we face.
"What they lack in technology they make up for in sheer numbers and heart. Let's hope there's been enough of a democratic shift in the Russian populace to prevent Putin from manifesting his full potential."
No, the Russian Army will not be coming through the Fulda Gap. However, the Prime Minister of Ukraine, Y. Timoshenko, just accused the President, V. Yushchenko, of intending to declare a state of emergency, cancel elections, and declare the country bankrupt.
Gazprom meanwhile applying the screws via Ukrainian natural gas debt.
Day to worship a messiah. Interestingly, though He had the will and power, His message was just ideas, a new matrix of thought. In other words, by each obtaining the wisdom and performing the correct action, comes heaven on earth.
Love of money and the iniquitousness of fractional and fiat money systems are oppositely arrayed to that message. Systemized evil where all pales of people must participate, stops the hand of God from bestowing bounty upon the people.
Jesse's Café Américain
Merry Christmas! May creative destruction help unfold a better world. Faith without works...
Pavel, It seems to me that Russia's nuclear arsenal at this point serves as insurance against large scale invasion for Russia. It would seem that from the Putin organization's point of view, reconstruction of conventional military forces would be a logical means to generate employment and focus mass sentiment in Russia on something that would be seen as building Russia's prestige. Factors that would make that difficult would seem to be the corruption of the conventional forces that currently exist, and lack of capital due to recent economic events. How do you say National Socialism in Russian?
I can haz bailouts? writes:
I'm just curious, but has anyone entertained the idea of outsourcing the entire U.S. prison system to China? Or at the very least California's. California's corrections system alone cost the state nearly 9 billion dollars last year. That is 9 billion dollars all to keep criminals locked up, talk about a waste. I'm pretty sure China can do it for less than one Billion, and better yet lower the rates of recidivism among prisoners. The 8 billion saved could be put to much better use or simply returned to the taxpayer. Though of course the prison guard unions are likely to resist any such moves.
Come on guys with almost 1/2 of the prisoners illegal aliens set the system up in Mexico, give them 15k a prisoner per year to keep them in, once they are let go, no money...let them build same kind of prison they use today...
Theirs a lot of desert in Baja...
The GMAC news is horrible....Tapping fed money backed by bad auto paper...
Another fleecing of taxpayers....
Theives....
They need to go bk....Cerebus, Pimco and the rest of the wall street/bank/ fed/treasury Pigmen are taking this way to far....
"Come on guys with almost 1/2 of the prisoners illegal aliens set the system up in Mexico, give them 15k a prisoner per year to keep them in, once they are let go, no money...let them build same kind of prison they use today...
Theirs a lot of desert in Baja...
The GMAC news is horrible....Tapping fed money backed by bad auto paper...
Another fleecing of taxpayers....
Theives...."
Don't worry. There's something called crowding out of private capital. Nasty secondary consequences here. The chosen companies live, everyone else dies
--> unemployment goes parabolic.
Then you try to fund higher government debt wit decreasing tax receipts --> unemployment goes parabolic.
"It seems to me that Russia's nuclear arsenal at this point serves as insurance against large scale invasion for Russia..."
With respect, I doubt that anyone contemplates an old-fashioned invasion. Nuclear check-mate is another matter.
But at this point my knowledge ends, and uninformed speculation begins.
I have been wondering for years what lies within the immense artificial caverns beneath Yamantau Mountain. Even during the Yeltsin era, and even when Russia was financially broken, the excavations continued.
I'm trying to keep my cool but I'm getting a little pissed at these clowns everyday thinking of what their doing to my daughters future..
Not an advocate of violence but actually feeling more inclined to think about what if it needs to happen..
Gmac bought paper that wouldn't support ink it was so bad....
MY oil call was 100% correct...what else matters? My analysis is my own and you wouldn't believe it anyway since you are sold on a lie (kinda of like the housing and credit bubbles...)
You appear to remain willfully stupid, which otherwise seems out of character - your call on prices notwithstanding, your inability to express anything remotely resembling an informed opinion on the future of oil supply makes any time spent on the topic with you, sadly, a complete and utter waste of time.
You have never presented any analysis - period. Nice call on prices, if you ever actually care to discuss supply feel free to present some information.
Didn't you close your shorts last week? Closed mine Monday, went long today, now underwater a.h. - that should be clear to the home audience. If you believed this mega-sell-off would continue, why'd you leave money on the table?
The problem with jesse's premise starts with not explaing the role of the contract. The price on it's last day of trading is inconsequential.
herewith in an analogy.
The total amount of contracts in any one expiration month is represented by a goose down pillow. The total weight of all contracts netted out divided by price is most important, not the last wisp of air blowing around one lite-weight feather that one or two guys are chasing.
Good tidings to you also. You're always patient with my often discourteous posts.
I keep forgetting to ask, do you ever post at TheOilDrum.com? If so, what handle? I find that place has become an unbearable circle jerk of doom over the last year.
U.S. retail store traffic fell 24 percent last weekend from a year earlier as deepened discounts failed to entice consumers to spend during what may be the worst holiday-shopping season in four decades. citizen energyecon | Homepage | 12.24.08 - 5:22 pm | #
That's not frightening. When people give up booze, that's frightening! My local liquor store manager told me that his regional distributor says that business is down 20% across the board. Fun, fun!
Ca. prisoners to China...Nah, Why not send them below the mason dixon line, new prisons have sprang up all over the south, taking prisoners from as far away as Hawaii. IWannaknow | 12.24.08 - 5:32 pm | #
Screw that. We don't want your criminals. We have plenty of those of our own.
Not an advocate of violence but actually feeling more inclined to think about what if it needs to happen.. cd | 12.24.08 - 6:00 pm | #
We are, thankfully, far from violence. Things will have to get much, much worse before America goes that far south. There is a lot of detioration to our standard of living yet to go before you see social unrest.
We have two cars. A Subaru Forester and Honda Civic, both were purchased before we met and married. We have essentially parked the Civic and are driving the piss out of the sunk-cost Forester while fuel is cheap. Wonder how many other families are doing this....
citizen energyecon:Dunno about Gulf states, saw some DB/PCF analysis that suggested Venezuela needs $97/bbl and Russia needs $70/bbl...
You would think that a higher gasoline and diesel tax would help reduce the trade deficit while taking some wind out of the oil producers sails. Since a tax would reduce demand, and thus the price of raw oil and at the same time give the government money spend on our misguided social programs. But of course that would be unamerican.
I hope it does. I need more time to dollar cost average into some very long holds.
What can I say...the CD rates just weren't enticing enough for some spare change I found in the car's ash tray.
I hunted around last week for any other buys. Zip, zero, zilch. Cripes it's ugly out there. (I don't short. I like to sleep. I'm willing to hold for 5-7 years... but I don't short.)
Oil suppliers can only cut so much before they no longer have leverage in the situation. There comes a point at which they must pump as much oil as possible just to survive. Boo hoo for them. I hope that they were saving during the past 5 years.
