Back in the '80 recession, the word was that Citibank was insolvent because of all its S.A. oil loans on the previous high price. How much leverage is there now based on $90+ oil.
I would say no, but I never thought we'd see the low '40s again. Ever.
Welcome to BizzaroWorld. Please keep your hands in feet inside the car while the ride is in motion, and the yellow safety bar locked in place. And get ready...
" Rob Dawg writes:
At least one of the oil exporting dependent economies has nuclear weapons.
Rob Dawg | Homepage | 12.17.08 - 4:17 pm | # "
Don't know which one that is. But apparently we've been making sure that others will, soon. Sauds, UAE. Hell, they could probably buy a few even if they can't make them yet.
I read an article stating that Opec needs to cut by 7.2M bl/day to have a hope of stopping this slide. There is clear cheating on the cuts that have happened so far.
So? What does it all actually mean? Is this price action any more meaningul than that of last summer when oil soared to almost $150? Even as data has confirmed that the US, the world's largest consumer, was in recession well before that.
Anybody else feeling like this is later September all over again, with the Fed dropping a bomb to pump markets, but the market not feeling remotely stable? I would not be shocked if we had a repeat of the drop in October very soon.
You may recall that the last major drop in the market occurred in the first week of October. All through that week, there was unrelenting selling. The week was the first of the 4th quarter.
It has been speculated that the selling occurred due to large requests for redemptions from hedge funds during the 3rd quarter.
It is likely that similar requests have been made during the current quarter, in which case the beginning of the next quarter, that is January 2nd onwards is likely to see similar selling pressure.
The Fed likely knew what was coming in October and now in January, motivating it to act in September and now again this month to preemptively mitigate the unfolding disaster.
And "drill baby drill," sounds not so mellifluous*.
LOL!
Sean hannity got the smack down when he told T Boone Pickens that refineries were running at 100% capacity and we were in trouble because we had built none in years...Boone told him otherwise, why do half wits like Hannity go on and on about subjects they know so little about.
When oil was at $140 how much was spec/hedge fund influence and how much was demand? On the one hand it's hard to believe there's been $95 of demand destruction, but it's also hard to see how spec buying accounted for a huge percentage of the price. I guess a third factor was percived risk in disruption of Middle Eastern oil supply, but that wouldn't seem to have materially changed in the past 6 months.
When oil was at $140 how much was spec/hedge fund influence and how much was demand? On the one hand it's hard to believe there's been $95 of demand destruction, but it's also hard to see how spec buying accounted for a huge percentage of the price. I guess a third factor was percived risk in disruption of Middle Eastern oil supply, but that wouldn't seem to have materially changed in the past 6 months.
MDV | 12.17.08 - 4:28 pm | #
Like with housing demand is at the margins. Take away the marginal demand and prices can go way down. Add to that the clear fact that we are in a minimum of a severe global recession. Oil is used in driving, constructions, creation of plastics etc... Add to that the fact that hedge funds are getting blown out of the water implying that less leveraged trades are going to be going on in the future.
If you look at the percentage collapse in oil prices during the last global recession in 82 then oil in the $20s is not impossible.
Sean hannity got the smack down when he told T Boone Pickens that refineries were running at 100% capacity and we were in trouble because we had built none in years...Boone told him otherwise, why do half wits like Hannity go on and on about subjects they know so little about. \t crispy&cole
But Is T. Boone any better these days? He traded considerable reputation for a shot at untoward wealth and power. It didn't work. The sad part is that our refineries are in dire need of major refurbishment. you know stimulating infrastructure type of expenditures. Nonetheless come next May expect petroleum fractions to be in shortages because of "scheduled" shutdowns/changeovers.
What about oil at $5 to $10? And a similar decline for other commodities (hard and soft). That would be an interesting ride ... The Middle East bankrupt, South America defaulting "en masse", Russia and natural resources reach South Asia (including Australia) down. The USA and Europe will become much poorer during the current depression but the rest of the world will simply be much, much worse off ... Best Regards, APM
I still believe in peak oil ... there is just less current demand ...
Oil producers, once they have invested in production just can't turn the spigot off, they have to recover costs and their domestic budgets depend on oil money flows ...
Considering using this as an entry point to build a long position in the DXO... Start very small and buy more over the next 3-6 months. Could be very profitable if I am willing to hold for 24 months or so.
\tWhat about oil at $5 to $10? And a similar decline for other commodities (hard and soft). APM | 12.17.08 - 4:33 pm | #
Personally I really don't think you can correlate oil to gold or any other commodity. Oil is clearly trading on supply/demand issues. Gold is trading much more on fear of fiat currencies, fear of political instability etc..
I really think it's dangerous here to trade all commodities in one direction based on one theory.
NOT Irving Fisher!(Unrated) writes: \tConsidering using this as an entry point to build a long position in the DXO... Start very small and buy more over the next 3-6 months. Could be very profitable if I am willing to hold for 24 months or so.
I think that's a good strategy. I may start dollar cost averaging in from $35 oil down. I'm also looking at getting into some agricultural etfs (DBA perhaps??) for a long term hold.
Tinfoil thought of mine once upon a time, want to put pressure on the countries causing grief for USA, engineer a recession and skunk the price of oil...
To make it to the other side of the valley one has to navigate the raging river at the bottom ...
Not really. I can simply park the money... Oil will one day be more expensive than now.
Key reasons to be long:
US gas consumption increased, month over month, in October at nearly double the normal seasonal rate. It is still down YOY but it is showing signs of stabilizing.
Cap Ex for new projects is down dramatically.
China and India will most likely soon "give back" a portion of the gasoline subsidies they pulled this summer.
OPEC members "are shooting themselves in the foot. The market priced in these production cuts,"
Makes no sense. If the market anticipated these cuts, then the actualization of the cuts would already be priced in and therefore there would be no effect whatsoever. If the price drops further, all that means is the market was pricing in larger cuts.
Western Digital...puts 2,500 out of their misery \t crispy&cole | \t \t \tHomepage | \t12.17.08 - 4:28 pm | #
Meh. C&C has, in the past, struck me as something of an economic rubbernecker. His handle is a parody on some Bakersfield real estate brokers that went down, I believe. Sounded like examples of excess. However, serious it is happening as a result of credit excesses, and not necessarily to those deserving. Doesn't make those of us who foresaw it better than those who are losing their jobs over it. Definitely, not all of the 2500 workers that got stcanned at Wester Digital had it coming to them. Kinda sucks that somebody would make light of their situations like that. Am I reading too much into your comments? Dunno, but that's the impression I got from it, so please take that into consideration.
As we become rapidly undeveloped, it will do us all well to remember that for the future millions of poor, wood and charcoal are still available and in use in other undeveloped parts of the world for cooking and heating.
I think that oil, once the ships stop coming, will be a valuable commodity indeed.
Ideologues on both sides are so fixated on shoes and birth certificates, they are failing to see the reality right in front of them, the deconstruction of American institutions and the "undeveloping" of the worlds largest economy.
The jobs we lost and that will be lost (and never REALLY needed, come on, how many barristas can our culture support), were part and parcel to the various bubbles previous to this one, the Treasury/Bond bubble.
I think this is a targeted effort to get the public to accelerate their "cash burn rate", ensuring tens of millions of people staring at the walls, no savings, and with nowhere to go and nothing to do when they get there.
