Peak Oil is You
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Page added on December 2, 2014
Did Peak Oil Arrive in 2014?
The recent price crash in crude oil, if it lasts for any length of time, will certainly affect oil production. The question is, just how great an effect will it have and how soon? But in this post I want to concentrate on what is, or was, happening to world oil production even before the price crash.
Russia, the largest producer of crude oil in the world, will peak in 2014. There are various estimates of how fast their production will decline but best case, for Russia, puts their decline at about 2% per year. They say they are depending on the Bazhenov Shale and Arctic offshore just to keep production flat in 2015. Well that is not going to happen, not in the next few years anyway. And if prices stay in the current range it is unlikely to ever happen.
OPEC is a wild card but there is little doubt that they are producing flat out right now. Only Iran has any real any real chance of increasing production very much and only if sanctions are lifted. While Libya has increased production significantly and may yet increase even further, the likelihood is that production will decline given the violent political instability in the country.
But before we go any further let’s look at what the EIA is predicting for 2015 for both the USA and the rest of the non-OPEC producers. The below charts are from the EIA’s Short-Term Energy Outlook. Current data is through October 2014 and the projected data is through December 2015. All data is in million barrels per day. Also, very important, the data is Total Liquids which includes NGLs, bio fuels and refinery process gain. The EIA, for US production even counts refinery process gain on imported oil.
The EIA is predicting US average production total liquids will be up 1.49 million barrels per day in 2014 and up another 1.1 mbd in 2015. (I always use m for million and k for thousand.)
The EIA is predicting non-OPEC average total liquids will be up will be up 1.88 mbd in 2014 but only about half that, up .95 mbd, in 2015.
By removing the US we get an entirely different picture. The EIA has non-OPEC total liquids, less US, up .39 mbd in 2014 but down .15 mbd in 2015.
We get a slightly better picture by looking at annual production instead of monthly production.
It is a little easier to see the EIA is predicting US production growth will slow slightly in 2015.
That same slowdown of growth is apparent in their non-OPEC total liquids prediction.
The EIA is saying that they expect that non-OPEC total liquids outside the USA will decline next year.
This chart is Crude + Condensate and the data is through July 2014. I show it to emphasize the point that only the US is keeping the world from peak oil. And what you see above is many nations that have improved production in the last 5 years or so but have now peaked. Only a couple of non-OPEC nations will increase production next year and those by only a tiny amount. Most nations will see a decline next year.
But what will happen to US production? The price decline will most definitely affect production but how long will it take for that decline to show up? After all, at the end of September there were 610 Bakken wells awaiting completion. That is a three months’ supply. That means any slowdown in drilling will take several months to show a decline in wells completed. However, elsewhere it may not take nearly that long.
When the price collapsed in 1985 the decline was rather dramatic. However the price collapse in 2008 led to no noticeable decline in either US or other non-OPEC production. There was a huge decline in OPEC production in 08 and 09 but that was a deliberate cut.
I believe non-OPEC production less US production will be down between .5 and 1 million barrels per day next year. And I believe it unlikely that US production will be able to offset that. OPEC is still the wild card but I think it is more likely their production will decline rather than increase.
Bottom line, it is obvious that we are on the cusp of peak oil and only the seemingly ever-increasing barrels from US shale oil production is keeping it at bay. But it now looks like that party is about to be over. I think it is very likely that peak oil has already arrived, if not this year then 2015 for sure.
For clarification: Peak oil for me is when C+C peaks. I do not count bottled gas and bio-fuels as oil. I would like to exclude condensate but no one except OPEC, Mexico and Norway gives up “crude only” stats so we are forced to count Crude + Condensate. I posted the EIA’s “total liquids” charts here because they make no predictions for C+C and the data they do post only goes through July 2014.
43 Comments on "Did Peak Oil Arrive in 2014?"
Plantagenet on Tue, 2nd Dec 2014 11:32 am
Perhaps we will peak in 2014 or 2015. However, fracking is just starting up in places outside the US and Canada, so the potential for further oil production growth is there.