Lowest gasoline is 1.28 in Salt Lake City. Unless it dropped before Christmas, the economy would have been fucked much worse than it is now. At 400 millions gallons per day, Americans are saving 1.2 billion dollars PER DAY compared to peak prices. This is just more evidence that the US government is controlling the price of oil, which is not surprising. They milked Iraq, they milked oil and gas, and now they're milking the taxpayer with cash grabs. Keep stuffing your faces America! Fed people don't start revolutions, which is why the government is so liberal with food stamps.
WHY SHOULD OIL GO UP? Because the charts say so ... I RAISE THE BS FLAG.
How is this for all you oversold campers ... the leveraging in oil was because to buy 1 barrel of a future's contract, I only had to put down 1/16 of the money. Now 1/16 ehhhh is not a lot, but for all those who thought a bounce was due at 120, 110, 90, 75, 50, 40 and that had bought futures contracts at those prices, well the bounce never materialized. So how many of those buyers have sold out yet? Not many, many still keep thinking the bounce is coming. Get over it, there is no bounce. There WAS NO NEED for oil to ever go up the way it did. China and India were growing before 2001, so were the other emerging markets. What a marketing ploy these countries were. The huge oil discovery in Brazil, the ability to drill horizontally in pre-existing dry wells and extract what was considered once unextractable, are these reasons enough for a huge supply overhang. Let's see, what else, yes the BUSH crime syndicate is leaving office. THIS IS THE SINGLE BIGGEST REASON OIL IS NOT GOING BACK UP TO EVEN 60. Oil will only go up when numbskulls stop making calls like "OIL IS DUE A BOUNCE", because these clowns have not done their due diligence yet make calls based on what is marketed to them. If you have done YOUR (YES YOUR) due diligence and seen both sides of the coin, then you realise in 2000 Oil was a buy (BUSH CRIME SYNDICATE WAS THE SINGLE REASON), now there is nothing to it. Did oil go up during the Clinton era? If you say yes ... by how much? Didn't America grow the most between 1992 and 2000, but oil hardly budged. Cyclical cycle, secular cycle or even by-cycle, who cares what kind of a cycle it is. Oil was, is and will be a naturally occuring substance, yes there is no reason to fear it will be put on the endagered list. Now my poverty stricken individual with even lesser wisdom has thought of this. I can go to SUBWAY and buy myself a footlong for $5, or I can buy 1 oil futures contract with less than $2.50. OK IF I CAN BUY OIL, THEN I AM DAM WELL SURE MY RICH GODFATHERS ARE SELLING. Last but not least, if you can point one sign in the oil related world that says inflation supercedes deflation, then buy. OR IF THE CRIME SYNDICATE COMES BACK INTO POWER. Look you can lie to yourself and keep buying into this (hopeful/expecting/wishful/kid myself) oil bounce theory, OR, OR, OR, OR, OR, YOU CAN PROTECT YOUR WEALTH.
As regards to SRS, look at the options of IYR, URE and SRS (the forward months out of the money options). I REPEAT, ANYTIME SRS TRADES UNDER 70, SKF UNDER 95 AND QID UNDER 60, THANK YOUR GODS. There is no superior in making money than CORRUPTION. LEARN TO UNDERSTAND CORRUPTION.
". . . despite the fact that relative to 2005, we are going to almost certainly see three years of lower net oil exports, flat crude oil production and a slight increase in total liquids production, the conventional wisdom is that the increase in annual US oil prices from $57 in 2005 to about $100 in 2008 was due to speculation, while the recent sharp decline in monthly and daily oil prices was due to Peak Oilers being wrong about a near term peak in world oil production."
Based on Kenneth Deffeyes' estimate, since 2005 the world has consumed about 8% of remaining conventional crude oil reserves, but the crux of our argument is that net exports will decline much more rapidly than production will. I estimate that since 2005 the world has consumed about one-fifth of remaining conventional net oil exports.
Indonesia is a recent example of what we are talking about.
It appears that 1996 was the final production peak for Indonesia. Here are the net export numbers per day, by year for Indonesia, along with remaining post-1996 cumulative net export capacity (EIA)
Note the illusion of the 1998 increase in net exports (happy days are here again!). The reality was that their remaining cumulative net export capacity fell from 78% to 56% in one year (22 percentage points, one fifth of their remaining net export capacity in only one year)--when their net export rate went up year over year.
This is obviously analogous to the possible slight increase in net exports from the top five net exporters in 2008, to a level well below their 2005 rate (happy days are here again!).
Crispy and Rob Dawg may not bother to come back to this thread, save your fire.
P.O. purists tried to tell the "doomers" that it's not about the price... that argument got lost in the sensationalism of $5 a gallon (plus shortages after the hurricanes).
I'm willing to give Crispy and Dwag credit that they're smart guys, and can change their tune when the proof is in, if we do live to see the backside of the peak. Kinda like getting Sebastian to admit there is a recession,
Got really whacked betting on the need for all societies using oil. Still can't believe it, bought DRYS at $80..., RIG at $150....In hindsight, makes perfect sense, the demand that arose from too much credit was the real mirage...sold out with my tail between my legs on DRYS at $70, RIG at $125...I should count my blessings and be very happy this year...but I still can't believe it. Should write an investment diary for my kids and their future families....
I think you all are overrating the economy collapasing and under estimating the geo-politicial aspect of oil, Right now it is good all of the people we dislike are suffereing. This well causing civil unrest in places like iran,russian and venuz. Good in the short term. Very bad in the long term. Also you need to look at mexico. They are runnning there oil fields into the ground and when that drys up it will hurt. Enjoy oil at this price while it last. I am sure it will be higher soon.
Regarding Mexico--our #3 source of imported crude oil--I estimate that they have already exported about 80% of their post-2004 cumulative net export capacity. 80% in only four years.
This is the same pattern that Indonesia showed--when they exported about 80% of their post-1996 cumulative net export capacity in only four years.
This is very much analogous to a gasoline gauge. Regarding post-2005 worldwide conventional cumulative net export capacity, I estimate that the gas gauge is at 80% full, down 20% in only three years.
"Should write an investment diary for my kids and their future families...."
It should start with "Remember, buy low..." But, I'm no expert.
The thing about buying a little oil-related stuff right now for me is, either 1) the price stays low and I have lower living expenses so I really can just sit on the investments or 2) the price goes up and I can make back some of my additional expenses and break even or hopefully make a bit. Both are totally fine.
Also, people are now talking about cash they way they were previously talking about real estate and pets.com, so I feel relief at getting out of it, even a tad.
I am in the oil biz deep in the heart of the East Texas Field. I own and operate a very small (comparatively speaking) oil business.
In December 1999, just 9 years ago, the posting price for our crude, was $9/bbl.
We still had to pay the middlemen, so we got $5 or $6/bbl gross. One transport (truck) load of crude is 180 bbls x $6 = $1080; obv. we were barely making it.
Fast forward to June 2008 and do the math. We had won the lottery. I still have a proforma I created at the very peak that was based on a "conservative" $100/bbl number. lol.
The precipitous drop of almost 70% that crude has experienced in just 5 months since then is analogous to someone winning the lottery only to find out that it was a fake gag-gift from one of your smart-assed friends.
I remember like yesterday the very day that crude got to $20/bbl from being in the doldrums of $10/bbl; myself and other owner went out for dinner and popped open a bottle of Dom Perignon.