You are all going to be my slaves when I am the Warlord!!!
From 2003 Kenya, soon to be 2010 USA:
"It is estimated that 80 per cent of Kenya's fuel comes from wood with only nine per cent of the population connected to electricity supplies."
- China and India will most likely soon "give back" a portion of the gasoline subsidies they pulled this summer. NOT Irving Fisher! | 12.17.08 - 4:43 pm | #
China electricity consumption is dropping fast. Aprox. -5% YOY in October and -9% YOY in November. Industrial production in China is a huge driver of oil consumption in China and electrical usage indicates that factories are getting obliterated.
And to me that suggests job losses...batted this around a bit with dryfly on a previous thread...think he found Setser more persuasive but those electricity consumption numbers seem to be a tell.
I wonder this this Chrysler move will wake up some folks in the UAW. If they were smart, they'd be making all kinds of concessions. The Big 3 will likely get an initial bailout, but barring major changes they will be bankrupt by the summer.
Sean hannity got the smack down when he told T Boone Pickens that refineries were running at 100% capacity and we were in trouble because we had built none in years...Boone told him otherwise, why do half wits like Hannity go on and on about subjects they know so little about.
crispy&cole
At $30-40/barrel oil, I certainly have no interest in buying a windmill.
mmckinl... My time horizon is 2yrs. If it goes to 4 I would be ok with that as long as "soring" prices results in a solid average/year gain in the end.
The world is in transition. The consequences of the Great Shutdown going on worldwide will be population die off and a new balance of power.
The fiat currency system needs evermore growth. Eventually this fails and money is worthless. The concentration of real assets is the final stage of a return to a feudal system. The bank owners have long been the kings and queens with many of the same families and dynasties controlling huge real wealth. In a real sense the economies of the world are being harvested and the wealth redistributed to the wealthy.
The US harbors an illusion that we are different due to our history and prolific gun ownership. The only difference for us is we will have a period of unrest where we are allowed to destroy each other and then a foreign military force will be brought in to stabilize. Starvation and constant violence is effective in motivating the population to cooperate. Tinfoil? I fervently hope so.
first you guys get me all panicky about everything, now it's snowing in las vegas nv. full on snowing. it ain't sticking yet but it's coming down good.
i'm calling it:
** it is the end of the world!! **
Who is that guy, anyway?
Nemo | Homepage | 12.17.08 - 4:49 pm | #
Ah, a fellow Latinophile? Taken from my readings of the Aeneid long ago. Fun stuff.
ille_vir - Nohting meant against any individuals at all at that company...ugh.
crispy&cole | Homepage | 12.17.08 - 4:49 pm | #
Fair enough, but man, people are starting to lose their jobs in industries that had nothing to do with the real estate madness, and it might be a good idea to start getting a bit more sensitive about it. These are not necessarily people that can be blamed for our current economic situation. Thanks for your understanding.
Chrysler promoting $2.99 / gallon gas with new vehicles will be remembered as one of the last bonehead moves from a bonehead company. From that point on, oil/gas prices sank like a stone, and in my neighborhood are less than half that price.
Will the last person leaving Chrysler please get this ugly frikkin' PT Cruiser outta here !
The only difference for us is we will have a period of unrest where we are allowed to destroy each other and then a foreign military force will be brought in to stabilize.
~~~~
It will be our own military ... plans already inked and approved ...
Chill dude. It's the mans subtle humor. Inside the anquish, pain, and depression is killing him. Let him vent. Don't rain on his parade. he loves us all.
The average price per bbl earlier this decade was in the mid 20's people. Last decade it was in the teens. I know many a investor who is interested in oil at
Snow in Vegas?
Nope, that's not snow. Those are poker chips. That's the new strategy: mint truckloads of new chips and drop them from helicopters... that will make more people come to Vegas and gamble.
Thanks, HOTL. I've been wondering about this potential market mover. I can't imagine having funds tied up in a hedge and leaving it there after the Madoff mess.
Tin foil is a minimum... I think asylum is more appropriate.
NOT Irving Fisher! | 12.17.08 - 4:59 pm | #
Reading too much CR will do that to you. Always consider the implausible when nothing else makes sense. I present you the market finding a plateau and going up on top of horrendous news and desperate measures.
The rational explanations have been exhausted and the lunacy is widespread.
I work for a decent sized company (between 1000 and 10000 people) in Silicon Valley. My company laid off 10% of its workforce in the last month.
The way I see it, the wealthiest class in our society got even more greedy and made a lot of sheer speculative bets, and now my co-workers are losing their jobs.
I try to stay detached and amused, but down inside I'm pissed. And maybe even a little scared.
...
So, Chrysler has decided to play hard ball? (Or is that Dodge ball?)
"Neither can we call this a begging of misery, or a borrowing of misery, as though we were not miserable enough of ourselves, but must fetch in more from the next house, in taking upon us the misery of our neighbours...If a man carry treasure in bullion, or in a wedge of gold, and have none coined into current money, his treasure will not defray him as he travels." - Donne
I can't imagine having funds tied up in a hedge and leaving it there after the Madoff mess. Lionel | 12.17.08 - 5:04 pm | #
Hell, I can't imagine wanting to leave money in a hedgie even before the Madoff exposure. And now, how many people are really trying to convince themselves in earnest that, this time, there really is just the one cockroach. Not many, I'd dare to say.
You ever notice that it seems like you only get laid off when its cold outside? Then it always seems like, when you look back, that is was a really cold winter. Always grey outside...
However, serious it is happening as a result of credit excesses, and not necessarily to those deserving. Doesn't make those of us who foresaw it better than those who are losing their jobs over it. Definitely, not all of the 2500 workers that got stcanned at Wester Digital had it coming to them. Kinda sucks that somebody would make light of their situations like that.
The dollar continues its rapid march downward today, and few outside boards like this seem to be paying any attention.
And oil still falls in dollar-denominated price. Yes, I realize the whole world economy's in trouble, but at some point the weaker dollar has to make a price.
Or, if the dollar becomes toilet paper, will China devalue until the renmibi is that scratchy, low-grade toilet paper that nobody wants to use?
You may recall that the last major drop in the market occurred in the first week of October. All through that week, there was unrelenting selling. The week was the first of the 4th quarter.
It has been speculated that the selling occurred due to large requests for redemptions from hedge funds during the 3rd quarter.
It is likely that similar requests have been made during the current quarter, in which case the beginning of the next quarter, that is January 2nd onwards is likely to see similar selling pressure.
The Fed likely knew what was coming in October and now in January, motivating it to act in September and now again this month to preemptively mitigate the unfolding disaster.
Hymns for the Lord | 12.17.08 - 4:25 pm | #
C&C, I've enjoyed seeing many of your posts here, so please don't be put off. I just think that we could start getting a bit more sensitive/selective with the schadenfraude stuff here sometimes.
Yep. Well, it is quite obvious that knowledgeable market participants (those willing to put money down) consider the current price levels very temporary. It should also indicate to any interested observer that it makes lots of sense to not sell spot but to keep storing it away. Obviously, storage is quite profitable at this time therefore reducing supply. I expect oil prices to behave similarly to the Dollar the past few months. One might think of it as sudden whiplash. The question is simply when.