Westexasfanclub on Tue, 2nd Dec 2014 1:09 pm
Plantagenet, your claim might or might not be true with high oil prices – but having in account the recent price drop, those fracking projects outside the US certainly become pies in the sky.
When the US goes down so does the world. That was projected for 2016 anyway but might happen now some months or a year earlier.
Northwest Resident on Tue, 2nd Dec 2014 1:42 pm
“fracking is just starting up in places outside the US and Canada”
Really? What places outside the US and Canada have billion$ in spare cash to throw at unprofitable and environmentally destructive fracking operations? Please, list those places.
peakyeast on Tue, 2nd Dec 2014 2:23 pm
Total seems to think that Danmark has potential to be a shale-gas producer.
Even though Poland was their first choice and almost no-one succeeded there.
The Danish government, however, is pro-fracking – or rather pro-profit of any kind – including producing parts for land-mines and cluster bombs
Plantagenet on Tue, 2nd Dec 2014 3:11 pm
@NWR
Your ignorance on oil topics never ceases to amaze me.
Google “vaca muerte argentina”
Plantagenet on Tue, 2nd Dec 2014 3:16 pm
@fanclub
It is certainly possible the “US will go down” as you claim. But it is also possible that cheap oil will be good for the US and world economy.
Already SUV sales are taking off in the US thanks to cheap gas. Cheaper gas is like giving everybody a tax cut!
I don’t think this cheap oil will last, but I don’t see how it will make the US “go down” as you suggest. Would you care to expand on your thoughts?
Northwest Resident on Tue, 2nd Dec 2014 3:37 pm
Plantagenet — Actually, it is your ignorance on oil topics combined with your pompous “know it all” demeanor that never ceases to amaze not only me, but almost everybody else who posts on this board. Of all the flat out ignoramuses and pompous asses posting on this board, you stand above all others. Your statement:
“But it is also possible that cheap oil will be good for the US and world economy.”
The absurdity and lack of intelligent thought in that statement is a shining example of pure ignorance.
Despite numerous articles from authoritative sources and posts on this board from oil industry folks describing in detail exactly why the falling oil prices are anything but good, you make that ignorant statement.
Maybe you can explain to us all why that “cheap” ($65 – $75 is NOT cheap, but let’s assume it is so you can make your case) is good for the US and world economy? Please, enlighten us all.
Now it’s your turn, Plant. Get nasty. Get rude. Do the obnoxious pontificating grunt thing that is the one and only thing you do well.
And then, after you’ve educated us all, explain how that fracking operation that is “just getting started” in vaca muerta argentina is anything other than a crock of B.S.
Northwest Resident on Tue, 2nd Dec 2014 3:46 pm
Plant proves he’s an idiot — News Flash
OK Plantagent, oh wise all knowing oil expert. I took your advice and Googled “vaca muerte argentina”.
Here’s what I found, along with numerous other articles that seem to make the same case, which is, shale oil extraction in vaca muerta argentina is NOT going to happen.
Please note the quote from the following article is pointing to the same issue I raised in my initial post that you responded to — difficulty in getting financing. Who’s the ignorant one, Plant?
Dead-cow bounce
“A bigger obstacle is government energy policy. Price controls and export taxes have deterred investment; oil and gas output have declined while demand has grown. Unless policy changes, it will be hard to find the $140 billion to $200 billion that oilmen say is required for large-scale development of Vaca Muerta. Shell, Total and many others have bought stakes in the field, but so far are just exploring. Daniel Gerold, a director at G & G Energy Consultants, estimates that only $3.7 billion has been invested over the past three years.”
http://www.economist.com/news/americas/21613314-politics-biggest-hurdle-developing-enormous-vaca-muerta-field-dead-cow-bounce
Plant, if you’re going to accuse somebody of being ignorant, try to be less obviously totally ignorant when you make those accusations. You’re looking like a total dunce right now.