For those out there bottom-fishing, thinking crude is a steal at $35, please take heed, it could easily drop another 70% from these levels and not be out of the ordinary, historically.
Thanks for your insider incite. The way I bottom fish is to start at a point where if it loses another 1/2 I'm happy because I can buy even more over time (I'll admit 70% hadn't entered into my mind, I'm using $26-$28 as an expected bottom). So far I'm only 1/5 in of what I want to invest. I'm happy to wait until it recovers, even if it takes a decade, because my current new investments are limited to things that will work as intergenerational transfer. So, it was either this or farmable property and the price of that is distorted by subsidies which have an uncertain future.
What they lack in technology they make up for in sheer numbers and heart.
Get real. The average Russian army conscript makes Lynndie England look like West Point material. As for numbers, half the Russian army will be Muslim within a decade or so. Think that one over.
Oil prices have skyrocketed in recent yearly due to speculative trades. It was well below 50$ for most of the years. When it was rising from 30$ to 40$ to 50$, it used to be considered high. When markets will see some revival, this current price will be considered as normal.
"Instead of a desperate effort to keep our high consumption auto centric suburban way of life going, we need to be investing in things like rail transportationespecially electrified rail transportation, which can be powered by alternative energy sources like windpower.
However, this would force us to recognize that we live in a finite world, with finite fossil fuel resource. This is a difficult idea to sell since the finite world concept violates most people's concept of how the world works--which is that we can have an infinite rate of increase in our consumption of a finite fossil fuel resource base.
We can only hope for an outbreak of rational thinking in the months and years ahead."
1st
Merry Christmas everybody. C.R. Thank you for a great Blog! Thanks everybody for your insightful comments over the past year.
Can't do a cliff diving post without a chart.
That <a href="http://quotes.ino.com/chart/?s=NYMEX_CL.G09.E&v=s&w=5&t=c&a=2>1pm plunge in the futures was a big middle finger to bottom feeders like me. I'm up 12 cents on USO at the close, but down 2 bucks after hours (stupid holiday)
Peak Oil = Leveraged Speculation = Bankruptcy
once again...headed to $25bbl
Reminds me of an idea for a fim:
"Big Ruble in Little Russia"
"And this is hitting other oil producers too"
Like LA, TX, ND and AL???
We finally showed those russkies who's boss; we get the flu, they get drug resistant flesh eating TB.
Obviously this is related to credit contraction, but like Rich has written there are some energy plays out there if one wants to do the work along with any PM who starts hedging fuel.
"but like Rich has written there are some energy plays out there"
I like Rich but he has been wrong on oil for some time now...$$$ going down the drain listenting to his call on texas tea!
That 1pm plunge in the futures was a big middle finger
Persecuted Comrade Anonymouse | Homepage | 12.24.08 - 4:22 pm | #
Obviously NYMEX crude needs a PPT.
The 1 to 1.382 extension of the A-B=C-D pattern <a href="http://img255.imageshack.us/img255/5218/usodaily081219jq4.png>confirmed last week is 24.22, for USO. A 1 to 1.618 extension is 21.45. DXO will be under $1 and de-listed by then.
and don't forget the US and China have big strategic oil reserves...talk about oversupply!
Crude inventories at Cushing, Okla., the delivery point for crude futures contracts traded on the New York Mercantile Exchange, reached 28.7 million barrels in the week ended Dec. 19, the Energy Information Administration reported.
It was the highest since at least April 2004, when the government started collecting Cushing data.
Was this ever tracked before? How long can they keep this up?
Persecuted Comrade Anonymouse(Unrated)(Unrated)(Unrated)(Unrated)(Unrated)(Unrated)(Unrated)(Unrated)(Unrated) writes:
was a big middle finger to bottom feeders like me. I'm up 12 cents on USO at the close, but down 2 bucks after hours (stupid holiday)
| \t12.24.08 - 4:22 pm | #
\tThat 1pm plunge in the futures
\t Persecuted Comrade Anonymouse | \t \t \tHomepage
Persecuted Comrade Anonymouse | Homepage | 12.24.08 - 4:22 pm | #
PCA, stick to SRS if you want to see big middle fingers. I can't even stick the middle finger in my Christmas stocking it's so large.
And all these Gulf States need $50 per barrel just to pay for their government programs.
Correction:
And all these Gulf States need $50 per barrel just to pay for their planned government programs and costs of production.
CR, you titled the article just a tad off.
he's already 5 of ten posts!
All in fun
Signs of instability spread from the economic to the political. Personally, I find this worrisome.
What the h*ll is wrong with CR companion? I've thrown in the towel with it. Everytime I try to use it the delays are making it unusable.
Crispy Bait - Other than housing...this is my favorite econ topic...thanks for the laugh
"Persecuted Comrade Anonymouse writes:
That 1pm plunge in the futures was a big middle finger to bottom feeders like me. I'm up 12 cents on USO at the close, but down 2 bucks after hours (stupid holiday)"
why don't you use a futures account?
btw.. i'm starting to really like commodities and "emerging markets" because it seems they're the only markets that are being allowed to fall to a clearing price, wherever that may be. to me, this means that when they start to recover it will be a more long term sustainable recovery.
cheers
Did anyone get a comment from that Russian economist who was predicting the US would split into 4-5 fiefdoms a few weeks ago?
lama - link?
CA, stick to SRS if you want to see big middle fingers. I can't even stick the middle finger in my Christmas stocking it's so large.
Pissed Off In California | 12.24.08 - 4:27 pm | #
I have the SRS middle finger stuck in my stocking as well. Trying to be patient and will do so for as along as I can but it's been brutal.
As I'm a complete economic neophyte, does the Ruble devauation make Russia's oil more attractive on the open market?
So I guess I can't expect an energy welfare check from OB taxing the oil companies win fall profits. Just when I wanted a Hummer.
"So I guess I can't expect an energy welfare check from OB taxing the oil companies win fall profits. Just when I wanted a Hummer.
joe after the 12 pack | 12.24.08 - 4:34 pm | # "
Oh you're gonna get a Hummer in 2009, just not the kind you were expecting.
Oh you're gonna get a Hummer in 2009, just not the kind you were expecting.
Pissed off in California | 12.24.08 - 4:35 pm | #
Is Kathy Ireland involved?
Kathy Ireland? Just how old are you?
Kathy Ireland? Just how old are you?
I can haz bailouts?
Not as old as I am. My first thought included snaggletoothed stewardesses.
LOL! Merry Christmas to all!
Kathy Ireland? Just how old are you?
I can haz bailouts? | 12.24.08 - 4:37 pm | #
You're saying you wouldn't hit it?
"Did anyone get a comment from that Russian economist who was predicting the US would split into 4-5 fiefdoms a few weeks ago?"
There are always strange people over there with strange theories. Here too of course.
"Kathy Ireland?"
LOL!! Someone answer the phone 1986 is caling
"joe after the 12 pack writes:
LOL! Merry Christmas to all!"
Merry Christmas, joe and all.
scuse me?
