onlooker wrote:I am not sure how the Western Economies will recover from this. They will not. Already the middle class has virtually disappeared. The financial system is a rogue and parasitic element on the general Economy sucking wealth from the general economy and totally unresponsive to the working class as it serves totally the ownership/wealthy class.
Already Americans overwhelmingly had little extra income and virtually no savings. They are as the phrase says
living paycheck to paycheck. Their economic condition after all this will be significantly worse. And yes we are still better off than many others around the world. The point is the trajectory is downward
onlooker wrote:I am not sure how the Western Economies will recover from this. They will not. Already the middle class has virtually disappeared. The financial system is a rogue and parasitic element on the general Economy sucking wealth from the general economy and totally unresponsive to the working class as it serves totally the ownership/wealthy class.
Already Americans overwhelmingly had little extra income and virtually no savings. They are as the phrase says
living paycheck to paycheck. Their economic condition after all this will be significantly worse. And yes we are still better off than many others around the world. The point is the trajectory is downward
asg70 wrote:onlooker wrote:boy are we far along in that process.
Sorry, um, no. Shutting in with netflix is nothing.
Outcast_Searcher wrote:asg70 wrote:onlooker wrote:boy are we far along in that process.
Sorry, um, no. Shutting in with netflix is nothing.
I swear to god, my house cat is more clear on economic principles than he is.
onlooker wrote:a teetering Oil Industry ie oil price too low to sustain the Shale/fracking
onlooker wrote:and a teetering general economy ie, massive unemployment now
Unless you work in the shale patch, low oil prices are only a benefit.
rockdoc123 wrote:Unless you work in the shale patch, low oil prices are only a benefit.
not the case if there are massive layoffs at oil and gas companies, service companies, companies who truck fluids, companies who sell materials including food to field operations and then the fallout in local restaurants, shops etc. Landholders will no longer see royalties, States will no longer see their share of production royalites and the federal government loses out on corporate and personal income tax. It isn't trivial. And once the Saudis are comfortable they can shut down NA oil they will close in their own production to drive the price up. So you will ultimately see higher gasoline and byproduct prices as well as the economic fallout from companies going under.
rockdoc123 wrote:Unless you work in the shale patch, low oil prices are only a benefit.
not the case if there are massive layoffs at oil and gas companies, service companies, companies who truck fluids, companies who sell materials including food to field operations and then the fallout in local restaurants, shops etc. Landholders will no longer see royalties, States will no longer see their share of production royalites and the federal government loses out on corporate and personal income tax. It isn't trivial. And once the Saudis are comfortable they can shut down NA oil they will close in their own production to drive the price up. So you will ultimately see higher gasoline and byproduct prices as well as the economic fallout from companies going under.
have always been quite certain that the oil companies would be bailed out or nationalized if necessary, particularly on the shale side of the business which has always seemed to me to be financially unsustainable in the medium term. Letting some companies go bankrupt while having others buying the assets for pennies on the dollar also seems another way to keep things going for a few more years, too. I don't know anything about the business. What do you think of these ideas?
rockdoc123 wrote:have always been quite certain that the oil companies would be bailed out or nationalized if necessary, particularly on the shale side of the business which has always seemed to me to be financially unsustainable in the medium term. Letting some companies go bankrupt while having others buying the assets for pennies on the dollar also seems another way to keep things going for a few more years, too. I don't know anything about the business. What do you think of these ideas?
Nothing new there. I was active in the industry for 35+ years and saw at least 3 major phases of consolidation. I worked for two different mid-size international companies that eventually became somebody else. The most recent consolidation came after the 2014 price crash and there should have been one in late 2018 but the price drop was too short-lived. I've been on record here over the past decade (as has Rockman) stating that consolidation in the oil and gas business is a good thing. It cleans up overall balance sheets. Companies who have just not figured out how to make it work efficiently in any price scenario get bought out, other companies restructure under legal umbrellas and either come out as healthier entities able to survive or are bought out. And then once Saudi Arabia figures out they once again shot themselves in the foot (third time not so lucky) they will shut-in production in order to raise the price and new start-up oil and gas companies will rise up once again.
Consolidation sounds quite reasonable. How long do you think it would take for US shale oil production to peak from a geological point of view, if we disregarded all economic considerations.
rockdoc123 wrote:you can't do a calculation without taking into consideration economic considerations given it is the economics that drive whether a new well gets driven or not. The details require digging in the data and I'm sure some like WoodMac and Rystad have been busy doing that. We know that new drilling isn't going to happen and the decline rate over the first 24 - 36 months in horizontal unconventional wells drilled into tight formations and fracked is somewhere between 65 - 80%. After that those wells go into a gradually slowing low rate decline phase. But the wells are all staggered in time of course so some will already be through that hyperbolic decline and others are just starting into it. Adding to that calculation is the need to look at conventional production both offshore and Canadian heavy oil. Unlike the unconventionals operating costs (the cost to keep lifting oil) are much higher so if you get the oil price into the teens then those wells will be shut-in. So how long does it take for all that production to fall off? In 2014 it took about 6 months before it became noticeable but total production from unconventionals was much smaller back then. An added uncertainty is that many producers have hedged a portion if not all of their 2020 production at higher prices so that draws the curve out further. I'm not going to dig through the data to come up with an estimate as it would almost certainly be wrong but I've seen estimates that US production could easily drop by 30% this year.
rockdoc123 wrote:not the case if there are massive layoffs...
.Shale was already hit hard once before during when the Saudis kept the taps open to kill it. The greater economy of the US barely felt it. It's a minor factor
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