Me think⦠China just copied US stimulus energy efficiency plans for 2009, by installing florescent bulbs in all factories. Anonymous | 12.17.08 - 5:10 pm | #
The 600k plants closing in the Southern Delta region of China, outright riots, increasing social unrest due to unemployment would argue otherwise.
unintended consequences for condo folks, just started hearing about this -
Landleases: When The 'Worst Case' Scenario Happens
Fast forward 18 months. You receive a notice that the land rent is going up to $2,500,000. Your maintenance is going to double! The entire building is in shock. Based on the research you did on land-lease buildings before buying the apartment, this kind of land rent increase is unprecedented for a land-lease building in Manhattan.
I am considering "getting into oil"
at some point, after some D&D.
Dad regretted not getting into oil at $10 , long ago.
In a general:
How would I do this ?
What broker accounts are suggested ?
I assume just buying XOM or such will not work.
but I would prefer some way that I do not have to manage it at a micro/daily
level.
I believe I have some time to look into this, not urgent.
Disclaimer:
Of course, due-dilli is my responsibility ;
and if I lose my ass,
it is my own damn fault.
Dec. 17 (Bloomberg) -- General Motors Corp., the biggest automaker in the U.S. and Mexico, increased production of $12,625 Chevrolet Aveos south of the border while seeking a bailout to keep domestic plants from closing.
comrade tinman, it went amazingly well. the hearing by the waterfront committee was on all the sunken ships in the NYC waterway. one of my groups is in a task force comprised of 8 different federal, state and city agencies who took out 100 ships last year. my group is working on salvaging them for art and materials to keep the landfills less full.
they were doofuses because they didn't know about us, but i worked with them on the agenda ahead of time and wrote expert questions to ask us and they made good decisions. some are really smart and good statesman.
"So am I...mainly for the future that my young kids will inherite."
nods
Goes back to what we (should have) learned as kids on camping trips--leave places nicer than you found them. We as a society took what was given to us by our forebears and screwed it up royally.
"Or, if the dollar becomes toilet paper, will China devalue until the renmibi is that scratchy, low-grade toilet paper that nobody wants to use?
Bob Dobbs | Homepage | 12.17.08 - 5:09 pm | # "
Sounds like you're describing "John Wayne" toilet paper........It's rough & tough....
......and don't take $hit off nobody.
Industrial production in China is a huge driver of oil consumption in China and electrical usage indicates that factories are getting obliterated.
You might be surprised how much money China spends to rev up domestic or regional demand and keep those factories open. It's not like they lack the means.
They also have the motive -- namely, keeping the Communist Party in power and avoiding domestic chaos.
Okay, despite the coming depression, at least gas will be dimes on the gallon.
Now, if I just could find a gas station.
Sarcasm off.
With oil so low and going lower, when will see $1.00/gallon gas again.
I seem to recall around Glendora, CA in the mid-90s, 1996, I seem to recall, there was a Texaco at the end of the 210 before the extension, where they sold gas for about $0.95/gallon.
"I certainly have no interest in buying a windmill glorified bird cuisinarts bgates | 12.17.08 - 4:57 pm | #
I worked out the methods by which you could monitor birds with stereo cameras and alter the generator modulations such that the birds would fly in between the blades instead of being clobbered. Filed provisional patent application, shopped the idea around the major turbine manufacturers. Bottom line: nobody cares about the birds (or bats).
It almost seems to me like these kind of movements make modern international business impossible. ac | 12.17.08 - 4:33 pm | #
I agree. I've been concerned about this for quite some time. Currency hedging in this environment is just about impossible and unless you have really deep pockets, conducting commerce becomes extremely challenging if not impossible. This is why I stated a while ago that we are basically in a currency crisis already.
This is about as monumental a crash as I have ever seen in major currencies. Not exactly conducive for business, is it? Hedging in this environment could be a little rough and I wonder who would dare do major deals unhedged.
When a credit crunch coincides with very low demand for oil, it crushes investment in new drilling and production infrastructure.
Since there is a lag of 1-2 years between investment and new production, you will see production shortfalls occur at the same time that hyper-inflation and dollar collapse revs up. At that point, oil prices will go vertical. It's not more than 1-2 years away.
"So am I...mainly for the future that my young kids will inherite."
nods
Goes back to what we (should have) learned as kids on camping trips--leave places nicer than you found them. We as a society took what was given to us by our forebears and screwed it up royally.
Mostly Lurker | 12.17.08 - 5:28 pm | #
ML, it reminds of the saying:
"Take photographs and leave only footprints."
Couldn't agree more, esp. with the attitude of my generation, the Xers.
Forget about all the other gens. We are the worst.
Late 30- 40 somethings had it all given to us, but it wasn't enough. We saw greed is good and took it to the infinite power tower.
The 5 Lomborghinis, 21-yearold trophy wife, 50,000 sq. ft. home in the Hamptons, 10 other homes around the world, priceless art and other things collections, weren't enough.
" the hearing by the waterfront committee was on all the sunken ships in the NYC waterway. one of my groups is in a task force comprised of 8 different federal, state and city agencies who took out 100 ships last year."
Did they ever find the barge with all the silver that sank in the 1800s? We worked on that case 20 years ago, but the salvors came up dry. Still down there somewhere in the mud....
early 30s late Xer here, so yeah, I totally know what you mean. Due to some childhood experiences I (and my hubby) got scared to death of debt--our phobias seemed silly in the late 90s and early 2000s, but we're by far the most financially stable of our circle of friends because of it. Barring total social collapse we'll probably make it through this in reasonable shape, and yet that just makes me feel guiltier in some ways, because I've been largely unable to get my friends to heed the alarm until it was too late.
BO's revenue plan is "Lets not have the Great Depression Mark 2".
Generally,
We've seen this movie before, in the 1980s. The traditional OPEC Hawks (Iran, Venezuala) need $60+ oil to support the lifestyle to which their growing population has become accustomed.
Likewise, I'm pretty sure that Saudi production costs are now around $30 a barrel - all that waterflooding and development horizontals dont come cheap.
Likewise, not-OPEC Russia now has a state that needs high energy prices to avoid a repeat of the 1980s - it also has a state strong enough to set Allowables at 75%, or even lower.
UK has fallen off a cliff production-wise, Norway will comply with Saudi requests (*), and Brazil's new fields need $60 oil or they dont get drilled.
Will it happen ? Dunno. But if you cant do supply management under these circumstances, it'll never happen.
(*) Industry joke ... whats the difference between Norway and an OPEC member ? When the Saudi's ask Norway to cut production, they comply
mmckinl writes:
It will be our own military ... plans already inked and approved ...
mmckinl | 12.17.08 - 5:01 pm | #
Yes, an unconstitutional government is in effect a foreign power already. Also, I know the power of "patriotism"; I believe the military will obey when the time comes. I would have, when I was young.
eh writes: So? What does it all actually mean? Is this price action any more meaningul than that of last summer when oil soared to almost $150?
Both are very meaningful in showing how artificially high commodities and asset prices can be be pushed by an ill-conceived, fed-sponsored credit-binge pursued over decades, and then how fast and how far prices can plummet when credit expansion founders and the unstable credit contraction process begins.
Stable, inflation-protected growth is not and never has been an objective of our corrupt federal reserve. I hope Mish succeeds in raising enugh public support to have the fed abolished.
about a year ago I remember interviews with T Boone and Ross Perot's son. Of course T Boone said $200 and then Perot's son came on and said "Mr. Boone is real smart and he may be right, but the way I figure anything over $60 has nothing to do with oil."