About 3,000 people are working on 20 projects that Hensel Phelps Construction Co. of Greeley, Colorado, is overseeing in California, including a $110 million medical facility at the San Quentin State Prison near San Rafael,
what's the dude's name, ?? is to have better health care than me.
uh ahhnold.
Excuse me but I must have missed the posts reporting oil prices skying.
Hey Pavel!
Don't know if you heard, but Lawyerliz's mom was ambushed by an intruder in her Baltimore home and pushed down the basement steps.
10 broken ribs and a sputtering ticker later, Liz is on her way to Baltimore to spend the holiday with illin' mom unit.
I said I'd inveigh on you to make some extra-holy entreaties to the messiah when you're at his birthday party.
And so it is.
C&C,
Rich may have been on the oil direction, from looking at the old charts we are obviously below equilibrium. There should be a return to the mean with all the projects being scuppered at this price.
The fly in the ointment is that the listed firms are being elbowed out by national firms.
"I said I'd inveigh on you to make some extra-holy entreaties to the messiah when you're at his birthday party."
I'm not in any way extra holy, but I will remember Liz's Mom in my prayers. A heart-felt prayer by anyone, holy or not, is a good prayer, in my experience.
There was news several days/weeks ago that the big oil companies were taking tankers to store oil at sea. I don't know whether they thought then that the price was low and, so, ought to stockpile as much as possible.
I for one have decided not to be surprised to see gas at 99.9 cents per gallon next year. Ah, unemployment, cheap gas and a road-trip.
Liquidity deleveraging creates lots of folks at the commodity exits, another financial narrative hits the dust bin.
A merry Christmas to all except Broward Horne.For him I wish a Joyous Saturnalia...don't forget the wet suit and extra batteries.
"And all these Gulf States need $50 per barrel just to pay for their government programs."
Oil prices didn't jump up to $50 until the hurricanes of 2004-05, and then rocketed to $147 in 2008 due to the speculative commodities bubble. Before that, $50 a barrel was considered a high price. We've only had these high oil prices for a relatively short period of time - due to temporary circumstances.
Oil prices probably never should have jumped above $50 in the first place, if it weren't for those two things.
Why on earth would the Gulf States actually plan their future based on temporary bubble prices?
Guess they're just as stupid as us.
Not to be a Scrooge but the next next bubble is showing itself. Jewels and jewelry. Diamonds are near multi-decade averages before inflation. Extraction and manufacturing and distribution have dropped markups. Bye bye asset valuations.
If you look at oil charts they spent years around $20 after the last global recession.
In 2007 I drove 31,011 miles, bought 1,394 gallons, spent $4,234 and my pickup averaged 22.3 mpg. Average gas price was $3.04/gallon.
In 2008, I drove 28,225 miles, bought 1,167 gallons, spent $4,102 and averaged 24.2 mpg. Average gas price was $3.51/gallon.
I spent less for gas in 2008 vs 2007, by driving less (-9%), and improving mpg (+8.7%).
For 2009, I expect to save at least $2,000 just from gas at $2/gal. On top of that I expect to drive much less and maintain/increase fuel efficiency.
I developed an intense hatred for OPEC last year and will go to great lengths to help them feel pain.
ever been a better time for Farrah Fawcett to bye and sell oil of ole'.
I'm just curious, but has anyone entertained the idea of outsourcing the entire U.S. prison system to China? Or at the very least California's. California's corrections system alone cost the state nearly 9 billion dollars last year. That is 9 billion dollars all to keep criminals locked up, talk about a waste. I'm pretty sure China can do it for less than one Billion, and better yet lower the rates of recidivism among prisoners. The 8 billion saved could be put to much better use or simply returned to the taxpayer. Though of course the prison guard unions are likely to resist any such moves.
I thought the next bubble is our government printing press?
Cerberus has friends in the right places:
Fed Grants GMAC's Request to Become Bank-Holding Company - WSJ.com
re: Cushing
Something that might limit speculation in oil would be to limit the number of outstanding contracts to the amount of oil that Cushing has capacity for. Even with that limit there would be speculators to take the other side of hedger's contracts, but there wouldn't be the -- common -- situation where there are more outstanding contracts than Cushing's capacity.
I know that many speculators close their contracts before the delivery date.
"I can haz bailouts? writes:
I'm just curious, but has anyone entertained the idea of outsourcing the entire U.S. prison system to China? Or at the very least California's. California's corrections system alone cost the state nearly 9 billion dollars last year. That is 9 billion dollars all to keep criminals locked up, talk about a waste. I'm pretty sure China can do it for less than one Billion, and better yet lower the rates of recidivism among prisoners. The 8 billion saved could be put to much better use or simply returned to the taxpayer. Though of course the prison guard unions are likely to resist any such moves."
If this happens I'd recommend going long bullet manufacturers and shorting health-care companies.
I hear they only allow 1 bullet per prisoner, but still they'll make that up on volume.
Plus organ donations will sky-rocket cutting into the cost of health-care.
Looks like Bill Gross and Feinberg are going to make out great again on the US taxpayers...criminal!
c&c - actually, it is PIMCO that does
remember - they rejected the debt swap - now they will be made whole as GMAC is a bank
yay we are all banks now!
GMAC Granted Bank Status as U.S. Seeks to Save GM (Update1) - Bloomberg.com
"I'm just curious, but has anyone entertained the idea of outsourcing the entire U.S. prison system to China?"
That might reduce the cost of spare body parts.
I've thrown in the towel with it.
Pissed off in California | 12.24.08 - 4:30 pm | #
I believe it's a function of Haloscan. I've noticed that CRCompanian gets funky when Haloscan is acting up.
monta's ankle - nice timing on the release...Christmas eve to make an exception to the banking rules...discusting!
Uffish Thought writes:
As I'm a complete economic neophyte, does the Ruble devauation make Russia's oil more attractive on the open market?
Uffish, I don't think so since oil is settled in U.S. dollars.
"crispy&cole writes:
monta's ankle - nice timing on the release...Christmas eve to make an exception to the banking rules...discusting!
crispy&cole | Homepage | 12.24.08 - 5:03 pm | # "
Exactly how the Federal Reserve was created in the first place. Read up on the history of how/when the Congressional vote was performed. Nothing new here unfortunately.
reptillian writes:
"I'm just curious, but has anyone entertained the idea of outsourcing the entire U.S. prison system to China?"
That might reduce the cost of spare body parts.
reptillian | 12.24.08 - 5:01 pm | #
What will reduce the cost of body parts is cloning on an epic scale. I mean that everyone gets themselves cloned. Getting your spare body parts from your clone also has the advantage that no immune suppression drugs are required when you have your clone's liver transplanted into you.
"cloning on an epic scale"
Ah - I see the Christmas Eve commentariat will be roughly equivalent to the 4am commentariat. Cue the gold bugs and survivalists, please.
Feckless,
He was linked in the comments here.
I just found this:
Russian analyst predicts decline and breakup of U.S. | Top Russian news and analysis online | 'RIA Novosti' newswire
c&c et al
usually a day for unsavory pardons - oh wait, this was an unsavory pardon...
monta's ankle: The Fed is using emergency powers to grant GMACs request because of the unusual and exigent circumstances affecting the financial markets,
The rule of unusual and exigent circumstances.