Northwest Resident on Tue, 2nd Dec 2014 3:54 pm
Plant — Congratulations are in order.
Ron Patterson, who does know something about the oil business, actually addressed you directly in one of his posts the other day. The reason I say “congratulations” is because rarely does Ron Patterson bother to address specific individuals posting on this board. But he singled you out. What did he say to you? He said:
“Plantagent, I’ve always suspected that you don’t know what you’re talking about. Now you’ve proved it.”
Way to go, Plant. When a guy like Ron Patterson goes out of his way to tell you what a frigging idiot you are, that is indeed a moment to cherish.
Suffer in shame, Plant. Or better yet, when I ask you for information to back up your stupid claims, how about just engaging in civil discussion instead of going full pompous moron on me? Deal?
Westexasfanclub on Tue, 2nd Dec 2014 3:56 pm
So the only question that remains is if Plantagenet is a Hobbit living in a parallel world full of giant redwood and oil or a Troll wasting away in the desert of his self constructed universe of misleading testimony and ignorance.
Plantagenet on Tue, 2nd Dec 2014 4:23 pm
Something tells me you guys didn’t google on “vaca muerte argentina” as I suggested.
If you had you would’ve seen thousands of articles about large scale fracking program for shales in Argentina, with funding coming the Argentina government, George Soros, Chevron, the Spanish National Oil company, etc.
You can pretend all you want, but fracking technology works just as well outside the US national borders as it does inside. Yes, the current low prices will hurt TOS. NO, it won’t last forever.
Well…..you can lead a horse to water but you can’t make them drink. Or, in this case, you can lay the facts out for people but you can’t make them understand it all.
CHEERS!
MSN Fanboy on Tue, 2nd Dec 2014 4:40 pm
Plant: “I don’t think this cheap oil will last, but I don’t see how it will make the US “go down” as you suggest. Would you care to expand on your thoughts?”
Plant your ultimately correct, but in the “bad” kind of way,
Relieving the symptoms is good but fails to get rid of the underlying problem.
0, Depletion = increasing cost of supply, as society spends more on energy production productivity per BTU declines.
1,The great majority of the American populace finds itself in worsening degrees of poverty (ditto west)as a society which pays more and gets less gives rise to social issues such as under-employment etc..
2,This leads to reduced demand for oil products thus lower price.
3,As oil is arguably interchangeable with BAU we find ourselves:
In a negative feedback loop.
Rinse and repeat.
So far the plan has been to print away and reduce interest rates to prop up the dying system.
Unfortunately this means a back up ever greater occurs: more debt.
How do you think They are buying those SUVs: ahem credit.
It cant be held back forever, at some point as companies have so much debt and reduced profitability as they are hollowed out by depletion.
BANG. When company X is in so much debt it cant pay back 0.1% interest is when we see it break.
The financial death happens and well, after that I don’t know.
I just bet a financial death bought on by the nature of our monetary system visa v depletion is the starting gun of collapse.
And that is how America could be negatively effected plant. Like the rest of us.
Plantagenet on Tue, 2nd Dec 2014 4:50 pm
@Fanboy
i didn’t suggest that cheap oil would bring down the US. A poster named “W…FanClub” suggested it.
I asked him to explain his reasoning, but he has failed to do so.
Your explanation is mostly a general critique of the US economy. All quite valid, but I note you say nothing specific about low energy prices, which is the issue actually under discussion.
Thanks, but the question remains….how are low energy prices supposed to “bring down” the USA?
Cheers!
Northwest Resident on Tue, 2nd Dec 2014 5:08 pm
Plant — I DID google “vaca muerte argentina” as you suggested.