He was right. Had it not overshot so high it would probably not undershoot so low and we would probably be around $60.
"Likewise, I'm pretty sure that Saudi production costs are now around $30 a barrel - all that waterflooding and development horizontals dont come cheap.
Likewise, not-OPEC Russia now has a state that needs high energy prices to avoid a repeat of the 1980s - it also has a state strong enough to set Allowables at 75%, or even lower."------------------------------------------
First, the ROI of water flooding and development horizontals
depends on the size and characteristics of the field and prices vary widely. Please cite your sources that indicate that Saudi production costs are $30/ bbl.
Secondly, the Russians are in such a strong position that I believe they had to devalue the ruble twice recently.
If i had a connection into that circle, i would put Chrysler to Richard Branson.
Branson could take over for a dollar, overhaul Chrysler down to a couple of useful brands, one of them being The Virgin. All the dealers would need to commit to xxxx number of purchases first, and then second Wells Fargo, or someone TARP approved, would need to ink a deal to underwrite 36 month interest free financing. Finally, i would cut a deal with Obama's wife to buy one of the Virgins.
Hopefully, whatever OPEC cuts, the rest of the non-OPEC production will be able to compensate. Canada for one supplies the US with 20%. I would love to fuck over OPEC and buy 1000 gallons of gasoline at $1.25 (price in Kansas City).
OPEC nations are just so reliable.
headed to $25 bbl
Could it be that, gasp, supply and demand is the final driver?
Back in the '80 recession, the word was that Citibank was insolvent because of all its S.A. oil loans on the previous high price. How much leverage is there now based on $90+ oil.
If OPEC were to disband I think oil prices would go up at this point.
At least one of the oil exporting dependent economies has nuclear weapons.
Spot on CR,
Besides the weak global economy, everyone believes OPEC members will cheat if they can.
Michigan unemployment hits 9.6%.
Oil prices are falling because the worldwide economy is in free fall ... Even the shrinking dollar isn't abating the fall.
" crispy&cole writes:
headed to $25 bbl
crispy&cole | Homepage | 12.17.08 - 4:15 pm | # "
I would say no, but I never thought we'd see the low '40s again. Ever.
Welcome to BizzaroWorld. Please keep your hands in feet inside the car while the ride is in motion, and the yellow safety bar locked in place. And get ready...
It's really cool that Kuwait's oil minister is named Mohammad Al-OilMan.
...
Any article that does not mention futures prices beyond the front month cannot be taken seriously. That is some serious contango.
Theories?
We should have pumped out the strategic oil reserve this past summer and be refilling it now.
Actual inventory reductions will need to occur to see any impact from reduced quotas.
" Rob Dawg writes:
At least one of the oil exporting dependent economies has nuclear weapons.
Rob Dawg | Homepage | 12.17.08 - 4:17 pm | # "
Don't know which one that is. But apparently we've been making sure that others will, soon. Sauds, UAE. Hell, they could probably buy a few even if they can't make them yet.
I read an article stating that Opec needs to cut by 7.2M bl/day to have a hope of stopping this slide. There is clear cheating on the cuts that have happened so far.
I guess the Arab SWFs won't be saving the US economy, afterall.
When does Duabi fold?
Oil prices are a clear window on the world's economy ... even a cheaper dollar isn't helping ...
The world economy is crashing ...
When does Venezuela fold? I can't wait to see that bumbling petty dictator strung up by his own people.
It's almost like the majority component of oil prices was.....MARGIN.
imagine_that_shit
This would be a prudent time to load up the Strategic Petroleum Reserve, no?
And "drill baby drill," sounds not so mellifluous*.
*word of the day, Feb. 19, 2006
So? What does it all actually mean? Is this price action any more meaningul than that of last summer when oil soared to almost $150? Even as data has confirmed that the US, the world's largest consumer, was in recession well before that.
I saw a report that refineries are running at record low utilization...
The list of people who do not control economic cycles is getting longer and longer.
Dear OPEC:
Eff You !
signed,
oil loving Americans
Chris the CobraDriver
Did you see my reply about the Honda your coworker got for his daughter?
i had been planning to get back into oil at $37, but the deflation factor is too intense, waiting for $22 now.
In a previous thread, Lionel writes:
Anybody else feeling like this is later September all over again, with the Fed dropping a bomb to pump markets, but the market not feeling remotely stable? I would not be shocked if we had a repeat of the drop in October very soon.
You may recall that the last major drop in the market occurred in the first week of October. All through that week, there was unrelenting selling. The week was the first of the 4th quarter.
It has been speculated that the selling occurred due to large requests for redemptions from hedge funds during the 3rd quarter.
It is likely that similar requests have been made during the current quarter, in which case the beginning of the next quarter, that is January 2nd onwards is likely to see similar selling pressure.
The Fed likely knew what was coming in October and now in January, motivating it to act in September and now again this month to preemptively mitigate the unfolding disaster.
And "drill baby drill," sounds not so mellifluous*.
LOL!
Sean hannity got the smack down when he told T Boone Pickens that refineries were running at 100% capacity and we were in trouble because we had built none in years...Boone told him otherwise, why do half wits like Hannity go on and on about subjects they know so little about.
one wonders...
When oil was at $140 how much was spec/hedge fund influence and how much was demand? On the one hand it's hard to believe there's been $95 of demand destruction, but it's also hard to see how spec buying accounted for a huge percentage of the price. I guess a third factor was percived risk in disruption of Middle Eastern oil supply, but that wouldn't seem to have materially changed in the past 6 months.
Poor Chavez, Putin and Ahmadinnerplate...
Where are all the "Trough Oil" theorists?
AH update;
Take-two...taken down
Ryder...drives into a ditch
Western Digital...puts 2,500 out of their misery
why do half wits like Hannity go on and on about subjects they know so little about.
Because there are no consequences to being wrong on the teevee. Besides, Hannity is Too Big To Fail.
why do half wits like Hannity go on and on about subjects they know so little about.
crispy&cole
Because he gets paid $5m a year to do so
citizen energyecon - that kind of hurt!!
When does Duabi fold?
crispy&cole
I hope they finish the Tower of Bubble first.
lol - thanks c&c - didn't mean to be too mean...
We'll see if Russia, Iran, and Hugo pick up the slack just drive opec down further.
jo6pac
c&c,
My four year old is asking me what is so funny as I was cracking up - doing some 'splaining...
When oil was at $140 how much was spec/hedge fund influence and how much was demand? On the one hand it's hard to believe there's been $95 of demand destruction, but it's also hard to see how spec buying accounted for a huge percentage of the price. I guess a third factor was percived risk in disruption of Middle Eastern oil supply, but that wouldn't seem to have materially changed in the past 6 months.
MDV | 12.17.08 - 4:28 pm | #
Like with housing demand is at the margins. Take away the marginal demand and prices can go way down. Add to that the clear fact that we are in a minimum of a severe global recession. Oil is used in driving, constructions, creation of plastics etc... Add to that the fact that hedge funds are getting blown out of the water implying that less leveraged trades are going to be going on in the future.
If you look at the percentage collapse in oil prices during the last global recession in 82 then oil in the $20s is not impossible.