Welcome to martial law.
HG(Unrated) writes:
Oil prices didn't jump up to $50 until the hurricanes of 2004-05, and then rocketed to $147 in 2008 due to the speculative commodities bubble.
Factors exogenous to the US domestic market have an effect on price setting. I hear there are people in India and shit these days.
2005 -- the effects of the mortgage ATM are really kicking in and the trans-Pacific capital-for-goods pump is thrumming along.
Now it is apparently gone into the magical world of freefall economics.
I suggest sending out a scouting party to find out where emerging market demand went.
IMO, this is a really ominous signal WRT second order consequences. I expected oil to have a punishment price around $65/bbl.
There are some sights to be seen these days in China, I reckon.
The world's economy is crashing ... this oil price is a tell tale sign ....
Inelastic demand is a bitch on the way up and inelastic supply a bitch on the way down ...
[Bair has called for the federal government to direct $24 billion from the $700 billion financial bailout to give lenders a financial incentives to modify more loans and help more borrowers keep their homes. Doing so could prevent 1.5 million foreclosures, the FDIC says]
This pisses me off totally. All the benefits Greenspan claimed the whole way up the bubble was that risk is spread around the globe. But now that risk turns into losses the US Taxpayer needs to pick up the tab.
Hypocrites.
" Pissed off in California writes:
What the h*ll is wrong with CR companion? I've thrown in the towel with it. Everytime I try to use it the delays are making it unusable.
Pissed off in California | 12.24.08 - 4:30 pm | # "
Are you pissed off because you're never first;-)
All the benefits Greenspan claimed the whole way up the bubble was that risk is spread around the globe. But now that risk turns into losses the US Taxpayer needs to pick up the tab.
~~~~
As it always will be until we get a Public Central Banking system based on a public utility model.
Hypocrites.
Correction, Filthy Rich Hypocrites.
xxxxx,
Haha, no. But I was finding it useful and within the last few days it's just ground to a halt.
" I can haz bailouts? writes:
I'm just curious, but has anyone entertained the idea of outsourcing the entire U.S. prison system to China? O....... Though of course the prison guard unions are likely to resist any such moves.
I can haz bailouts? | 12.24.08 - 4:56 pm | # "
SCOTUS might have something to say about cruel and unusual punishment. We don't use our prisons as organ banks.
U.S. Store Traffic Fell 24% on Pre-Christmas Weekend (Update1)
By Allison Abell Schwartz
Dec. 24 (Bloomberg) -- U.S. retail store traffic fell 24 percent last weekend from a year earlier as deepened discounts failed to entice consumers to spend during what may be the worst holiday-shopping season in four decades.
U.S. Store Traffic Fell 24% on Pre-Christmas Weekend (Update2) - Bloomberg.com
Ah - I see the Christmas Eve commentariat will be roughly equivalent to the 4am commentariat.
el lurko | 12.24.08 - 5:10 pm | #
Go get some eggnog - you'll feel better!
I want to wish everyone and their families a Merry Christmas, and also to Tanta wherever she is out there in the ether.
Sincerely,
Sebastian
Wells Fargo in Irvine, CA:
"Open a checking account today and get a free plush pony"
Great example of trickle down economics. Wells Fargo gets billions of taxpayer dollars and they give away free plush ponies.
Nominated for QUOTE of the DAY:
"Inelastic demand is a bitch on the way up and inelastic supply a bitch on the way down ...
mmckinl | 12.24.08 - 5:16 pm | # "
Many happy returns Seb - must go check the prime rib cooking in the oven now - later the extended family, excess calories and a cigar with a scotch that is legal to vote...
Merry Christmas to all!
Wouldn't multiple devaluations in a short timespan qualify to be referred to as hyperinflation? or at least the beginnings of hyperinflation? Regrettably, it would appear that the 21st century analogue of Weimar Germany is going to be Putin's Russia. And they already have the xenophobia and the secret police and the elected dictator want-to-be in place. All thats needed is a Duma resolution declaring Putin "dictator for life". On the other hand, Russia's military is a threat to no one with the exception of their Strategic Rocket Forces.
Tanta wherever she is out there in the ether.
Sebastian | 12.24.08 - 5:22 pm | #
Tanta is either in heaven, or on her way via the scenic route.
Merry Christmas to you as well, Sebastian!
[Correction, Filthy Rich Hypocrites]
Goes without saying. The lenders are getting bailed out.
If the borrowers need a break why not simply legislate a national cramdown of 20% off everyone's mortgage, transferring wealth to J6P.
Merry Christmas to all, including the inflationistas (:
From Lama's article about Russian economist predicting break-up of U.S.:
He even suggested that "we could claim Alaska - it was only granted on lease, after all."
On the fate of the U.S. dollar, he said: "In 2006 a secret agreement was reached between Canada, Mexico and the U.S. on a common Amero currency as a new monetary unit. This could signal preparations to replace the dollar. The one-hundred dollar bills that have flooded the world could be simply frozen. Under the pretext, let's say, that terrorists are forging them and they need to be checked."
Trying to keep Alaska out of Russian hands will keep Sarah Palin busy for a while.
Question: Are we filling up our strategic oil reserves, or just watching prices plummet?
Good thing Hank is bailing out all the oil companies who already sold their production for next year.
We lose at $3 a gallon and then we finance their counterparties with taxpayer $ to pay them FV on the contracts.
If the borrowers need a break why not simply legislate a national cramdown of 20% off everyone's mortgage, transferring wealth to J6P.
Well, last I checked, the people can't afford their congressmen.
Besides, what kind of message would that send the average American? Go ahead and be irresponsible and the government will bail you out? Can you imagine what would happen to our society if the rules were optional for everybody?
I'm just curious, but has anyone entertained the idea of outsourcing the entire U.S. prison system to China?
Not a bad idea- the numbers would work.
A better strategy would be to outsource Foreign Policy to France-- they seem to be many times better at it than the current regime.
"On the other hand, Russia's military is a threat to no one with the exception of their Strategic Rocket Forces."
That would seem to be an exception.
In "The myth of the Oil Crisis" (2008), Robin Mills an economist and geologist, points out that (Production) "(c)osts in Saudi Arabia also remain low by world standards and estimates vary from,$1.2 to $5.1/bbl.(page 118)
"Clearly production costs in the Persian Gulf don't average $50/bbl.
Secondary and tertiary costs depend on the field size and structure.
He also points out that data on proven reserves varies widely. Total OPEC recovery estimates vary from 895 billion (from Campbell) to 2140 billion (from USGS).
Interesting book.
Merry Christmas, the esteemed CR crowd!
Ca. prisoners to China...Nah, Why not send them below the mason dixon line, new prisons have sprang up all over the south, taking prisoners from as far away as Hawaii.
Tanta is the Angel on top of the tree of reality.
"On the other hand, Russia's military is a threat to no one with the exception of their Strategic Rocket Forces."
~~~~
Not exactly, look at what 19 highjackers did ...
"Question: Are we filling up our strategic oil reserves, or just watching prices plummet?"
---xxxxx
Well judging by their homepage:
Strategic Petroleum Reserve
They are still offering "emergency" sales.