Obviously, you didn’t read my post above. I found:
Dead-cow bounce
“A bigger obstacle is government energy policy. Price controls and export taxes have deterred investment; oil and gas output have declined while demand has grown. Unless policy changes, it will be hard to find the $140 billion to $200 billion that oilmen say is required for large-scale development of Vaca Muerta. Shell, Total and many others have bought stakes in the field, but so far are just exploring. Daniel Gerold, a director at G & G Energy Consultants, estimates that only $3.7 billion has been invested over the past three years.”
http://www.economist.com/news/americas/21613314-politics-biggest-hurdle-developing-enormous-vaca-muerta-field-dead-cow-bounce
Now we see why Plant is so consistently wrong. He thinks what he wants to think and never even bothers to educate himself on opposing points of view. He skips right past any information that disputes what he WANTS to believe.
How about this, Plant. You post a link that describes in glowing detail exactly how profitable and prodigious that Argentine shale play is going to be. Someday. Maybe. IF they ever get enough money to finance it.
MSN Fanboy on Tue, 2nd Dec 2014 5:26 pm
In the short term low energy prices don’t Plant.
The U.S. economy in the short term, much as the world economy will grow at a faster pace.
Other commentators on this board are… erroneous. 🙂
They argue high oil prices will do x then argue low oil prices will do x lol
WHAT IS IT NR, GRET T, WEST TEXAS?
Westexasfanclub on Tue, 2nd Dec 2014 6:07 pm
The funny thing with people like Plantagenet is that one can practice to structure arguments. In the end he is a helpful fellow 😉
One basic issue with fracking are the high costs. There are numerous articles about that and they only vary about if you are leaving the profitable territory at 90$/barrel or at 70$/barrel or somewhere in between. Oil is actually below the profitable price of fracking and if this is not a temporary phenomenon the low price will hinder further investment which must be very high just to MAINTAIN current production.
One thing about Vaca Muerta: It will take years to develop that area even in favorable conditions and all those years global depletion will go on and even increase. But Vaca Muerta won’t make up for all those losses. It may be helpful for Argentine and I hope so very much as Argentine is a great country but it won’t save the world, pathetically said.
Makati1 on Tue, 2nd Dec 2014 7:09 pm
Actually we should be more interested in NET oil ENERGY recovered, NOT barrels of liquid. NET energy has been dropping since the 70s. There is a huge difference in NET energy between the sweet light crude that came out of the ground on it’s own, and the tar sands/fraking junk we have today to brag about.
Northwest Resident on Tue, 2nd Dec 2014 7:42 pm
Westexasfanclub — I agree that Plant and a few others who post here regularly are useful for setting the stage for alternate points of view. I just wish that he would do it in a more civil way. He could have posted his link to the Argentine shale play without accusing me of being ignorant on oil topics, which by the way I most definitely am not having been a dedicated student of oil topics for quite a while now. If he hadn’t made that lame and unfounded accusation, then I would have ridiculed his point of view and shredded his belief in the Argentine shale play in a much more civil way.
oilystuff on Tue, 2nd Dec 2014 8:35 pm
NW, you are a smart fella ( and I love steelhead fishing around Tillamook ); you have too much to give up than to get on somebody, religiously, that does not agree with you. Its dark up there in Alaska and that guy is getting cabin fever, big time. He ain’t thinkin’ straight. Move on.
There is way too much anger on this blog. All you guys. Stick to the facts, Jack, and lighten up a little.
Really? Anybody that blogs peak oil stuff, constantly, 30 times a day, is wasting valuable time in life. Go fishing!
Davy on Tue, 2nd Dec 2014 8:59 pm
Yeap, oily, I know we are addicted and sometimes angry. I have my moments with Mak. I have been better lately. Yeah, I comment far too much but it is good brain exercise. I work all day on the farm mostly alone and it is great to be in touch with my buddies. I tell myself our blogging is not goin to last much longer so enjoy. One day we will have a flickering grid and you know what that means for the web. I appreciate the advice even though it was directed to NR. It fit so I reponded.
Northwest Resident on Tue, 2nd Dec 2014 9:23 pm
oilystuff — You’re right. I have determined several times to just stay clear of Plant because every time I dispute what he says or offer an alternative point of view, he goes off. I *thought* I was making a politely worded counterpoint to his post this time, and wasn’t expecting the accusatory response. I have a tough time backing away from fights, to be honest. I’ll try harder to just stay clear.