The tower will be finished but most of the new projects in Dubai have been put on hold in the last month or so.
Sean hannity got the smack down when he told T Boone Pickens that refineries were running at 100% capacity and we were in trouble because we had built none in years...Boone told him otherwise, why do half wits like Hannity go on and on about subjects they know so little about.
\t crispy&cole
But Is T. Boone any better these days? He traded considerable reputation for a shot at untoward wealth and power. It didn't work. The sad part is that our refineries are in dire need of major refurbishment. you know stimulating infrastructure type of expenditures. Nonetheless come next May expect petroleum fractions to be in shortages because of "scheduled" shutdowns/changeovers.
What about oil at $5 to $10? And a similar decline for other commodities (hard and soft). That would be an interesting ride ... The Middle East bankrupt, South America defaulting "en masse", Russia and natural resources reach South Asia (including Australia) down. The USA and Europe will become much poorer during the current depression but the rest of the world will simply be much, much worse off ... Best Regards, APM
Where are all the "Trough Oil" theorists?
~~~~
I still believe in peak oil ... there is just less current demand ...
Oil producers, once they have invested in production just can't turn the spigot off, they have to recover costs and their domestic budgets depend on oil money flows ...
What kind of nightmare does bucky create for foreign exporters trying to balance their income and expenses?
It almost seems to me like these kind of movements make modern international business impossible.
You can't make predictions in this kind of environment; how can you run a business?
pause for obligatory reference to the baltic dry index
You can't make predictions in this kind of environment; how can you run a business?
~~~~
The Wall Street Banks predicted they would be bailed ... and they were ...
Considering using this as an entry point to build a long position in the DXO... Start very small and buy more over the next 3-6 months. Could be very profitable if I am willing to hold for 24 months or so.
Thoughts?
\tWhat about oil at $5 to $10? And a similar decline for other commodities (hard and soft).
APM | 12.17.08 - 4:33 pm | #
Personally I really don't think you can correlate oil to gold or any other commodity. Oil is clearly trading on supply/demand issues. Gold is trading much more on fear of fiat currencies, fear of political instability etc..
I really think it's dangerous here to trade all commodities in one direction based on one theory.
Dubai will fold like bad oragami..
What's one of the best ways to make the Iranians behave themselves?
Keep oil prices low. When prices are low the Iranians can't afford a war...
It's funny how the hue and cry over the evil oil companies profits has evaporated. Politicians are such populist sheep.
Considering using this as an entry point to build a long position in the DXO...
To make it to the other side of the valley one has to navigate the raging river at the bottom ...
NOT Irving Fisher!(Unrated) writes:
\tConsidering using this as an entry point to build a long position in the DXO... Start very small and buy more over the next 3-6 months. Could be very profitable if I am willing to hold for 24 months or so.
Thoughts?
NOT Irving Fisher! | 12.17.08 - 4:35 pm | #
I think that's a good strategy. I may start dollar cost averaging in from $35 oil down. I'm also looking at getting into some agricultural etfs (DBA perhaps??) for a long term hold.
chrysler closes all plants for 1 month==bloomberg
trader walt | 12.17.08 - 4:37 pm | #
Tinfoil thought of mine once upon a time, want to put pressure on the countries causing grief for USA, engineer a recession and skunk the price of oil...
USD/JPY 87.30
just saying
Lionel (and others wondering about the next leg down),
See this BusinessWeek article:
Madoff Losses Will Change Hedge Funds - BusinessWeek
To make it to the other side of the valley one has to navigate the raging river at the bottom ...
Not really. I can simply park the money... Oil will one day be more expensive than now.
Key reasons to be long:
darnell washington writes:
chrysler closes all plants for 1 month==bloomberg
Can we have a link? I'm not finding that on Bloomberg.
OPEC members "are shooting themselves in the foot. The market priced in these production cuts,"
Makes no sense. If the market anticipated these cuts, then the actualization of the cuts would already be priced in and therefore there would be no effect whatsoever. If the price drops further, all that means is the market was pricing in larger cuts.
Western Digital...puts 2,500 out of their misery
| \t12.17.08 - 4:28 pm | #
\t crispy&cole | \t \t \tHomepage
Meh. C&C has, in the past, struck me as something of an economic rubbernecker. His handle is a parody on some Bakersfield real estate brokers that went down, I believe. Sounded like examples of excess. However, serious it is happening as a result of credit excesses, and not necessarily to those deserving. Doesn't make those of us who foresaw it better than those who are losing their jobs over it. Definitely, not all of the 2500 workers that got stcanned at Wester Digital had it coming to them. Kinda sucks that somebody would make light of their situations like that. Am I reading too much into your comments? Dunno, but that's the impression I got from it, so please take that into consideration.
As we become rapidly undeveloped, it will do us all well to remember that for the future millions of poor, wood and charcoal are still available and in use in other undeveloped parts of the world for cooking and heating.
I think that oil, once the ships stop coming, will be a valuable commodity indeed.
Ideologues on both sides are so fixated on shoes and birth certificates, they are failing to see the reality right in front of them, the deconstruction of American institutions and the "undeveloping" of the worlds largest economy.
The jobs we lost and that will be lost (and never REALLY needed, come on, how many barristas can our culture support), were part and parcel to the various bubbles previous to this one, the Treasury/Bond bubble.
I think this is a targeted effort to get the public to accelerate their "cash burn rate", ensuring tens of millions of people staring at the walls, no savings, and with nowhere to go and nothing to do when they get there.
You are all going to be my slaves when I am the Warlord!!!
From 2003 Kenya, soon to be 2010 USA:
"It is estimated that 80 per cent of Kenya's fuel comes from wood with only nine per cent of the population connected to electricity supplies."
A Tale of Two Peaks: Kenyan Mountains Highlight Stark Choices Facing World's Environment Ministers in Quest for Sustainable Development | UNEP/GRID-Arendal - Press releases
- China and India will most likely soon "give back" a portion of the gasoline subsidies they pulled this summer.
NOT Irving Fisher! | 12.17.08 - 4:43 pm | #
China electricity consumption is dropping fast. Aprox. -5% YOY in October and -9% YOY in November. Industrial production in China is a huge driver of oil consumption in China and electrical usage indicates that factories are getting obliterated.
"Did you see my reply about the Honda your coworker got for his daughter?"
nova | Homepage | 12.17.08 - 4:25 pm | #
Yep,thanks. I'll have him check the DOT date codes.
Chris
ille_vir --
Nice handle.
...
Who is that guy, anyway?
ille_vir - Nohting meant against any individuals at all at that company...ugh.
POIC,
And to me that suggests job losses...batted this around a bit with dryfly on a previous thread...think he found Setser more persuasive but those electricity consumption numbers seem to be a tell.
I saw the Chrysler news on Jesse's Cafe:
Jesse's Café Américain
the chrysler closedown was breaking news on bloomberg television,
Chrysler, Ford Idle Plants; GM Halts Engine Factory (Update1) - Bloomberg.com
NOT Irving Fisher!
My bet is that the world is headed for a depression ... that includes the U.S. ... One month does not a trend make ....
I agree with you long term, I think oil will skyrocket, but it might be years not months.
I wonder this this Chrysler move will wake up some folks in the UAW. If they were smart, they'd be making all kinds of concessions. The Big 3 will likely get an initial bailout, but barring major changes they will be bankrupt by the summer.