What else would you expect?
Merry Christmas, Everyone!
Russia's military is a threat to no one with the exception of their Strategic Rocket Forces.
What they lack in technology they make up for in sheer numbers and heart. Let's hope there's been enough of a democratic shift in the Russian populace to prevent Putin from manifesting his full potential.
Federal Reserve lets GMAC tap bailout fund
WASHINGTON The Federal Reserve has granted a request by the financing arm of General Motors to tap the government's $700 billion rescue fund, bolstering GM's ability to survive.
The Fed announced Wednesday that it had approved GMAC Financial Services' request to become a bank holding company. That designation makes GMAC eligible to receive a portion of the bailout fund and get emergency loans directly from the Fed.
crispy&cole writes:
Peak Oil = Leveraged Speculation = Bankruptcy
Peak Oil = a 50-year+ theory with based on sound geology, EROEI, world oilfield discovery rates, and world known proven reserves.
Summer 2008 oil prices = leveraged speculation + panicked $$ fleeing from the housing & stock markets.
To conflate the two would be an insult to M. King Hubbert, Matthew Simmons, Kenneth S. Deffeyes, and dozens of other scientists that have spent their lives painstakingly accumulating data, researching and assembling the big energy picture of what may lie in store for us.
The latest collapse in commodities speculation and the global recession/depression has thankfully given us a brief reprieve in oil prices. I hope we use it wisely to seek out new and better sources of energy that we can produce domestically (though our track record to date is not very good).
Merry Christmas, my friends!
I'm headed for the bottle of old vines Zin, and I'll be tucking into those braised lamb shanks.
I hope Santa is good to every one of you. Even you, Jas.
We need Russia and they need us ... This rehashing of the Cold War is and will be a strategic blunder the size of Iraq if relations keep worsening.
Europe needs Russian resources to function. We need Europe in good shape. We need Russian cooperation around the world. Russia needs economic stability. Good relations will provide that ...
Do we rearm along with Russia as the Chinese build their domestic industrial production?
Another Cold War is a "fools' errand" that we surely can not afford with the domestic and foreign challenges we face.
c&c vs anonymous.
On couch and ready. have at it.
"What they lack in technology they make up for in sheer numbers and heart. Let's hope there's been enough of a democratic shift in the Russian populace to prevent Putin from manifesting his full potential."
No, the Russian Army will not be coming through the Fulda Gap. However, the Prime Minister of Ukraine, Y. Timoshenko, just accused the President, V. Yushchenko, of intending to declare a state of emergency, cancel elections, and declare the country bankrupt.
Gazprom meanwhile applying the screws via Ukrainian natural gas debt.
fyi: "Anonymous" post above re: Peak Oil courtesy me. Blogging from another PC today.
Day to worship a messiah. Interestingly, though He had the will and power, His message was just ideas, a new matrix of thought. In other words, by each obtaining the wisdom and performing the correct action, comes heaven on earth.
Love of money and the iniquitousness of fractional and fiat money systems are oppositely arrayed to that message. Systemized evil where all pales of people must participate, stops the hand of God from bestowing bounty upon the people.
Jesse's Café Américain
Merry Christmas! May creative destruction help unfold a better world. Faith without works...
Pavel Chichikov | 12.24.08 - 5:42 pm
This has all been because of our broken promise NOT to expand NATO after Russia broke up ...
We have spent the last 10 years breaking that promise.
Pavel,
It seems to me that Russia's nuclear arsenal at this point serves as insurance against large scale invasion for Russia. It would seem that from the Putin organization's point of view, reconstruction of conventional military forces would be a logical means to generate employment and focus mass sentiment in Russia on something that would be seen as building Russia's prestige. Factors that would make that difficult would seem to be the corruption of the conventional forces that currently exist, and lack of capital due to recent economic events. How do you say National Socialism in Russian?
@Game On,
lol - don't want to hijack the thread and spoil the convivial holiday spirit today. Just throwing in my 2 centavos.
HARM,
Go enjoy the holiday - you won't get anything remotely close to a data driven debate - or anything resembling analysis from c&c on this topic...
I can haz bailouts? writes:
I'm just curious, but has anyone entertained the idea of outsourcing the entire U.S. prison system to China? Or at the very least California's. California's corrections system alone cost the state nearly 9 billion dollars last year. That is 9 billion dollars all to keep criminals locked up, talk about a waste. I'm pretty sure China can do it for less than one Billion, and better yet lower the rates of recidivism among prisoners. The 8 billion saved could be put to much better use or simply returned to the taxpayer. Though of course the prison guard unions are likely to resist any such moves.
Come on guys with almost 1/2 of the prisoners illegal aliens set the system up in Mexico, give them 15k a prisoner per year to keep them in, once they are let go, no money...let them build same kind of prison they use today...
Theirs a lot of desert in Baja...
The GMAC news is horrible....Tapping fed money backed by bad auto paper...
Another fleecing of taxpayers....
Theives....
They need to go bk....Cerebus, Pimco and the rest of the wall street/bank/ fed/treasury Pigmen are taking this way to far....
"His message was just ideas..."
His message is Easter. His deed the conquest of death.
The message and deed are this: He is risen.
"Come on guys with almost 1/2 of the prisoners illegal aliens set the system up in Mexico, give them 15k a prisoner per year to keep them in, once they are let go, no money...let them build same kind of prison they use today...
Theirs a lot of desert in Baja...
The GMAC news is horrible....Tapping fed money backed by bad auto paper...
Another fleecing of taxpayers....
Theives...."
Don't worry. There's something called crowding out of private capital. Nasty secondary consequences here. The chosen companies live, everyone else dies
--> unemployment goes parabolic.
Then you try to fund higher government debt wit decreasing tax receipts --> unemployment goes parabolic.
"It seems to me that Russia's nuclear arsenal at this point serves as insurance against large scale invasion for Russia..."
With respect, I doubt that anyone contemplates an old-fashioned invasion. Nuclear check-mate is another matter.
But at this point my knowledge ends, and uninformed speculation begins.
I have been wondering for years what lies within the immense artificial caverns beneath Yamantau Mountain. Even during the Yeltsin era, and even when Russia was financially broken, the excavations continued.
Where are all the Republicans? We need to drill, baby, drill! Country first!
Pissed...
Merry Christmas..
I'm with you on this won't help...
I'm trying to keep my cool but I'm getting a little pissed at these clowns everyday thinking of what their doing to my daughters future..
Not an advocate of violence but actually feeling more inclined to think about what if it needs to happen..
Gmac bought paper that wouldn't support ink it was so bad....
Lessons of Darkness (Kuwaiti oil field fires)
YouTube -
GM will reduce its ownership interest in GMAC to less than 10 percent of the voting and total equity interest of GMAC.
sold for whhhhunnn dollar.
trustee acceptable to the Board and the Department of the Treasury
Bernie?
MY oil call was 100% correct...what else matters? My analysis is my own and you wouldn't believe it anyway since you are sold on a lie (kinda of like the housing and credit bubbles...)
Great post at Jesse Cafe Americain on manipulation, both up and down, in the NYMEX crude prices...