Northwest Resident on Tue, 2nd Dec 2014 9:24 pm
Yeah, Davy, lighten up on Mak, would you, for Christ’s sake!
🙂
adamx on Tue, 2nd Dec 2014 10:10 pm
You know, we’ve talked about how the “resource pyramid” is wider at the base – if fracking, oil sands, methane hydrates and other hard to get resources still have just enough EROEI and turn out to be literally more plentiful than other oil sources, that means we can keep running the red queen’s race for a while longer. i.e. Peak could get pushed out through possibly decades of “scraping the barrel”. At some point it goes sideways no matter what, but a couple decades of burning everything we have (there’s still a lot of coal) will mean a much more crowded, polluted, and developed world.
The end result would be ecological disaster of a much higher magnitude, but the delay before that starts to bite is important.
It will also mean that maybe I could live out most of my life without seeing the utter failure of civilization. If peak is 5 years from now, we’ll all be in a world of pain. If it’s 30 years out (which seems crazy but humor me), then the pain gets put off till my old age.
It doesn’t matter if net energy is down or EROEI is down until it reaches the point at which the system can’t be maintained. Gross energy use is still rising – the total of all the coal, oil, hydro, and everything else. The system creaks a bit but we haven’t even seen Great Depression II. It just keeps going, with no real appearance that it could ever stop.
Makati1 on Tue, 2nd Dec 2014 10:25 pm
adamx, I’m at that “old age” point and doubt I will have to live too many more years to see the collapse. I am sorry for my kids and grand kids who will have to live the longest in the chaos and pain that is coming. My great grands will never know the beautiful earth I grew up in right after WW2.
For myself, I have lived a good life. I am very healthy and living in a climate where I can grow food year round, plenty of water, and no worry about freezing or roasting (Temp range is about 70F to 90F). I have friends here and am fairly independent of the US except for that damn tax form every April.
If you are thinking about becoming an expat, look at this article…
http://www.zerohedge.com/news/2014-12-01/martin-armstrong-asks-it-time-turn-lights-america
…and you will better understand my comment.
Plantagenet on Tue, 2nd Dec 2014 10:28 pm
@Westexasanlub
First you argue that there isn’t any fracking outside the US. Then when I instruct you precisely what to google to learn about the huge fracking program at vaca muerte you say it will take years to develop.
So what? Any new oil field takes years to develop. Methinks you are trying to ignore the important point that I was right and you were wrong— fracking is starting to go international.
Cheers!
Apneaman on Tue, 2nd Dec 2014 10:40 pm
Constant commenting is a 21st century dopamine drip. I needs it!
Jimmy on Tue, 2nd Dec 2014 11:37 pm
I can’t decide which one of you regular commenters is the biggest fool. Plant is up there for sure but many of you are tied for a close second and third. I can’t wait til some rouge state nukes you all.
Davy on Wed, 3rd Dec 2014 6:56 am
Adam, it is still unclear whether the old car can keep running on the increasingly watered down fuel. I like that analogy because energy is nothing without a utilization platform. Personally I find our platform more the problem. We have constructed a global society that is too energy intensive to operate properly in a resource starved world. We should have listened to Jimmy in the 70’s. Much of this excessiveness is in lifestyles, attitudes, and built out infrastructure.
We know the non-resilient and unsustainably lifestyles. They are everywhere in the west with overconsumption and in Asia with overconsumption and over population. The global 1%er crowd is nothing more than parasitic humans engaged in a massive entropic blow off of resources. Food is an example of a lifestyle of excess. We have discarded for the most part seasonal, local production, and local preservation for industrially distributed monocultures of hollow calories. Leisure is out of control with entropic waste with almost all leisure activities unnecessary and wasteful.
