Oso planning to go pro
I know it’s not literal because it’s speculative, but oil now at $2.17 (!!!!) a barrel.I say this knowing it’s speculative, but in my wildest dreams I never imagined oil being literally worthless.
The timing of this article--this morning at 8:45am--isn't so good.https://thehill.com/opinion/energy-environment/493614-the-world-can-thank-president-trump-for-the-oil-dealInsert Rick Wilson's quote re Trump here
Of all the things to bang on Trump for, its not one of them. He did what he needed to do, but all he could do was be an arbiter. US isnt in OPEC and this really went further sideways when KSA and Russia undershot the agreed/hoped for cuts at the OPEC meeting 2 weeks back. He essentially convinced the two sides to cease fire, but there were already catastrophic injuries on both and it wasn't in time to stop the inbound bombers with further ammo.Its great that the US mitigated much of their need for foreign oil over the decades, but that adds an extra layer of complexity to the geopolitical chess match cause its beyond just a purchaser/consumer interest.
Surprised this isn't hitting the stock market a bit harder. Similarly, surprised that oil stocks aren't being hit harder today. All priced in?
My take (highly under educated on the subject matter though) is that KSA and Russia are trying to put US shale production out of business. I think as you described nicely, there is a war going on here, and in this case for KSA/Russia, my enemy is my friend as long as our mutual enemy is US shale output.
Yeah, but the US shale industry is going to be somewhat shielded with government bailouts that wouldn't have otherwise happened. They are shutting down like the rest of the US and will have access to cheap capital when they start back up as demand starts to ramp back up
It won't just be somewhat. It will be total based on the White House position released this morning. The industry as a whole will be bailed out. The socialist bent of the current administration continues afoot. Thus, investment should be strong knowing the USG will prop up those who may not make it on their own.
That wasn’t the actual spot price of oil, it was a futures contract that (I think) expires tomorrow. If you’re long the contract you either have to sell or take delivery. Traders stuck long have no place to put the oil and are forced to sell at any price. This was an unprecedented situation but the oil stocks care about the true price of the commodity, not the price of expiring futures. Hence, XOM, Chevron, etc., down pretty big but not in total panic. If you’re waiting to buy gas for10c a gallon you’re in for a bit of a wait.
Is it hard to stop pumping oil? I don't understand why producers just don't restrict their output.
I believe I read a good article (can't find it right now) that said it was actually more expensive to stop pumping, than it is to pay someone to take the barrels. There's people much more educated on this than I am that can probably explain the rationale here, but I know I saw that in a couple of articles yesterday.
It's not really socialist. If the government actually owned the industry at least the people could benefit from this. It's worse. Bailing out the shale oil industry is exactly the problem with these bailouts. Do you think the people who were running this industry last year would have supported higher taxes (personal or corporate) or higher rights fees? Of course not.But now that they need help? Well of course!!! Allow them to go bankrupt and sell off their assets. Someone will come in to take their place. The oil isn't going anywhere. And if that doesn't work, have the federal government take partial ownership as an investor so we can also reap the benefits.But we are going to do what we have become conditioned to do. Privatize the benefits and socialize the risk.