Sean hannity got the smack down when he told T Boone Pickens that refineries were running at 100% capacity and we were in trouble because we had built none in years...Boone told him otherwise, why do half wits like Hannity go on and on about subjects they know so little about.
crispy&cole
At $30-40/barrel oil, I certainly have no interest in buying a windmill.
Sorry T-Boone.
mmckinl... My time horizon is 2yrs. If it goes to 4 I would be ok with that as long as "soring" prices results in a solid average/year gain in the end.
"I certainly have no interest in buying a windmill."
glorified bird cuisinarts
The world is in transition. The consequences of the Great Shutdown going on worldwide will be population die off and a new balance of power.
The fiat currency system needs evermore growth. Eventually this fails and money is worthless. The concentration of real assets is the final stage of a return to a feudal system. The bank owners have long been the kings and queens with many of the same families and dynasties controlling huge real wealth. In a real sense the economies of the world are being harvested and the wealth redistributed to the wealthy.
The US harbors an illusion that we are different due to our history and prolific gun ownership. The only difference for us is we will have a period of unrest where we are allowed to destroy each other and then a foreign military force will be brought in to stabilize. Starvation and constant violence is effective in motivating the population to cooperate. Tinfoil? I fervently hope so.
Yup, glad I didn't jump on any of those alternate-energy bandwagon stocks...
Might make for some interesting bottom-fishing this spring, though. Oil is not going to stay below $60 forever...
600,000+ job losses tomorrow
first you guys get me all panicky about everything, now it's snowing in las vegas nv. full on snowing. it ain't sticking yet but it's coming down good.
i'm calling it:
** it is the end of the world!! **
Huh?
Tin foil is a minimum... I think asylum is more appropriate.
Anonymous writes:
600,000+ job losses tomorrow
And the dow will be up 200
Who is that guy, anyway?
Nemo | Homepage | 12.17.08 - 4:49 pm | #
Ah, a fellow Latinophile? Taken from my readings of the Aeneid long ago. Fun stuff.
ille_vir - Nohting meant against any individuals at all at that company...ugh.
crispy&cole | Homepage | 12.17.08 - 4:49 pm | #
Fair enough, but man, people are starting to lose their jobs in industries that had nothing to do with the real estate madness, and it might be a good idea to start getting a bit more sensitive about it. These are not necessarily people that can be blamed for our current economic situation. Thanks for your understanding.
It snowed in Vegas in '98, also.
When do retailers report their numbers?
Chrysler promoting $2.99 / gallon gas with new vehicles will be remembered as one of the last bonehead moves from a bonehead company. From that point on, oil/gas prices sank like a stone, and in my neighborhood are less than half that price.
Will the last person leaving Chrysler please get this ugly frikkin' PT Cruiser outta here !
The only difference for us is we will have a period of unrest where we are allowed to destroy each other and then a foreign military force will be brought in to stabilize.
~~~~
It will be our own military ... plans already inked and approved ...
"people are starting to lose their jobs in industries that had nothing to do with the real estate madness"
agreed on sensitivity and compassion - but the bell tolls for thee.
T. Boone Pickens is a national treasure...
as a contrary indicator.
Any word on if the workers get any compensation from Chrysler?
ille_vir | 12.17.08 - 5:00 pm
Chill dude. It's the mans subtle humor. Inside the anquish, pain, and depression is killing him. Let him vent. Don't rain on his parade. he loves us all.
My cabin on the Titanic is neat & tidy. It's just the deck that's listing.
The average price per bbl earlier this decade was in the mid 20's people. Last decade it was in the teens. I know many a investor who is interested in oil at
LOL!!
Snow in Vegas?
Nope, that's not snow. Those are poker chips. That's the new strategy: mint truckloads of new chips and drop them from helicopters... that will make more people come to Vegas and gamble.
Worked for the Fed, right?
Hymns for the Lord writes:
Lionel (and others wondering about the next leg down),
See this BusinessWeek article:
BusinessWeek - Business News, Stock Market & Financial Advice maga...14000908444.htm
Hymns for the Lord | 12.17.08 - 4:43 pm | #
Thanks, HOTL. I've been wondering about this potential market mover. I can't imagine having funds tied up in a hedge and leaving it there after the Madoff mess.
Tin foil is a minimum... I think asylum is more appropriate.
NOT Irving Fisher! | 12.17.08 - 4:59 pm | #
Reading too much CR will do that to you.
Always consider the implausible when nothing else makes sense. I present you the market finding a plateau and going up on top of horrendous news and desperate measures.
The rational explanations have been exhausted and the lunacy is widespread.
CR: Besides the weak global economy, everyone believes OPEC members will cheat if they can.
Only US politicians, Wall streeet and the corrupt Elite like Madoffs can cheat.
we dont investigate anything but blame others and wage wars.
ille_vir and crispy&cole --
I work for a decent sized company (between 1000 and 10000 people) in Silicon Valley. My company laid off 10% of its workforce in the last month.
The way I see it, the wealthiest class in our society got even more greedy and made a lot of sheer speculative bets, and now my co-workers are losing their jobs.
I try to stay detached and amused, but down inside I'm pissed. And maybe even a little scared.
...
So, Chrysler has decided to play hard ball? (Or is that Dodge ball?)
"Neither can we call this a begging of misery, or a borrowing of misery, as though we were not miserable enough of ourselves, but must fetch in more from the next house, in taking upon us the misery of our neighbours...If a man carry treasure in bullion, or in a wedge of gold, and have none coined into current money, his treasure will not defray him as he travels." - Donne
I can't imagine having funds tied up in a hedge and leaving it there after the Madoff mess.
Lionel | 12.17.08 - 5:04 pm | #
Hell, I can't imagine wanting to leave money in a hedgie even before the Madoff exposure. And now, how many people are really trying to convince themselves in earnest that, this time, there really is just the one cockroach. Not many, I'd dare to say.
cd
You ever notice that it seems like you only get laid off when its cold outside? Then it always seems like, when you look back, that is was a really cold winter. Always grey outside...
ille_vir said:
However, serious it is happening as a result of credit excesses, and not necessarily to those deserving. Doesn't make those of us who foresaw it better than those who are losing their jobs over it. Definitely, not all of the 2500 workers that got stcanned at Wester Digital had it coming to them. Kinda sucks that somebody would make light of their situations like that.
Quoted for Truth.
The dollar continues its rapid march downward today, and few outside boards like this seem to be paying any attention.
And oil still falls in dollar-denominated price. Yes, I realize the whole world economy's in trouble, but at some point the weaker dollar has to make a price.
Or, if the dollar becomes toilet paper, will China devalue until the renmibi is that scratchy, low-grade toilet paper that nobody wants to use?
Industrial production in China is a huge driver of oil consumption in China and electrical usage indicates that factories are getting obliterated.
What about
Me think China just copied US stimulus energy efficiency plans for 2009, by installing florescent bulbs in all factories.
Hymns posted this ... I agree ...
You may recall that the last major drop in the market occurred in the first week of October. All through that week, there was unrelenting selling. The week was the first of the 4th quarter.
It has been speculated that the selling occurred due to large requests for redemptions from hedge funds during the 3rd quarter.
It is likely that similar requests have been made during the current quarter, in which case the beginning of the next quarter, that is January 2nd onwards is likely to see similar selling pressure.