We have a generalized corn porn attitude globally that all will be well and things will work out at least in the next 10-15yrs. The time frame of 10-15yrs is not a motivating one. This cavalier attitude prevents us from serious mitigation and adjustment attitudes. Our built out infrastructure is so large and immense the task of making it efficient, more resilient, and sustainable is beyond our replacement timeframe.
The platform at the very top is in a debt and unfunded liability trap. Extend and pretend at the top is what is happening with the huge mountain of debt. Interest compounds and the system operates under this meme and it is called growth. Compounding is wonderful with growth but ugly when it goes in reverse. It does not take long for losses to multiply beyond even extend and pretend.
Adam I am like you maybe a crisis will come while we still have the resources to scrape by. Maybe we can lurch and lunge into something that still resembles what we have now. I would call that food on the table every day, warm home, lights that work, and socks for our feet. Maybe a depression will occur to slow this whole bumpy descent down. BAU will fade away instead of quickly burn up. Time is of the essence now because of our time value of existence. Degree and duration of the bumpy descent is critical. Like you say can we scrap by? Will the global 1%ers watch as their wealth is cannibalized by descent or will they lash out at each other in resource wars?
We as the little locals need to build our lifeboats and hope globally the top will not sink the ship too soon. We also need hope the system itself, which is beyond all control, will work out in our favor. The top is where the real waste is and it is where the power is. I see no indication yet the top gives a shit nor knows there ass from a hole in the ground. I am a hybrid 1%er I live with them so I have this insight. TPTB at the very top may have me snowed as another scenario. Maybe this tip of the spear top has their golden parachute and they will jump when the time is right allowing nature to do her work for them. They will then climb out of their holes to a new world free of over population. Maybe it is a combination. All we little locals can do is either believe with comfort this crash is out 15-20yrs or prep like it is 3-5. Are you prepping or corning?
Westexasfanclub on Wed, 3rd Dec 2014 7:16 am
Plantagenet, fracking is discussed and analyzed all over the world and there are in fact areas where it might be viable concerning infrastructure and geology.
This is nothing new and well known here.
But it is also a fact that actually there isn’t any significant fracking outside the US and if the oil price slumps there won’t be any development of it. To put it simply: La vaca muerta se quedará muerta para siempre (The dead cow will stay dead forever).
Have in mind the economic approach of this discussion here.
Westexasfanclub on Wed, 3rd Dec 2014 7:32 am
It seems it’s beginning:
http://www.zerohedge.com/news/2014-12-01/shale-bust-arrives-november-permits-new-shale-wells-tumble-15
Don on Wed, 3rd Dec 2014 9:24 am
“I can’t wait til some rouge state nukes you all.”
Oh no… Did Revlon get nukes? Or is it the dreaded l’oreal?
Northwest Resident on Wed, 3rd Dec 2014 9:42 am
Plantagenet — Has your ignorance on oil topics been corrected yet? Especially as concerns your total and complete ignorance related to “fracking just starting up outside of USA and Canada”? If your ignorance on that oil topic persists, I can find some articles and post the links here for you to read in hopes that your ignorance might be cured.
I didn’t have time yesterday to list the articles that explain exactly WHY “it is also possible that cheap oil will be good for the US and world economy” is a completely ignorance statement to make. But I have time today, in between my work assignments. Please, let me know if you’re still feeling like an ignorant moronic dunce on this topic, and I’ll do my best to help you self-educate.
And Plant, next time you ignorantly tell me I’m ignorant, I’m not going to take it nearly as kindly as I have this time around. Fair warning. Unlike you, when I’m actually ignorant on a subject, I simply say nothing about it — maybe ask a question or two. But YOU proudly put your ignorance on display daily, promenading your stupidity and ignorance as rude pompous know-it-all knowledge. Please stop doing that.
Davy on Wed, 3rd Dec 2014 9:54 am
Don, jimmy-do-little is mad because no one likes him. He sceers me when he talks like that. I wonder where little Jimmy is going when his desired Armageddon takes place. Jimmy, talk to Mak he loves talking NUK war casually and with excitement.