Jesse's Café Américain: The CFTC Is Failing to Regulate Commodity Market Ponzi Schemes
your right Crispy. I do enjoy your anti PO stance for the simple reason that it challenges my thought process. Keep it up.
c&c,
You appear to remain willfully stupid, which otherwise seems out of character - your call on prices notwithstanding, your inability to express anything remotely resembling an informed opinion on the future of oil supply makes any time spent on the topic with you, sadly, a complete and utter waste of time.
You have never presented any analysis - period. Nice call on prices, if you ever actually care to discuss supply feel free to present some information.
Oh, and give the Jesse's post a read, some good analysis there...
c&c,
Didn't you close your shorts last week? Closed mine Monday, went long today, now underwater a.h. - that should be clear to the home audience. If you believed this mega-sell-off would continue, why'd you leave money on the table?
The problem with jesse's premise starts with not explaing the role of the contract. The price on it's last day of trading is inconsequential.
herewith in an analogy.
The total amount of contracts in any one expiration month is represented by a goose down pillow. The total weight of all contracts netted out divided by price is most important, not the last wisp of air blowing around one lite-weight feather that one or two guys are chasing.
"And all these Gulf States need $50 per barrel just to pay for their government programs."
Citation please. What are "Gulf States?" Persian Gulf countries? U.S. Gulf States?????
And where is the budgetary data that shows that $50/bbl is required to support the "government programs?"
Merry Christmas A-mouse,
I think part of the cross talking here is a function of time frame - anyways, it's Christmas Eve - sugar plums for everyone!
Oh wait, I need to become a bank holding company first...
Anonymous | 12.24.08 - 6:33 pm | #
Dunno about Gulf states, saw some DB/PCF analysis that suggested Venezuela needs $97/bbl and Russia needs $70/bbl...
citizen energyecon,
Good tidings to you also. You're always patient with my often discourteous posts.
I keep forgetting to ask, do you ever post at TheOilDrum.com? If so, what handle? I find that place has become an unbearable circle jerk of doom over the last year.
Oil better not get much cheaper. If it does, it will be in the interest of many to have an "international incident"
U.S. retail store traffic fell 24 percent last weekend from a year earlier as deepened discounts failed to entice consumers to spend during what may be the worst holiday-shopping season in four decades.
citizen energyecon | Homepage | 12.24.08 - 5:22 pm | #
That's not frightening. When people give up booze, that's frightening! My local liquor store manager told me that his regional distributor says that business is down 20% across the board. Fun, fun!
Ca. prisoners to China...Nah, Why not send them below the mason dixon line, new prisons have sprang up all over the south, taking prisoners from as far away as Hawaii.
IWannaknow | 12.24.08 - 5:32 pm | #
Screw that. We don't want your criminals. We have plenty of those of our own.
NIMBY!
Not an advocate of violence but actually feeling more inclined to think about what if it needs to happen..
cd | 12.24.08 - 6:00 pm | #
We are, thankfully, far from violence. Things will have to get much, much worse before America goes that far south. There is a lot of detioration to our standard of living yet to go before you see social unrest.
Finally a gallon of bottled water is almost as cheap as a gallon of gasoline.
We have two cars. A Subaru Forester and Honda Civic, both were purchased before we met and married. We have essentially parked the Civic and are driving the piss out of the sunk-cost Forester while fuel is cheap. Wonder how many other families are doing this....
citizen energyecon:Dunno about Gulf states, saw some DB/PCF analysis that suggested Venezuela needs $97/bbl and Russia needs $70/bbl...
You would think that a higher gasoline and diesel tax would help reduce the trade deficit while taking some wind out of the oil producers sails. Since a tax would reduce demand, and thus the price of raw oil and at the same time give the government money spend on our misguided social programs. But of course that would be unamerican.
"Oil better not get much cheaper."
I hope it does. I need more time to dollar cost average into some very long holds.
What can I say...the CD rates just weren't enticing enough for some spare change I found in the car's ash tray.
I hunted around last week for any other buys. Zip, zero, zilch. Cripes it's ugly out there. (I don't short. I like to sleep. I'm willing to hold for 5-7 years... but I don't short.)
Oil suppliers can only cut so much before they no longer have leverage in the situation. There comes a point at which they must pump as much oil as possible just to survive. Boo hoo for them. I hope that they were saving during the past 5 years.
Lowest gasoline is 1.28 in Salt Lake City. Unless it dropped before Christmas, the economy would have been fucked much worse than it is now. At 400 millions gallons per day, Americans are saving 1.2 billion dollars PER DAY compared to peak prices. This is just more evidence that the US government is controlling the price of oil, which is not surprising. They milked Iraq, they milked oil and gas, and now they're milking the taxpayer with cash grabs. Keep stuffing your faces America! Fed people don't start revolutions, which is why the government is so liberal with food stamps.
WHY SHOULD OIL GO UP? Because the charts say so ... I RAISE THE BS FLAG.
How is this for all you oversold campers ... the leveraging in oil was because to buy 1 barrel of a future's contract, I only had to put down 1/16 of the money. Now 1/16 ehhhh is not a lot, but for all those who thought a bounce was due at 120, 110, 90, 75, 50, 40 and that had bought futures contracts at those prices, well the bounce never materialized. So how many of those buyers have sold out yet? Not many, many still keep thinking the bounce is coming. Get over it, there is no bounce. There WAS NO NEED for oil to ever go up the way it did. China and India were growing before 2001, so were the other emerging markets. What a marketing ploy these countries were. The huge oil discovery in Brazil, the ability to drill horizontally in pre-existing dry wells and extract what was considered once unextractable, are these reasons enough for a huge supply overhang. Let's see, what else, yes the BUSH crime syndicate is leaving office. THIS IS THE SINGLE BIGGEST REASON OIL IS NOT GOING BACK UP TO EVEN 60. Oil will only go up when numbskulls stop making calls like "OIL IS DUE A BOUNCE", because these clowns have not done their due diligence yet make calls based on what is marketed to them. If you have done YOUR (YES YOUR) due diligence and seen both sides of the coin, then you realise in 2000 Oil was a buy (BUSH CRIME SYNDICATE WAS THE SINGLE REASON), now there is nothing to it. Did oil go up during the Clinton era? If you say yes ... by how much? Didn't America grow the most between 1992 and 2000, but oil hardly budged. Cyclical cycle, secular cycle or even by-cycle, who cares what kind of a cycle it is. Oil was, is and will be a naturally occuring substance, yes there is no reason to fear it will be put on the endagered list. Now my poverty stricken individual with even lesser wisdom has thought of this. I can go to SUBWAY and buy myself a footlong for $5, or I can buy 1 oil futures contract with less than $2.50. OK IF I CAN BUY OIL, THEN I AM DAM WELL SURE MY RICH GODFATHERS ARE SELLING. Last but not least, if you can point one sign in the oil related world that says inflation supercedes deflation, then buy. OR IF THE CRIME SYNDICATE COMES BACK INTO POWER. Look you can lie to yourself and keep buying into this (hopeful/expecting/wishful/kid myself) oil bounce theory, OR, OR, OR, OR, OR, YOU CAN PROTECT YOUR WEALTH.