The Fed likely knew what was coming in October and now in January, motivating it to act in September and now again this month to preemptively mitigate the unfolding disaster.
Hymns for the Lord | 12.17.08 - 4:25 pm | #
C&C, I've enjoyed seeing many of your posts here, so please don't be put off. I just think that we could start getting a bit more sensitive/selective with the schadenfraude stuff here sometimes.
ille_vir | 12.17.08 - 5:11 pm
I think you need a hug.
industries that had nothing to do with the real estate madness
No offense intended , but that notion is a bit naive. Which retirement fund managers and company investors "didn't" buy MBS/CDO's?
Sensitivity is not funny.
ille_vir
Pain is cheap and abundant right now ... but the price is still going up ...
That is some serious contango. Theories?
Nemo | Homepage | 12.17.08 - 4:18 pm | #
Yep. Well, it is quite obvious that knowledgeable market participants (those willing to put money down) consider the current price levels very temporary. It should also indicate to any interested observer that it makes lots of sense to not sell spot but to keep storing it away. Obviously, storage is quite profitable at this time therefore reducing supply. I expect oil prices to behave similarly to the Dollar the past few months. One might think of it as sudden whiplash. The question is simply when.
What about
Me think⦠China just copied US stimulus energy efficiency plans for 2009, by installing florescent bulbs in all factories.
Anonymous | 12.17.08 - 5:10 pm | #
The 600k plants closing in the Southern Delta region of China, outright riots, increasing social unrest due to unemployment would argue otherwise.
I try to stay detached and amused, but down inside I'm pissed. And maybe even a little scared.
Throw in hungry and then things get real interesting...
Ted Power writes:
Sensitivity is not funny.
But that was.
So if Chrysler shuts down for a month. I guess they don't have to pay any bills or answer the phone. Must suck to be one of their suppliers.
"The Great Shutdown" Was that phrase coined here and if so by who?
unintended consequences for condo folks, just started hearing about this -
Landleases: When The 'Worst Case' Scenario Happens
Fast forward 18 months. You receive a notice that the land rent is going up to $2,500,000. Your maintenance is going to double! The entire building is in shock. Based on the research you did on land-lease buildings before buying the apartment, this kind of land rent increase is unprecedented for a land-lease building in Manhattan.
http://www.urbandigs.com/2008/12/landleases_when_worse_than_the.html
Instead of funny, we should all be sensitive and weep continually. That will really make the comments roll.
darnell,
I was asking about that a couple of days back, was that you Huh?
It's already Wednesday, any news on the auto bailout yet? Huh? crickets chirping..
The rational explanations have been exhausted and the lunacy is widespread.
Huh? | 12.17.08 - 5:05 pm | #
Beg to differ. Go read Buckminster Fuller. He anticipated all of this and what's to come.
ah---I remember seeing it and I say it to my friends---they like it.
Hello,
I am considering "getting into oil"
at some point, after some D&D.
Dad regretted not getting into oil at $10 , long ago.
In a general:
How would I do this ?
What broker accounts are suggested ?
I assume just buying XOM or such will not work.
but I would prefer some way that I do not have to manage it at a micro/daily
level.
I believe I have some time to look into this, not urgent.
Disclaimer:
Of course, due-dilli is my responsibility ;
and if I lose my ass,
it is my own damn fault.
SoF
"I try to stay detached and amused, but down inside I'm pissed. And maybe even a little scared."
So am I...mainly for the future that my young kids will inherite.
c&c,
yep.
serfalan, curious:
how did the city council mtg go yesterday? are they as big as doofuses as us proles think?
"Go read Buckminster Fuller. He anticipated all of this and what's to come."
Utopia or Oblivion? is a good one...
When it comes to the car companies, Bush is like the parent who if they don't answer the answer is no. He's just gonna leave them hangin.
darnell,
Huh? is the handle of a poster here, and possibly the originator of the Great Shutdown...
New post. Chrysler...
Huh? that's funny--my bad--cool- credit to him the
Dec. 17 (Bloomberg) -- General Motors Corp., the biggest automaker in the U.S. and Mexico, increased production of $12,625 Chevrolet Aveos south of the border while seeking a bailout to keep domestic plants from closing.
GM Mexican Plants Expand as Carmaker Seeks Funds for Rescue - Bloomberg.com
Sounds like stockings full of mothballs for Detroit
comrade tinman, it went amazingly well. the hearing by the waterfront committee was on all the sunken ships in the NYC waterway. one of my groups is in a task force comprised of 8 different federal, state and city agencies who took out 100 ships last year. my group is working on salvaging them for art and materials to keep the landfills less full.
they were doofuses because they didn't know about us, but i worked with them on the agenda ahead of time and wrote expert questions to ask us and they made good decisions. some are really smart and good statesman.
I am considering "getting into oil"
at some point, after some D&D.
Dad regretted not getting into oil at $10 , long ago.
In a general:
How would I do this ?
I took a tip from someone on this blog and now have about a dozen barrels of oil in my basement. I don't remember who or why.
c&c,
"So am I...mainly for the future that my young kids will inherite."
nods
Goes back to what we (should have) learned as kids on camping trips--leave places nicer than you found them. We as a society took what was given to us by our forebears and screwed it up royally.
I was asking about that a couple of days back, was that you Huh?
citizen energyecon | Homepage | 12.17.08 - 5:17 pm | #
No. I did pick it up here from a couple days ago. I do believe it was a regular poster. It did garner several comments so should be easy to find.
"Or, if the dollar becomes toilet paper, will China devalue until the renmibi is that scratchy, low-grade toilet paper that nobody wants to use?
Bob Dobbs | Homepage | 12.17.08 - 5:09 pm | # "
Sounds like you're describing "John Wayne" toilet paper........It's rough & tough....
......and don't take $hit off nobody.
Feckless: Which of his books would you recommend for his financial predictions
You might be surprised how much money China spends to rev up domestic or regional demand and keep those factories open. It's not like they lack the means.
They also have the motive -- namely, keeping the Communist Party in power and avoiding domestic chaos.
Okay, despite the coming depression, at least gas will be dimes on the gallon.
Now, if I just could find a gas station.
Sarcasm off.
With oil so low and going lower, when will see $1.00/gallon gas again.
I seem to recall around Glendora, CA in the mid-90s, 1996, I seem to recall, there was a Texaco at the end of the 210 before the extension, where they sold gas for about $0.95/gallon.
"I certainly have no interest in buying a windmill
glorified bird cuisinarts
bgates | 12.17.08 - 4:57 pm | #
I worked out the methods by which you could monitor birds with stereo cameras and alter the generator modulations such that the birds would fly in between the blades instead of being clobbered. Filed provisional patent application, shopped the idea around the major turbine manufacturers. Bottom line: nobody cares about the birds (or bats).
It almost seems to me like these kind of movements make modern international business impossible.
ac | 12.17.08 - 4:33 pm | #
I agree. I've been concerned about this for quite some time. Currency hedging in this environment is just about impossible and unless you have really deep pockets, conducting commerce becomes extremely challenging if not impossible. This is why I stated a while ago that we are basically in a currency crisis already.
http://www.haloscan.com/comments/calculatedrisk/809977984120044341/#689033
This is about as monumental a crash as I have ever seen in major currencies. Not exactly conducive for business, is it? Hedging in this environment could be a little rough and I wonder who would dare do major deals unhedged.