Don on Wed, 3rd Dec 2014 10:12 am
That was just me being a grammar nazi. I hate it when people spell rogue “rouge”. I also hate it when they don’t know the difference between their burro and a burrow.
Davy on Wed, 3rd Dec 2014 11:05 am
http://www.zerohedge.com/news/2014-12-03/new-us-oil-well-permits-collapse-40-november-fed-still-not-worried
Northwest Resident on Wed, 3rd Dec 2014 11:38 am
Davy — One hour before catastrophic collapse descends upon us all, the FED spokesperson will be in front of a microphone talking up America’s bright economic outlook, Harold Hamm will be giving an interview to Fortune Magazine proclaiming that the era of shale oil investment opportunities has just begun, Plantagenet will be posting on this forum how great dirt-cheap oil prices are for the global economy, and many if not most of the one-percenters will already be safely settled into their fabulous doomer hideouts stockpiled with piles of gold, caviar and champagne along with wall-to-wall satellite views of the major world population centers, ready to party on while they watch the drama unfold.
Plantagenet on Wed, 3rd Dec 2014 11:48 am
@Jimmy
You are waiting for a “rouge state” to nuke people?
Why not a chartreuse state? Or a puce state?
Davy on Wed, 3rd Dec 2014 12:21 pm
NR, my minds eye of your comment is Baghdad Bob second Iraq war. Grandmother Yelen will be so soothing in those last few seconds before the lights go out.
J-Gav on Wed, 3rd Dec 2014 1:10 pm
The answer to the title’s question is – no. Peak oil arrived in about 2005. But that was conventional oil. We are now running on the ‘dregs’, as it were.
But oh yes! There are plenty of dregs, no doubt about that! As long as the capital expenditure holds out … That should correspond fairly closely to the lapse of time allowing for low oil prices. A year? A few years? A decade? Personally, I don’t know, but I find it difficult to believe it might extend much beyond that, barring a long-lasting, world-wide recession – and even then we would gain what?
Another 5 or 10 years of social and economic chaos before the reality of the natural order finally sinks into the minds of those enfeebled by media propaganda in league with political and corporate corruption. Some will undoubtedly call that a ‘pessimistic’ stance. Sorry, that’s my “best-case scenario.”
Northwest Resident on Wed, 3rd Dec 2014 1:36 pm
“Already SUV sales are taking off in the US thanks to cheap gas. Cheaper gas is like giving everybody a tax cut!”
Oh, the JOY!
Now for the reality:
Those who think collapsing oil is bullish are wrong
“The meme out there? Falling oil is bullish. After all, the more oil falls, the more consumers and companies save. I’m sorry, but there are a number of flaws with this argument. First of all, falling oil can be bullish, but collapsing oil tends to historically be very bearish. Many major corrections and bear markets have been preceded by oil in a precipitous fall.
Second, people forget that several state budgets actually rely on tax revenue that is derived from oil drilling and exploration activities. If that tax revenue collapses because those companies collapse on that oil decline, what’s the response by those states? Raises taxes on, you guessed it, consumers.
Third, you might want to be careful what you wish for when it comes to falling oil prices. A good amount of many junk-debt indices is made up of energy-sector bonds. Junk-debt spreads have been widening, and should defaults occur in the energy space, that could serve as a butterfly effect for all bonds.”
http://www.marketwatch.com/story/those-who-think-collapsing-oil-is-bullish-are-wrong-2014-12-02
bobinget on Wed, 3rd Dec 2014 3:10 pm
http://www.investorvillage.com/uploads/13230/files/Petroleum_Storage_Charts_3-December-14.pdf
if you wish to see what a glut looks like, go elsewhere.
bobinget on Wed, 3rd Dec 2014 3:13 pm
NWR,
First came the financial crisis…then— came falling oil.
Stop me if Im incorrect, is there a stronger currency today then USD?
Davy on Wed, 3rd Dec 2014 3:39 pm
Bob, great link thanks