As regards to SRS, look at the options of IYR, URE and SRS (the forward months out of the money options). I REPEAT, ANYTIME SRS TRADES UNDER 70, SKF UNDER 95 AND QID UNDER 60, THANK YOUR GODS. There is no superior in making money than CORRUPTION. LEARN TO UNDERSTAND CORRUPTION.
A simple explanation for oil prices | Energy Bulletin
A simple explanation for oil prices
". . . despite the fact that relative to 2005, we are going to almost certainly see three years of lower net oil exports, flat crude oil production and a slight increase in total liquids production, the conventional wisdom is that the increase in annual US oil prices from $57 in 2005 to about $100 in 2008 was due to speculation, while the recent sharp decline in monthly and daily oil prices was due to Peak Oilers being wrong about a near term peak in world oil production."
Based on Kenneth Deffeyes' estimate, since 2005 the world has consumed about 8% of remaining conventional crude oil reserves, but the crux of our argument is that net exports will decline much more rapidly than production will. I estimate that since 2005 the world has consumed about one-fifth of remaining conventional net oil exports.
Indonesia is a recent example of what we are talking about.
It appears that 1996 was the final production peak for Indonesia. Here are the net export numbers per day, by year for Indonesia, along with remaining post-1996 cumulative net export capacity (EIA)
1996: 780,000 bpd & 100%
1997: 665,000 & 78%
1998: 710,000 & 56%
1999: 605,000 & 37%
2000: 493,000 & 21%
2001: 356,000 & 10%
2002: 214,000 & 3%
2003: 102,000 & 0%
Note the illusion of the 1998 increase in net exports (happy days are here again!). The reality was that their remaining cumulative net export capacity fell from 78% to 56% in one year (22 percentage points, one fifth of their remaining net export capacity in only one year)--when their net export rate went up year over year.
This is obviously analogous to the possible slight increase in net exports from the top five net exporters in 2008, to a level well below their 2005 rate (happy days are here again!).
Crispy and Rob Dawg may not bother to come back to this thread, save your fire.
P.O. purists tried to tell the "doomers" that it's not about the price... that argument got lost in the sensationalism of $5 a gallon (plus shortages after the hurricanes).
I'm willing to give Crispy and Dwag credit that they're smart guys, and can change their tune when the proof is in, if we do live to see the backside of the peak. Kinda like getting Sebastian to admit there is a recession,
Got really whacked betting on the need for all societies using oil. Still can't believe it, bought DRYS at $80..., RIG at $150....In hindsight, makes perfect sense, the demand that arose from too much credit was the real mirage...sold out with my tail between my legs on DRYS at $70, RIG at $125...I should count my blessings and be very happy this year...but I still can't believe it. Should write an investment diary for my kids and their future families....
This is what stupied ANAL-ysts wrote not long ago:
From: Guild Investment Global Market Commentary
Written: July 09, 2008
"INFLATION IS HERE AND HAS GRIPPED NATIONAL AND INTERNATIONAL PSYCHOLOGY.
IF YOU NEED PROOF LOOK AT THE PRICE CHARTS OF GOLD, COAL, OIL, FERTILIZERS, CORN, SOYBEANS, SUGAR, AND WHEAT."
I think you all are overrating the economy collapasing and under estimating the geo-politicial aspect of oil, Right now it is good all of the people we dislike are suffereing. This well causing civil unrest in places like iran,russian and venuz. Good in the short term. Very bad in the long term. Also you need to look at mexico. They are runnning there oil fields into the ground and when that drys up it will hurt. Enjoy oil at this price while it last. I am sure it will be higher soon.
$132 billion reserve fund? Bwahahahahahaha!
Russia, the failed state.
Robert,
Regarding Mexico--our #3 source of imported crude oil--I estimate that they have already exported about 80% of their post-2004 cumulative net export capacity. 80% in only four years.
This is the same pattern that Indonesia showed--when they exported about 80% of their post-1996 cumulative net export capacity in only four years.
This is very much analogous to a gasoline gauge. Regarding post-2005 worldwide conventional cumulative net export capacity, I estimate that the gas gauge is at 80% full, down 20% in only three years.
"Should write an investment diary for my kids and their future families...."
It should start with "Remember, buy low..."
But, I'm no expert.
The thing about buying a little oil-related stuff right now for me is, either 1) the price stays low and I have lower living expenses so I really can just sit on the investments or 2) the price goes up and I can make back some of my additional expenses and break even or hopefully make a bit. Both are totally fine.
Also, people are now talking about cash they way they were previously talking about real estate and pets.com, so I feel relief at getting out of it, even a tad.
I am in the oil biz deep in the heart of the East Texas Field. I own and operate a very small (comparatively speaking) oil business.
In December 1999, just 9 years ago, the posting price for our crude, was $9/bbl.
We still had to pay the middlemen, so we got $5 or $6/bbl gross. One transport (truck) load of crude is 180 bbls x $6 = $1080; obv. we were barely making it.
Fast forward to June 2008 and do the math. We had won the lottery. I still have a proforma I created at the very peak that was based on a "conservative" $100/bbl number. lol.
The precipitous drop of almost 70% that crude has experienced in just 5 months since then is analogous to someone winning the lottery only to find out that it was a fake gag-gift from one of your smart-assed friends.
I remember like yesterday the very day that crude got to $20/bbl from being in the doldrums of $10/bbl; myself and other owner went out for dinner and popped open a bottle of Dom Perignon.
For those out there bottom-fishing, thinking crude is a steal at $35, please take heed, it could easily drop another 70% from these levels and not be out of the ordinary, historically.
I love cheap things and things getting cheaper!!! - I hope Crude drops again 50 %!!!
I hate inflation, I love deflation!
Thanks for your insider incite. The way I bottom fish is to start at a point where if it loses another 1/2 I'm happy because I can buy even more over time (I'll admit 70% hadn't entered into my mind, I'm using $26-$28 as an expected bottom). So far I'm only 1/5 in of what I want to invest. I'm happy to wait until it recovers, even if it takes a decade, because my current new investments are limited to things that will work as intergenerational transfer. So, it was either this or farmable property and the price of that is distorted by subsidies which have an uncertain future.
What they lack in technology they make up for in sheer numbers and heart.
Get real. The average Russian army conscript makes Lynndie England look like West Point material. As for numbers, half the Russian army will be Muslim within a decade or so. Think that one over.
Oil prices have skyrocketed in recent yearly due to speculative trades. It was well below 50$ for most of the years. When it was rising from 30$ to 40$ to 50$, it used to be considered high. When markets will see some revival, this current price will be considered as normal.
Lisa
Hedge Fund Jobs
From the article on oil prices, linked uptop:
"Instead of a desperate effort to keep our high consumption auto centric suburban way of life going, we need to be investing in things like rail transportationespecially electrified rail transportation, which can be powered by alternative energy sources like windpower.
However, this would force us to recognize that we live in a finite world, with finite fossil fuel resource. This is a difficult idea to sell since the finite world concept violates most people's concept of how the world works--which is that we can have an infinite rate of increase in our consumption of a finite fossil fuel resource base.
We can only hope for an outbreak of rational thinking in the months and years ahead."