When a credit crunch coincides with very low demand for oil, it crushes investment in new drilling and production infrastructure.
Since there is a lag of 1-2 years between investment and new production, you will see production shortfalls occur at the same time that hyper-inflation and dollar collapse revs up. At that point, oil prices will go vertical. It's not more than 1-2 years away.
Good time to slap a little tax on oil to drive consumption & prices down further. BO might do it ?
rich writes:
When a credit crunch coincides with very low demand for oil, it crushes investment in new drilling and production infrastructure.
And what will this credit crunch do to investment in wind mills?
mostly lurker..
we need commercials like this with Iron eyes Cody
YouTube - The Crying Indian - full commercial - Keep America Beautiful
But they wont notice as their tossing thier trash on the street..
Lazy litter bugs get me angry...
Mostly Lurker writes:
c&c,
"So am I...mainly for the future that my young kids will inherite."
nods
Goes back to what we (should have) learned as kids on camping trips--leave places nicer than you found them. We as a society took what was given to us by our forebears and screwed it up royally.
Mostly Lurker | 12.17.08 - 5:28 pm | #
ML, it reminds of the saying:
"Take photographs and leave only footprints."
Couldn't agree more, esp. with the attitude of my generation, the Xers.
Forget about all the other gens. We are the worst.
Late 30- 40 somethings had it all given to us, but it wasn't enough. We saw greed is good and took it to the infinite power tower.
The 5 Lomborghinis, 21-yearold trophy wife, 50,000 sq. ft. home in the Hamptons, 10 other homes around the world, priceless art and other things collections, weren't enough.
No, we wanted the world.
And the worst part...
For most, it was on east credit.
Now the unwinding.
The pain.
@Substance over Form:
Same here. Someone did mention DXO for oil.
I'm also looking at gold, silver, and commodities.
Any ETFs to check up on?
bearly writes:
Good time to slap a little tax on oil to drive consumption & prices down further. BO might do it ?
bearly | 12.17.08 - 5:34 pm | #
Not part of his plan, bearly.
[Not part of his plan, bearly.
asl hearts lenin ]
Well, what is BO's revenue plan then? Every reasoned financial model needs revenues to offset spending, no?
serf Alan Greenspend writes:
" the hearing by the waterfront committee was on all the sunken ships in the NYC waterway. one of my groups is in a task force comprised of 8 different federal, state and city agencies who took out 100 ships last year."
Did they ever find the barge with all the silver that sank in the 1800s? We worked on that case 20 years ago, but the salvors came up dry. Still down there somewhere in the mud....
OCDan,
early 30s late Xer here, so yeah, I totally know what you mean. Due to some childhood experiences I (and my hubby) got scared to death of debt--our phobias seemed silly in the late 90s and early 2000s, but we're by far the most financially stable of our circle of friends because of it. Barring total social collapse we'll probably make it through this in reasonable shape, and yet that just makes me feel guiltier in some ways, because I've been largely unable to get my friends to heed the alarm until it was too late.
Bearly,
BO's revenue plan is "Lets not have the Great Depression Mark 2".
Generally,
We've seen this movie before, in the 1980s. The traditional OPEC Hawks (Iran, Venezuala) need $60+ oil to support the lifestyle to which their growing population has become accustomed.
Likewise, I'm pretty sure that Saudi production costs are now around $30 a barrel - all that waterflooding and development horizontals dont come cheap.
Likewise, not-OPEC Russia now has a state that needs high energy prices to avoid a repeat of the 1980s - it also has a state strong enough to set Allowables at 75%, or even lower.
UK has fallen off a cliff production-wise, Norway will comply with Saudi requests (*), and Brazil's new fields need $60 oil or they dont get drilled.
Will it happen ? Dunno. But if you cant do supply management under these circumstances, it'll never happen.
(*) Industry joke ... whats the difference between Norway and an OPEC member ? When the Saudi's ask Norway to cut production, they comply
Hi,
AHL LOL , I needed the laugh !
Yeah DXO has been mentioned recently,
(s-o-o-o-o many comments to sift thru )
And one commenter mentioned DXO as a 'buy and hold' for a period of time.
DXO was talked of often lately , but I
thought it sounded too involved for me.
I will look into it.
thx , SoF
mmckinl writes:
It will be our own military ... plans already inked and approved ...
mmckinl | 12.17.08 - 5:01 pm | #
Yes, an unconstitutional government is in effect a foreign power already. Also, I know the power of "patriotism"; I believe the military will obey when the time comes. I would have, when I was young.
bgates writes:
"I certainly have no interest in buying a windmill."
glorified bird cuisinarts
Make that glorified LOUD bird cuisinarts. Ever heard a windmill?
Those of you suggesting DXO - check the prospectus. Unless you think volatility will be low, then holding this thing will prove...um...exciting.
eh writes:
So? What does it all actually mean? Is this price action any more meaningul than that of last summer when oil soared to almost $150?
Both are very meaningful in showing how artificially high commodities and asset prices can be be pushed by an ill-conceived, fed-sponsored credit-binge pursued over decades, and then how fast and how far prices can plummet when credit expansion founders and the unstable credit contraction process begins.
Stable, inflation-protected growth is not and never has been an objective of our corrupt federal reserve. I hope Mish succeeds in raising enugh public support to have the fed abolished.
about a year ago I remember interviews with T Boone and Ross Perot's son. Of course T Boone said $200 and then Perot's son came on and said "Mr. Boone is real smart and he may be right, but the way I figure anything over $60 has nothing to do with oil."
He was right. Had it not overshot so high it would probably not undershoot so low and we would probably be around $60.
Bottom line: nobody cares about the birds (or bats).
Plantagenet | 12.17.08 - 5:32 pm | #
I love birds!! With a tangy picatta and extra capers.
Seriously, all birds on Earth are edible. Put that in your tinfiol survival folder.
Ian Whitchurchwrites,
"Likewise, I'm pretty sure that Saudi production costs are now around $30 a barrel - all that waterflooding and development horizontals dont come cheap.
Likewise, not-OPEC Russia now has a state that needs high energy prices to avoid a repeat of the 1980s - it also has a state strong enough to set Allowables at 75%, or even lower."------------------------------------------
First, the ROI of water flooding and development horizontals
depends on the size and characteristics of the field and prices vary widely. Please cite your sources that indicate that Saudi production costs are $30/ bbl.
Secondly, the Russians are in such a strong position that I believe they had to devalue the ruble twice recently.
Just sayi
If i had a connection into that circle, i would put Chrysler to Richard Branson.
Branson could take over for a dollar, overhaul Chrysler down to a couple of useful brands, one of them being The Virgin. All the dealers would need to commit to xxxx number of purchases first, and then second Wells Fargo, or someone TARP approved, would need to ink a deal to underwrite 36 month interest free financing. Finally, i would cut a deal with Obama's wife to buy one of the Virgins.
They should have raised production, at least they could have agreed on that! They always cheat so nobody takes them seriously.
Hopefully, whatever OPEC cuts, the rest of the non-OPEC production will be able to compensate. Canada for one supplies the US with 20%. I would love to fuck over OPEC and buy 1000 gallons of gasoline at $1.25 (price in Kansas City).